Blowing the whistle on whistleblower protections: is your business aware of its obligations?

Whistleblowing in Australia has seen a rapid increase in attention given past legislative changes following the Royal Commission into the Banking, Superannuation and Financial Services industry and recent high profile whistleblower prosecutions in this space. As we go on to discuss below, in late March 2023, former public servant and Australian Taxation Office employee, Richard Boyle, lost his bid to be granted immunity from prosecution as a whistleblower and now faces the prospect of life imprisonment.

There are whistleblower protections in both the private and public sector. At its broadest, ‘whistleblowing’ refers to a disclosure to an authority by an eligible whistleblower of illegal or illegitimate conduct.

In relation to those in the private sector, the Corporations Act 2001 (Cth) (Corporations Act) provides the main form of protection for potential whistleblowers. There are three key elements that must be satisfied to constitute an eligible whistleblower disclosure under the Corporations Act, namely:[1]

• the discloser must be an eligible whistleblower
• the disclosure must be made to an eligible recipient
• the disclosure must be about a disclosable matter.

In relation to the Commonwealth public sector, the Public Interest Disclosure Act 2013 (Cth) (PID Act) regulates the disclosure of matters by public sector employees. There is similar legislation at the State level.[2]

This article considers both whistleblower schemes and offers some helpful insights for organisations in navigating this legal minefield.

Whistleblower protections under the Corporations Act

Who is an eligible whistleblower?

Individuals can access the whistleblower protections provided for in the Corporations Act on the condition that they are an ‘eligible whistleblower’ and satisfy the elements outlined above. Under the Corporations Act, an individual is an eligible whistleblower in relation to a regulated entity if the individual is or has been, an officer, an employee or a supplier of a regulated entity.[3] Generally speaking, a regulated entity is a company or corporation, but also extends to other under entities provided for under section 1317AAB of the Corporations Act.

Who is an eligible recipient?

Eligible whistleblowers are permitted to report disclosable matters to an eligible recipient which includes regulatory bodies such as the Australian Securities and Investments Commission (ASIC), the Australian Prudential Regulation Authority (APRA) or another Commonwealth regulator.[4] In addition to these regulatory bodies, a whistleblower is able to make disclosures within their company which will not diminish their protections as an eligible whistleblower under the Corporations Act. Examples of other eligible recipients of a whistleblower disclosure are as follows:[5]

• an officer
• a senior manager
• an auditor
• an actuary
• any other person authorised by the company to receive disclosures that may qualify for protection.

What is a disclosable matter?

A disclosure by an eligible whistleblower will be regarded as a disclosable matter in instances where the whistleblower has reasonable grounds to suspect that the information in question concerns corporate misconduct or an improper state of affairs or circumstances.[6] The term ‘reasonable grounds’ refers to a situation where a reasonable person in the same position as the whistleblower would have also suspected an act of misconduct or improper affairs.

Protections

Whistleblowing plays an integral role in detecting misconduct and illegitimate practices that often harm consumers and the greater community. To encourage lawful whistleblowing, the Corporations Act provides eligible whistleblowers with various rights and protections. These protections include:

• upholding the confidentiality of a whistleblower’s identity[7]
• prohibiting victimisation[8]
• granting compensation to eligible whistleblower’s for receiving detrimental conduct.[9]

A breach of whistleblower protections will constitute a contravention of the Corporations Act and may attract criminal penalties. With this in mind, it is essential that these protections are upheld by relevant companies and corporations and by eligible individuals within these entities.

Personal work-related grievances not classed by whistleblower protections

The whistleblower protections do not extend to personal work-related grievances. A personal work-related grievance will include situations such as:[10]

• an interpersonal conflict between the discloser and another employee
• a decision relating to the engagement, transfer, or promotion of the discloser
• a decision relating the terms and conditions of engagement of the discloser
• a decision to suspend or terminate the engagement of the discloser, or an attempt to discipline the discloser.

Requirement to have a whistleblower policy

Public and large proprietary companies are also legally required to have a whistleblower policy within their organisation.[11] This policy is required to contain:[12]

• information about the protections available to whistleblowers, including protections
• information about which disclosures will qualify for protection
• information about how the company will support whistleblowers and protect them from detriment
• information about how the company will investigate disclosures that qualify for protection
• information about how the company will ensure fair treatment of employees of the company who are mentioned in disclosures that qualify for protection
• information about how the policy is to be made available to officers and employees of the company.

