Whistleblowing is a corporate term that is commonly referred to in highly publicised media cases involving large corporations. This Legal Kitz blog will provide an overview of what whistleblowing is, and how to go about reporting any suspected misconduct.
What is whistleblowing?
The concept of ‘whistleblowing’ is the ability for employees to be able to identify and call out actions conducted by other employees or managers that may be considered misconduct and/or harm to consumers and the community. The Corporations Act 2001 was implemented to encourage whistleblowers to come forward with any concerns and protect them when they do by providing certain legal rights and protections.
As of January 1st 2020, the Corporations Act implemented a new amendment, which requires public companies, large proprietary companies, and corporate trustees of APRA (including regulated superannuation entities) to have a whistleblower policy.
Who should I report to as a whistleblower?
As a whistleblower, there are multiple channels or reports you may follow. This can be entirely dependent on your level of trust or confidence in your supervisor to address the issue, or if the issue relates to the supervisor or senior officer directly, which may result in removing the director from a company.
You can report your concerns to any of the following:
- entities.
- a director, officer, senior manager, auditor, or actuary of the company that the concerns relate to, or people holding these positions in a related company – if you believe the matter can be resolved internally.
- people the company has authorised to receive whistleblower reports – such as whistleblower hotlines.
- The Australian Securities and Investment Commission or the Australian Prudential Regulation Authority.
- a lawyer, for the purpose of obtaining legal advice or legal representation about the whistleblower protections.
Why is whistleblowing important?
Whistleblowing is not only important due to its regulatory requirements, but furthermore, plays a crucial role in allowing employees to feel as though they are able to speak about problems they are experiencing or have witnessed, without the fear of facing repercussions. This consequently creates a strong culture of internal reporting that regulates the organisation, and gives voice to those who may not normally speak out. This kind of culture is what builds a successful business, keeping both employees and people in power accountable, and promoting communication.
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How to qualify as a whistleblower?
There are certain whistleblower criteria that must be met to ensure that the whistleblower is protected under the law. This criteria aims to include most people with a connection to an organisation, and may be in the position to have observed or been affected by the misconduct and who may face internal consequences for reporting it.
According to the Australian Securities and Investments Commission, the criteria is as follows:
You must be a current or former:
- employee of the company or organisation your disclosure is about, or a related company or organisation;
- officer (usually that means a director or company secretary) of the company or organisation your disclosure is about, or a related company or organisation
- contractor, or an employee of a contractor, who has supplied goods or services to the company or organisation your disclosure is about, or a related company or organisation. This can be either paid or unpaid, and can include volunteers;
- associate of the company or organisation, usually a person with whom the company or organisation acts in concert;
- trustee, custodian or investment manager of a superannuation entity, or an officer, employee, or a goods or service provider to a trustee, custodian, investment manager; or
- spouse, relative or dependant of one of the people referred to above.
While you must hold or have held one of these roles to access the protections, you do not have to identify yourself or your role, and you can raise your concerns anonymously.
The organisation your disclosure is about must be:
- a company;
- a bank;
- a provider of general insurance or life insurance;
- a superannuation entity or a superannuation trustee; or
- An incorporated association or other body corporate that is a trading financial corporation. This includes the not-for-profit organisations that trade in goods or services, lend or borrow money, or provide other financial services, and their trading or financial activities make up a sufficiently significant proportion of their overall activities. Not all not-for-profit organisations are subject to the whistleblower protections.
You must make your disclosure to:
- a director, company secretary, company officer, or senior manager of the company or organisation, or a related company or organisation;
- an auditor, or a member of the audit team, of the company or organisation, or a related company or organisation;
- an actuary of the company or organisation, or a related company or organisation;
- a person authorised by the company or organisation to receive whistleblower disclosures;
- ASIC or the Australian Prudential Regulation Authority (APRA); or
- your lawyer.
While you must make your disclosure to one of these people or organisations, you can raise your concerns anonymously.
You must have reasonable grounds to suspect that the information you are disclosing about the company or organisation concerns:
- misconduct; or
- an improper state of affairs or circumstances.
This information can be about the company or organisation, or an officer or employee of the company or organisation, engaging in conduct that:
- breaches the Corporations Act;
- breaches other financial sector laws enforced by ASIC or APRA;
- breaches an offence against any other law of the Commonwealth that is punishable by imprisonment for a period of 12 months; or
- represents a danger to the public or the financial system.
What are the benefits of whistleblowing?
Ethical business practices – Through the implementation of whistleblowing systems, a business can ensure that any unethical practices are monitored and reported, which will reduce the activity and create a more ethical business.
Protection of the company – There is an obligation for public and large companies to have their own whistleblowing policy, which protects the company against the law. This policy however, also protects the company from any internal conflicts and allows the company to maintain a reputable business.
Minimal risk and costs – Long-term misconduct can result in an expensive resolution, or severe reputational damage to the company, leading to civil lawsuits or errors leaving the business accountable which is expensive to resolve. If whistleblowers are comfortable to speak out, they will save money in the long term.
Drives communication and trust – Having a whistleblower policy encourages employees to communicate with their seniors to resolve issues, and creates a level of trust within the company across employee status, by openly discussing issues, and practising resolutions.
Legal advice
Becoming a whistleblower means you are protected by the law, allowing you to openly communicate the issue to be resolved. If you are unsure about how to best protect yourself as a whistleblower or are unsure about your rights, Legal Kitz can assist you. To arrange a FREE consultation with one of our highly experienced solicitors, click here today, or contact us at [email protected] or 1300 988 954.