A Survivor’s Guide to Whistleblowing

It is important that organisations understand the ethical importance and necessity of whistleblowing and ensure that their employees fully understand the relevant procedures and policies governing whistleblowing.

What is a Whistle-blower?

A whistle-blower can broadly be defined as any person who provides information about the wrongdoing or acts of malfeasance by a company or an executive of a company. An employee, for instance, discloses information about the company they work for, or a superior, which they have reason to believe provides evidence of-

• financial malpractice;
• miscarriage of justice;
• a violation of a law or regulation; and
• a danger to the public safety or health.

What is Whistleblowing?

Whistleblowing legislation is largely regulated by the Protected Disclosure Act, the Labour Relations Act and the Companies Act. The provisions in these Acts protect, amongst others, an employee (the whistle-blower) who provides information about a possible material wrongdoing by the company, against any consequential occupational detriment. It is important to understand that the employee who reported the wrongdoing through the correct channels had been unable to get a reasonable response from the normal lines of reporting in the company’s management structure and is therefore forced to approach another person or organisation to report the breach.  There is a nexus between corporate governance and whistleblowing practices.

It is clearly mandated that senior management has a responsibility to recognise whistleblowing by an individual / employee and to uncover any significant risks that may occur.

It is important that the organisation develops procedures and policies for whistleblowing and that these procedures are regularly communicated to employees. These policies and procedures must be outlined in an organisation’s ethical code of conduct to ensure best practice. The system in place must deal impartially and fairly with allegations made by whistle-blowers, so that an honest employee does not feel under threat when reporting wrongdoings. Management must implement procedures that encourage honest whistleblowing, but at the same time discourage any unjustifiable or malicious accusations by employees against their managers.

The King IV report on corporate governance suggests that organisations should govern their ethics in a way that supports an ethical culture, with particular reference to the use of protected disclosures or whistleblowing practices when investigating breaches of ethical standards, to ensure that such disclosures are dealt with in a protective manner.

No matter how fair the system, an employee may not trust the internal procedures and may feel more comfortable to report such matters to an external authority.

The Whistle-blower’s Legal Protection

Whistle-blower protection is not limited to employees by virtue of section 159 of the Companies Act 2008; it also extends to stakeholders of the company. This includes but is not limited to employees, creditors, lenders, shareholders, directors, suppliers and the community. A person contemplated above shall be entitled to compensation from another individual for any damages suffered if the first person is entitled to make, or has made, a protected disclosure contemplated in this section and, because of that actual or possible disclosure, the second individual–

• engaged in conduct with the intent of causing harm to the first individual, and such conduct caused such detriment.
• directly or indirectly makes a threat, whether conditional or unconditional, to cause any detriment to the first individual or to another person.

Furthermore, this protection under section 159 is only applicable if the allegations are made in good faith to the commission, the company’s tribunal, the panel, regulatory authority, a legal advisor, a director or prescribed officer, an auditor, company secretary or the board committee of the company concerned.

According to this section, a stakeholder who makes a protected disclosure shall be immune from any civil, criminal or administrative liability for that disclosure.

The law recognises the risks employees take by making allegations of possible malpractice and offers certain protective measures. The Act further states that a whistle-blower who is subjected to suspension, demotion, disciplinary action, lack of promotion opportunities or transfer may approach the court for relief.

The employee may ask, if reasonably possible, to be moved or transferred to another post where the terms and conditions of the new post may not be less favourable than those applicable to the whistle-blower before their transfer.

In conclusion

To conclude, it is important that organisations understand the ethical importance and necessity of whistleblowing and ensure that their employees fully understand the relevant procedures and policies governing whistleblowing.

From a corporate governance perspective, employees must always feel protected and that their position or job is never at risk when making any sort of disclosure.

In order to avoid any corporate governance issues, SERR Synergy assists businesses to implement whistleblowing procedures within the ambit of the Companies Act, Labour Relations Act and Protected Disclosure Act.

About the author: Keira-lea Sandilands completed her B.Com law degree at Pearsons Institute of Higher Education where she graduated Cum Laude and was named as the top student on campus. She is in the process of completing the Corporate Governance Qualification. She joined our team in June 2018 and holds the title of Corporate Legal Advisor.