Human rights lawyers have hailed a landmark whistleblower ruling awarding a more than $7 million settlement, the first made under private-sector protections.

The Federal Court on Tuesday ruled against mining resources company TerraCom, awarding the Commonwealth $7.5 million in damages and $1 million in legal costs for the “hurt, humiliation, distress and embarrassment, and damage to reputation” caused to a whistleblower.

Justin Williams was fired in August 2019, the same day he informed the company’s CEO and chief financial officer of possible misconduct regarding the “fake analysis of coal samples”.

TerraCom denied the allegations, made Williams redundant and made an announcement that his allegations were false, according to the Federal Court ruling.

Williams informed the financial watchdog, the Australian Securities and Investments Commission, in February 2020 about the alleged misconduct.

An open letter from the company denying the allegations was published in the Australian Financial Review and The Australian newspapers in March that same year.

An independent investigation authorised by the company found no evidence of wrongdoing, that none of TerraCom’s customers raised quality control issues with coal exports and that Williams made the allegations after he was dismissed as part of a company-wide redundancy program, the letter said.

The Federal Court ruling said TerraCom admitted the publishing of the letter and other announcements contravened private-sector whistleblower protections in the Corporations Act.

It also admitted Williams was an eligible whistleblower under the laws and had reasonable grounds to suspect the allegations were covered by the legal protections.

“TerraCom admits … the tone and content of the announcements caused detriment to Mr Williams in the form of hurt, humiliation, distress and embarrassment, and damage to reputation,” the judgment said.

This included the announcement representing him as someone who had been made redundant, when he believed he was fired for whistleblowing, and as someone who made unfounded allegations, when a subsequent report “at least partially supported Mr Williams’ allegations”.

Human Rights Law Centre associate legal director Kieran Pender said the court settlement underscored the importance of organisations protecting and not punishing whistleblowers.

“This is a landmark moment, following the corporate regulator’s first enforcement case under the new private sector whistleblower protections regime,” he told AAP.

“The significant size of the penalty shows that mistreating whistleblowers cannot, in the words of the judge, be seen as just ‘a cost of doing business’.

“It will send a message to companies to ensure their whistleblower protection policies are in order, whistleblowers make Australia a better place and this is a positive step for whistleblowing in Australia.”

The federal attorney-general has flagged a further tranche of whistleblowing protections as transparency advocates say current laws are failing those exposing wrongdoing.

–AAP