Do the new Whistleblower Laws affect your NFP Organisation?
Legal Practitioner Director
Law Student, Paralegal
On 1 July 2019, the Treasury Laws Amendment (Enhancing Whistleblower Protections) Act 2019 (Cth) (Treasury Laws Amendment) commenced. The Treasury Laws Amendment amends the whistleblower provisions set out in the Corporations Act 2001 (Cth) and aims to consolidate and strengthen the whistleblower protection regime. The basis for the new laws is to improve company transparency, as well as to deter wrongdoing.
In summary, the Treasury Laws Amendment:
- expands the category of persons who can make disclosures;
- allows disclosures to be made anonymously;
- replaces the ‘good faith’ requirement on whistleblowers to one of reasonableness;
- requires all public companies to implement a whistleblower policy as soon as possible and no later than 1 January 2020;
- requires companies to provide training to ensure that potential recipients of disclosures know how to identify a whistleblower disclosure and what to do if they receive one; and
- introduces significantly higher civil and criminal penalties for individuals and companies.
Which NFP organisations must comply with the whistleblower laws?
All NFP organisations that are registered with the Australian Securities and Investment Commission (ASIC) must comply with the new laws. This includes public companies limited by guarantee and Incorporated Associations that have registered with ASIC as a registerable body.
Who can make disclosures?
The definition of a whistleblower is broad, effectively aiming to encourage the reporting of misconduct and illegal behaviour. An individual is an eligible whistleblower if the individual is, or has been, any of the following:
- employees and officers;
- contractors, suppliers and the employees of the suppliers (either paid or unpaid and can include volunteers);
- an associate of the organisation; or
- spouses, relatives or dependants of any of the above.
Associate has the meaning outlined in section 318 of the Income Tax Assessment Act 1936 (Cth).
Who can disclosures be made to?
To qualify for protection under the Treasury Laws Amendment, the disclosure must be made to one of the following people or bodies:
- an officer or senior manager of the company;
- an auditor or actuary of the company;
- a person authorised by the company to receive protected disclosures;
- a lawyer, for the purpose of legal representation or legal representation regarding the whistleblower protections; or
- to a parliamentarian or a journalist (but only where it is a public interest or emergency disclosure).
What types of disclosures are protected?
The new laws protect disclosures that include where a person has reasonable grounds to suspect that the information disclosed concerns:
- misconduct or an improper state of affairs or circumstances regarding the company;
- conduct that breaches the Corporations Act 2001 (Cth)
- conduct that breaches laws enforced by ASIC;
- conduct that relates to an offence against any law of the Commonwealth which is punishable by imprisonment for 12 months or more; or
- represents a danger to the public or the financial system.
Does my NFP organisation need to implement a whistleblower policy?
All NFP organisations that are public companies limited by guarantee are required to implement a whistleblower policy as soon as possible but before 1 January 2020. Companies who fail to have a compliant policy in place before 1 January 2020, face fines of up to $12,600.
The NFP organisations whistleblower policy must comply with the Treasury Laws Amendment and include:
- the protections available to whistleblowers;
- details of the people to whom disclosures may be made, and how to make a disclosure;
- information on how the company can support whistleblowers and protect them from victimising;
- information about how the company will investigate disclosures;
- how the company will ensure fair treatment of employees who are mentioned in disclosures; and
- how the policy is to be made available to employees or officers of the company.
Does my NFP organisation need to provide training to the recipients of a disclosures?
Those NFP organisations that are required to implement a whistleblower policy must also ensure the recipients of disclosures receive training, so recipients of disclosures know how to identify a whistleblower disclosure and what to do if they receive one.
What penalties apply for breaching the laws?
The Treasury Laws Amendment introduces significantly higher civil and criminal penalties for individuals and companies that breach the new protection laws.
If an individual or a company breaches a whistleblower’s anonymity, fines of up to $1.05million apply to an individual and up to $10.5million apply to companies engaged in the breach of confidentially.
Significant fines also apply to an individual or company whom engages in threatening or victimising a whistleblower.
What does your NFP organisation need to do?
Given the complexity of the new laws and the severe penalties in the event of a breach, we strongly recommend as a matter of good corporate governance, that all companies regulated under the new legislation adopt a whistleblower policy to ensure the protections in the legislation are observed.
Use the following checklist as a general guideline to implement a compliant whistleblower policy:
☐ Does your policy:
- outline the protections available to whistleblowers?
- include the details of the people who disclosures may be made to?
- outline how a disclosure is to be made?
- include information on how your NFP can support whistleblowers, including how they will be protected from victimising?
- indicate how the company will investigate disclosures made?
- include how the company will ensure fair treatment of employees mentioned in disclosures?
☐ Have you made the policy available to all employees and officers of the company?
☐ Has your NFP provided training to the potential recipients of disclosures?
☐ Do the potential recipients know how to identify a disclosure and what to do if they receive one?
If you have any questions or wish to seek legal advice on how these whistleblower reforms may impact your NFP, please contact us.