Why private sector whistleblowers need better protection

10th May 2018

With the possible added stimulus of a couple of recent high-profile private sector cases, in September 2017 a Joint Committee of the Australian Senate published a comprehensive and detailed report on whistleblower protections, focused heavily on the private sector, and made recommendations for change.

What is whistleblowing?

Everyone knows what a whistleblower is – someone who publicly discloses improper, corrupt, or possibly even criminal conduct on the part of someone in an organisation. Pretty much by definition, the whistleblower is (or was) also part of the organisation, and is speaking out with insider knowledge and at considerable risk to their career.

But not everyone knows how we came to have whistleblower legislation, websites, support organisations and a range of reviews and inquiries, when 50 years ago a ‘whistleblower’ was a football referee.

Australian public servants historically gagged by secrecy provisions

For most of the 20th century, public service legislation in Australia had secrecy provisions. The fact that someone speaking out was exposing serious misbehaviour was no defence. In the early 1970s, police officer Sergeant Phillip Arantz, who had publicly disclosed that NSW police crime clear-up rates were being routinely falsified, was branded as insane by the then Premier Robert Askin (who was also the Minister for Police) and subsequently dismissed.

While this was an unusually high-profile case, public servants were often disciplined, and occasionally dismissed, for speaking out about things they believed were wrong.

Anti-corruption push gains momentum during 1970s

In 1976 Neville Wran became Premier of NSW. He took office with the support of South Coast independent MP and anti-corruption campaigner John Hatton, and his government agreed to support Hatton’s agenda.

Hatton had championed the case of Eddie Azzopardi, whose efforts to reveal police corruption had been rewarded by, among other things, the police firebombing his garage. Azzopardi was a member of the public and hence not a ‘whistleblower’ as such, but this case gave impetus to Hatton’s cause.

Establishing of Independent Commission Against Corruption

Although Hatton was a tireless campaigner, an anti-corruption commission (ICAC) was not established until the election of the Greiner government in 1988. The first whistleblower legislation was the Protected Disclosures Act 1994 (NSW).

While public service secrecy provisions had by then been much watered down, it was still entirely possible that a public servant would suffer consequences for speaking out, whether in accordance with the rules or otherwise.

Whistleblowers obliged to try internal channels before speaking publicly

The Protected Disclosures Act may seem fairly modest in its approach: all it really did was to protect a public servant from reprisals for speaking publicly, provided all internal channels had first been tried and found wanting.

This indeed remains the model: a whistleblower disclosing something in the public arena will (other than in extraordinary circumstances) not be protected without having made at least some attempt to bring the problem to notice internally.

Lack of comprehensive scheme of private sector whistleblower protections

While public sector whistleblower laws are now in place Australia-wide, no comprehensive scheme covers the private sector. There are presently provisions of this kind in a small number of specific industries (for example, banking, insurance and superannuation), a limited range of provisions in the Corporations Act 2001 (Cth) and, in relation to trade unions, provisions of the Fair Work (Registered Organisations) Act 2009 (Cth).

That there is no comprehensive private sector scheme is not surprising, because the original whistleblower laws were part of a broader push to combat the secretive nature of governments. The main thrust here was freedom of information laws, which were rooted in the principle that, in a democracy, the public is entitled to know what its governments are doing.

By contrast, it was accepted that private sector organisations had no comparable obligation and were entitled to keep secret anything they wanted in the course of fostering their commercial interests, as long as they did not break the law. Their mantra was ‘commercial-in-confidence’.

Whistleblower protections in private sector now seen as vital to robust corporate governance

Fifty years on, the public/private sector distinctions are less clear and, in particular, there is far less acceptance that private sector organisations should simply be immune from this kind of scrutiny. The recent report (Whistleblower Protections, Parliamentary Joint Committee on Corporations and Financial Services, September 2017) reflects this shift.