Case study: Quinlan v ERM Power Ltd & Ors

The application of these protections was explored in the 2021 Queensland Supreme Court case of Quinlan v ERM Power Ltd & Ors (Quinlan).[13] In that case, Mr Quinlan commenced proceedings against his former employer, ERM Power (ERM), alleging that he made protected disclosures to directors and officers of ERM and another company, Empire Oil & Gas NL, claiming ‘sham transactions’ and substantial insider trading.

Mr Quinlan alleged that these protected disclosures were then disclosed without his consent and led to him being subsequently victimised. As a result, Mr Quinlan sought compensation for the loss, damage and injury he incurred as a result of ERM’s alleged conduct.

ERM submitted a successful application to strike out parts of Mr Quinlan’s claim and instead claimed that Mr Quinlan’s grounds for suspecting misconduct and the basis upon which it was alleged were unreasonable. The Court found that whether a discloser’s grounds to suspect misconduct were reasonable is to be determined by considering what the discloser knew at the time of the disclosure. Relevantly, Mr Quinlan did not plead that he had knowledge of the matters the subject of his whistleblower disclosure.

The court ultimately decided that the alleged misconduct was not within Mr Quinlan’s knowledge at the time the disclosures were made and therefore any allegations of what is said to have occurred were deemed to be irrelevant in determining whether the whistleblower protections under the Corporations Act applied.

Whistleblower protections under the PID Act

While the Corporations Act generally deals with whistleblower disclosures relating to companies in the private sector, the PID Act deals with whistleblower disclosures in the public sector. The PID Act also provides protections to eligible whistleblowers who provide a public interest disclosure, specifically, immunity for liability, protection from reprisal and compensation for an eligible whistleblower for an act of reprisal. A public interest disclosure is a disclosure of information, by a public official, that is, a disclosure within the government, to an authorised internal recipient or a supervisor, concerning suspected or probable illegal conduct or other wrongdoing (referred to as ‘disclosable conduct’).[14] Alternatively, it may be:

• a disclosure to anybody, if an internal disclosure of the information has not been adequately dealt with, and if wider disclosure satisfies public interest requirements
• a disclosure to anybody if there is substantial and imminent danger to health or safety
• a disclosure to an Australian legal practitioner for purposes connected with the above matters.

The whistleblower protections provided for under the PID Act were recently drawn upon in Boyle v Commonwealth Director of Public Prosecutions.[15] In that case, Mr Boyle had commenced his employment with the ATO in 2005 and from July 2012, as a debt collection officer. He used his mobile phone at work to take photographs of taxpayer information and secretly recorded conversations with colleagues to gather evidence for a public interest disclosure that he was intending to make.

Mr Boyle first made a public interest disclosure within the ATO internally, before making a complaint to the tax ombudsman raising issues on the unethical debt-recovery practices at the ATO. In May 2018, Mr Boyle’s employment with the ATO was terminated, purportedly on the grounds of breaching the Code of Conduct in several respects, primarily for using his mobile phone at work to take photographs of taxpayer information and covertly recording conversations with colleagues. After his termination, he submitted an application for a declaration seeking immunity from any civil, criminal or administrative liability for making a public interest disclosure regarding alleged conduct at the ATO in 2017.

The key issue for the court to consider was whether the immunity provided for under section 10(1)(a) of the PID Act for making the public interest disclosure, protected Mr Boyle against criminal liability for the conduct of recording and disclosing protected information. Mr Boyle’s application for immunity was ultimately denied and he is now facing the prospect of life in prison.

Conclusion

Gadens has extensive experience in drafting whistleblower policies to comply with legislative requirements and assisting business to effectively manage whistleblower disclosures.

To enquire as to how Gadens may be able to assist, please contact Jonathon Hadley in Brisbane by email Jonathon.hadley@gadens.com or phone +61 7 3231 1653.

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Authored by:

Jonathon Hadley, Partner
Blade Atton, Associate
Braden Wong, Paralegal

[1] Corporations Act (2001) (Cth) s 1317AA(1).

[2] See eg Public Interest Disclosure Act (2010) (Qld).

[3] Corporations Act (2001) (Cth) s 1317AAA.

[4] Ibid s 1317AA(1).

[5] Ibid s 1317AAC(1).

[6] Ibid s 1317AA(4).

[7] Ibid s 1317AAE.

[8] Ibid s 1317AC.

[9] Ibid s 1317AD.

[10] Ibid s 1317AADA.

[11] Ibid s 1317AI(1),(2).

[12] Ibid s 1317AI(5).

[13] Quinlan v ERM Power Ltd & Ors [2021] QSC 35.

[14] Public Interest Disclosure Act (2013) (Cth) s 25.

[15] Boyle v Commonwealth Director of Public Prosecutions [2023] SADC 27.