In our previous bulletin (see it here), we provided an overview of the new Federal whistleblower laws introduced by the Treasury Laws Amendment (Enhancing Whistleblower Protections) Bill 2018 (Cth). Now it is time to get into some of the detail. On 12 March 2019, the Bill received Royal Assent meaning the regime will come into force on 1 July 2019.
In this bulletin, we look at what disclosures fall within the whistleblower protections - what is a disclosable matter? It is a broad concept, the limits of which are not easily defined.
A quick refresh
To qualify for protection, disclosures must:
- be made by an eligible whistleblower;
- be made to a prescribed authority or an eligible recipient; and
- be a disclosable matter (but cannot be a personal work-related grievance).
It is this last aspect of what is a disclosable matter that we now explore in more detail.
What do the new protections cover?
The new protections apply to the disclosure of information if the whistleblower:
"has reasonable grounds to suspect that the information concerns misconduct, or an improper state of affairs or circumstances",
in relation to the company or a related body corporate. It is immediately apparent that this definition may capture a range of activity, not just outright illegal conduct.
This later observation is confirmed by the new laws providing "without limitation", the protections apply to the disclosure of information that indicates conduct that:
- is an offence against, or contravention of, a range of specified banking, finance, corporate and insurance legislation;
- is an offence against "any other law of the Commonwealth that is punishable by imprisonment of 12 months or more"; or
- represents a danger to the public or the financial system.
Are there reasonable grounds to suspect?
The requirement for the discloser to have "reasonable grounds to suspect" the information has the requisite quality is an important threshold to qualifying for protection. Though, in practice, this threshold will not be burdensome.
The word "suspect" is an ordinary word meaning to have an idea or impression. The High Court of Australia in George v Rockett (1990) 170 CLR 104, when dealing with the issue of reasonable grounds to believe, said the issue is not one of evidential proof. "Belief is an inclination of the mind towards assenting to, rather than rejecting, a proposition", the High Court said.
The discloser does not need to know, as fact, that the information has the requisite quality. A suspicion is likely to be reasonable if it is not fanciful, illogical or irrational.
What is "misconduct, or an improper state of affairs or circumstances"?
There is no definition in the legislation of what is "misconduct". There will be a danger in equating misconduct with what is serious misconduct in employment law. The disclosure simply needs to relate to misconduct, not the more stringent concept of serious misconduct.
The Oxford Dictionary defines misconduct simply as "unacceptable or improper behaviour". In Soliman v University of Technology, Sydney [2012] FCAFC 146, the Full Federal Court commented that misconduct should not be limited to "that conduct which is contrary to or in breach of any specific direction, rule or policy ...". The Explanatory Memorandum makes clear that misconduct captures a broad range of conduct "whether or not it is in breach of any law" and that "may also indicate a systemic issue".
However, in our view, what is disclosable misconduct needs to have some intelligible limits. As the Federal Court said, "what constitutes "misconduct" is to be informed by reference to the context in which the term is employed".
Usefully, the Australian Prudential Regulatory Authority says "misconduct may include:
- failure to comply with a legal duty;
- gross mismanagement or waste;
- dishonest or unethical behaviour by an individual; or
- fraud or other type of criminal behaviour".
The phrase "improper state of affairs or circumstances" is also not defined. There has been no judicial consideration of the legal meaning of the phrase. The Oxford Dictionary defines "improper" as "not conforming with accepted standards of behaviour". Consistent with the Explanatory Memorandum, this will be a broad category of conduct. However, it too will have some limits.
The focus of the new whistleblower regime is on corporate "wrongdoing". As such, in our view, the regime is not about providing a forum to challenge any management decisions over which the discloser is merely aggrieved or in disagreement. Not every management decision, even if wrong, would fall within the new regime. Performance issues may not be misconduct. As discussed below, personal work-related grievances are excluded.
Conduct that constitutes an offence
As said above, conduct that is an offence, or contravention, is disclosable. This includes "an offence against any law of the Commonwealth that is punishable by imprisonment of 12 months or more".
Offences under Commonwealth law that can carry punishment of 12 months or more would include numerous criminal offences. It may also include reckless breaches of duty of care under work health and safety.
Conduct that is not an offence is also captured if it is a "danger to the public or the financial system". This category covers conduct that is a significant risk to public safety.
No personal work-related grievances
Given the broad range of conduct that is likely to fall within the expanded definition of disclosable matters, it is important to note that the new laws contain a significant exclusion. Disclosures related to "personal work-related grievances" will not be covered by the new whistleblower protections. Workplace grievances will remain the jurisdiction of the Fair Work Act 2009 (Cth).
A personal work-related grievance is defined as "a grievance about any matter in relation to the discloser's employment, or former employment, having (or tending to have) implications for the discloser personally". Typical examples would include:
- personal conflicts within the workplace;
- decisions relating to engagement, promotion and termination of employees; and
- ordinary workplace bullying disputes.
However, whistleblower protections do apply if the disclosure also:
- concerns a detriment to the discloser caused by alleged victimisation; or
- is made to a legal practitioner to obtain legal advice regarding the whistleblower provisions; or
- has significant implications for the company and concerns alleged conduct that could be an offence, or contravention, as discussed above. The law recognises that some personal work-related grievances may involve very serious wrongdoing entitling the discloser to protection.
Our tips
Organisations need to develop clear rules and systems for the triage of disclosures to determine if:
- the disclosure reveals reasonable grounds to suspect the alleged conduct;
- the information disclosed concerns:
- misconduct, or an improper state of affairs, or an alleged contravention or offence, of something more serious like a danger to the public; or
- a personal work-related grievance.
That assessment will be critical for determining whether the whistleblower laws apply, qualifying the discloser to strict protection. Given the serious consequences for non-compliance, any system may include some allowance or caution as a risk management device.
However, in our view, the personal work-related grievance exclusion should be jealously protected. To treat such matters as within the whistleblower laws will make management of employment disputes complicated and unnecessarily difficult.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
