Whistleblower protections in the private sector
A whistleblower may make a protected disclosure for a variety of reasons, including to expose wrongdoing or unlawful activity or to prevent harm to the public or the environment.
In this article, we consider whistleblower protections in Australia, including:
- protected disclosure schemes;
- private sector whistleblowing;
- what is a ‘protected disclosure’;
- confidentiality and protection from victimisation;
- remedies, penalties and compensation; and
- privileges and immunity.
High-profile cases that bring whistleblower protections into the public eye
Whistleblower Jeff Morris’ disclosures about financial planning practices at a big-four bank triggered several parliamentary inquiries and the Royal Commission into Banking Misconduct.
More recently, for the first time, ASIC has commenced proceedings alleging breaches of whistleblower protections against a Queensland coal mine operator. The proceedings concern the alleged falsification of coal quality results, the making of false or misleading statements to the ASX and, relevantly, engaging in conduct that harmed the whistleblower (a former employee) who revealed the alleged misconduct.
Whistleblower protection schemes
Speaking out about wrongdoing or systemic misconduct can be stressful, and whistleblowers too often face retaliation and threats and significant personal and legal risk.
The purpose of protected disclosure schemes is to provide certain protections to encourage and protect whistleblowers who report misconduct and wrongdoing, thereby promoting transparency, accountability, and good governance in public and private organisations.
However, whistleblower protection laws can be incredibly complex. An extensive patchwork of state and federal laws exists in Australia to protect whistleblowers in the public, private, and not-for-profit sectors. Understanding which scheme applies and the qualifying criteria for protection can be difficult to navigate.
Which whistleblower scheme applies?
Which protected disclosure scheme applies can depend on:
- whether you’re a public or private sector employee;
- the relevant jurisdiction;
- the industry you work in; and
- the nature of the wrongdoing or misconduct being disclosed (ie. what it is you are “blowing the whistle” on).
For example, a public sector employee who suspects wrongdoing in the Commonwealth public sector may be able to raise their concern under the Public Interest Disclosure Act 2013 (Cth). For the private sector, including in banking and finance, the Corporations Act 2001 (Cth) (Corporations Act) provides protection for certain whistleblowers.
The Taxation Administration Act 1953 (Cth) also provides protection for disclosures about misconduct in relation to tax affairs. The Aged Care Act 1997 (Cth) offers limited protection for disclosures of wrongdoing in the government-funded aged-care sector, while the National Disability Insurance Scheme has its own protected disclosure scheme.
Under the Corporations Act, public companies and large proprietary companies must have a whistleblower policy that provides information about what protections are available to whistleblowers, how the company will support and protect whistleblowers, and how protected disclosures will be investigated.
In this article, we focus on the Corporations Act and whistleblowing in the private sector.
What disclosures are protected under whistleblower laws?
Where an eligible whistleblower discloses certain information to an eligible recipient, the whistleblower may be afforded certain protections, including in regard to confidentiality and protection from victimisation and detriment.
To qualify for protection, disclosures must meet certain, specific criteria. It is important to note that the qualifying criteria for protection varies and depends on which scheme applies.
The Corporations Act provides protection to whistleblowers making protected disclosures about specific regulated entities, including companies, corporations, authorised deposit-taking institutions (e.g. banks and credit unions), and certain insurers, superannuation entities and trustees.
We explore some of the qualifying criteria for making a protected disclosure under the Corporations Act below.
Eligible whistleblowers and eligible recipients
Under the Corporations Act, an eligible whistleblower includes:
- an officer, employee or associate;
- a supplier or contractor, or an employee of a supplier or contractor;
- a spouse, relative or dependant of an employee, officer, supplier or contractor.
Disclosures must also be made to an ‘eligible recipient’. Under the Corporations Act, an ‘eligible recipient’ includes:
- an officer (e.g. a company secretary or director);
- senior manager;
- an auditor or actuary;
- ASIC or APRA;
- other persons authorised to receive disclosures.
The information being disclosed must be about a serious or systemic issue. Under the Corporations Act, a disclosable matter is one which involves the disclosure of information regarding ‘misconduct’ or an ’improper state of affairs’ in relation to a regulated entity (or an officer or employee of the regulated entity). This includes conduct which represents a danger to the public or financial system or a contravention of or offence against certain laws.
With few exceptions, a personal work-related grievance of the discloser is typically not a matter to which whistleblower protections apply. For example, disclosures about the following types of individual grievances would generally not be considered protected disclosures:
- an interpersonal conflict;
- the terms or conditions of employment of the discloser; or
- a decision regarding the dismissal, promotion or transfer of the discloser.
