The new Whistleblower laws introduced by the Treasury Laws Amendment (Enhancing Whistleblower Protections) Act 2019 (The Act) are now in effect. The new laws will require companies to adopt policies providing enhanced protection for those who report corruption, fraud, tax evasion and misconduct in the corporate sector. Failure to implement a whistleblower policy can result in fines of up to $12,600 for individuals, or a maximum of five times more for body corporates.
Finlaysons gave a comprehensive overview of the Whistleblower reforms in an article earlier this year, we have also developed a Whistleblower Policy template for clients to ensure they meet obligations.
The new laws took effect July 1. Now that we are into the new financial year, it is important for business owners to ensure they are meeting the enhanced requirements of The Act. This starts off with you first needing to understand if your business falls within the requirements.
Which companies require a Whistleblower Policy?
It is mandatory for public companies (which includes companies limited by guarantee), large proprietary companies and corporate trustees of registrable superannuation entities to have a whistleblower policy in place.
Under the Corporations Act 2001 (Cth), a business is considered to be a ‘large proprietary limited company’ if it satisfies at least two of the following requirements; [1]
| For financial years commencing before 30 June 2019 | For financial years commencing on or after 1 July 2019 | |
|---|---|---|
| Consolidated revenue for the financial year of the company and any entities it controls | $25 million or more | $50 million or more |
| Value of the consolidated gross assets at the end of the financial year of the company and any entities it controls | $12.5 million or more | $25 million or more |
| Number of employees the company and any entities it controls has at the end of the financial year | 50 or more | 100 or more |
Public companies will have six months from 1 July 2019 (commencement of the new laws) to establish a whistleblower policy. ‘Large proprietary limited’ companies will have six months from the end of their financial year. A small proprietary company that becomes a large proprietary company after 1 January 2020 will have an additional six months to establish a whistleblower policy.
Where the new Whistleblower laws will Impact
In particular the new laws will
- Encourage employees to speak out without fear of reprisal
- More people will be ‘eligible’ whistleblowers – such as contractors and former employees
- Stronger protections will be in place for whistleblowers and their families
- Allow and protect anonymous disclosure by whistleblowers
- Provide protection for disclosure to journalists or parliamentarians in certain circumstances
- Introduce civil penalties for causing detriment through victimisation or breaching the confidentiality of a whistleblower
What else can a company do?
Adopting, reviewing and revising your policy are the obvious requirements which need to be taken immediately. We also suggest that businesses begin establishing or improving the following framework
- Educating staff on the processes in place. Clearly identify roles and responsibilities for the whistleblower program, ensuring disclosure is made to the appropriate person
- Ensuring the staff who will have the responsibility to receive and investigate, be trained to support the whistleblower program. Such as, ensuring the whistleblowers consent is obtained to pass the information on to necessary third parties to investigate
- As a business you should always support and promote a safe work place. Culture is imperative and ensuring that staff are confident in the program and feel comfortable to “speak up” should be known
This Alert is intended as general information only. It does not purport to be comprehensive advice or legal advice. Readers must seek professional advice before acting in relation to these matters.
[1] The Corporations Amendment (Proprietary Company Thresholds) Regulations 2019 has updated the definition of a ‘large proprietary company’ for the purposes of section 45A of the Corporations Act.
