The rise of the Whistleblower – where you stand legally, as an employer or employee
Our firm has recently experienced an increase in clients who are concerned about the concept of ‘whistleblowing’ and who have approached us for advice regarding their Public Interest Disclosure status (PID status).
Relevantly, whistleblower legislation continues to remain at the forefront of state and federal legislative reform discussions.
Both employers and employees should ensure they understand how these protections operate and how they could potentially be impacted. For example, there is distinctive legislation for the public and private sectors in relation to the operation and obligations of whistleblower protections. Currently, there is a trend in legislative reform at state and federal levels to encourage whistleblowers to come forward, and to increase their legal protections if they do so.
What is a PID status? – Whistleblower protections in the public sector
PID status is a protection granted to a whistleblower who has come forward to report the internal wrongdoings within their workplace that could be considered to be of public interest.
In NSW, The Public Interest Disclosures Act 1994 (NSW) (PID Act) is the relevant legislation for public officials to follow when making disclosures. The PID Act provides that PID status can be only be granted to public officials reporting suspect internal wrongdoings of the public authority they work for.
PID status can be granted if the disclosure satisfies certain criteria. The public official disclosing the information must honestly believe on reasonable grounds that the information disclosed shows disclosable conduct, such as:
the disclosure of corrupt conduct; or
serious and substantial waste; or
government information contravention; or
local government pecuniary interest contravention.
Furthermore, protocol must be adhered to in that the disclosure must be made to the principal officer of the public authority and the disclosure must adhere to the policies and procedures within the workplace of that public authority.
Comparatively, within the Commonwealth public sector, a public official can also be protected by PID status in the disclosure of suspected internal wrongdoing under the Public Interest Disclosure Act 2013 (Cth). A disclosure can be made by a public official who reasonably believes that the information disclosed tends to show disclosable conduct. These types of conduct can include:
illegal conduct; or
abuse of public trust; or
perverting the course of justice; or
wastage of public money; or
deception in scientific research
unreasonably endangering the health and safety of the environment.
Comparing State and Commonwealth Procedures
The Public Interest Disclosure Act 2013 (Cth) came into effect on the 15 January 2014 and is applicable to any public authority within the Commonwealth public sector. The legislation aimed to encourage public officials in reporting internal wrongdoings within their workplace through ensuring these officials were supported and protected from any adverse consequences. These protections do not interact with NSW’s PID Act or any NSW public authorities. The Commonwealth legislation is extensive and relatively new in comparison to the NSW legislation. Furthermore, it highlights the inadequacies in the NSW’s PID Act regarding insufficient levels of protections for whistleblowers. The PID Act dates to 1994 and recent issues have sparked debate on whether the NSW government needs to review current legislation to provide clarity and increased protections for those applying for PID status in NSW
NSW Whistleblower Legislation in the Public Sector – Is there potential for reform?
In August 2019, it was found that two western Sydney council rangers were dismissed after revealing that they were directed to stay away from property developments owned by an Auburn councillor. The rangers had disclosed the information to the Independent Commission Against Corruption (ICAC) and subsequently to a 2016 public inquiry. Presently, public officials who report information on corrupt conduct that ICAC is not investigating do not receive immediate protection. Evidently, current protections in NSW do not sufficiently ensure the protection of whistleblowers within the public sector. As a result, this can discourage the potential for future whistleblowers to report internal wrongdoings within a public authority.
Whistleblower legislation should ideally encourage and facilitate the disclosure of information that is deemed to be in the public interest. However, legislation might be discouraging such disclosures. For example, in 2018, the South Australian Parliament passed the Public Interest Disclosure Act 2018 (SA) in an attempt to repeal and replaceoutdated legislation. The updated South Australian legislation encourages and provides increased protections for whistleblowers within the public sector to disclose internal wrongdoings of public interest. Similarly, in NSW there is increasing pressure for updated reforms to the PID Act.
It is important to distinguish between the difference of PID status in the public sector as opposed to whistleblower legislation in the private sector.
The growing trend for increased protections to whistleblowers and the encouragement of disclosures has also emerged within the private sector. Recently, there have been considerable changes to whistleblower protections in the private sector which have impacted many companies across Australia in 2020.
Public Officers – Who do you tell?
If you are a Public Sector worker and have identified inappropriate behaviour within your organisation that you think is in the public interest, there are a number of processes to adhere to to ensure you follow the appropriate legal channels.
A Commonwealth or State public officer can have their disclosure accepted by an authorised officer working for the organisation the disclosure was made about. The contact information for your authorised officer should be available on your organisation’s website. Alternatively, current public officials can also make disclosures to authorised officers through their supervisor. A disclosure can be made to an authorised officer by telephone, in writing or in person.
As an employee of a public organisation it is important to familiarise yourself with your organisation’s policies and processes for whistleblowing along with the relevant legislation that is applicable to you. If you work for a Commonwealth Government organisation, for example, then your relevant legislation is the Public Interest Disclosure Act 2013 (Cth), and if you work for a State Government organisation your relevant legislation will be your State’s PID legislation (e.g. for NSW, the relevant legislation is the Public Interest Disclosures Act 1994 (NSW)). NSW public officers should also look out for any future changes that might be made to the PID Act, as this will likely create more protections for whistleblowers.
