Employment and Migration Blog

Do you know what's happening under your nose? The importance of whistleblowers in reporting misconduct

Posted by Lisa Qiu on 18 May 2016

Managers are often unaware of the day to day issues experienced by their employees, partly because employees who are aware of the issues may have reservations about formally coming forward with a concern, and partly because it’s difficult for managers to oversee everything that happens in an office. 

It is important, as a matter of risk management, for employers to be aware of practices in the workplace which could expose the company to liability in some way. How willing employees are to come forward with important information depends on the reaction of the employer upon receipt of that information, and whether that reaction encourages, or deters, other employees from speaking up. 

In the news recently, ICAC hearings into Botany Bay Council have revealed that several people reported financial irregularities years ago, but no action was taken. The Council’s financial accountant reported to the Deputy General Manager in 2009 that invoices from a computer contractor carried the bank details of the Council’s CFO, Gary Goodman. In 2007, another employee had reported that Mr Goodman insisted on having another signatory sign blank cheques, and then completed them himself. As far as the employees could tell, no action was taken on either report. That hardly encourages employees to make further reports of irregularities.  

The 7-Eleven scandal around underpayment of employees serves to illustrate just how important it is for employers to know about issues that could amount to contraventions on the part of the employer. The CEO and Chairman of 7-Eleven resigned from their positions, shortly after it became known to them how widespread the underpayments had been. If more protection had been afforded to whistleblowers, and a culture existed which rewarded, rather than punished, whistleblowers for speaking out, the issue may have resolved itself with much less publicity, and the period over which the offences occurred (and the cost of rectification) would have been much less. By the time the underlying issues are resolved, the dirty laundry has already been aired.

More recently, a Queensland rail worker was disciplined for taking a photo of a co-driver who climbed onto the bonnet of a moving train. The whistleblower was given a final warning because she was not supposed to be using her mobile phone in the driver’s cabin. Although the whistleblower may have contravened a safety policy, the purpose for the contravention was to give evidence to the employer about unsafe work practices. Perhaps a better response would have been to discuss the seriousness of the contravention of the no-phone policy, but to make an allowance in this situation, in order to better foster a culture supportive of whistleblowers. 

Although disciplining a whistleblower for conduct in connection with speaking out may be justified, the potential message to employees in general is that speaking out could lead to the employee losing their job, or facing some other adverse consequence. The fear of reprisal felt by many employees who have something to disclose, is pervasive and needs to be addressed. This need was recently voiced by Greg Tanzer, a Commissioner at the Australian Securities and Investments Commission, who has suggested that the definition of a whistleblower (the “discloser”) under the Corporations Act needs to be broadened so as to cover more individuals, and that whistleblowers who suffer financially as a result of speaking out should be compensated. 

To encourage employees to speak out about the issues they see, employers should ensure that first, they have a grievance policy in place that tells employees what will happen if they raise a complaint, and to whom they should speak. Second, procedures should be put into place that afford the whistleblower a degree of anonymity if required, or at least shield the whistleblower from potential backlash from those involved in the misconduct. Third, employers should ensure that such policies are actually followed. It’s one thing to say that employees will be supported - it’s another thing to demonstrate that the support and protection on offer is a real part of the culture. As we have seen with many of the organisations reviewed by the Royal Commission into Institutional Responses to Child Sexual Abuse, too often the institution protects its own interests, rather than those of vulnerable clients.

If you do not have the right policies or culture in place, you should contact our Employment Law team: