Advantages of Whistleblowing in the Workplace

What is whistleblowing?

A payroll officer notices one supplier has been paid twice for every invoice for six months. She can tell someone inside the company, go to a regulator or a journalist, or say nothing. Whistleblowing covers the first two: an employee or other insider reporting fraud, illegal activity or other misconduct inside an organisation.

Whistleblowing in the workplace exposes wrongdoing that leaders would otherwise never see. Someone on the floor knows about the unsafe shortcut or the padded invoice long before the board does. If they report it internally, you get to fix it before it becomes public. That is why whistleblowing is important most of all where wrongdoing hurts people directly, as in healthcare, finance and government.

Advantages of whistleblowing

The benefits of whistleblowing come down to three things: lower costs, better information, and safer customers and communities.

Reduces financial losses and legal risks

Fraud gets more expensive the longer it runs. An internal report catches it while the loss is small and the response is still yours. If a regulator or a court finds it first, you lose control of the timing and the cost.

Stephen Stubben and Kyle Welch studied nearly two million internal reports made to more than 1,000 US public companies (Journal of Accounting Research, 2020). Companies whose staff used the internal channel more faced fewer government fines and material lawsuits, and paid less when they did.

A working channel is also the law in many places. Since 1 January 2020, public companies and large proprietary companies in Australia have needed a whistleblower policy under the Corporations Act 2001 (Cth). Our guide to whistleblower protection laws covers the detail.

Valuable insights for management

Reports show managers what their dashboards miss. A run of complaints about one site manager points to a problem no audit has flagged yet.

Plenty of what comes through is small: a process that wastes time, a supervisor who shouts. Act on the small reports and people will trust the channel with the serious ones. Staff who see concerns handled also start offering ideas, and many of the best fixes to how work gets done come from the people doing it.

Protects customers, clients, and the public

A worker who reports falsified safety checks or billing fraud protects the customers who would have paid for it. That is the main reason whistleblowing is worth encouraging: it exposes wrongdoing in the firm while there is still time to stop the harm.

In the public sector, the benefits of reporting corruption go to taxpayers. When a government employee reports a rigged tender, the money saved is public money. Commonwealth public officials who make disclosures are protected under the Public Interest Disclosure Act 2013 (Cth).

Aged care has its own rules. Under the Serious Incident Response Scheme, providers must report serious incidents such as abuse and neglect to the Aged Care Quality and Safety Commission. That chain starts with a staff member who speaks up about how a resident is being treated.

Risks of whistleblowing

The disadvantages of whistleblowing are real, and most come from reports being handled badly. Each one below has a fix.

Potential for reputational damage

If a worker raises a concern internally and nothing happens, the next stop is a regulator, a journalist or social media. By then you are answering a story instead of a report.

The effects of an external disclosure on a company show up as financial and reputational damage: lost business and shaken investor confidence. The fix is an internal process that responds fast enough that workers don't feel they have to go outside.

Strained relationships and mistrust

Whistleblowers pay a personal price. Colleagues see them as disloyal, and some face open retaliation, such as losing shifts or being moved off a project. In the worst cases the whistleblower leaves.

Other staff watch what happens to the person who spoke up and decide whether they would do the same, so treat retaliation as misconduct in its own right. It is also unlawful: under the Corporations Act, victimising an eligible whistleblower is an offence, and the whistleblower can seek compensation through the courts.

Difficulty investigating anonymous reports

Anonymous reporting protects the person speaking up, and some people will only report on that basis. The trade-off is information. A one-line report saying "the warehouse manager is stealing" gives an investigator little to work with, and nobody to ask for dates or names.

You need a channel that keeps the reporter anonymous and still lets your investigator ask follow-up questions. Elker does this with two-way messaging.

Encouraging whistleblowing

People report when they believe it is safe and that something will happen. Your job is to make both true. That starts with a secure reporting channel, anonymous if the reporter wants it, for anything from financial crime to sexual harassment and discrimination, backed by a clear commitment to protect reporters from victimisation.

Write a whistleblowing policy and tell every employee where to find it. It should say who can report, how, and what protection they get. Then train your managers. Under the Corporations Act, revealing an eligible whistleblower's identity without consent is itself an offence, with limited exceptions, and one careless manager can undo the policy.

Some organisations also pay rewards for internal reports that lead somewhere. Money brings more reports forward, and it also changes why people make them, so weigh it carefully.

A speak-up culture comes from leaders who thank people for raising concerns and visibly act on what they hear. When employees see that, they report through internal channels.

Laws and compliance

How do whistleblowing systems enhance workplace compliance? They give you a documented way to receive, investigate and respond to reports. Every jurisdiction below protects whistleblowers from retaliation, and most expect larger organisations to run a formal channel.

EU - EU Whistleblowing Directive

The EU Whistleblowing Directive (Directive (EU) 2019/1937) entered into force on 16 December 2019, with national laws due by 17 December 2021. Private employers with 50 or more workers must set up internal reporting channels. Member states set penalties for hindering a report, retaliating or breaching a reporter's confidentiality, so the fines depend on the country you operate in.

US - Sarbanes-Oxley Act

The Sarbanes-Oxley Act of 2002 (SOX) requires the audit committee of every US-listed company to set up procedures for receiving complaints about accounting and auditing matters, including confidential, anonymous submissions from employees. It also makes it unlawful to retaliate against employees who report fraud. Under the Dodd-Frank Act of 2010, the Securities and Exchange Commission (SEC) pays whistleblowers 10 to 30 per cent of the money collected when their information leads to sanctions over US$1 million.

UK - Public Interest Disclosure Act

The Public Interest Disclosure Act 1998 (PIDA) protects workers who report wrongdoing such as criminal offences, breaches of legal obligations and dangers to health and safety. PIDA itself doesn't require a reporting channel. For larger banks and insurers, the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) do: their rules require firms in scope to have internal whistleblowing arrangements.

Australia

In Australia, Part 9.4AAA of the Corporations Act 2001 (Cth) protects eligible whistleblowers who report misconduct in companies, and requires certain companies to keep a whistleblower policy.

The Sex Discrimination Act 1984 (Cth) adds a positive duty to take reasonable and proportionate measures to eliminate sexual harassment, sex discrimination and related conduct, as far as possible. The duty doesn't mention whistleblowers by name. Even so, the Australian Human Rights Commission lists reporting and response among the seven standards in its guidelines for complying with it.

Aged care now has its own regime. The Aged Care Act 2024 started on 1 November 2025, and registered providers must keep a whistleblower system and policy as a condition of registration. Getting any of these wrong brings regulator action as well as reputational damage.

How Elker can encourage anonymous reporting

Whistleblowing carries risks, mostly reputational damage and strained relationships, and the benefits of whistleblowing outweigh them. You catch problems while they are small, you hear what managers would otherwise miss, and the first you hear of misconduct is far less likely to come from a journalist.

Elker gives your staff a secure place to raise concerns, with anonymity available at every step. Two-way messaging lets your investigators ask follow-up questions without forcing the reporter to identify themselves. Each case moves through a configurable investigation and response workflow with role-based access and a full audit trail, so you can show a regulator or your board what happened and when. Elker is ISO 27001 certified and SOC 2 attested.

With Elker, you can:

• Give staff an internal channel they trust, so fewer concerns go public first
• Support your obligations under Part 9.4AAA of the Corporations Act and the positive duty
• Show executives and the board the trends across cases

Book a demo of Elker to see how it would work for your organisation.