6 August 2015 by

Whistle blowers in corporate South Africa enjoy first world protection

The high profile global media attention around whistleblowing has underlined its relevance to all organizations across the globe. The revelations made by Edward Snowden continue to make their mark, the Chinese authorities have announced that protection of whistleblowers will be prioritised in an ongoing crackdown on corruption and, on the other side of the Pacific, the US Securities and Exchange Commission has recently made its highest ever award to a whistleblower of more than USD 30 million. It is in this context that DLA Piper and its global network of employment lawyers have produced a report comparing whistle blower protective legislation around the  globe. This report  follows on from a previous report issued in early 2014, in which South Africa also compared very favourably with other countries in terms of its protection of whistle-blowers. The latest report again shows that South Africa has whistleblower legislation that rates alongside countries such as the United State, the United Kingdom and China, among others.

The  previous DLA Piper whistleblowing research report quoting South Africa received the attention of the South Africa judiciary system, when it was quoted in a judgment delivered by the South African Labour Court. Tlhotlhalemaje, AJ, an  acting judge of the Labour Court of South Africa, said in his judgment, “......South Africa’s whistle-blowing framework has received the highest possible rating of three stars in a report by global law firm DLA Piper for providing express protection to those making legitimate disclosures. It means South Africa trumps Germany, France, Hong Kong and Australia and is on a par with the laws in the US, UK and China." 

Tlhotlhalemaje, AJ said in the judgment, “In the light of such “feel-good” news, as South Africans, we should ordinarily be in self-congratulatory mood and patting ourselves at the back for having trumped such illustrious nations known generally for clean governance, and also being on par with such good company in the field of whistle-blowing."

In the latest report just issued, South Africa - once again - achieved the highest three star rating alongside the UK, the US, China, Canada and Japan. South Africa again fared better than trading partners Germany, France, Netherlands, Australia and Hong Kong, among others, offering more protection to whistleblowers than these countries currently offer.

"South Africa also leads the way in Africa because of its progressive and extensive protection for whistleblowers," explains Aadil Patel, National Head of Employment at Cliffe Dekker Hofmeyr (CDH). CDH's employment team contributed the South African chapter to this report.

"In terms of South Africa, the report notes, however,  that internal disclosure of corporate misconduct must be made before protection for external disclosures may be claimed, except in limited circumstances. This is to afford the business an opportunity to correct corporate misconduct before external disclosures may follow. To the extent that a whistleblower’s disclosure is not made internally first, or not based on a reasonable belief in the veracity of the disclosure, statutory protections are forfeited. However, the benchmark to qualify for whistleblowing protection is set fairly low, to allow for protection even if the whistleblower may not have irrefutable proof of the truth of the disclosure," explains Patel.

Patel notes that the whistleblowing framework in South Africa has developed over time and includes constitutional provisions, the Protected Disclosures Act 2000 (PDA), the Labour Relations Act (LRA), the Companies Act 2008 (CA) and a body of case law. South Africa has specific legislative protection for whistleblowers in the workplace, similar to the legislation in place in the UK. Employees who disclose information in a prescribed manner regarding criminal, unlawful or irregular conduct in the workplace are protected from any form of occupational detriment (such as victimization/ retaliation) under the PDA. 

Patel notes that South African whistleblowers enjoy extensive protections, both under general employment legislation and in terms of custom legislation. However, employees who become aware of malfeasance, whether relating to employer conduct or that of other employees may well be subject to a duty to disclose this knowledge, failing which they too may suffer adverse consequences. For instance, legislation places an obligation on certain individuals such as managers and directors of companies to report corrupt activities to the South African police, failing which they will themselves be guilty of a criminal offence. Furthermore, failure to disclose the misconduct of other employees may result in disciplinary steps (which may include dismissal) against employees innocent of the misconduct, under a so-called “derivative misconduct”, or breach of the duty of good faith, charge. 

 Tim Marshall, Global Head of Employment at DLA Piper explains the rationale behind the report, "Whistleblowers within organisations have been instrumental in revealing serious corruption and fraud in organizations and preventing mistakes from leading to disasters. However, employers face a delicate balancing act in responding to the potential for whistleblowing in their organization. Over 30 countries have now adopted some form of specific whistleblower protection. However, legal protection for whistleblowers varies significantly in its scope and effect. Regulated industries in certain sectors may face additional layers of legislation. In this report we have selected a representative sample of countries across the globe to highlight the variations in whistleblower protection and the challenges which this presents to global employers seeking to minimize the risks to their business.

Marshall explains that the report also outlines the use of hotlines, and states how emerging regulatory guidance and case law across the globe has forced many multi-national companies, which had initially implemented robust Sarbanes-Oxley compliant reporting hotlines, to revisit their procedures with a view to achieving global compliance of hotlines. A global company must decide whether it can tolerate some “regionalization” to address jurisdictional differences in its hotline procedures or whether it is preferable to dramatically streamline its code to produce a limited but uniformly acceptable hotline. The implementation of any solution, however, requires a proper understanding of local laws and implementation of strategy which works both at global and, importantly, local level. Hotlines are considered to be an effective tool in whistle-blower policies.

Patel note that all companies in South Africa should have a well-drafted whistleblowing policy to help to avoid expensive claims by picking up on disclosures at an early stage and dealing with them properly and appropriately. 

"Policies set clear standards of behavior for employees. Yet companies operating in a global business environment with subsidiaries and operations across a large number of jurisdictions face a daunting challenge. The global variation in levels of whistleblower protection can lead to significant difficulties for multi-national employers seeking to impose compliance guidelines and whistleblowing reporting schemes which are effective and consistent across the organization but at the same time observe applicable local law particularly in relation to data protection and privacy. 

"However, comprehensive and well-drafted policies provide an opportunity for employers to set our clear rules about how employees may express their concerns about malpractices in the workplace. Given the different cultural and legal approaches to whistleblowing across the globe, multi-national employers must ensure they tailor their policies according to their global footprint. . Employers must also keep the procedures under review to ensure that they remain fit for purpose as the business develops and moves forward. In order to do this, they need to work with a team of legal specialists who have access to legal specialists in multple jurisdictions and on the continent of Africa. There is simply no other way to produce an effective cross border policy," Patel adds.

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