Whistleblower Protections in the Private Sector
In accordance with the Corporations Act 2001 (Cth) (Corps Act) an eligible whistleblower must be a current or former officer, employee, supplier, associate, contractor, spouse, dependent, relative or regulated superannuation entities. Further, to obtain PID Status under the Corporations Act, a discloser:
must be an eligible whistleblower under section 1317AAA; and
must have been at least 90 days since the previous disclosure; and
does not have reasonable grounds to address matters which a previous disclosure dealt with; and
has reasonable grounds to believe that the further disclosure would be in public interest; and
provided written notification; and
has communicated the public interest disclosure to a member of Parliament or journalist; and
has provided a disclosure that is no greater than is necessary to inform the recipient of the misconduct of the improper actions.
Recent Changes to Legislation in the Private Sector
The introduction of the Treasury Laws Amendment (Enhancing Whistleblower Protections) Act 2019 has resulted in a strengthening of protections for Australian whistleblowers in the private sector (Cth). These changes came into effect on 1 July 2019, expanding on existing protections within the Corporations Act and the Taxation Administration Act 1953 (Cth). The focus of these legislative changes demonstrates a commitment from regulators in increasing protections in order to hear the content of information being disclosed rather than focusing on why the information is disclosed. Such changes have resembled legislative reform in the public sector. If you are an employer, it is crucial to make yourseslf aware of your current obligations to your employees and officers as potential whistleblowers under the new legislative changes.
How Do These Changes Strengthen Whistleblower Protections?
These changes have benefitted potential whistleblowers through a widening of the scope of legal protections available, which now include:
strengthened protections for whistleblowers to make anonymous disclosures without exposing their identities; and
the majority of information disclosed by whistleblowers is now protected from prosecution; and
‘eligible whistleblowers’ now extends to include current or former employees, contractors, officers, suppliers, spouses, dependants and relatives; and
the removal of the ‘good faith’ disclosure requirement for whistleblowers; and
compensation and injunctions are available to whistleblowers for the victimisation or any detriment caused.
Who is required to have a Whistleblower Policy?
Currently, if you are a public company, large proprietary company or a registrable superannuation entity, you are now obligated to implement a whistleblower policy and must have it accessible on your website.
This obligation may also extend to not-for-profit bodies corporates (NFP) and registered not-for-profit charities. Specifically, those not-for-profit organisations or charities which sell goods or services to the public or participate in financial activities (e.g. borrowing, lending, investing or financial advice).
What defines a large company?
If you are a public company, not-for-profit, or registrable superannuation entity, these changes clearly apply to you. However, establishing whether a proprietary company can be classified as ‘large’ can be difficult, as the definition of a ‘large proprietary company’ under the Corporations Act was updated on 1 July 2019. A proprietary company is considered ‘large’ if it satisfies at least two of the following criteria:
consolidated revenue of the company and related entities is greater than $50 million; or
value of the consolidated gross assets of the company and related entities is greater than $25 million; or
the company and related entities have 100 or more employees.
What happens if I as an employer do not have a Whistleblower policy?
Whether you are a public company or ‘large proprietary company’, it is important to correctly implement a whistleblower policy in order to avoid any penalties for breaching the new legislative changes. The failure to implement a compliant whistleblower policy is considered a strict liability offence under s 1311 of the Corporations Act.
The maximum penalty for not having a policy is $126,000.
ASIC will be monitoring companies ensuring their policies have been ‘made available’ on their websites. Therefore, you should aim to implement policy in accordance with s 1317AI of the Corporations Act to avoid any penalties.
Section 1317AI sets out the requirements for your whistleblower policy to include:
the protections available to whistleblowers, including protections under the Corporations Act;
to whom disclosures can be made and how they can be made;
information on how the company will support whistleblowers to protect them from detriment;
information on how the company will investigate disclosures that qualify for protection;
information on how the company will ensure the fair treatment of employees who qualify for protection; and
information on how the policy will be made available to officers and employees of the company.
ASIC has released the Regulatory Guide 270 (RG 270), which will assist you in meeting the legislative requirements and implementing the best framework possible to manage whistleblowing processes within your company.
Whistleblower Policies – How are employees affected by these changes?
Since 1 January 2020, public companies, large proprietary companies and registrable superannuation entities are to have implemented whistleblower policy and have these ‘made available’ to employees and officers of the company. Additionally, companies that have had pre-existing whistleblower policies in place before 1 January 2020, must ensure their policy complies with the new legislative changes.
Consequently, employees working in the private sector should find it easier to access whistleblower policies for their own workplaces. These policies will ideally provide clarity on the processes for whistleblowers identifying if they are eligible for protection, what their next steps are, and who to approach within the organisation, if relevant.
The Impacts of these Changes on Employers
These recent changes to legislation for the public and private sector have seen a shift in power transferring from the employer to the whistleblower. These strengthened protections for whistleblowers will likely result in an increased number of whistleblower cases within both sectors. The NSW government is yet to update the PID Act, with continued political push it is likely that such changes might eventuate. Therefore, it is crucial for employers to ensure the best possible frameworks are in place to correctly deal with the processes of an eligible whistleblower disclosing information about the internal operations of their organisation.
Employers need to adapt to these changes and ensure the culture of their organisation encourages potential whistleblowers to make disclosures upon witnessing internal wrongdoings.
If you or your organisation would like assistance developing and implementing policies, advice or assist
ance with workplace compliance issues please contact us on firstname.lastname@example.org (02) 92611954 for a consulation with one of our lawyers.