Indeed, major business and regulatory organisations making submissions to the Joint Committee were fairly unanimous in their view that a broad and effective scheme of whistleblower protection in the private sector was an essential element of ensuring robust corporate governance.

Deficiencies of Public Interest Disclosure Act

There have in fact been numerous publications on whistleblowing, the most recent being a Senate Economics Reference Committee Issues paper in 2015, and the 2016 Moss Review of the Public Interest Disclosure Act 2013 (Cth).

Although public sector whistleblowing protections are of longer standing and are generally fairly comprehensive, the Moss Review found that this Act applying to the Commonwealth public sector had substantial deficiencies, including that it was largely ineffective in providing whistleblowers with effective protection against reprisals; holding those responsible for reprisals to account; and in exposing and dealing with misconduct.

Whistleblower Protections report recommends laws to govern private sector

In the Whistleblower Protections report, the Joint Committee took an important step in recommending that the private sector generally should be covered by whistleblower laws.

However, it recognised that because of the differences between the public and private sectors, there should (at least at this stage) be separate legislation governing each sector. Nonetheless, it recommended the establishment of a single authority to oversee the operation of all whistleblower protection.

Essentially, the report argues for consistency across the sectors, except where that was judged to be impractical because of current differences.

Other recommendations include:

  • continuing use of the ‘tiered’ approach under which, to secure protection, whistleblowers must first make internal disclosure and, where that does not succeed, disclosure to regulatory authorities before ‘going public’;
  • allowing for anonymous disclosure, and protecting whistleblower confidentiality;
  • setting and promotion of standards for internal disclosure in private sector organisations;
  • annual reporting to parliament; and
  • aligning protections for whistleblowers and sanctions for retaliators with the provisions of the Fair Work (Registered Organisations) Act 2009 (Cth).

Growing size and influence of private sector demands more protection for whistleblowers

Few would dispute the importance, in Australian society today, of mechanisms to strengthen accountability in the private sector. The growing size and influence of private sector organisations, and the ongoing push to privatise public sector organisations, means that individuals frequently have no more ability to avoid dealing with, or being unavoidably influenced by, private sector organisations than they do government agencies.

Differences will inevitably remain. While it is proposed to broaden the definition of disclosable conduct in the private sector to include breach of any Commonwealth, state or territory law, disclosable conduct in the public sector extends to some conduct which does not necessarily involve the breach of a law.

And there is always the prospect that an organisation will claim some disclosures to be mischievous: false allegations made for wrong or unworthy purposes, or as a ‘pre-emptive strike’ in an attempt by the whistleblower to erect a defence (through the anti-reprisal provisions) against anticipated dismissal or other disciplinary action.

The Whistleblower Protections report generally takes a measured approach which recognises that due to continuing changes in organisations, the impact on the public of wrongdoing and the shifting of private/public sector boundaries, we need evolutionary change if there is to be an effective regime for protecting those who speak out to expose wrongdoing.

**Note that this article was written before the commencement of the 2018 banking Royal Commission hearings. The author believes that one by-product of the Royal Commission will be added stimulus to the push for whistleblower laws.**

A version of this article first appeared on the Stacks Law Group website, and can be found here.

Geoff Baldwin is a lawyer in the employment law team at Stacks Champion. He has worked at senior management levels in the public and tertiary education sectors, as an independent consultant providing management advice, and in the legal profession. His experience includes industrial relations litigation, property and leasing, commercial and administrative law advice, and workplace law. Originally trained as a scientist before being admitted to legal practice in 1977, Geoff has appeared in a range of employment tribunals and has instructed in matters before the Supreme Court. He is an experienced investigator in fields such as workers compensation, corrupt conduct and misconduct.

The views and opinions expressed in these articles are the authors' and do not necessarily represent the views and opinions of the Australian Lawyers Alliance (ALA).

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Tags: Human rights whistleblowers whistleblower protections private sector recommendations Geoff Baldwin