Olivia Christensen, Special Counsel together with Nicola Stewart, Lawyer at Macpherson Kelley clarify the five most common myths on whistleblower laws, following the mandatory requirement for companies to implement a Whistleblower Policy by 1 January 2020.
By now, you may have read a myriad of articles on the mandatory requirement for public and large private companies to implement and publish a Whistleblower Policy by 1 January 2020.
But it wasn’t until ASIC released Regulatory Guide 270: Whistleblower Policies (RG270) in mid-November 2019, that the regulator’s expectations on how to comply became clear.
What’s also clear is just how much confusion remains on key elements such as what’s disclosable, what qualifies for the whistleblower (WB) protections, and how organisations are expected to manage communications.
This article busts some of the common myths that we’ve been hearing.
myth #1: We don’t have to provide WB protections if the disclosure doesn’t state that it is being made under the Whistleblower policy?
Remember that cliché, if it looks like a duck? Well the same applies to a WB disclosure.
If an ‘eligible discloser’ (such as an employee or a supplier), makes a disclosure about a ‘disclosable matter’ to an ‘eligible recipient’ (which may be internal or external) then they will qualify for WB protections regardless of whether the disclosure is marked or labelled with any special words.
A ‘disclosable matter’ relates to ‘misconduct’ or an ‘improper state of affairs’ in relation to an entity or its related bodies corporate.
This carries two inherent difficulties for companies:
- ‘Disclosable matters’ is intentionally broad to cover a wide range of matters that may affect organisations and some disclosures may prima facie appear not to be a WB disclosure. It may include circumstances or conduct that don’t break any laws.
- An ‘eligible recipient’ is not just the authorised person identified in the WB policy. It can be an officer, a senior manager or even an auditor, in addition to a relevant regulatory body such as ASIC, APRA and the ATO.
To avoid an inadvertent breach of WB protections, we recommend:
- Senior staff training – All senior management level employees (and above) should receive specific training to identify a WB complaint, and know their obligations when one has been disclosed;
- Triage checklist – Have an easy to use checklist available to assist the recipient to assess the substance of the report and whether it qualifies for WB protections;
- Referral process – If the receiver is unsure, have a clear procedure as to how the matter is to be referred, potentially for external legal advice, before the matter is dismissed.
myth #2: I’m being bullied by my boss. I’ll use the WB laws to make them pay.
WB policies do not cover personal work-related grievances such as interpersonal conflicts between team members or hiring decisions. The Act and ASIC do not regulate disputes that are purely employment related and this has not changed with the introduction of WB protections. In fact, there is a specific carve out.
A general rule of thumb for any employee is that if the matter only affects them as an individual then it will be unlikely to fall within WB protections, unless there is victimisation involved.
Companies need to take care in relation to what is known as a ‘mixed report’. For example, a disclosure that deals with a personal work-related grievance and includes information about a ‘disclosable matter’, such as:
- allegations of misconduct – noting that misconduct is expressly defined in the Act as ‘fraud, negligence, default, breach of trust and breach of duty’;
- breaches of commonwealth employment or other laws that are punishable by a period of imprisonment of 12 months or more;
- reports of an ‘improper state of affairs or circumstances’ – this is intended to cover systemic issues that should be known by the regulator or may cause harm to the public (therefore not likely to cover workplace matters that only affect one individual).
Remember that complainants may be emotional, and the subject matter of the complaint may involve a multitude of things. It could take some time to unpack it and identify which issues are ‘disclosable matters’ and which ones are not.
We anticipate that very few workplace disputes will qualify for WB protections. Federal employment laws (except for the Work Health and Safety Act 2011 (Cth)) do not provide for criminal sanctions or terms of imprisonment. WB protections will apply to employees who make allegations of criminal misconduct such as fraud or sexual assault and any contraventions of the specified legislation such as the Act.
To avoid employees incorrectly using the WB policy to air personal work-related grievances, in addition to the earlier recommendations, we suggest that:
- Companies update their ancillary HR policies to ensure there is cohesion between all relevant policies;
- Choice of authorised ‘eligible recipients’ – When choosing who to name in your WB policy as a person eligible to receive WB complaints, think carefully about that person’s interpersonal skills and whether they are likely to be well-equipped for the role;
- Senior staff training – Should include training on ‘mixed reports’ and identify the other tools (such as a Triage Checklist) available to them to assist in identifying whether these contain a ‘disclosable matter’ or elements of victimisation. Training should identify appropriate avenues and responses for different elements of a complaint, and the other applicable company policies that may need to be followed, if the WB Policy does not apply.
- General awareness training – Staff at all levels should receive general awareness training of what is, and (importantly) what isn’t a matter to be dealt with under the WB policy. This may assist in curbing over-use of the policy.
myth #3: I’m anonymous so I can say what I like!
Individuals can report anonymously under WB protections and are entitled to remain anonymous through the course of their disclosure.
