The Australian Government introduced the Treasury Laws Amendment (Enhancing Whistle-blower Protections) Bill 2017 (the Bill) into the Senate on the 7th of December 2017. This was in response to a Joint Parliamentary enquiry report into enhanced Whistle-blower protection laws for Australia handed down in September 2017. The Bill, if adopted in its current form, will require all public companies and large proprietary companies covered under the Corporations Act 2001 to create and make available internal whistle-blower policies and programs or risk facing penalties.
The envisaged operative timeline for implementation of the Whistle-blower Bill into legislation is 1 July 2018, with compliance obligations for affected organisations commencing on 1 January 2019.
Under the reforms, all public companies and large proprietary companies captured under the provisions of the Corporations Act 2001 must maintain and make available to all potential whistle-blowers a whistle-blower policy. Not having one in place by 1 January 2019 will be an offence, subject to a penalty of up to $12,600.
Proposed key changes to the Corporations Act 2001
The proposed changes under the Bill are designed to strengthen legislative protection measures for prospective whistle-blowers and motivate affected companies to improve their whistle-blower programs such that:
The envisaged operative timeline for implementation of the Whistle-blower Bill into legislation is 1 July 2018
- A broader group of persons will be eligible for protection under the provisions of the legislative change which includes former officers, employees, contractors and suppliers as well as associates and family members of these individuals.
- A broader category of disclosures will be covered, including suspected contraventions of a range of Federal laws.
- Anonymity of whistle-blowers must be maintained and preserved and there will no longer be a requirement for whistle-blowers to disclose their identity in order to receive protections.
- Whistle-blowers will be able to disclose to a wider range of persons, including media and members of Parliament.
- Immunity will be available to whistle-blowers in respect of information that they disclose.
- There is no longer a requirement for whistle-blowers to make a report "in good faith". This will be replaced by "reasonable grounds to suspect misconduct or improper circumstances".
- Penalties will apply to individuals and companies who reveal a whistle-blower's identity without consent, or companies who fail to develop and implement a whistle-blower policy.
- Financial compensation will be easier for whistle-blowers (and others) to access.
Organisations affected by the Proposed Changes
The proposed whistle-blower legislative change is intended to be incorporated as changes to the Corporations Act 2001. As such, the changes will apply to Public Companies which meet the compliance requirements of the Act, whether a public company limited by shares or by guarantee, an unlimited public company with a share capital or no liability companies (mining and resource type companies). The whistle-blower changes will also apply to Large Propriety Companies, which is " defined as large for a financial year if it satisfies at least two of the following requirements:
- the consolidated revenue for the financial year of the company and any entities it controls is $25 million or more
- the value of the consolidated gross assets at the end of the financial year of the company and any entities it controls is $12.5 million or more, and
- the company and any entities it controls have 50 or more employees at the end of the financial year."
Planning for Legislative Change and Associated Obligations
In preparing for the legislative change, it is advisable that work commence as soon as possible in designing processes and systems that will deal with whistle-blower or protected disclosures in a way that is compliant with these changes. It will not be enough for companies that are subject to the reforms to simply develop a whistle-blower policy and circulate it within the organisation. The clear intent of the legislative change is to ensure that companies have compliant processes in place to ensure the confidentiality and anonymity of whistle-blowers and to effectively enable the reporting of whistle-blower complaints so affected companies can respond quickly and effectively to whistle-blower reports.
Now is the time to start developing and implementing your policies and procedures so you are ‘ahead’ of the curve