In these situations, other protections may be available under anti-discrimination or work health and safety legislation or the Fair Work Act 2009 (Cth).
The exclusion of personal work-related grievances does not, however, preclude a disclosure from being a protected disclosure where it concerns an ‘improper state of affairs’ that has significant implications beyond the individual whistleblower.
Good faith or reasonable belief?
A whistleblower must also have reasonable grounds to suspect that the information being disclosed is true and correct.
Under some schemes, to qualify as a protected disclosure, the disclosure must be made in ‘good faith’, while other schemes require that the whistleblower must have a reasonable belief or suspicion of a breach of the law or misconduct.
Under the Corporations Act, a disclosure needn’t be made in good faith, however, the whistleblower must have reasonable grounds to suspect that the information concerns misconduct or an improper state of affairs or circumstances in the conduct of the business. The test is objective, and the whistleblower needn’t be in a position to prove the actual misconduct.
Confidentiality obligations and protection from victimisation for whistleblowers
Many schemes impose confidentiality obligations to protect the identity of whistleblowers and also prohibit the victimisation of whistleblowers.
The Corporations Act prohibits the unauthorised disclosure of a whistleblower’s identity or information that is likely to lead to the identification of the whistleblower.
Victimisation causing detriment (or threatening to cause detriment) for a reason which includes the whistleblower’s disclosure (or a belief or suspicion of the whistleblower’s disclosure) is also prohibited under the Corporations Act. ‘Detriment’ includes:
- dismissal or termination of employment;
- changing duties to the employee’s disadvantage;
- discrimination, harassment or intimidation;
- harm (including psychological harm);
- damage (for example, to property or to a person’s reputation, business or financial position).
Whistleblower compensation and penalties
A whistleblower who suffers damage from victimisation or breach of confidentiality may be able to seek compensation for that damage. Many protected disclosure schemes also impose significant civil and criminal penalties for victimisation and breach of confidentiality obligations.
Under the Corporations Act, the unauthorised disclosure of a whistleblower’s identity or victimisation causing detriment (or threatening to cause detriment) can result in significant financial penalties.
For example, unauthorised disclosure of a whistleblower’s identity can attract criminal penalties (including up to six months imprisonment) or, for a company, whichever is the greater of:
- a maximum civil penalty of up $13,750,000;
- three times the benefit derived (or detriment avoided) by the disclosure; or
- 10 percent of the company’s annual turnover (up to $687,500,000).*
* (current as at 1 January 2023)
Privilege, immunity and other protections for whistleblowers
Whistleblowers often face significant personal and legal risk when making a disclosure. Certain privileges and immunities may apply to a whistleblower making a protected disclosure.
Under the Corporations Act, a whistleblower making a protected disclosure is protected from civil, criminal and administrative liability (including any disciplinary action) for making the disclosure. This does not necessarily mean that the whistleblower is protected from liability for conduct which is revealed by the disclosure.
Provided the disclosure is, of course, a ‘protected disclosure’, the information is also not admissible in evidence against the whistleblower in criminal proceedings or civil penalty proceedings.
Other protections under the Corporation Act for whistleblowers include:
- qualified privilege against defamation;
- no contractual or other remedy or right may be enforced or exercised against the whistleblower for making the disclosure (eg. breach of a term of the employment contract);
- the ability to make an anonymous ‘public interest disclosure’ to a journalist or member of parliament (additional qualifying criteria apply);
- the ability to make an ‘emergency disclosure’ in the case of substantial and imminent danger to health and safety or the environment (additional qualifying criteria applies).
Get help from an employment lawyer
If you have already made a disclosure or if you are considering doing so, or have suffered victimisation, it is important to understand the risks and any whistleblower protections that apply in your situation.
If you are seeking representation or advice in relation to whistleblower protections or making a disclosure, you can contact us by phone or email to arrange a consultation with one of our employment lawyers for advice and assistance.
Contacting Hall Payne Lawyers
You can contact us by phone or email to arrange your consultation; either face-to-face at one of our offices, by telephone or by videoconference consultation.
This article relates to Australian law; either at a State or Federal level.
The information contained on this site is for general guidance only. No person should act or refrain from acting on the basis of such information. Appropriate professional advice should be sought based upon your particular circumstances. For further information, please do not hesitate to contact Hall Payne Lawyers.
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