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The Protected Disclosures Act
A means for allowing employees to blow the whistle - or just another cost on employers?
Over recent months, several legal commentators have noted that the publicity associated with the introduction of the Employment Relations Act (and the conduct of some more prominent cases pursuant to the legislation) has tended to overshadow the more general reform intended to be brought about by the review of several other key pieces of employment-related legislation.
Some media attention has been directed to the work of three advisory groups established by the Government to consider reform in the areas of equal opportunities, the Holidays Act and contracting out (which relates to policy which may apply to the employees upon the sale or transfer of businesses). Recommendations on those matters will be considered by Government, and action will be taken, later this year.
There is, however, one piece of legislation which is already in force, and which has a material affect upon the employment environment. The Protected Disclosures Act 2000 came into force on 1 January 2001. Colloquially referred to as the "whistle blower's legislation", the Act provides a framework whereby employers may create internal procedures to allow employees to make disclosures about serious wrongdoing. Provided that such disclosures are made in accordance with the requirements of the legislation, the employee disclosing information is entitled to certain protections against reprisal - including protection against disciplinary action being taken by an employer.
The legislation has its origins in Parliament's concerns about the experiences of certain "whistle blowing" employees in the mid-1990s. Amongst these, possibly the most well known was Neil Pugmire, a nurse at Lake Alice Hospital who in 1994 expressed concerns to his employer about the release of dangerous psychiatric patients into the community. When dissatisfied with the response of his managers, he made public statements about these concerns and was later dismissed from his employment as a result (although the Employment Court subsequently reinstated him in his job).
While the Protected Disclosures Act clearly sets out to provide an environment whereby employees such as Neil Pugmire can make important public disclosures about wrongdoing, the experience of the legislation to date indicates that it may be having some teething problems - or, indeed, that it may not have any teeth at all!
At the outset, the Act is curious in its application: it places a mandatory obligation upon public sector organisations to create internal procedures to allow for protected disclosures. It does not, however, place a similar obligation upon private sector organisations, and most private employers have been slow to create internal procedures in accordance with the Act. There appear to be several factors giving rise to these employers' reservations.
First, the Act only applies to disclosures about "serious wrongdoing" - which broadly relate to significant matters such as unlawful use of public funds, actions that might endanger public health or would constitute an offence, and actions of a public official that are indicative of gross mismanagement. A common concern of many private sector employers is that their employees would be inclined to use an internal disclosure procedure for raising issues not about such serious matters, but rather about issues of management and internal decision making. This concern about possible misuse of an internal system or disclosure appears to be a significant factor disinclining employers to create a procedure for disclosure.
Secondly, many employers have expressed general concerns about the cost of maintaining such a system for disclosure, and commonly argue that existing business procedures have been sufficient to allow disclosures. This reservation is probably unfounded: aside from the initial cost of establishing and publicising a procedure, the ongoing costs of maintaining an internal disclosure procedure appear to be relatively low.
In reality, it may in fact be that private sector employers run the risk of incurring greater costs (both in terms of financial burden and negative publicity) by not having an internal procedure consistent with the Act. Where an organisation does not have a relevant internal procedure for disclosure an employer may seek reliance upon the protections given by the Act by disclosing information about serious wrongdoing to the "head" or "deputy head" of the employee's organisation. An interesting question arises, however, where the employee seeks to make a disclosure about alleged wrongdoing committed by the head or deputy head of an employer organisation. It is at least arguable that, in that case, the employee would be able to rely upon the protections given by the Act while referring the matter to an appropriate authority (such as the Police or the Director of the Serious Fraud Office).
An equally interesting issue arises where an employee makes a disclosure of information which, upon examination, does not constitute "serious wrongdoing". In such a situation, the Act would arguably be inapplicable, and the employee would be prevented from relying upon the protections offered by the Act. This may be a particular significance where, having determined that a disclosure is not about serious wrongdoing, the person to whom the disclosure relates (ie the alleged wrongdoer) may seek to establish the identity of his or her "whistleblower". It is arguable that, in this case, the person who has made the disclosure would have to place reliance upon the organisation's internal policies and procedures concerning privacy and confidentiality in order to avoid a disclosure of his or her identity being made. Some potentially difficult issues involving interpretation of certain provisions of the privacy legislation may arise - particularly where it is argued that a disclosure has been made other than on the basis of a genuinely held belief about wrongdoing.
The Protected Disclosures Act is one of several pieces of employment-related legislation that contribute to the current makeup of New Zealand's employment environment. Experience of this Act to date suggests that some interesting questions may arise in the future concerning its potential application.
