History and Purpose of the Protected Disclosures Act
By Campbell McKenzie
New Zealand was among the early adopters of dedicated whistleblower protection laws, enacting the Protected Disclosures Act 2000 (PDA 2000) to encourage employees to report misconduct without fear of reprisal. The PDA 2000 sought to provide a safe framework for exposing serious wrongdoing (sometimes called “public interest disclosures”) in workplaces. This reflected a growing recognition, both in NZ and internationally, that employees needed channels to report corruption, fraud, or abuses of power while being shielded from retaliation.
The PDA 2000 was a significant step at the time, but over the following two decades it gained relatively little visibility. By the late 2010s, surveys showed very low public awareness and usage of the PDA 2000. In 2017 the State Services Commission (now Public Service Commission) reviewed the law and found it had not kept pace with best practices. Stakeholders noted that a “speak up” culture was not sufficiently embedded, and the legislative scheme was complex and under-utilized. Public consultation in 2018 confirmed the need for reform, with calls to make the law clearer, more accessible, and more effective in protecting whistleblowers. The legislative intent behind the reform was to strengthen protections and better facilitate disclosures of wrongdoing.
Differences Between the 2000 Act and the 2022 Revision
After 22 years, the PDA 2000 was repealed and replaced by the Protected Disclosures (Protection of Whistleblowers) Act 2022, effective 1 July 2022. The new Act retains the core framework of the original - protecting “serious wrongdoing” disclosures made in good faith through proper channels- but also introduces several important changes and clarifications.
The 2022 Act addresses the following issues and improvements from the 2000 Act:
- extending the definition of serious wrongdoing to cover private sector use of public funds and authority and to cover behaviour that is a serious risk to the health and safety of any individual;
- allowing people to report serious wrongdoing directly to an appropriate authority at any time, while clarifying the ability of the appropriate authority to decline or refer the disclosure;
- strengthening protections for disclosers by specifying what a receiver of a disclosure should do;
- clarifying internal procedure requirements for public sector organisations and requiring them to state how they will provide support to disclosers; and
- clarifying the potential forms of adverse conduct disclosers may face.
Key Considerations for Organisations’ Whistleblowing Regimes
Laws alone are not enough – organisations must implement them effectively to foster trust. A whistleblower regime will only succeed if people have confidence, they can speak up safely. Here are key considerations and best practices for organisations under the NZ Protected Disclosures framework:
- Establish Clear Internal Policies: Every organisation (especially every public sector agency, as now required by law) should have a clear, user-friendly whistleblowing policy. This policy must explain who a concern can be reported to, how a disclosure will be handled, and what protections are in place. Private companies and not-for-profits are strongly advised to do the same, as these procedures are “a key resource” for employees who become aware of wrongdoing.
- Leadership Commitment and Culture: Tone from the top is critical. Leaders should actively promote a “speak up” culture where raising concerns is viewed positively, not as disloyalty. This involves communicating the importance of ethics and whistleblowing in staff forums and setting an example of integrity. The goal is to normalise reporting of wrongdoing as a responsible action that the organisation values, rather than something that will be punished. As the Chief Ombudsman put it, regulatory reform must be “accompanied by the wholesale encouragement of a ‘speak up’ culture” across organisations.
- Confidentiality and Anonymity Assurances: Organisations need to reassure potential whistleblowers that their identity will be protected. The law obligates confidentiality – any person receiving a protected disclosure must use best endeavours not to disclose identifying information (with limited exceptions). This obligation should be mirrored in internal policy and rigorously observed. Practical steps include limiting the number of people who know a reporter’s identity and using secure channels for communication. Many organisations also allow anonymous reporting (even though the Act doesn’t guarantee anonymity, it protects confidentiality). By providing anonymous channels (e.g. a hotline or web portal that doesn’t trace identity), organisations can further lower the barrier to reporting.
- No Tolerance for Retaliation: A cornerstone of any whistleblowing program is a strong anti-retaliation stance. The law prohibits “victimisation” of whistleblowers, and organisations should reinforce this by policy and action. Make it explicit that any form of reprisal against a person who reported a concern will result in disciplinary consequences.
- Training and Awareness: Policies on paper are not enough – staff need to know about them. Organisations should conduct regular training or awareness sessions about the whistleblowing process. This includes educating employees on what types of wrongdoing should be reported (e.g. fraud, safety hazards, etc.), how to make a disclosure, and what to expect after reporting. The better employees understand the protections and procedures, the more comfortable they will be using them. Periodic reminders (via emails, posters, intranet) help keep the reporting channels front-of-mind.
- Support and Feedback to Whistleblowers: To maintain confidence, it’s important to support whistleblowers throughout and after the reporting process. This can involve offering counselling or Employee Assistance Program services, providing updates on the investigation (to the extent possible), and ultimately informing them of the outcome of their disclosure. Even if details must be limited, letting the whistleblower know that “your concern was taken seriously and investigated, and appropriate action has been taken” can assure them it was worth the risk. Under the new Act’s guidance, receivers of disclosures are expected to update the discloser within 20 working days on what steps are being taken.
- Multiple Reporting Channels (including Independent Options): One best practice is to offer more than one avenue for reporting. Different employees may be comfortable with different channels – some might go to a trusted manager, others directly to an internal ethics officer or HR, and many may prefer an independent third-party hotline (discussed in the next section). Making a third-party reporting mechanism available can dramatically increase confidence for those worried about internal reporting. The easier and safer it is to report, the more likely employees will speak up early before issues worsen.
