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Why the whistleblower protections in Australia don’t work - HRM

By Alan J. McDonald

Why the whistleblower protections in Australia don’t work - HRM

“The fact that there has never been a successful whistleblower case in Australia speaks volumes.”

The whistleblower protections in Australia are seriously lacking. Despite Parliament passing new legislation to expand the whistleblower protections in the Corporations Act to provide greater protections, there is still very little recourse for employees who are punished for shedding light on employer misconduct.

The private sector

The primary provisions for those working in the private sector are contained in the Federal Corporations Act 2001. The changes to these laws were put in place to provide for an expanded corporate whistleblowing scheme that will apply to the vast majority of businesses. Both the new laws and existing laws contain protections for whistleblowers.

The current corporate sector whistleblower regime, as of 1 July 2019, looks like this:

  • It includes in the definition of whistleblower both current and former employees, officers and contractors, as well as their spouses, dependents and other relatives, and anonymous disclosures.
  • It extends the protections to  whistleblower  reports that allege misconduct, an improper state of affairs or circumstances, or breach of financial sector law and all Commonwealth offences punishable by imprisonment of 12 months or more. Though a report solely about a personal work-related grievance is not covered by the protections.
  • It creates civil penalty provisions in addition to the existing criminal offences, for causing or threatening detriment to (or victimising) a whistleblower, and for breaching a whistleblower’s confidentiality.
  • It gives protections for whistleblowers in limited circumstances, if they disclose to a journalist or parliamentarian after they have reported to ASIC or APRA their concerns about substantial and imminent danger to the health or safety of one or more people or to the natural environment or matters in the public interest after 90 days.
  • It provides whistleblowers with easier access to compensation and remedies if they suffer detriment, including protections from costs orders unless a court finds the claim to be vexatious or the whistleblower acted unreasonably.
  • It requires all public companies, large proprietary companies and corporate trustees of registrable superannuation entities to have a whistleblower policy from 1 January 2020.

Under the new regime public companies and large proprietary companies (with turnovers of A$25 million or above, gross assets of at least A$12.5 million, or at least 50 employees) need to have a whistleblower policy in place by 1 January 2020.

The public sector

According to the Australian Public Service Commission, whistleblowing refers to the reporting of information which alleges a breach of the APS Code of Conduct by an employee or employees within an agency. Section 16 of the PS Act provides legislative protection for whistleblowers within the APS and, according to the act,

“…provides that a person performing functions in or for an agency must not victimise or discriminate against an APS employee because the APS employee has reported breaches (or alleged breaches) of the Code to an authorised person.

Because the PS Act prohibits victimisation and discrimination by persons performing functions ‘in or for an Agency’, contractors as well as APS employees are prohibited from taking retaliatory action against whistleblowers.”

While it may appear that public sector employees have been provided with greater protections than private sector employees in the past, public sector employees face a greater risk of consequences when standing up to the government. We have seen this in the case of Richard Boyle against the ATO. The ATO came down hard on Boyle. He faces the possibility of 161 years behind bars for his role in outing what he saw as the ATO’s questionable debt collection tactics.

As a public sector employee, Boyle would be covered by Public Interest Disclosure Act 2013, which is far more comprehensive than the coverage afforded to those in the private sector. However, despite what may look like greater protection for public sector employees, there is potentially more damage that can be done.

As it stands under public sector whistleblower laws, it is a requirement that the whistleblower must first file an internal complaint and wait for it to be internally investigated within 90 days before taking that complaint externally.

A security guard working for the Department of Parliamentary Services complied with that requirement, waiting 90 days before attempting to reach out to an MP to disclose the misconduct. The document was intercepted, and the security guard was subsequently dismissed. Despite a bid to the court by the security guard, the case was lost due to a time frame technicality. The security guard ultimately lost.

Why the protections haven’t worked in the past

While whistleblower protections read well on paper, an employee only really has the ability to commence proceedings against a former employer which are essentially commercial proceedings that have all the issues associated with complex litigation, including significant costs, risk and time. While an employee can technically bring a claim against a current employer that is rarely practically possible due to the stress being in the workplace while legal proceedings progress.

A whistleblower would likely have to fund the litigation personally and be able to afford to live while the case proceeds to court, which could take two years. Practically, that means most individuals cannot proceed.

If a whistleblower was to lose their case, which may be due to a technicality,  that individual could face costs of hundreds of thousands of dollars. If a whistleblower wins, they could be compensated with lost income and a contribution to costs (which likely won’t cover all of their actual costs), but there is no compensation for the stress experienced during proceedings.

One of the reasons employees may feel comfortable disclosing the  misconduct of their employer is because they are under the impression they are protected by the law. But the fact that there has never been a successful whistleblower case in Australia speaks volumes about the rights afforded to those who publicise their employer’s wrongdoings.

What can employers do?

The Whistleblower Bill requires all public companies and large proprietary companies to have a whistleblower policy in place, however, as a best practice measure, all companies should implement whistleblower policies and procedures which comply with the Corporations Act 2001.

Allegations of misconduct brought forward by an employee should be respected and properly investigated, preferably externally, and the whistleblower should be protected from any victimization that could occur.

Companies should provide training to their HR departments and managers about how to handle allegations of misconduct against the company and ensure they are compliant with both new and existing whistleblower protections.

Reference: ‘Why the whistleblower protections in Australia don’t work’, HRM, Tuesday 12th November 2019.