When is an employee whistleblower protected by the law?

Most sports fans will agree that the best games are those in which the referee is seen but not heard. The players are allowed to get on with it, the tempo of the match can flow naturally and attention can be focussed on the game — not the person holding the whistle.

Of course, this principle does not easily carry over to the business world. Laws are in place for a reason, and it is vital that the entities enforcing those laws (such as the FWO, ASIC and the ATO) keep businesses in check in regular and transparent ways. The relevant enforcement agency holding the whistle should blow it loudly whenever it is required.

But what about employee whistleblowers? These are the individuals who are insiders within an organisation and who, for one reason or another, report misconduct, dishonesty or illegal activity that has occurred within their organisation. Should these individuals be encouraged to publicly disclose such information? What protections are in place for them? What if an employee claims that they have been dismissed or victimised due to their whistleblowing activities?

Conflicting interests

There has been recent media coverage of a dispute between Origin Energy and one of its former employees, Sally McDow. In a recently filed amended statement of claim, Ms McDow made allegations of an internal cover-up of serious non-compliance with safety and environment regulations, among other things. Ms McDow also claims that she was subjected to a bullying campaign after making complaints about her being asked to delete evidence of compliance defects at Origin’s gas and oil fields. Origin later announced that it would cut 800 jobs as part of a cost-cutting effort and Ms McDow was subsequently made redundant. Ms McDow is now suing Origin for unlawful dismissal, claiming that she lost her job because she had complained about Origin’s practices and not because of the redundancy of her position.

Ms McDow’s claims have not yet been heard by a court, so it is difficult to draw any firm conclusions from her case. However, it highlights a difficult question which often arises in these types of situations — is an employer permitted to take disciplinary action against an employee for disclosing confidential information when the employee claims that they have done so in order to blow the whistle on their employer’s unlawful practices? To answer this question, we must first consider the whistleblower protections regime currently present in Australia.

Protections available for whistleblowers

Generally speaking, legitimate whistleblowing should be encouraged as it helps to keep businesses accountable for their actions. However, there are no uniform whistleblower protection laws in Australia. There are various pieces of legislation in each State, and at the Federal level, which provide protections for public sector employees. The principal legislation providing whistleblower protections in the private sector is found in the Corporations Act. However, this is, for the most part, limited only to blowing the whistle on breaches of the Corporations Act.

Under the Corporations Act, an employee will only be entitled to protection as a whistleblower if they meet all of the following criteria:

1. they make their disclosure to ASIC 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 (i.e. the whistleblower is not anonymous);
3. they have reasonable grounds to suspect that the information they are disclosing indicates that the company may have breached the Corporations Act; and
4. they make the disclosure in “good faith”. That means that their disclosure must be honest and genuine, and motivated by wanting to disclose misconduct. Their disclosure will not be in “good faith” if they have any other secret or unrelated reason for making the disclosure.

In other words, any person who discloses matters anonymously or with ulterior motives will not be entitled to receive protections under the Corporations Act.

However, if a whistleblower does meet the above criteria, they will be entitled to the following protections:

1. protection of information provided by whistleblowers — 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 for whistleblowers against litigation — an employee whistleblower 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 for whistleblowers against victimisation — it is a criminal offence to victimise an employee 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.

A connection between whistleblowing and disciplinary actions?

Alex Charles, a casual hospital assistant at Lismore Base Hospital, made a public interest disclosure to the NSW Independent Commission Against Corruption in late 2011, stating that he had observed practices at the hospital that posed health and safety risks to both workers and the public.

Mr Charles claimed that, as a result of him making the complaint to ICAC, his co-workers subjected him to a campaign of bullying and harassment until he stopped working in July 2013 after suffering a psychological injury. On 12 June 2014, he received a letter from his employer, Northern NSW Local Health District, advising him that he had been removed from the casual employment pool as he had not worked for over six months.

Mr Charles commenced legal proceedings, claiming that he had been dismissed in breach of NSW’s public sector whistleblower protection legislation. Northern NSW Local Health District submitted that Mr Charles’ removal from the casual employment pool was purely a standard administrative procedure which would be followed for any employee who had not worked for six months, and that Mr Charles’ previous complaint to ICAC was not relevant to its decision.

The NSW Industrial Relations Commission ultimately found in favour of Northern NSW Local Health District, as Mr Charles failed to make a link between his whistleblowing activity and his dismissal.

The lesson from this case is that employers should feel confident in taking disciplinary action against employees who are protected whistleblowers if that disciplinary action is not motivated by the whistleblowing in any way. An employer may otherwise be liable and may be ordered to pay compensation to an employee or even reinstate them if they have been dismissed.

How should your business handle disclosures made by a whistleblower?

It is prudent for businesses to implement a whistleblowing policy which clearly outlines the procedure an individual should follow if they wish to make a protected disclosure. Training staff in whistleblower protections and procedures should also ensure that they are familiar with the whistleblower protections regime. It is important that all staff understand that an employee whistleblower cannot be victimised, and that their identities and the information they provide cannot be passed on to third parties (other than ASIC and APRA) without their consent.

In an ideal world, no-one would ever have the need to blow the whistle on illegal activity. However, it is better to be prepared for the worst, and to ensure that people feel confident in coming forward to disclose any improper or unlawful activity that they encounter.

This article is part of a regular employment law column series for HRM Online by Workplace Relations & Safety partner Aaron Goonrey and lawyer Luke Scandrett. It was first published in HRM Online on 31 October 2017. The HRM Online version of this article is available here.