Author: Tim Lange
The new private-sector whistleblower scheme introduced into theCorporations Act 2001 came into operation only on 1 July 2019, but has already prompted significant action by the large, small business, and not-for-profit entities it covers.
One of the key measures the scheme mandates is the introduction of a workplace policy for public and large proprietary companies, with seven specific areas the mandatory policy must address. A failure to have a satisfactory policy available at least to employees and officers will be a criminal offence. Mandatory policies must be in place at least from 1 January 2020 (although this might be slightly later for some large proprietary companies, where it operates in reference to a non-standard financial year). The definition of what is a “large proprietary company” has recently changed and entities should check they know if the mandatory policy requirement applies, and from when.
Entities should be careful to recognise that the mandatory content of a workplace policy includes “information about how the company will” do various things – support whistleblowers, investigate disclosures and ensure fair treatment of employees making disclosures or who are affected by them. A key issue for mandatory policy content is that the scheme does not include obligations that require any particular support, investigation or fair treatment (although those are ordinary and sensible management responses to disclosure). A policy, or regulatory guidance from ASIC, that treats the list of mandatory policy content as a direction to do these things to any particular degree is not a reflection of the actual legislative requirement.
Apart from that, the enforcement mechanism of having an entity police itself by issuing its own mandatory policy is a new legislative experiment. Classically, a workplace policy need be nothing more or less than a direction to workers (issued at the discretion of the entity), and so long as the direction is lawful and reasonable it must be complied with by workers in the same was as any other management direction.
The usual and accepted process by which legislation requires action by an entity is to directly say so, and leave it to the affected entity to decide how best to ensure compliance (which can include a workplace policy). However, this new step co-opts the capacity to give a lawful and reasonable management direction by in effect requiring a direction to be given, where the scope for an entity to judge the usefulness of the direction is restricted.
The policy adopted by any entity becomes even more significant because the scheme includes provisions that explicitly provide that the extent to which a whistleblower policy was given effect will factor into any claims by an individual that they suffered detriment as a whistleblower. There may be a temptation to have a mandatory policy that sets a high, even aspirational bar, to ensure that the obligation to have a sufficient mandatory policy has been met. However, doing so may create a rod for the entity’s own back when the question whether the aspirational aspects of the policy were met comes up in later claims.
A good illustration of how an entity can come to grief as a result of a proscriptive and unachievable workplace policy is the long-running series of litigation brought by a seafarer, Lisa Romero, against her employer Farstad Shipping Pty Ltd. Ms Romero established that an extensive workplace grievance policy had been incorporated as a term of her contract of employment, and was breached when Farstad undertook an investigation of her discrimination complaint without strict compliance with each step in that policy, but in a more practical and streamlined way (the complaint was dismissed). Ultimately, the mechanism used to investigate the complaint was irrelevant as there was no suggestion that the same outcome would not have been reached even had the ‘bells and whistles’ approach required under the policy been strictly applied. Ms Romero was awarded nominal damages of $100, but not until extensive and expensive litigation based on non-compliance with the workplace policy had occurred.
