What has happened?

The Senate Economics Legislation Committee (Senate Committee) recently completed its inquiry into the Treasury Laws Amendment (Enhancing Whistleblower Protections) Bill 2017 (Bill), issued its report and recommended the Bill be passed.

What does the Bill do?

The Bill would:

• amend the Corporations Act 2001 to strengthen and consolidate whistleblower protections;
• amend the Taxation Administration Act 1953 to create a whistleblower protection regime for disclosures of information by individuals about breaches of the tax laws or misconduct in relation to an entity's tax affairs; and
• repeal the existing financial sector whistleblower regime and implement transitional arrangements.

The most notable amendments contained in the Bill will:

• significantly extend the group of people who can make disclosures and be eligible for protection;
• broaden the types of wrongdoing (a disclosable matter) whistleblowers can make disclosures about;
• expand who can receive a whistleblower's disclosure;
• replace the current 'good faith' test with a requirement that the whistleblower has objectively reasonable grounds to suspect wrongdoing;
• allow anonymous disclosures;
• strengthen immunities for whistleblowers;
• provide an avenue for emergency disclosures to Parliament/journalists in some circumstances;
• increase penalties for individuals and corporations if a whistleblower's identity is revealed without consent;
• make it easier for whistleblowers to be compensated if they suffer victimisation, with a reverse onus of proof on the defendant;
• expand the orders that may be made by a court in favour of a person who has suffered loss, damage, or injury as a result of victimising conduct; and
• require public and large proprietary companies to have a compliant policy that is made available to their officers and employees, with penalties applying for non-compliance. For the definition of a large proprietary company, visit the Commonwealth Consolidated Acts website.

These amendments will likely create a number of practical difficulties for employers in receiving and investigating protected disclosures. For example, it can be very difficult to properly investigate an anonymous disclosure. Similarly, the restrictions on disclosing a whistleblower's identity may seriously hamper a proper investigation. If identity is disclosed, even unintentionally, significant penalties can be imposed.

Another difficulty will be determining whether the alleged wrongdoing is a disclosable matter covered by the new provisions. For example, such matters include conduct in breach of a range of legislation, including the Corporations Act 2001, and disclosures about 'misconduct' or 'an improper state of affairs' in relation to a relevant entity.

The fact that disclosures can be made to a person's manager or supervisor may also be problematic. At the very least, it means managers and supervisors will need training to be able to identify and respond to a relevant disclosure.

For more detailed information on the contents of the Bill and the amendments it contains, please visit this previous article.

What does the Senate Committee's report recommend?

As well as recommending the Bill be passed, the Senate Committee also recommended the Bill include a requirement for future review, including to consider the:

• creation of a single private sector Act relating to whistleblower protection;
• introduction of a rewards scheme for whistleblowers; and
• establishment of an independent whistleblower protection authority.

These matters were all recommended by the Parliamentary Joint Committee report but not included in the Bill.

The Senate Committee also noted concerns that the definition of 'journalist' is too narrow as it currently stands in the Bill, and is ambiguous as to its intended scope. Accordingly, it recommended that the definition of 'journalist' in the Bill be reviewed.

What do you need to do now?

Based on the Senate Committee's report and recommendations, we expect the Bill will be passed in its current form in the near future. Even though companies will have until 1 January 2019 to put in place a compliant policy, the new legislation will come into force on 1 July 2018. Therefore, now is the time to think about:

• reviewing any existing whistleblower policy and updating it well before the 1 January 2019 deadline;
• preparing a whistleblower policy if you don't already have one (noting only public and large proprietary companies are legally obliged to have one); and
• appropriate training for managers and others to deal with the new legislation.

Importantly, the Bill includes a number of mandatory content requirements for the whistleblower policy.

Want more information?

Read our previous update about the draft Whistleblower Bill being released for consultation.

You can find the Bill and the Senate Committee report on the Parliament of Australia website.