‘Protecting David from Goliath’: Parliamentary Committee makes recommendations for new whistleblower reforms

As the Minister for Revenue and Financial Services, the Hon. Kelly O’Dwyer MP commented in a recent address at the University of Melbourne, exposing an organisation’s misconduct can take a serious toll on the informer: ‘It is David versus Goliath’. 

After giving a Parliamentary Committee the task of reviewing the current regime, the Federal Government has indicated the likely introduction of a revised scope of whistleblower protection legislation later this year.

As we’ve written previously, these reforms have been some time coming, and, if implemented, will increase the likelihood of whistleblowing practices occurring, and provided enhanced protections to the informers.

So what can we expect to see in the new whistleblower protection legislation?

THE WHISTLEBLOWER PROTECTIONS REPORT

On 13 September 2017, the Parliamentary Joint Committee on Corporations and Financial Services (Committee) tabled its report on Whistleblower Protections.

The report contains a number of recommendations which are a step beyond what presently exists, including:

• identifying the types of conduct which can be ‘informed on’ and obtain protection (disclosable conduct);

• the establishment of a reward system for whistleblowers; and

• enhanced protections from recrimination.

The Committee’s report provides some idea as to the possible changes to whistleblower laws.

WHO CAN RECEIVE WHISTLEBLOWER PROTECTIONS?

The Committee made a number of recommendations regarding whom whistleblower protections should cover in both the public and private sectors, including:

• current and former public officials (including contractors to the Australian Public Service), pursuant to proposed amendments to the Public Interest Disclosure Act 2013 (Cth);

• current and, additionally, former staff, contractors and volunteers (in the private sector);

• people who have made a disclosure;

• people who propose to make a disclosure;

• people who could make a disclosure but do not propose to; and

• people who may be suspected of making, proposing to make, or being capable of making, a disclosure, even if they do not actually make a disclosure.

Under the Committee’s recommendations, the informant need not satisfy the existing requirement (under the Corporations Act whistleblower protections) that the whistleblower be acting in ‘good faith’ to be able to take the benefit of the protections. The report recommends this be replaced with a requirement that the whistleblower has a reasonable belief of the existence of Disclosable Conduct to receive protections.

WHAT IS DISCLOSABLE CONDUCT?

The Committee also recommended that disclosable conduct be defined to include:

1. Either a contravention of any law of the Commonwealth or a contravention of a law of a state or territory where the disclosure relates to:

• the whistleblower’s employer and the employer is covered by the Fair Work Act 2009 (Cth); or

• a constitutional corporation.

2. Any breach of an industry code or professional standard that has force in law or is prescribed in regulations under whistleblowing protection legislation (a Whistleblowing Protection Act).

However, the Committee recommended that neither of the above should apply where the disclosure relates to a breach of law by the public service of a state or territory.

For corporations, these changes are significant because presently, the only disclosable conduct relates to breaches of the Corporations Act, and protections are only afforded to current employees, suppliers etc. The wider scope recommended by the Committee would mean ‘disclosable conduct’ would cover a much larger range of offences, including cartel conduct, bribery, and breaches of other financial services legislation.

THE WHISTLEBLOWER PROTECTION AUTHORITY

A key recommendation by the Committee was the establishment of a ‘one-stop shop Whistleblower Protection Authority’ to cover both public and private sectors. This Authority would receive a number of criminal and non-criminal investigative and oversight powers, as well as the power to:

• take non-criminal matters to workplace tribunals or court on behalf of whistleblowers or on its own motion; and

• approve the payment of a wage replacement commensurate to the whistleblower’s current salary where the whistleblower suffers adverse action or reprisals.

THE ESTABLISHMENT OF A REWARD SYSTEM

The Committee also recommended that a reward system be established, whereby:

• the Whistleblower Protection Authority would be required to allocate a reward to a whistleblower that is to be a portion of the penalty imposed on the relevant employer wrongdoer (these would be determined by a Court or some other independent body); and

• a reward would be required to be determined by the Court (or other body), imposing the penalty within a legislated range of percentages and where the specific percentage would be determined by the Court (or other body).

This proposal will provide a new incentive for whistleblowers to come forward, but will also present some management challenges in respect of employee motivations for reporting on wrongdoing and the potential for conflicts of interest.

OTHER KEY CHANGES

Other proposals made by the Committee were to:

• extend whistleblower protections to people who disclose on an anonymous basis; and

• override confidentiality clauses in employment contracts and settlement agreements reached with employers.

We have seen circumstances where the existence of these provisions has constrained the ability of regulators to obtain information from employees. With employees released form these obligations, this further increases the likelihood of whistleblowing occurring.

WHAT’S NEXT?

On 28 September, Minister O’Dwyer announced the members of an Expert Advisory Panel which is to review and comment on the draft legislation the Government expects to introduce in 2017.

At the same time, Minister O’Dwyer also announced the Terms of Reference for the panel, which focuses on tax avoidance disclosures, and strengthening of the protections under statutes administered by ASIC (such as the Corporations Act) and APRA (such as insurance and superannuation legislation).