Whistleblowers play an important role in helping to combat corporate misconduct. Whilst protections are available, these people often have legitimate concerns about the repercussions of their reporting and the potential impact on their career and life.
In July 2019, the Australian Securities and Investments Commission (ASIC) issued an Information Sheet outlining the protections available for whistleblowers under the Corporations Act 2001 (Corporations Act), encouraging whistleblowers to come forward with a better understanding of the protections available to them.
Which whistleblowers are protected under the law?
ASIC states that the legal rights and protections for whistleblowers in the Corporations Act are available if you meet the definition of an ‘eligible whistleblower’.
The criteria for protection as a whistleblower relate to your role, the company in question, who the disclosure is made to, and the subject of the disclosure.
Your role
You must be a current or former:
- Employee, officer (e.g. director), contractor (including contractor’s employees) or associate of the company or organisation the disclosure is about, or a related company or organisation
- 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
Company or organisation your disclosure is about
The organisation must be:
- a company
- a bank
- an insurance provider
- a superannuation entity or trustee, or
- financial corporation – this includes not for-profit organisations whose financial activities represent a significant proportion of their overall activities.
Who you make the disclosure to
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.
The protections can also apply if you make a whistleblower report to a journalist or parliamentarian, however they only apply in matters of public interest or in emergencies. Further information is provided on the ASIC website.
Subject of your disclosure
You must have reasonable grounds to suspect that the information you are disclosing concerns misconduct by the company or organisation (or their employees) 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.
Whistleblower rights and protections are accessed when you report misconduct in line with all of the above requirements.
ASIC notes however that these are general guidelines and that it is important to seek specialist legal advice if you are thinking of acting on the rights the whistleblower protections give you.
How exactly does the law protect whistleblowers?
The Corporations Act contains certain protections for whistleblowers including protection of information, protection against legal action and protection from detriment.
Protection of information
Generally, companies and organisations that receive your report cannot disclose your identity without your consent. However, they may report the information to ASIC, APRA, the AFP, or to a lawyer for advice about the whistleblower protections.
If a whistleblower believes that their confidentiality has been breached following their report, ASIC can investigate these allegations.
The ASIC also has a duty to protect a whistleblower’s personal information when receiving reports directly, unless disclosure of this information is specifically authorised by law.
Protection against legal action
The Corporations Act protects a whistleblower against certain legal actions related to making the whistleblower disclosure, including:
- criminal prosecution (and the disclosure cannot be used against the whistleblower in a prosecution, unless the disclosure is false)
- civil litigation (such as for breach of an employment contract, duty of confidentiality, or other contractual obligation), or
- administrative action (including disciplinary action).
This protection does not grant immunity to you for any misconduct that you were involved in that is revealed in the disclosure.
Protections from detriment
The Corporations Act makes it illegal for someone to cause or threaten detriment to you because they suspect that you have made or could make a whistleblower report.
‘Detriment’ includes dismissal from employment, harassment, discrimination, reputational or any other kind of damage.
If you were the subject of detriment after making a whistleblower report, you may be eligible to compensation and other remedies such as reinstatement of employment.
To whom may whistleblower protections not apply?
As this is a complex area of law, is it important to seek independent legal advice to determine whether whistleblower protections apply in your unique situation. ASIC provides, however, a list of common scenarios where whistleblower protections are generally not applicable.
Personal work related issues
Generally, whistleblower protections do not cover a report of misconduct solely about your personal work-related issue, except in specific circumstances such as where there is a suggestion of systemic misconduct beyond your own circumstances.
Competitors
Whistleblower protections do not apply to those reporting the misconduct of a competitor to the competitor’s management or to ASIC, as protections are targeted at insiders of companies or organisations.
Customers and clients
Similar to the above, protections do not apply to customers or clients of a company or organisation who report misconduct.
Key takeaways
Whistleblowers play an important role in helping to prevent corporate misconduct in Australia, however they often fear the consequences of reporting. By becoming more familiar with the protections available to them under the Corporations Act and through seeking expert legal advice, an individual wishing to make a whistleblower report can ensure that their identity is protected, and that they are protected from any potential legal action or detriment as a result of the report.
