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Economics Legislation Committee
06/03/2018
Treasury Laws Amendment (Enhancing Whistleblower Protections) Bill 2017

CLARKE, Mr Trevor, Director, Industrial and Legal, Australian Council of Trade Unions

[10:24]

Evidence was taken via teleconference—

CHAIR: Thank you very much for appearing before the committee today. I invite you to make a brief opening statement should you wish to do so.

Mr Clarke : Our submission is really getting into the weeds a bit in relation to this. I'm happy to take any questions on that. We highlighted through the joint committee processes and through this process what the concerns we had about the scheme in the Corporations Act were. This bill goes to address those. What we're really saying in our submission, essentially, is that this is a good step and a big step. We think that there's certainly more to be done in terms of whistleblower protections. Obviously, there is still a long way to go to implement everything that the joint committee wanted to do. Curiously, we still have a scheme that, if you accept that many whistleblowers are employees, is giving legal protections to employees but giving no rights to unions to act to support them or enforce those rights on their behalf, which is an odd thing.

I'll raise a couple of points in response to some of the written material. The Institute of Company Directors raised a point about the appropriateness or otherwise of allowing disclosures to be made to line managers. To balance that out, I would say, firstly, that the internal management procedures and policies that are contemplated by the bill permit organisations to appoint another person—external investigators. The extent of the line managers properly trained under the policy may well be to refer the person to the external investigators appointed by the company to deal with these things. I've pointed out in the submission all the reasons as to why companies might want to go down that path. I think that the submission by the Institute of Company Directors also misunderstands the way that the emergency disclosure provisions operate in the sense that—and we've raised a point about the rights and wrongs of this—there is no right under this bill to make an external disclosure, even on an emergency basis, if you have only raised it internally. If you've raised it externally with the regulator, yes, you can go on, subject to the bill, to make an external disclosure, but if it is only an internal disclosure you are not protected through the emergency disclosure process.

The other issue that came up in a lot of submissions was around the onus of proof and whether or not the bar had been set a little too low to make it too easy for whistleblowers to go to court. It's not an easy thing, to go to court. The situation with the onus of proof is that the reverse onus, if you like, is only relating to the mental elements that are within the knowledge of the respondent to the proceeding. There is still a positive case for the whistleblower to prove, albeit at a lower standard, that they have suffered harm because of the conduct of the alleged wrongdoer. I suspect the reason that the onus in relation to that point is a little lower is to cover situations where the harm has been suffered by the whistleblower but it's been inflicted upon them in an indirect way and in a purposely contrived indirect way, and it, therefore, makes sense to have a lower standard to demonstrate the sort of conspiratorial elements of how it was that they came to suffer the harm rather than require them to have to prove beyond reasonable doubt every link in the chain. That might sound a little bit radical, but you have to remember that, just because the whistleblower is asked to prove that, that's not the end of it; the respondent can still put a case to say that they're wrong. I don't regard the onus of proof provisions in this to be as radical or misguided as some of the others might be suggesting. I think you've actually had a reasonable go at addressing what is probably a very complex problem in that respect. I'm happy to take questions on the detail of any of this. I note that much of my submission is also raising some issues about harmonisation with the regime in the registered organisations act.

CHAIR: Thank you, Mr Clarke. I was going to ask you a couple of questions about that. I just want to confirm: do you believe that the bill that's before us represents a significant improvement for whitleblowers?

Mr Clarke : Yes, we do.

CHAIR: In your view, do you think that the bill compares favourably to the whistleblower regime in the registered organisations act?

Mr Clarke : In some ways it does; in some ways it doesn't. That's where we start to get into the weeds a little bit. There are some difficulties with both of them. There are some things that, in my view, are executed better in this bill than they are in the registered organisations act, and in some instances the reverse is the case.

CHAIR: I want to touch on something that you mentioned in your opening statement, which was that in the bill, obviously, disclosures made by an individual to a legal practitioner for the purposes of getting advice or representation qualify for protection. You've argued that that protection should extend beyond disclosures to lawyers and include disclosures to union officials—is that correct?

