Whistleblowing protections: are you bulletproof?

Whilst at common law and through employment contracts employees owe a range of obligations to their employer, including the obligation to preserve confidence, some employees are faced with the unenviable task of working out what to do when they feel the need to report misconduct within their organisation.

Whistle-blower stories frequently receive national media attention and the inevitable debate about their legal protections ensues. We are familiar with Andrew Wilkie’s revelations about the Iraq War and Bonita Mersiades, the former Football Federation Australia employee, who called into question Australia’s 2022 World Cup bid.

Last year, Greg Medcraft, Australian Securities and Investments Commission chairman suggested a radical shift in the protection of whistleblowers, arguing for adequate compensation in recognition of the damage done to a whistleblower’s career.

This begs the question; would you be protected if you blew the whistle at work?

So, what is whistleblowing?

‘Whistleblowing’ is commonly defined as ‘the disclosure by organisation members (former or current) of illegal, immoral or illegitimate practices under the control of their employers to persons that may be able to effect action.’

Since the spate of corruption and misconduct inquires in the 1980’s (think the Fitzgerald Inquiry which revealed widespread corruption in the Queensland police), the Australian government at the state and federal level introduced significant legislative protections for whistleblowers. There are also protections that are in place for the private sector as well.

Private sector protections

The first statutory protection in the corporate setting was introduced into the Corporations Act 2001 (Cth) in 2004. Similar provisions were included in the Banking Act 1959 (Cth), Insurance Act 1973 (Cth), Life Insurance Act 1995 (Cth) and the Superannuation Industry (Supervision) Act 1993 (Cth) in 2007.

What are the protections under the Corporations Act (‘the Act’)

The Act affords protections where there are reasonable grounds to suspect a breach of the Corporations Act or the Australian Securities & Investments Commission Act 2001 (Cth).

To be protected, a whistleblower must be:

• A director or company secretary of the company to whistle blow about;
• A current employee of the company; or
• A contractor or employee of a contractor, who has a current contract to supply goods or services to the company.

Under the Act disclosure is to be made to:

• The company’s auditor or a member of the audit team;
• A director, secretary or senior manager of the company;
• A person authorised by the company to receive whistleblower disclosures; or
• The Australian Securities and Investments Commission.

Whilst the disclosure must be kept confidential, to be protected under the Act, the whistleblower needs to provide their name.

Motivation is relevant

Under the Act, the disclosure must be made in ‘good faith’. It must be honest, genuine and motivated by wanting to disclose the conduct, not to be malicious or for an unrelated basis.

How does the Act protect against victimisation and retaliation?

If proceedings are commenced against a whistleblower, the Act can be relied upon as a defence. That said, the significant burden of defending the claim lies with the whistleblower.

Where the disclosure has resulted in the termination of employment the Act includes the right to seek reinstatement.

It is a criminal offence to be victimised as a result of making a protected disclosure and a claim for damages can be made if this occurs. Again, this is a personal right and ASIC does not assist.

Notably, the Corporations Act does not protect whistleblower disclosures to third parties, such as the media. This is an important consideration for whistleblowers who want to rely upon the protections available under the Act.

It is very much a case of ensuring strict compliance with the processes of the Act in order to maintain protection.

Additional protections

Beyond the whistleblowing protections mentioned above, which apply specifically to breaches of the Corporations Act and other corporate laws, there are other options available such as breaches of contract and tort, or legislative remedies such as OH&S, worker’s compensation and equal opportunity acts to deal with instances of retaliation or bullying.

The Fair Work Act 2009 (Cth) arguably provides some limited protection to those employees who wish to make a complaint or inquiry in relation to their employment about misconduct.

Further, the Fair Work Act does offer strong protections to employees who wish to complain to their union or the Fair Work Ombudsman about an employer that is not complying with industrial laws.

Why is 2017 an important year for whistleblowers?

It goes without saying that whistleblowing is a courageous act of which the fall-out can be enormous. Yet, at present the system for protection is fragmented, complex and lacks robust protections or compensation.

2017 will be an important year for progressing whistleblower protections in Australia. Former Origin Energy employee and whistleblower, Sally McDow, has filed proceedings in the Federal Court for alleged breaches of the Corporations Act which will be a test case for the application of the law in this area.

As the law is complex it is vital for anyone considering becoming a whistleblower to obtain legal advice before doing so to ensure that wherever possible steps are put in place that provide protections.

Aron Neilson and Mercedes Hoad Moussa of Slater and Gordon advise employees at all levels on matters relating to their employment and have a keen interest in advising and assisting employees faced with the dilemma of how best to ‘blow the whistle’. If you need advice on this topic, do not hesitate to get in contact with us today.