With the federal government’s renewed focus on ‘corporate culture’ in the wake of the banking royal commission, increased whistleblower protections have taken effect from 1 July 2019. This means that whistleblowers who report misconduct about companies and company officers have stronger rights and protections under the Corporations Act 2001.
What are the key changes?
The protections now apply to a larger group of people who may observe or be affected by corporate misconduct and face reprisals, including current and former employees, officers and contractors, as well as their spouses and dependants.
The protections have been extended to cover not just reports of breaches of the law, but reports of misconduct or an improper state of affairs about any matter covered by financial sector laws, conduct which demonstrates systemic issues, as well as Commonwealth offences punishable by imprisonment.
Now, there are more ‘eligible recipients’ of whistleblower disclosures, including senior managers, directors and auditors. If a disclosure is made to any of these people, the whistleblower protections will apply.
The protections now enable whistleblowers to seek compensation from you if they suffer loss, damage or injury for making their disclosure.
The amendments introduce civil penalty provisions in addition to the existing criminal offences for causing detriment to a whistleblower, or for breaching their confidentiality. The courts can now grant relief against your business if you fail to fulfil your duty of care to protect the whistleblowing employee from detriment. The maximum penalties, in the case of corporations, is $10.5 million, or 10% of the annual turnover.
How does this affect your business?
From 1 January 2020, all public companies, large proprietary companies and corporate trustees of registrable superannuation entities are required to have a whistleblower protection policy in place. The maximum penalty for not having one by then is $50,400.
In any event, even if your business does not fall into any of these categories, the amendments (including the large penalty provisions), have taken effect immediately. Likewise, a whistleblower’s entitlement to seek compensation from you as an employer has already taken effect.
Whatever the size of your business, you should, therefore, look to create a whistleblower protection policy as soon as possible. Contact us to see how we can help!