Canadian HR Reporter

CANADIAN HR REPORTER February 20, 2017 NEWS 11 securities misconduct internally, without fear of reprisal." $5-million award Individuals who meet eligibil- ity criteria and who voluntarily submit information to the OSC regarding a breach of Ontario se- curities law may be eligible for a whistleblower award of up to $5 million. "e payment of a financial in- centive is critical to the success of our program because it recogniz- es the personal and professional risks that whistleblowers take when speaking up about miscon- duct. We know from consulta- tions with various stakeholders that these risks can deter whistle- blowers from coming forward. By offering awards up to $5 million, we are hoping to tip the balance in favour of reporting," said Franken. But this kind of incentive is a concern for employers, said Lisa Talbot, a partner at Torys in Toronto. "If you do have a disgruntled employee who may have some interest in, or some vendetta against, the company or some interest in causing damage to the company… this program could be used as a sword rather as is intended, as I understand it, as a method to protect the investing public, so that certainly is a con- cern. And employers are trying to manage that concern by hav- ing good relationships with their employees, by hiring carefully, by making termination decisions at the appropriate time and not al- lowing situations to fester." Increased protections for complainants and whistleblow- ers within the law have generally been seen as positive, said Ritchie, "and something that responsible companies have effectively dealt with through internal policies and protocols." However, the concept of a bounty for information "has po- tential to set up a de facto com- petitor with internal compliance regimes" and this is a concern of businesses, he said. ere is a large body of study and evidence that suggests most whistleblowers want the problem to be resolved, and that's their primary motivation, said Ritchie. "at may reduce the kinds of concerns businesses have about the impact of whistleblower awards but, nonetheless, the fact that companies have to be in this situation where there is an incentive for individuals to report externally as opposed to internally, that cloud is still there and makes it a much more diffi- cult job for compliance and legal terms internally." In fairness, the OSC has recog- nized this and created incentives for complainants to go to their employers first — but there's no requirement to do so, he said. "My personal concern is that tying a whistleblower award to a financial sanction militates to- wards punishment as opposed to focusing on remediation." Quebec's Autorité des marchés financiers (AMF) also introduced a whistleblower program in June 2016, but it does not offer a po- tential reward to whistleblowers. "Further to a review of various whistleblower programs around the world, including in the United Kingdom and Australia, the AMF concluded that it cannot be estab- lished with certainty that financial incentives generate more quality reporting of wrongdoing, and that the key component of any whistle- blower program is in fact the pro- tection offered to whistleblowers," said Sylvain éberge, director of media relations and public affairs at AMF in Montreal. Since last summer, Quebec has received 43 cases about wrongdo- ing under the laws and regulations administered by the AMF and, of those, 17 have led to an investiga- tion, he said. While the OSC said in Septem- ber it had received more than 30 tips through the program, accord- ing to media reports, it would not provide updated numbers. "It's early days, but certainly we have received credible tips. We are pleased that the very existence of our program is having a deter- rent effect," said Kate Ballotta, se- nior public affairs specialist at the commission. Internal reporting While the commission encour- ages whistleblowers to report po- tential violations through an in- ternal compliance and reporting mechanism with their employer, it does not require them to do so as there may be circumstances in which a whistleblower may wish to go directly to the OSC. "Reporting internally is a posi- tive factor that may increase the amount of a whistleblower re- ward. Of course, we recognize that in some cases it may not be appropriate for whistleblowers to report internally, particularly where members of senior man- agement are involved in the mis- conduct," said Franken. It's important employers ensure their policies state employees don't necessarily have to go through the internal process first, that they could go directly to the OSC if that is their choice, said Talbot. "But certainly, from an employ- er's perspective, there are benefits in employees bringing situations to the attention of the employer first so that the employer does have an opportunity to under- stand the context and to conduct remediation if that's necessary." All of the employees should know about the employer's inter- nal whistleblowing program and to whom complaints or concerns can be raised, she said. "ey should be ensuring that there is training not only about the availability of the program but for those who are in charge of admin- istering the program, that they're well-trained in terms of how to do so." Most meaningful whistleblower complaints are from people who first go internally, said Ritchie. "Nonetheless, when you are a compliance officer or you have systems and processes in place as a business, there is this shadow that there may be some problems inter- nally that you don't know about be- cause someone has chosen to take the complaint externally," he said. "And that is a problem for busi- nesses because responsible busi- nesses, first and foremost, want to fix whatever problems come to light. And if people are choosing to tell outsiders, as opposed to working within the internal sys- tem or process, that information isn't being conveyed to the people who are in the position to remedy the shortcoming." The best way to encourage employees to report internally is to give them confidence that any steps they take will be confidential and there'll be no adverse conse- quences to bringing evidence or suspicions of wrongdoing to the attention of the employer, he said, "(and) the company will take meaningful steps to remedy any wrongdoing once it's investigated and determined to actually exist." Reprisals forbidden e Ontario act also allows the OSC to take enforcement action against employers that take a reprisal against whistleblowers, such as disciplining, demoting or terminating an employee, or threatening to do so. As a result, employers should review existing discipline policies to ensure they do not conflict with the amendments, said Talbot. "Discipline policies should be clear that employees will not be disciplined for exercising their rights under any provincial or federal statute." And supervisors and other leaders should be aware of the new prohibition against retalia- tion and its implications, she said. "e employer should be cau- tious in a termination to ensure there is no link between the fact of the employee reporting and the termination decision. Even when there is no link, employers, if they know an employee has reported under the whistleblower program, should make sure that any of their internal documents, emails con- cerning the decision-making pro- cess, don't make that link." Internal record-keeping is ever more relevant now, particularly when employers are considering dismissing employees who are thought to be complicit in corpo- rate misconduct, said Ritchie. "e OSC will be looking for documentation such as perfor- mance appraisals when investi- gating allegations of retaliation by employers against employees," he said. "You don't want what's a bona fide action within the rights of the employee to be clouded by an allegation that they were the subject of retribution, and not just for that individual but also for other employees who become aware of these things because it'll undermine their own confidence in the bona fides of the compa- ny's approach, which is crucial. It really requires companies to understand their obligations and be very, very cautious as to their motivations or their perceived motivations." Quebec version lacks reward WHISTLEBLOWER < pg. 1 Credit: Google Street View The Ontario Securities Commission's whistleblower program should "encourage companies to strengthen their compliance systems." Assure employees "the company will take meaningful steps to remedy wrongdoing."

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