Whistleblowing and In-House Counsel

Elizabeth Ticehurst

Principal, Activate Workplace Law

On 1 July 2019 new laws delivering the biggest shakeup to whistleblowing protection laws in the past two decades came into effect. Amendments to the whistleblower protection provisions in the Corporations Act 2001 (Cth) include a special role for Legal Practitioners. This article discusses the ways in which these changes will impact in-house counsel.

Disclosures to In-House Counsel

Under the new whistleblowing protection laws, there are three ways to make a protected disclosure:

(1) Make the disclosure to ASIC, APRA or another prescribed Commonwealth authority;

(2) Make the disclosure to an “eligible recipient” (which includes directors, officers, auditors and senior managers of a corporation); or

(3) Make the disclosure to a legal practitioner for the purpose of obtaining legal advice about the operation of the whistleblowing protections.

If either of the first two methods is used, the disclosure has to meet several other requirements in order to be a protected disclosure. It must be: 

· made by an “eligible whistleblower”; 

· in relation to a “regulated entity”; and 

· the content of the disclosure must be about:

o  a suspected breach of a Commonwealth law; or 

o misconduct or an improper state of affairs in relation to the regulated entity.

However, a disclosure to a legal practitioner does not have to meet any of these requirements. The whistleblower can be someone completely unrelated to the entity and there are no restrictions on the content of the information disclosed. The only requirement is that the disclosure be made for the purpose of obtaining legal advice about the operation of the whistleblowing protections.

Any in-house counsel with a current practising certificate would qualify as a “legal practitioner” under this section. A whistleblower does not have to announce or declare ahead of time that they are about to make a whistleblowing disclosure, and there is no requirement that the disclosure be made at the workplace, during working hours, or in any formal setting. In theory, a whistleblower could make the disclosure to an in-house counsel at the pub during Friday night drinks, and then ask them whether they think the whistleblower protection laws apply to that information. Even if the in-house counsel gives no advice in response to that question, or directs the whistleblower to disclose the information to someone else, a protected disclosure has already been made. (In fact, the in-house counsel could be in a conflict of interest situation at that point and should be very wary of giving advice in this situation).

What are the implications if a protected disclosure is made to an in-house counsel?

Two main protections apply after a protected disclosure is made:

1. Vicitimisation: The whistleblower is protected from victimisation (or “detrimental conduct”) because they have made the disclosure; and

2. Anonymity: The identity of the whistleblower, and information that is likely to lead to the identification of the discloser cannot be disclosed to anyone else without the consent of the whistleblower.

Anonymity is an “opt-out” rather than an “opt-in” feature of the new law.  This means that an in-house counsel who receives a disclosure will have to obtain consent from the whistleblower to make a further disclosure of the information. If the whistleblower wishes to remain anonymous, the recipient of the disclosure cannot disclose the information to any third parties without risk of personal liability (including a fine of up to $1,050,000).

There are some limited exceptions to this strict confidentiality requirement:

· The information can be passed to ASIC, APRA, or the Federal Police; 

· The information can be disclosed to (another) legal practitioner for the purpose of obtaining legal advice or representation in relation to the whistleblowing protection provisions; or

· information that is likely to lead to the identification of the discloser (but not the identity) can be disclosed if it is reasonably necessary for the purposes of investigating the matter, and all reasonable steps are taken to reduce the risk that the discloser will be identified. 

What should in-house counsel to do protect themselves from liability?

Keeping in mind the strict requirements of the law, in-house counsel will need to:

1. recognise when a protected disclosure is made

2. ask for consent to pass the whistleblower’s identity and other information on to the company’ internal whistleblowing program or to an investigator; and

3. if the whistleblower wishes to remain anonymous, ensure that any information that is passed on is only done so for the purpose of reasonable investigation of the matter, and any identifying details are removed.

Importantly, an in-house counsel is permitted to discuss the disclosure with another legal practitioner (internal or external) in order to obtain advice on the whistleblower protections. 

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Elizabeth   Ticehurst is a Principal Lawyer at Activate Workplace Law, a boutique firm   specialising in whistleblowing and employment law. She helps organisations with   all aspects of whistleblowing, from establishing a policy and program   framework, to training senior managers and advising on individual   reports. Find out more or get in touch   with Elizabeth at www.activatelaw.com.auWB