Mr Clarke : The answer to your question is yes, and, beyond that, we're also seeking to allow registered unions to have a role in making the disclosure to the employer or the regulatory authority on behalf of their member as well.

CHAIR: Can you explain why you think it's appropriate to treat a union official, I suppose, in the same manner as a lawyer? A lawyer, obviously, is professionally trained and is competent to give whistleblowers advice about their legal rights and positions. Do you think that a union official has the same capacity?

Mr Clarke : I think that if the right was not given to union officials per se, but given to unions, what you would find is that the way that the provision operates would be much the same as the way, for example, as what would traditionally be known as the freedom of association protections and are now known as the general protections in the current Fair Work Act operate. The closest example is somebody who thinks that they've suffered adverse actions as a consequence of a complaint that they've made about their employment. They might talk to their union. This is a legal framework. They might first talk to their union delegate about it, then it will go to the union office and then it will go to the industrial officer, who is, more often than not, legally trained with a corporate practice. Representation happens through the unions by that industrial officer. Something might be filed in the Fair Work Commission, there might be conciliation proceedings and the thing might proceed to a consent arbitration in the commission or go to court. That's handled by the appropriately qualified staff within the organisation. Unions do things through legal frameworks all the time. As you would know, they are increasingly heavily regulated in what they can and can't do and how they need to do particular things.

CHAIR: One of my concerns is the consistency here. You surely must be able to identify individuals in the past who have blown the whistle on misconduct in the trade unions themselves and there have been claims of retaliation against them. I feel that this bill should treat everybody consistently in that regard. Do you think that there is not a case to be made?

Mr Clarke : If it was going to be consistent treatment with the whistleblower protections in the Fair Work regime, there'd be no protection for raising a matter internally. Curiously that's where the Fair Work (Registered Organisations) Act works. You cannot get protections as a whistleblower within a union by going to the union and saying, 'I think we've got a problem here.' The only option is to go to the regulator.

CHAIR: I might leave it there. I'm very conscious of time, and we do want to finish up within the next couple of minutes. Senator Ketter.

Senator KETTER: Mr Clarke, you've acknowledged the fact that unions are not picked up in this bill in terms of either being eligible to receive disclosures or to provide support for workers, and you've identified this issue of adverse action under the Fair Work Act. Is it fair to say that unions have been dealing with these types of issues—people dealing with complaints about how they've been treated by their employer—for quite a long time?

Mr Clarke : Yes, indeed. Provisions like that have been part of our domestic industrial relations framework since 1904, and initially as criminal offences.

Senator KETTER: Why have unions been cut out of this legislation?

Mr Clarke : I'm not sure, but I can simply point to: if you conceive of this as a situation that is highly likely to operate, whereby employees are being the whistleblower on their employers, and you're setting up legal protections for employees against the actions of their employers, I just can't see a basis consistent with the way the rest of the law works to say that you'd exclude the role of free unions there.

Senator KETTER: Do you think that the legislation covers the range of potential disclosures sufficiently?

Mr Clarke : I think it does. Is your question in relation to the types of conduct that might be disclosed?

Senator KETTER: Just to clarify: you've mentioned the fact that, under the registered organisations act, problems under the Work Health and Safety Act, the Fair Work Act and the Competition and Consumer Act should be included. How can we improve the range of potential disclosures that need to be covered here?

Mr Clarke : I think there are two points to it. Firstly, because we've started to go down the road of having different bits of law for different types of entities—they're in different acts and all the rest of it—you start to wonder whether, even though you've got quite a broad behavioural description here, of being misconduct or improper behaviour or something like that, and you've then got the alternatives of specific laws, you run into the possibility that some lawyer opposing something, or some judge down the track, will say, 'We don't think the Fair Work Act is covered,' or 'We don't think the Competition and Consumer Act is covered.' Clearly I think they should be covered. The Fair Work Act regulates employers as much as it regulates representatives of organised labour. It's a bit strange that it's only the whistleblower regime for unions that allows complaints to be made specifically in relation to that act. It is similar with the Competition and Consumer Act. That's an act that heavily regulates employers in relation to matters of product safety and market behaviour and all those sorts of things that you would suspect people might want to raise issues about if, for example, they suspected that a company was in receipt of information that a product was dangerous and burying it.

