By Aaron Goonrey & Luke Scandrett*
Blowing a whistle while walking down the street is a sure way to get people to look at you. Everybody will be wondering why you blew the whistle. Is there an emergency? Are you directing traffic? Or are you just a trouble maker looking for attention?
Whistleblowing in a business context is integral to maintaining accountability, transparency and ensuring that misconduct, dishonest behaviour and unlawful activities come to light. However, employers have to manage the tension between encouraging genuine whistleblowing while discouraging employees from publicly making false allegations. The reasons for "false" whistleblowing can range from a desire to embarrass the employer to seeking to distract from the employee's own misconduct. How can an employer know when an employee is a genuine whistleblower, and what protections are genuine whistleblowers entitled to?
The recent Australian media coverage of Bradley Turner's claim against the Australian Federal Police provides a good example of how interests may conflict when it comes to alleged whistleblowing.1 Mr. Turner was an AFP agent who alleged that government-sanctioned ethnic cleansing, murder, rape and corruption took place while he was deployed in Papua New Guinea in 2013-2014. No action was taken by the AFP in relation to investigating his complaint.
While protected under the public interest disclosure legislation, Mr. Turner claimed that he became the subject of an internal investigation for being a whistleblower. He was allegedly told by internal affairs that he "spoke out and will be dealt with", and claims that other AFP staff were instructed not to talk to him. Mr. Turner is currently pursuing an action for damages of $10.3 million for the alleged reprisals made against him and the post-traumatic stress disorder that he developed after making his complaint.
The AFP has publicly stated that the material submitted to it by Mr. Turner concerning his deployment did not contain matters that required further action, and that it has not received any reports corroborating Mr. Turner's claims. The AFP has not commented on Mr. Turner's claim of alleged breaches of whistleblower protections.
Mr. Turner's claim has not yet been heard in the Federal Court. However, it may serve as an interesting case study to follow in relation to whistleblower protections. Numerous questions arise from this case — when the figurative whistle is blown and confidential information has been disclosed, does the employer have any recourse? Can it take disciplinary action against an employee for disclosing that information? Is any action or lack of action viewed as victimisation? This article will consider the protections afforded to whistleblowers and how employers can be protected from victimisation claims.
Protections available for Australian whistleblowers
There is not one set of laws that govern whistleblower protection across Australia. Public sector employees are afforded the greatest protections, with legislation in force in each State, as well as at the Federal level, to protect members of the public sector.2 The main form of protection for those in the private sector is found in the Corporations Act.3 The protections available under the Corporations Act are restricted to disclosures made in relation to breaches of that legislation.
In order to be entitled to protection as a whistleblower under the Corporations Act, an employee must meet all of the following requirements:
|1.||they make their disclosure to the Australian corporate regulator or to the company's auditor, a company director or secretary, or a person authorised by the company to receive whistleblower disclosures;
|2.||they give their name to the person or authority that they are making the disclosure to (ie. the whistleblower is not anonymous);|
|3.||they have reasonable grounds to suspect that the information that they are disclosing indicates that the company may have breached the Corporations Act; and|
|4.||they make the disclosure in "good faith", meaning that their disclosure must be honest and genuine, and motivated by wanting to disclose misconduct. If the disclosure is motivated by an ulterior motive, their disclosure will not be in "good faith".|
If a whistleblower meets all of the above criteria, they will be entitled to the following protections:
|1.||Protection of confidentiality — the information provided by the whistleblowers and their identity will be kept confidential, unless the disclosure of that information is specifically authorised by law;|
|2.||Protection from litigation for blowing the whistle — whistleblowers will be protected against civil or criminal litigation (including a case for breach of contract) for protected disclosures. If a whistleblower is the subject of an action for disclosing protected information, they may rely on this protection in their defence; and
|3.||Protection against victimisation — it is a criminal offence to victimise a whistleblower because of a protected disclosure made by the whistleblower. If a whistleblower suffers damage because of such victimisation, the whistleblower can claim compensation for that damage from the offender.|
Whistleblower protection in other jurisdictions
The USA has arguably the most comprehensive protection schemes for public and private sector whistleblowers in the world. It has whistleblower protection laws at all levels of government. Among other strengths, US law cumulatively covers a broad cross-section of organisations, and includes a general definition of reportable wrongdoing and comprehensive confidentiality protections.
The federal level of whistleblower protection is comprised of the Whistleblower Protection Act, the Sarbanes-Oxley Act, and the Dodd-Frank Act. In 2015, under the Dodd-Frank Act, the US Securities and Exchange Commission paid more than $37,000,000 to whistleblowers to reward them for their provision of information leading to successful enforcement action.4
In the public sector, the Whistleblower Protection Act was one of the earliest examples in the world of a comprehensive scheme for protecting public interest disclosures. It was enacted in 1989 and covers most federal government employees. It remains at the forefront of whistleblower protection, having recently been strengthened by the 2012 Whistleblower Protection Enhancement Act, which created new whistleblower protections for certain government employees who had previously lacked these protections.
