THE perennial silence that previously resonated between employer and employee will experience a paradigm shift once the Protected Disclosures Act, 2011 (“the Act”) comes into operation.

The Act, which can be described as valiant move to decrease fraudulent and corrupt practices not only in the private but also in the public sector, is commonly referred to as the 'Whistleblower law'. It seeks to regulate the receiving and investigating of disclosures of improper conduct made in the public interest.

In addition, it protects employees, volunteers and contract workers who make protected disclosures from negative occupational consequences. As many companies seek to meet the changing and vigorous demands of the global trend towards greater corporate transparency the potential for interaction between the Act and good corporate governance principles will gain increased prominence.

Essentially, the Act creates a medium by which a protected person can disclose information on any conduct of an employer or even a fellow employee when he has a reasonable belief that the information disclosed indicates that improper conduct has occurred, is occurring or is likely to occur. The definition of improper conduct is wide ranging and includes any:

• criminal offence;

• failure to carry out a legal obligation;

• conduct that is likely to result in a miscarriage of justice;

• conduct that is likely to threaten the health or safety of a person;

• conduct that is likely to threaten or damage the environment;

• conduct that shows gross mismanagement, impropriety or misconduct in the carrying out of any activity that involves the use of public funds; and

• conduct that

tends to show unfair

discrimination on the basis of gender, race, place of origin, social class, religion, or political opinion.

An employer, who is broadly defined as any person who employs or has employed any person to carry out work or provide services, will have to establish and implementprocedures with

respect to receiving and

investigating these disclosures. These procedures include identifying at least one (1) person to whom these disclosures may be made and disseminating these procedures to employees. These procedures must adhere to certain minimum standards as prescribed by the Act. Specifically, the individual receiving the disclosure must record the matter disclosed and take steps in the event that an investigation is required. Further, the individual must issue periodic updates on the investigation to the protected person who made the disclosure at 30-day intervals and take remedial action for the improper conduct.

The disclosure will only be deemed protected if it is made in good faith and in the public interest. A protected person can make a protected disclosure to a multitude of individuals including the employer (ie internal disclosure) or a prescribed person which presently includes the director of public prosecutions, the auditor-general and the commissioner of police (ie an external disclosure). If the disclosure is made to an employer and steps are not taken within 30-days by the employer the employee can then escalate the matter by making the disclosure to a prescribed person or authority designated by the minister. However, it should be noted that care must be taken in making a disclosure as should the disclosure not be characterised as protected an individual may become exposed to litigation or defamation claims.

The Act has a number of safeguards for the protected person. Specifically, any term in any agreement that seeks to prevent a protected person from making a protected disclosure is void. Further, once the disclosure is deemed a protected disclosure, the protected person must not be subject to disciplinary action, dismissed or harassed. Indeed, the Act creates criminal penalties for such acts. The employer may be liable on summary conviction in a Resident Magistrate's Court to a fine not exceeding $2m or imprisonment for a term not exceeding two (2) years or both or on conviction in a Circuit Court to a fine or to imprisonment.

The United Kingdom's Committee on the Financial Aspects of Corporate Governance (1992), which sought to give recommendations for a framework of effective accountability, provides key insights into the interdependence between good corporate governance and effective communication between employee and employer. The Committee's report, perhaps foreshadowing the need for effective dissemination of key corporate procedures to employees, indicated that it is vital that all employees are cognisant of their standards of conduct. As a corollary, the Board of Directors should establish codes of ethics or statements of business practice and publish same internally and externally.

In addition, the committee's report suggested that the board of directors should present a balanced assessment of the company. It is submitted that this will include risk assessment, and in light of the Act, an evaluation of the methodology implemented to deal with these disclosures.

Evidently, the company will have to refine its corporate governance procedures to ensure compliance with the Act. Investors and other stakeholders who place significant value on principles of corporate accountability and transparency will likely require and expect these changes. However, the employee may have less of an adjustment as the Jamaican legislative landscape already facilitates individuals whispering across the divide to alert relevant authorities of wrong doing.

From a global perspective, the trend towards greater transparency and corporate accountability is clear as other countries such as the United States of America have enacted similar legislation, namely the Sarbanes-Oxley Act in 2002. It is hoped that with our 'Whistleblowers law' we will join the international voices that are bringing an end to the silence.

Stephanie Sterling is an associate at Myers, Fletcher & Gordon and is a member of the firm's Commercial Department. Stephanie may be contacted via stephanie.sterling@mfg.com.jm or www.myersfletcher.com. This article is for general information purposes only and does not constitute legal advice.