This month, the Parliamentary Joint Committee on Corporations and Financial Services (the Committee) published its report on Whistleblower Protections.

In this collaboration article with Catherine Brooks, Principal at Moores, we explore the recommendations and what this may mean for your organisation.

The report was produced based on public hearings and submissions and contains a number of recommendations to change private sector whistleblowing laws.

Whistleblowing is generally described as the reporting of wrongdoing such as illegal or unethical practices such as possible fraud, corruption, waste, discriminatory practices, sexual harassment or other risks that could affect customers, the environment, workplace health and safety, or the organisation[1].

Background

On 30 November 2016, the senate referred an inquiry into whistleblower protections in the corporate, public, and not-for-profit sectors to the Committee for report by 30 June 2017. The reporting date was subsequently extended to 14 September 2017. The purpose of the inquiry was generally to strengthen corporate whistleblower protections in Australia.

Proponents for whistleblowing assert that effective whistleblowing provides an essential service in fostering a culture of integrity and accountability while deterring and exposing misconduct, fraud and corruption in organisations. For instance, the Australian Institute of Company Directors argues that boards and directors have a critical role to play in establishing and promoting a corporate culture that supports disclosure of wrongdoing[2]. Additionally, the Australian Federal Police informed the Committee that whistleblowers are important in detecting serious financial crime that is often sophisticated, well concealed, and part of a culture of cover-up.

As part of the inquiry, the Committee analysed whistleblower protections across G20 countries and identified that Australia has comprehensive laws across the public sector but less so in the private sector. The Committee also identified that laws in Australia were fragmented and inconsistencies existed across the legislation.

Key recommendations

The Committee has made a raft of substantial recommendations to private sector whistleblowing laws. We set out a snap shot of the recommendations below.

  • Whistleblower Protection Authority: The establishment of a “one stop shop” Whistleblower Protection Authority to support whisteblowers, assess and prioritise the treatment of whistleblowing allegations, conduct investigations of reprisals, and oversee the implementation of the whistleblower regime for both the public and private sectors.
  • Reward system: The establishment of a reward system for whistleblowers in which whistleblowers would receive a proportion of any penalty imposed against an employer or as a result of an investigation initiated by whistleblowing. Such reward systems are currently used in a number of jurisdictions similar to Australia, including the US and Canada. The Committee is of the view that a reward system would motivate whistleblowers to come forward with high quality information which would otherwise be difficult to obtain. The committee also considered that a reward system will motivate companies to improve internal whistleblower reporting systems and to deal more proactively with illegal behaviour.
  • Single whistleblowing Act: That all Commonwealth private sector whistleblowing legislation be consolidated into a single Act to harmonise whistleblowing legislation across the Commonwealth, states and territories. Currently, the laws in Australia are piecemeal featuring in various legislation for distinct purposes, including the Corporations Act 2001 (Cth), the Occupational Health and Safety Act 2004 (Vic), and and the Fair Work Act 2009 (Cth). Submitters (including the ACCC and ASIC) noted that a single Act would benefit both potential whistleblowers and businesses.
  • Protections for anonymous disclosures: That private sector whistleblowing legislation explicitly allow, and provide protections for, anonymous disclosures consistent with public sector legislation. This recommendation was provided pursuant to the considerable weight of evidence that the Committee received strongly in favour of allowing and protecting anonymous disclosures in the private sector.
  • Regular updates to the whistleblower: That where a whistleblower discloses a protected matter to an Australian law enforcement agency, that agency must provide regular updates to the whistleblower as to whether or not it is pursuing the matter, including where it transfers the matter to another law enforcement agency, in which case obligations to keep the whistleblower informed are transferred to that agency.

For further details, you can access a copy of the report here.

What does this mean for your organisation?

Following the Committee’s report, we anticipate significant legislative changes to occur over the next few years with a parliamentary vote on legislation scheduled to be held by 30 June 2018.

Your organisation should actively monitor these expected legislative changes to ensure that your organisation’s whistleblowing policy is up-to-date and legally compliant. We will keep you informed as things progress.

You can also download a copy of our sample whistleblowing checklist here.

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[1] Australian Industry Group

[2] Ms Louise Petschler, General Manager, Advocacy, Australian Institute of Company Directors,

Committee Hansard, 28 April 2017, p. 23

Photo by Joshua Ness