Proposal for a comprehensive private sector whistleblower protection scheme
A recent analysis of whistleblower protections across G20 countries found Australia’s private sector whistleblower protections to be relatively weak.
The Federal Parliamentary Joint Committee on Corporations and Financial Services (Committee) was tasked with reviewing the current whistleblower protection scheme and recommending any changes for its improvement and, on 13 September 2017, it published its report on Whistleblower Protections (Report). The Report proposed broad changes to the current whistleblower protection scheme for the private sector. The full Report can be accessed here.
The key recommendations in the Report are to:
- consolidate all Commonwealth and state private sector whistleblower protections into a single Act;
- include provisions that override confidentially clauses in contracts, though not legal professional privilege;
- provide a broad definition of:
- “disclosable conduct” as being any conduct involving a breach of any Commonwealth, state or territory law; and
- “whistleblowers” to include former and current staff, contractors and volunteers
- guarantee the anonymity of whistleblowers;
- establish a Whistleblowing Protection Authority to:
- investigate criminal reprisals and make recommendations to the police or prosecutorial body regarding such reprisals;
- take non-criminal matters to tribunal or courts on behalf of whistleblowers; and
- provide advance payment of a wage replacement to a whistleblower suffering adverse action until compensation is obtained;
- require that whistleblowers have a reasonable belief in the existence of disclosable conduct to receive protection and that protection be maintained for whistleblowers even if it is ultimately determined that the conduct disclosed was not a breach of any law;
- pay uncapped compensation to whistleblowers for reprisals through a tribunal system.
Guaranteeing anonymity and providing compensatory relief should provide an incentive for whistleblowers to report more incidences of misconduct. This occurred following the introduction of a similar regime by the Securities and Exchange Commission in the United States in 2011. This will naturally put corporations to increased public scrutiny and, as already foreshadowed by some plaintiff law firms, will disclose misconduct earlier, with the possibility of class actions being commenced.
Although the government has yet to indicate which of the recommendations it will adopt, it is now an opportune time for organisations to review their internal culture and strengthen their internal reporting mechanisms. This is, of course, consistent with ASIC’s interest in and approach to the importance of corporate culture in organisations.
Date: 21 September 2017