New whistleblower legislation passes through the Australian Parliament today

The long awaited Treasury Laws Amendment (Enhancing Whistleblower Protections) Act was passed by the House of Representatives today and will now become law. While there are some features of a world’s best practice whistleblower protection regime that are not included, the legislation, as now enacted, is a major step forward. The new act will:

  • Encourage more people to come forward with reports of corporate wrongdoing;
  • More effectively protect people who come forward against reprisal; and
  • Make corporations more accountable for business integrity within their domestic and international business operations.

The major changes brought in by the new act include:

  • Broadening the definition of disclosable matters to include “misconduct or an improper state of affairs or circumstances” – previously only breaches of corporations legislation were contemplated.
  • Requiring the discloser to have only “reasonable grounds to suspect” in order to be protected rather than the old requirement of acting in “good faith”.
  • Broadening of the definition of “eligible whistleblower” to include “suppliers”, “associates of the regulated entity” and “relatives of individuals who are eligible whistleblowers”.
  • Introducing a “Public Interest Disclosure” provision where information can be provided to a member of parliament or a journalist where information provided previously has not been acted upon.
  • Introducing a new offence for unauthorised disclosure of confidential information.
  • Introducing a defence for corporations against compensation orders, where they have taken reasonable precautions and exercised due diligence to avoid detrimental conduct and who have ensured that their whistleblower protection policy has been implemented.
  • Introducing a requirement for public and large private companies to develop and communicate the company’s whistleblower policy.

The passing of the legislation today is timely in light of the release of the final report of the Banking Royal Commission a few weeks ago. Going forward, the new Act will give people who have relevant information about organisational misconduct the courage to come forward or to come forward earlier.

It is inevitable that illegal or unethical behaviour will occur in all businesses from time to time. Business therefore needs to recognise the inevitability of such behaviours and implement measures that will identify them as possible in order to contain the financial and reputational fallout. Australian corporations need to look beyond minimal compliance with the Act and recognise the compelling business case for having an effective whistleblower protection program.

McGrathNicol is assisting clients to be prepared to respond. Dean Newlan is co-lead of McGrathNicol’s Financial Crime Exchange. He was chair of the Standards Australia working group that developed Australia’s whistleblower protection standard. He is currently a member of an ISO (International Organization for Standardization) working group tasked with developing an international whistleblower standard.

AUTHORED BY

Matt Fehon

Matt Fehon
Partner, Sydney
T: +61 2 9338 2680
E: mfehon