Role of Independent Third-Party Providers in Whistleblowing
Many New Zealand organisations choose to engage independent third-party providers to manage whistleblower disclosures (e.g. external hotline services). These third-party channels are increasingly seen as a critical component of an effective disclosure framework. There are several reasons why an impartial, external reporting service can enhance a whistleblowing regime:
- Anonymity and Impartiality: Third-party whistleblower hotline providers specialise in offering anonymous, secure reporting mechanisms. Because the hotline is run outside the organisation, disclosers feel more confident that they truly won’t be identified if they choose not to be. The external operator has no stake in the company’s power dynamics, which gives disclosers peace of mind that their report will be handled neutrally. This impartiality is vital if the allegation concerns senior management – staff might fear an internal channel could be influenced or might tip off the wrongdoers. An independent hotline is seen as a “safe zone” where they can speak freely.
- Building Trust and Overcoming Fear: The mere availability of a reputable third-party reporting line can improve trust in the system. It signals to employees that the organisation is serious about transparency – serious enough to invest in an outside expert to hear their concerns. Employees who might hesitate to approach an internal manager often prefer talking to an external professional. Research confirms that the ability to report anonymously significantly increases the likelihood that employees will come forward.
- Expertise and Best-Practice Handling: Experienced hotline providers bring specialised training to the table. It’s not sufficient to just hand these duties off to a generic call center – those answering whistleblower calls must be “fully trained around the complexities of protected disclosures” and understand the organisation’s context. Reputable third-party services employ staff who know how to ask the right questions, reassure the caller, and gather necessary information without compromising the discloser’s comfort. They can triage the report, ensuring that urgent issues (like imminent safety threats) are escalated immediately, and that all reports are documented properly.
- Encouraging a “Speak Up” Culture: Using an independent hotline can be a practical way to demonstrate an open culture. Employees who are cynical that management “really wants to hear bad news” might change their view when they see a third-party channel in place, because it indicates openness to scrutiny. Organisations often roll out such hotlines with an internal communication campaign (sometimes even branded as an initiative for integrity), which can reframe whistleblowing as a positive act.
In summary, independent providers add value by increasing accessibility, trust, and effectiveness of whistleblower reporting. They are not a replacement for internal commitment – rather, they are a tool that organisations can use to reinforce that commitment. The Protected Disclosures Act allows employees to go to external authorities as an alternative; an independent hotline is slightly different in that it is an external service feeding into the organisation’s process.
Effectiveness of Whistleblower Hotlines vs Traditional Controls – Research Insights
Empirical research consistently shows that whistleblower reporting mechanisms are one of the most powerful tools for detecting and preventing fraud and misconduct. Multiple studies and surveys, including those by the Association of Certified Fraud Examiners (ACFE), have compared the effectiveness of whistleblower tip lines to more traditional fraud controls (such as audits or management reviews). The findings strongly favor whistleblower mechanisms:
- Whistleblower Tips are the Top Fraud Detection Method: ACFE’s global Report to the Nations studies have repeatedly found that tips uncover fraud more often than any other method. In the 2024 report, 43% of occupational frauds were detected by a tip – which was more than three times the number of cases detected by the next most common method. Typically, internal audits, external audits, and management oversight each account for a much smaller percentage of detections. This trend has held steady for years, highlighting that empowering insiders to speak up is crucial for early fraud detection. Whistleblowers, often being colleagues of the wrongdoer, notice red flags long before an outside auditor would.
- Hotlines Boost Reporting Rates: There is clear evidence that organisations with dedicated hotlines or whistleblower channels get more tips (and catch more misconduct) than those without. ACFE data analysis showed that in organisations with a hotline, 47% of fraud cases were detected by tip, whereas in organisations without a hotline, only 34% were caught via tip-offs. In other words, the presence of an anonymous reporting system correlates with a significant increase in the likelihood that wrongdoing will be reported rather than hidden. The same analysis found that hotlines also led to frauds being detected sooner (a median of 7 months earlier) and thereby reduced the median losses by about 50% compared to organisations lacking hotlines.
- Reduction in Losses and Damage: The quicker detection facilitated by whistleblower reports has tangible financial benefits. ACFE reports have noted that companies with active whistleblowing programs suffer significantly lower median losses from fraud. This is because schemes are uncovered in earlier stages. Additionally, simply having a whistleblower program can deter potential fraudsters inside an organisation – the knowledge that co-workers might report misdeeds creates a “perception of detection” that can prevent fraud from being attempted in the first place.
- Impact of Hotline Quality: Not all whistleblower systems are equal – the effectiveness depends on how well they are implemented. Research underlines that a well-designed hotline program (confidential, accessible, with strong follow-up) is what delivers results. Organisations that simply put a hotline number up and don’t actively promote it will not see the same benefits as those that train employees on its use and build trust in the process.
Conclusion
In conclusion, contemporary research strongly validates the emphasis that New Zealand’s Protected Disclosures Act places on internal reporting mechanisms. Whistleblower hotlines and related programs are not just ethical or legal niceties; they are proven to outperform traditional control measures in identifying wrongdoing.
Organisations that invest in these channels – and cultivate confidence in them – can catch misconduct earlier, address problems before they escalate, and ultimately foster a more transparent, accountable workplace. As the ACFE aptly noted, the better an organisation is at collecting and responding to tips, the better it will be at detecting fraud and limiting losses.
This evidence underlines why legal frameworks like the Protected Disclosures Act, which promote and protect whistleblowing, are so critical to good governance in both the public and private sectors.
Authored by:
Campbell McKenzie
Added note from TINZ
The Ombudsman has received a marked increase in protected disclosures since the Protected Disclosures (Protection of Whistleblowers) Act 2022 Act came into force. See Whistleblowing on the rise, growing number of complaints - Ombudsman.
