Whistleblowing Legislation
International Whistleblower Legislation
In the USA, the Sarbanes-Oxley Act gives whistleblower protection for corporate employees and mandates companies establish procedures to permit anonymous reporting by employees. The obligation to establish these is on the audit committee.
In the United Kingdom, the Combined Code of Corporate Governance protects whistleblowers and recommends audit committees have whistleblower arrangements for financial reporting irregularities.
Australian Whistleblower Legislation
Whistleblower legislation exists in some States although it has historically been more focused on the public sector than on the private sector. Australian whistleblower legislation has been described by Dr A.J. Brown (Griffith University) as “a tapestry, because it’s got some rich threads, the problem is that there’s no single law which even approaches what would be reasonable best practice. Everybody’s experimented, nobody’s really got a good handle on what best practice would look like.”
The Australian government first signalled its intention to legislate in this area in 2002 in its discussion paper Corporate Disclosure: Strengthening the financial reporting framework. Recently the present Australian Government committed itself to “provide best-practice legislation to encourage and protect public interest disclosure within government”.
On 25 February 2009, the House of Representatives Standing Committee on Legal and Constitutional Affairs tabled its report on the inquiry into whistleblowing protection “Whistleblower protection: a comprehensive scheme for the Commonwealth public sector”. The Government is considering the Committee’s recommendations with the aim of legislating to strengthen whistleblower protection during 2009.
The Australian Stock Exchange’s Corporate Governance Council issued Principles of Good Corporate Governance and Best Practice Recommendations in 2003. It recommends companies establish a code of conduct for directors and senior executives. The recommendations include fostering and encouraging whistleblowing by staff.
The ASX Corporate Governance Council (Council) undertook an extensive review of the first edition of the Principles of Good Corporate Governance and Best Practice Recommendations and carried out a public consultation process between November 2006 and February 2007.
On 2 August 2007, the Council released the revised Corporate Governance Principles and Recommendations (Second Edition Corporate Governance Guidelines). It refers to Code of Conduct under Recommendation 3.1 and under suggestions for implementation at point 10, stated “Identify measures the company follows to encourage the reporting of unlawful or unethical behaviour and to actively promote ethical behaviour. This might include reference to how the company protects those, such as whistleblowers, who report violations in good faith, and its processes for dealing with such reports.”
Whistleblowers: Company auditors’ obligations ~ Corporations Act 2001 Part 9.4AAA Section 1317 AA-AE
Company auditors and members of external audit teams have particular legal obligations under the Corporations Act 2001 (Corporations Act) if they receive a revelation from a whistleblower.
Protection of whistleblowers in Australia
A person is protected as a whistleblower if they are:
- an officer or
- an employee of a company or
- a contractor or their employee who has a contract to supply goods or services to the company.
The Corporations Act restricts any retaliation against a whistleblower and gives them a civil right, including seeking reinstatement of employment. It:
- provides qualified privilege against defamation and
- precludes contractual or other remedies being enforced including civil and criminal liability for making the disclosure. This means that secrecy provisions in any employment contracts and the like will not preclude whistleblowing.
To qualify for protection a whistleblower’s revelation must be made to:
- ASIC or
- the company’s auditor or a member of the audit team or
- a director secretary or
- senior manager of the company or
- another person authorised by the company to receive revelations of this kind.
To trigger the provisions of the Corporations Act, the whistleblower must:
- give their name before making the disclosure and
- have reasonable grounds to suspect that their revelation indicates the company or an officer or employee has, or may have, contravened the Corporations legislation (which includes both the Corporations Act and the ASIC Act) and
- act in good faith.
The protection only covers whistleblowers reporting breaches of the Corporations Act and the ASIC Act (protected disclosure).
Handling revelations from a whistleblower under the Corporations Act
Under the Corporations Act you can only pass on the revelation and the identity of the whistleblower (or information that may lead to the identity of the whistleblower) under the following circumstances:
- You can pass it onto ASIC, APRA or the Australian Federal Police without asking for the whistleblower’s permission.
- You can only pass it onto another person if the whistleblower has given their consent. Note: This means that as a member of an audit team you cannot pass on the revelation to an audit partner unless the whistleblower has consented to you doing this.
Your Call offers 24/7 reporting that is 100% independent, secure and confidential in real time. Your-Call Disclosure Management Services are compliant with Corporations Act 2001 Part 9.4AAA Section 1317 AA-AE and Australian Standard (AS 8004-2003).
Get Started?
If you’re looking to implement a whistleblower hotline that can reduce dishonesty, increase profits and create a more positive workplace, click here to email us and download our FREE The Ultimate Whistleblowing Checklist on how to establish a best-practice whistleblowing program, or call 1300 798 101 to discuss how Your-Call can best benefit your organisation.