Whistleblowing Cover Story

From 1 July 2004 the Corporations Act 2001 has "whistleblower" protection provisions, sections 1317AA -1317AE. They only apply to those who disclose a breach of the Corporations legislation.

Whistleblowing

From 1 July 2004 the Corporations Act 2001 has "whistleblower" protection provisions, sections 1317AA -1317AE. They only apply to those who disclose a breach of the Corporations legislation.

A whistleblower is:

• an officer or employee of a company
• a person (or employee) with a contract for the supply of goods or services to a company

who blows the whistle to

• ASIC
• the company's auditor/ member of audit team
• a director, secretary, or senior manager
• a person authorised to receive disclosures

and who:

• discloses his/her name before disclosing; and
• has reasonable grounds to believe a breach of the legislation has occurred: and
• discloses in good faith

This results in protected disclosure

Protected disclosure not actionable

• The whistleblower is not subject to any penalty for disclosing (but may be subject to penalty for a breach of the legislation): and
• no contractual or other remedy may be enforced against the whistleblower
• the whistleblower is immune from defamation;
• a contract of employment or contract for the supply of goods/ services cannot be terminated

Whistleblower may be reinstated

An employee, terminated for disclosing, may be reinstated to that or a comparable position

Victimisation prohibited

A person must not cause, or threaten to cause, detriment to a whistleblower. This may include termination, reduction in employment conditions, demotion or unfair or unequal treatment.

If a company engages in victimisation any officer or employee involved also commits a contravention. Penalty: $2750 or six months imprisonment or both.

Whistleblower has right to compensation if victimised

A whistleblower who is victimised has a right to compensation from the company and any officer or employee in contravention.

Identity must be kept confidential

The information disclosed and the whistleblower's identity must be kept confidential. This does not apply to disclosure made to: ASIC, APRA, the Federal Police, or someone else with the whistleblower's consent. Penalty $2750.

Some submissions made by AICD are reflected in the Act:

• recognition that a company may have internal processes
• protecting the whistleblower's identity
• correcting some drafting omissions

Some key submissions have not been taken up.

• limiting application to public companies and disclosure to serious breaches
• setting timeframes and procedures for dealing with complaints

The provisions are of uncertain application. There are no procedures for handling disclosure and no timeframes within which complaints have to be finalised. There are a number of problems of application and interpretation, too many to mention here. A real concern is potential misuse.

What should you be doing?

All companies should review the provisions, including those who may have whistleblower programs in place.

While formal programs may be unsuitable for small to medium enterprises, each company should at least have some system or procedure in place to deal with any disclosure made.

*Tony Hulett is on the AICD Law Committee

Disclaimer

The purpose of this database is to provide a full-text record of all articles that have appeared in the CDJ since February 1997. It is aimed to assist in the research and reference process. The database has a full-text index and will enable articles to be easily retrieved.It should be noted that information contained in this database is in pre-publication format only - IT IS NOT THE FINAL PRINTED VERSION OF THE CDJ - therefore there might be slight discrepancies between the contents of this database and the printed CDJ.