Whistleblowing Down Under

What Happened

On July 1, 2019, The Treasury Laws Amendment (Enhancing Whistleblower Protections) Bill 2019 (“Bill 19”) came into effect that amended the Corporations Act 2001 and Taxation Administration Act 1953 to provide more protections for whistleblowers in Australia.

The Background

Prior to Bill 19, Australia did not have legislation specifically pertaining to the protection of whistleblowers. This made individuals hesitant to blow the whistle as they were unaware of the protections available to them under the law. For years, whistleblower organizations and attorneys lobbied for a reform to Australia’s whistleblowing laws. In response, Parliament enacted Bill 19.

Who Can Be A Whistleblower in Australia?

According to Bill 19, a whistleblower may be a current or former employee, contractor, officer, supplier, or associate of a regulated entity that is incorporated or registered in Australia. Interestingly, a family member or dependent of the previously mentioned individuals may become a whistleblower as well. A whistleblower must make a disclosure concerning specific subject matter to specific parties to be eligible for whistleblower protection under Bill 19.

A whistleblower will only receive protection if the disclosure concerns danger to the public or financial system, offenses against the Commonwealth punishable by imprisonment for at least one year, breaches of financials acts prescribed in the Corporations Act, or misconduct related to tax affairs of regulated entities. The whistleblower must have reasonable grounds to suspect that the misconduct is occurring.

What Protections Can a Whistleblower Receive?

Bill 19 permits a whistleblower to anonymously disclose misconduct and protects the whistleblower’s confidentiality. Bill 19 also protects the whistleblower from a wide range of detriments including, but not limited to, dismissal, alteration of employment position, harassment, intimidation, physical and psychological harm, and damage to whistleblowers’ property, reputation, and business and financial position.

If the court finds that a whistleblower’s confidentiality was breached, or the whistleblower suffered a detriment, the breaching party may be subject to criminal charges resulting in imprisonment and/or fines. The court may also impose a civil penalty on the breaching individual of up to $1.05 million and on the breaching entity for $10.5 million, or 10% of the entity’s annual turnover [maximum of $525 minimum].[1]

The court may grant an injunction to prevent, stop or remedy the detrimental conduct. It can order an apology to the whistleblower, order the whistleblower to be reinstated if terminated, order the breaching individual or entity to compensate the individual for any loss or harm suffered from the detrimental conduct, or issue any other order that the court deems appropriate. Bill 19 also provides criminal and civil immunities for whistleblowers.

How to Blow the Whistle in Australia

A whistleblower will only qualify for protection if the disclosure is made to an eligible recipient such as an officer, senior manager, auditor, or actuary; legal practitioner for the purposes of obtaining legal advice or representation; trustee; or entity prescribed in Bill 19 such as ASIC or APRA. Bill 19 also permits the whistleblower to make an emergency disclosure and a disclosure in the public interest.

A whistleblower may make an emergency disclosure to the government or media if the whistleblower has reasonable grounds to believe there is a substantial and imminent danger to the health or safety of the public or the environment. 

A whistleblower may make a public interest disclosure to the government or media if the whistleblower 1) made a protected disclosure; 2) 90 days have passed since making the protected disclosure; 3) the whistleblower does not have reasonable grounds to believe that the disclosure is being addressed; 4) the whistleblower has reasonable grounds to believe that making a public disclosure would be in the public interest; 5) the whistleblower notified the authority of their intention to make a public interest disclosure in writing; and 6) the information disclosed is narrowly tailored to inform the recipient of the misconduct.

The Take Away

Bill 19 has been compared to the United States False Claims Act (“FCA”). While the two acts offer some similar protections, Bill 19 is missing a distinct feature of the FCA: the whistleblower award. Bill 19 only compensates whistleblowers if they were harmed, whereas the FCA compensates all whistleblowers who bring successful claims – regardless of harm. The FCA was designed to reward whistleblowers for the inherent risk of being a whistleblower. As time progresses it will be interesting to observe if the protections offered under Bill 19 are enough to motivate whistleblowers to come forward, or if other modifications to the law are needed.

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[1] Note, this penalty only applies to disclosures made under the Corporations Act.