On one hand, recipients of disclosures have positive obligations to:
- Permit an individual to remain anonymous if they choose, including receiving complaints made via anonymous emails or letters;
- Maintain the confidentiality of the discloser’s identity, including redaction of any information that may likely lead to their identification;
- Ensure that no action is undertaken which may result in detriment to the discloser (e.g. Westpac’s alleged demotion of their compliance officer for advising the board of their failure to declare payments under anti-money laundering laws).
But this doesn’t grant free licence to the discloser to say what they like.
The Whistleblower is only eligible for protection arising from a legitimate WB disclosure. If their report is a ‘mixed report’, then WB protections may not apply to the entirety of their disclosures. False or vexatious disclosures will not receive the available protections, and could expose a discloser to liability or other consequences of any misconduct they have engaged in during their employment.
Given the time it can take to determine if a report is false, companies are far better to err on the side of caution before opening themselves up to criminal liability for failing to extend WB protections.
A breach of confidentiality for a legitimate WB discloser is an offence which may result in criminal liability.
Any WB Policy and staff training programs need to specifically address how confidentiality and anonymity will be retained.
myth #4: The Company can decide whether to communicate with Whistleblowers
WB disclosures that qualify for protection are required to be investigated and WB policies must stipulate how the investigation will proceed.
ASIC have now clearly communicated that (whenever possible) companies are encouraged to communicate with a discloser throughout the course of any investigation, including providing progress updates, and clarifying in the policy how investigation findings will be documented and reported (either internally or to the discloser).
Notably though, the Act does not require companies to continuously communicate with the discloser or provide them with updates on the investigation, particularly if this communication may jeopardise the confidentiality of the discloser or overall investigation.
Continuous communication with disclosers is a discretionary matter for each company to consider on a case-by-case basis. We do not recommend that companies enshrine such an obligation in a policy, as it may be impractical, and in some cases, may jeopardise an organisation’s ability to provide required protections.
As a practical matter, Companies should be aware that WB disclosers will expect action, and a failure to communicate with the discloser may result in an attempt to make the complaint external.
- Do not enshrine communication obligations in a policy;
- Setting expectations on how the investigation procedure will work (in each case) and the level of communication a discloser can expect to receive from the outset (following a disclosure) will help to mitigate the risk of further action;
- Companies should keep a detailed record of each complaint and investigation undertaken so they can be prepared to respond to any enquiries from a regulator.
myth #5: The new laws mean that whistleblowers can go to the media or use social media to blow the whistle.
Disclosers will not be afforded WB protections if they go straight to the media.
To receive WB protections, a discloser must meet the requirements of the Act in relation to a ‘public interest’ or ‘emergency’ disclosure – meaning the discloser must:
- have made a previous disclosure of the information to the company or other ‘eligible recipient’; and
- have either:
- in the case of an ‘emergency disclosure’ reasonable grounds to believe that ‘the information concerns a substantial and imminent danger to the health or safety of one or more persons or the natural environment’; or
- in the case of a ‘public interest disclosure’, the discloser has waited 90 days since their previous disclosure and has reasonable grounds to believe that no action is being taken, and that making a further disclosure is in the public interest;
- notified the body to which the previous disclosure was made with sufficient information to ascertain the previous disclosure, and state that they intend to make a ‘public interest’ or ‘emergency’ disclosure under the Act;
- make the disclosure to a journalist or a member of the Parliament of the Commonwealth, state or legislature of a Territory; and
- disclose information that ‘must be no greater than what is necessary to inform the recipient’ of the improper state of affairs or misconduct (in the case of a public interest disclosure) or the substantial and imminent danger (in the case of an emergency disclosure).
Ultimately, a discloser will have to jump through these hoops before they can go straight to the media with a complaint. These reasonably high thresholds ensure that companies have an opportunity to take appropriate and measured responses to complaints, without being held to ransom by threats of premature public disclosure.
- Ensuring that potential whistleblowers understand the types of disclosures that may receive protections, and in what circumstances, is an important feature of staff ‘general awareness’ training;
- Consider whether your organisation’s social media policy needs to be amended and cross-refer to its WB Policy to guard against inappropriate use of social media;
- Whistleblowers are recommended to follow the procedures identified in the WB Policy or contact the relevant regulator before resorting to a disclosure to the media.
- If someone is adamant about making a public disclosure, we recommend seeking prior independent legal advice about how to access the legal protections available, or to understand the potential consequences if the protections do not apply.
WB policies were never intended to be a one size fits all policy and each company will need to adopt their own procedures that suit the needs of the company.
A meticulous and tenacious nature has made Olivia Christensen one of Brisbane’s “go-to” lawyers for listed and unlisted companies. Olivia’s love of strategy and ability to think commercially makes her an excellent corporate advisory lawyer. She has helped both public and private companies achieve their business objectives in a range of transactions from mergers and acquisitions to schemes of arrangement, capital reorganisation and takeovers. As an equity capital markets specialist, Olivia has significant capital raising and IPO experience and regularly advises on equity and hybrid raisings and investments. You may connect with Olivia via email or LinkedIn
Connect with Nicola Stewart via LinkedIn