The principal statute for protection of whistleblowers in the UK is the Public Interest Disclosure Act 1998. It applies to public and private sector "workers". The use of the term "worker" extends the Act's application to contractors and, according to a recent UK Supreme Court decision, members of an LLP partnership. However, it does not apply to volunteers, non-executive directors, job applicants or public appointees, among other examples.
In order to qualify for protection under the Act, whistleblowers must:
|1.||make the disclosure in good faith;|
|2.||reasonably believe that the disclosure is substantially true;|
|3.||ensure the disclosure is reasonable in the circumstances;|
|4.||not make the disclosure for personal gain; and|
|5.||fall within one of the following categories:|
the discloser must reasonably believe that they would suffer detriment if they disclosed internally or to a regulator;
|b.||there is no regulator and the discloser reasonably believes evidence may be concealed or destroyed;|
|c.||the discloser has previously attempted to remedy the unlawful behaviour by way of an internal disclosure; or|
|d.||the subject matter of the disclosure is "exceptionally serious".|
The Act also includes a broad definition of reprisal, by providing that a protected employee must not suffer any detriment in their employment as a result of their disclosure. It covers both negative and passive actions taken against a whistleblower, such as discipline, dismissal, failing to give a pay rise, or not being given access to facilities that would have otherwise been provided.
The UK Financial Conduct Authority and Prudential Regulation Authority recently published whistleblowing rules for UK banks and insurers, which aimed to encourage individuals to blow the whistle on concerning and poor practice, while avoiding retaliation. These rules came into effect in September 2016. New rules have also now been proposed by the FCA and PRA to apply to UK branches of overseas banks and insurers, which will require those branches to inform its employees that they can take advantage of the FCA and PRA's whistleblowing services. These rules are anticipated to come into effect in or around September 2017.
Disciplinary action taken against a whistleblower
Disciplinary action cannot usually be taken against an employee who is a protected whistleblower. However, disciplinary action can be taken if it has no connection to the whistleblowing. Where a link between the disciplinary action and whistleblowing is established, the employer may face consequences such as the payment of compensation or reinstatement of a former employee.
The Australian case of Alex Charles is a good example of these issues. Mr. Charles, a casual hospital assistant at Lismore Base Hospital in Australia, made a public interest disclosure in late 2011. The subject of his disclosure to the NSW Independent Commission Against Corruption was Mr. Charles' observation of practices at the hospital that put the health and safety of workers and the public at risk.
In June 2014, Mr. Charles was advised by Northern NSW Local Health District that he was no longer a member of the casual employment pool because he was away from work for over six months. Mr. Charles alleged that, following the making of his complaint, he became a victim of bullying and harassment by his co-workers. He claimed a psychological injury stopped him from working in July 2013.
Mr. Charles initiated proceedings against Northern NSW Local Health District for dismissal in breach of the whistleblower protection legislation for the NSW public sector. Northern NSW Local Health District claimed that the removal of Mr. Charles from the casual employment pool was in no way connected to his complaint to ICAC. His dismissal was described as a result of a standard administrative procedure which was followed whenever an employee had not worked for six months. The NSW Industrial Relations Commission was unable to find a connection between the whistleblowing activity and dismissal, and found Mr. Charles' allegations were not substantiated.5
As this case shows, employers should be aware that even where the disciplinary action is in no way driven by the whistleblowing, a protected whistleblower may suggest that any action taken against them was a result of victimisation, which may lead to further difficulties arising and/or costs being incurred by the employer in defending such a claim.
How should your business approach whistleblower protections?
Businesses should approach whistleblower protections in three ways:
Staff will only feel comfortable in disclosing knowledge of any improper or unlawful activity if strong protections are in place to protect whistleblowers and prevent victimisation. Policies and training should be updated regularly to encourage employees to come forward and report illegal actions. Whistleblowing, whether on the street or within a business, can be desirable in certain contexts — it's vital that people know when that is!
2 Public Interest Disclosure Act 2013 (Cth), Public Interest Disclosures Act 1994 (NSW), Protected Disclosure Act 2012 (Vic), Public Interest Disclosures Act 2002 (Tas), Public Interest Disclosure Act 2003 (WA), Whistleblowers Protection Act 1993 (SA), Public Interest Disclosure Act 2010 (Qld), Public Interest Disclosure Act 2012 (ACT) and the Public Interest Disclosure Act 2008 (NT).
3 Corporations Act 2001 (Cth).
4 U.S. Securities And Exchange Commission: 2015 Annual Report to Congress on the Dodd-Frank Whistleblower Program https://www.sec.gov/whistleblower/reportspubs/annual-reports/owb-annual-report-2015.pdf
5 Charles v Northern New South Wales Local Health District  NSWIRComm 1004
* Aaron Goonrey is a partner and Luke Scandrett is a solicitor in the Workplace Relations & Safety Practice Group in the Sydney office of Lander & Rogers. Mr Goonrey can be contacted at firstname.lastname@example.org.