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Whistleblower Protection – Corporate Obligation Expanded

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Whistleblower Protection – Corporate Obligation Expanded

On 12 March 2019 the Treasury Laws Amendment (Enhancing Whistleblower Protections) Bill 2019 (Cth) (“TLA Act”) was given Royal Assent and will significantly change the framework under which public and large proprietary companies will be required to operate in terms of providing protection for whistleblowers.

Who it applies to:

  • All public companies; and
  • All large proprietary companies.

Large proprietary companies are defined as companies who meet at least two of the following requirements:

  • Consolidated revenue for the relevant financial year of $25 million or over;
  • A value of consolidated gross assets of $12.5 million or over;
  • Employing, across all entities it controls, more than 50 staff.

Requirement to have a Whistleblower Policy

The TLA Act amends the Corporations Act 2001 (Cth) with effect from 1 July 2019 and all public companies and large proprietary companies will be required to have in place Whistleblower Policies by no later than 1 January 2020.

Whether you introduce the policy by 1 July 2019 or 1 January 2020 the broader protections will apply in terms of whistleblower protections from 1 July 2019 and can apply to disclosures made after that date even though they relate to matters arising prior.

Failure to have in place a compliant Whistleblowers Policy will carry heavy penalties, currently of up to $12,500 (60 penalty units).

The earlier you prepare the policy the sooner it can be integrated into your business and we can help ensure compliance.

Impact and Changes

The changes are significant, including:

  • Allowing protected disclosures to be on the basis of objectively reasonable grounds rather than the higher standard, acting in good faith;
  • Allowing making of protected disclosures about a wide range of misconduct, including the existence of an ‘improper state of affairs’;
  • Giving family members of former officers, employees and suppliers eligibility to make protected disclosures;
  • Providing that disclosures will be protected when made to persons as company auditors as well as officers or senior managers;
  • Making provision for anonymous disclosures;
  • Providing greater access to compensation for those whistleblowers who suffer reprisal, and a reverse onus of proof if such allegation is made;
  • Significant increases to the penalties that might apply if a contravention is found to have occurred including:
    • $1.05m (5000 penalty units) or three times the benefit derived, or detriment avoided where an individual breaches confidentiality of the identity of a whistleblower; and
    • $10.5m ($50,000 penalty units), three times the benefit derived, or detriment avoided, or 10% of the body corporate’s annual turnover up to $525m (2.5 million penalty units) for a corporation.
  • Creation of criminal offences in certain situations of breach.

We have assisted clients with compliant policies so call us to discuss how the new laws will impact you and get prepared to ensure you meet your obligations.

To speak more about employment and whistleblower law in Australia and how it operates, or to ensure your business complies by 1 January 2020, contact Colin Broadbent on (03) 9604 9400 or colin@mmrb.com.au

 

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