Senator KETTER: Do you have any concerns about how internal investigations will be managed and whether the bill anticipates potential problems?

Mr Clarke : The management of investigations can be difficult in terms of who is actually given the job of doing the investigation. Not everybody who receives a disclosure or is entitled to receive a disclosure is actually going to be the right person to try and investigate the thing. That's when you run into these problems with the way the confidentiality provisions operate. You can't have every line manager in the business fully trained to conduct an internal investigation. You need potentially some relief in relation to the way the confidentiality provisions operate so that you don't get in a situation where there's no way for the internal manager to refer the thing up the train without disclosing information that could lead to the identity of the whistleblower becoming apparent. I think that's one of the technical areas where some additional thought needs to be given to it. Perhaps the way around that at a practical level is to take the hint that's given in relation to the way policies should be drafted, for companies to basically appoint the KPMGs of the world to be their external investigators in relation to these matter. There are clearly benefits also for a company, legal and otherwise, to be able to say a disclosure was made about this and it was fully investigated by an independent investigator.

Senator KETTER: Do you believe that the whistleblower protection provisions under this bill match the Fair Work (Registered Organisations) Act?

Mr Clarke : They don't. This is one of the things that is very curious about the protections. I'm talking about the protection as opposed to the victimisation action. The protection is so all-consuming. It seems to be phrased in a manner that when a person who makes a disclosure, any of the information that they disclosed can never under any circumstances be used in a proceeding against them. If I want to be the whistleblower and I'm the general manager of a company and I say, 'The company's been doing some terrible things and I myself have personally benefited to the tune of $10 million of it, and I was one of the key masterminds of it' is that really right? Is it right that the whistleblower on every occasion is completely forgiven for the extent of their misdeeds, no matter how egregious they may be? In some cases you'll have whistleblowers who have done nothing wrong themselves. In some cases you'll have whistleblowers have done a little bit wrong themselves. In some cases you'll have whistleblowers who are perhaps blowing the whistle because they're so far in they think they have nothing to lose. Do you know what I mean? I'm trying to anticipate the range of circumstances that this thing might be forced to operate in. In circumstances where there is nothing in the act that says that that ASIC needs to set up a special procedure for taking whistleblower complaints; all you have to do is have some communication with ASIC that is capable of actually satisfying the definition of a protected disclosure without actually saying that you want to make it protected disclosure; if you report contacts to ASIC and your role in it, the operation of the law is that what you've disclosed is protected. That confession, if you like, absolves somebody of all sins forever and a day. I think that might be going a little bit too far.

Senator KETTER: I want to move on to external disclosure. In your submission you raise an interesting point as to whether or not somebody in ABC Online or The Guardian Australia would be covered by the definition of a journalist. Do you believe that those organisations would be covered?

Mr Clarke : I didn't mention The Guardian because, much as I tried, I couldn't get to the bottom of exactly what their structure was. If it is a purely philanthropic exercise, then you do risk them being not covered by the definition of media or journalist or whatever the expression was in the bill. The issue with the ABC is that if they had an operation that was exclusively for online content, because it's not operated on a commercial basis, that is where the issue might arise.

Senator KETTER: So journalists working for a community organisation, for example, might not be covered by that definition?

Mr Clarke : I think that's right. If you look at the explanatory memorandum, what they had in mind—I'm trying to find a nice way to describe it—they're suggesting that the tinfoil hat blogosphere on the internet that tweets or blogs things because they feel like it and call themselves journalists—that wouldn't satisfy this kind of definition. They want to have some exclusions for something that is not a media organisation. I guess the definition is going to be difficult. It's all very well to me to be an armchair critic here, but I do think—we would all say that the Australian Broadcasting Corporation is a media organisation. There should be absolutely no risk that they would fall outside of this. We also think that The Guardian is a media organisation. There shouldn't be any risk that they would fall outside of this, either

Senator KETTER: Can I ask a question in relation to reprisals. You've said in your submission that registered organisations should be able to seek compensation on behalf of members. Can you tell us why you think that's the case?

Mr Clarke : We're better resourced, basically, when we run court cases for members who have been dismissed and we allege that they've been dismissed because of their union activity. Sometimes we win, sometimes we lose, but the risk's on us. We can afford to run a few cases. Most workers in Australia can't afford to run a case. The cost protections against you having to pay adverse costs doesn't mean that you don't incur significant costs yourself along the way to get thing off the ground. With union membership those costs are borne by the union.

Senator PATRICK: I presume your proposal for whistleblowers to go to the unions is for the benefit of the discloser, not for the benefit of the union per se?

Mr Clarke : It's an indirect benefit to the union, I suppose, if you want to take a market look at it, in that it broadens the range of services we can offer to our members. We can now support you in relation to whistleblower complaints under the Corporations Act, where we previously could not. But it's something that we are doing for the benefit of the members. We are not proposing that compensation orders be paid to unions. They need to be paid to the person who needs to be compensated.

Senator PATRICK: I wasn't suggesting that that's where you were going—I just wanted you to confirm that—in fact, in your own statements and indeed in your answer to Senator Ketter. Is there any restriction on the union currently providing a service where you as a lawyer for the union could see a union member in some sense in an independent capacity, where they're not necessarily the client of the union but rather the discloser, and provide that service anyway as a lawyer? Is there anything that prevents that from happening at this point in time?

Mr Clarke : It does start to get a little bit difficult. As I say, where you've got lawyers working for unions, they generally have corporate practising certificates, so what they're in effect doing and limited to doing is giving advice to the union about how they can help a member, as opposed to giving advice to the member and acting for them independently. So there'd be all these kinds of insurance- and practising-certificate-related issues about somebody saying, 'I'm a lawyer for the union, but I'm stepping outside that because I'm not allowed to do this as a lawyer for the union and being your lawyer instead.' It starts to get a bit complicated.

Senator PATRICK: If that problem were solved, you'd be in a position where you'd be comfortable with the arrangements, noting that, as a lawyer, someone can come to you seeking advice on a whistleblowing issue?

Mr Clarke : No, not really. From a policy point of view I don't think that we as a country should be embarrassed about saying that protections that protect employees against the actions of their employers should be able to be enforced by unions. I really don't think that should be something that we're shy about or we try and disguise or where we try and find some other mechanism to make it work the same way without calling it that. I think that's not a problem. Even in the very limited view—take a look at the trade union royal commission. The royal commissioner there had a very clear view about what the legitimate role of a union was. It had nothing to do with building organised, powerful workers in the economy; it was all about the transactional services thing: people have problems at work, and unions represent them and act for them. Even in that very limited—we would say too limited—view of what unions' legitimate role in society is, this thing is clearly in there.

Senator PATRICK: Just finally, on the registered organisations legislation and the whistleblower changes which have been described as 'landmark', have you had any exposure to their operation since royal assent?

Mr Clarke : No. As I say, one of the issues with those is that, if a situation arises where a union member wants to make a whistleblower complaint, they have no protection under this law if they choose to raise it internally. They have to raise it externally.

Senator PATRICK: You mean in the context of the RO legislation, as opposed to this legislation?

Mr Clarke : The RO legislation. So there is no way that I or anybody like me working in a union would know anything about how it's operating, because we're cut out of the process and denied the opportunity to actually try and get to the bottom of things and fix things.

Senator PATRICK: A fair point. Thank you, Mr Clarke.

CHAIR: Thank you, Mr Clarke. We'll let you go.

Proceedings suspended from 10:53 to 11:08