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VOLUME 5
LAW REFORM
Subject Page
CH 1 INTRODUCTION 1
A - INTRODUCTION 3
B - STRUCTURE OF VOLUME 6
C - HISTORY OF TRADE UNION REGULATION IN AUSTRALIA
9
British settlement to Federation 9
Development of industrial arbitration 14
Move away from industrial arbitration: 1990s onwards 17
Changes to unions and union regulation from late 1980s onwards 19
D - PRESENT COMMONWEALTH STATUTORY FRAMEWORK
22
Fair Work (Registered Organisations) Act 2009 (Cth) 22
Rights of employee organisations under the Fair Work Act 2009 (Cth) 26
Subject Page
General observations concerning possible reform of the Fair Work (Registered Organisations) Act 2009 (Cth)
31
E - PRESENT STATE STATUTORY FRAMEWORK 32
New South Wales, Queensland, South Australia and Western Australia 32
Tasmania 34
Victoria 35
F - ROLES OF TRADE UNIONS IN AUSTRALIA 36
Role in assisting members and improving society 36
Commercial role 37
Statutory role in industrial relations system 39
Political role 40
CH 2 REGULATION OF UNIONS 41
A - INTRODUCTION 43
B - DUAL STATE AND COMMONWEALTH REGULATION
46
C - REGISTERED ORGANISATIONS REGULATOR
53
The current registered organisations regulator: General Manager of the Fair Work Commission 54
An independent standalone registered organisations regulator 55
Resources of the registered organisations regulator 64
Subject Page
Powers of the registered organisations regulator 65
D - FINANCIAL ACCOUNTABIILITY 74
Training of officers and employees 75
Requirements to have financial policies 79
Financial disclosure requirements by organisations and branches 83
Internal compliance and audit 93
External auditing 96
E - RECORD-KEEPING REQUIREMENTS 106
Minutes of committee of management meetings 106
Financial records 111
F - WHISTLEBLOWERS 112
Background 112
Existing protected disclosure regime 113
Persons who can make a protected disclosure 115
Persons entitled to receive a protected disclosure 118
Remedies for adverse action 121
G - USE OF UNION FUNDS 124
Use of union funds in union election campaigns 124
Use of union funds as political donations or for political expenditure 126
H - CONDUCT OF UNION ELECTIONS 129
Subject Page
APPENDIX A 135
CH 3 REGULATION OF UNION OFFICIALS 153
A - INTRODUCTION 155
B - DUTIES OF UNION OFFICERS TO THEIR UNION 157
Statutory duties of union officers 157
Appropriateness of corporate governance model for trade unions: submissions received 163
Appropriateness of corporate governance model: consideration 166
Are union officers subject to the duties in the Corporations Act 2001 (Cth)? 169
Meaning of ‘officer’ 172
Limitation of statutory duties to those in relation to financial management 176
Good faith duty 182
Civil penalties for breach of statutory duties 188
Criminal penalties for breach of statutory duties 201
Indemnity for civil and criminal penalties 207
Disclosure of material personal interests of officers 210
Requirement of conflicted officers not to participate in decision-making 216
Enforcement of officers’ duties by members 218
Subject Page
C - STATUTORY DUTIES IN RESPECT OF COURT ORDERS
222
The problem 222
Remedies under the Fair Work (Registered Organisations) Act 223
D - DISQUALIFICATION OF UNION OFFICERS 225
Existing disqualification regime 225
Defects in the current regime 227
Options for reform: ‘fit and proper person’ qualification 230
Options for reform: banning orders 231
CH 4 CORRUPTING BENEFITS 237
A - INTRODUCTION 238
Reasons for outlawing corrupting benefits 244
B - EXISTING LAWS REGULATING CORRUPTING BENEFITS 245
Blackmail and extortion 246
Secret or corrupt commissions 247
Overseas approach 250
C - INADEQUACY OF EXISTING LEGAL FRAMEWORK 253
D - REFORM TO EXISTING LEGAL
FRAMEWORK
259
Subject Page
Disclosure of benefits made to registered organisations 260
Corrupting benefits offence in relation to officers of registered organisations 263
Prohibition on payments by employers to employee organisations or their officials 266
CH 5 REGULATION OF RELEVANT ENTITIES 271
A - INTRODUCTION 272
B - DISCLOSURE OF FINANCIAL
RELATIONSHIPS BETWEEN UNIONS AND RELEVENAT ENTITIES
274
C - REGULATION OF RELEVANT ENTITIES GENERALLY 277
D - ELECTION FUNDS 279
Prohibition of any compulsion on employees to contribute to an election fund 282
Basic regulation of election funds 286
E - WORKER ENTITLEMENT FUNDS 295
Regulation under Corporations Act 2001 (Cth) 298
Fringe benefits tax exemption 301
Problems with existing regulation 302
Options for reform: submissions 308
Options for reform: consideration 314
F - EMPLOYEE INSURANCE SCHEMES 321
Subject Page
Introduction 321
Existing regulation 322
CH 6 ENTERPRISE AGREEMENTS 327
A - INTRODUCTION 328
B - TERMS REQUIRING CONTRIBUTIONS TO EMPLOYEE BENEFIT FUNDS OR EMPLOYEE INSURANCE SCHEMES
329
Introduction 329
Submissions received in response to the Discussion Paper 331
Options for reform 335
C - SUPERANNUATION FUNDS 340
Mandatory superannuation fund clauses 340
Default superannuation fund clauses 345
D - PATTERN BARGAINING 345
Introduction 345
Current provisions relating to pattern bargaining 348
History of legislative attempts to address pattern bargaining 349
Options for reform - pattern bargaining 352
CH 7 COMPETITION ISSUES 355
A - INTRODUCTION 356
B - SECONDARY BOYCOTTS 358
Subject Page
Introduction 358
Penalties 361
Secondary boycotts engaged in for a market sharing purpose 363
Restraint on competitors of secondary boycott target 370
General obligation to report boycott activity? 374
Appropriate regulator 377
C - ANTI-COMPETIVE CONDUCT IN ENTERPRISE BARGAINING 382
Introduction 382
Discussion 384
Conclusions 388
CH 8 BUILDING AND CONSTRUCTION 391
A - INTRODUCTION 393
B - THE CFMEU 395
Deregistration of the CFMEU 402
Legislative disqualification of officers 406
C - BACKGROUND TO THE AUSTRALIAN BUILDING AND CONSTRUCTION COMMISSION
409
The Cole Royal Commission 409
The Building and Construction Industry Improvement Act 2005 (Cth) 410
Subject Page
Changes by the Labor Government 413
The proposed return to the ABCC 416
Office of the Fair Work Ombudsman and Fair Work Inspectors 417
D - A SEPARATE, INDUSTRY SPECIFIC, REGULATOR 418
Introduction 418
Submissions opposing a separate regulator 419
Consideration 424
Conclusions 435
E - COMPULSORY INVESTIGATORY AND INFORMATION GATHERING POWERS 437
Introduction 437
Compulsory examination powers of other regulators 438
Submissions 443
Assessment 452
F - INDUSTRY SPECIFIC INDUSTRIAL LAWS 460
Issues 460
Submissions 468
Conclusions 473
G - RICO 478
What is RICO? 479
Subject Page
Adoption in Australia? 481
APPENDIX A - BUIDING & CONSTRUCTION INDUSTRY LTIGATION 487
CH 9 RIGHTS OF ENTRY 575
A - INTRODUCTION 576
B - RECOMMENDATIONS TO INCREASE DETERRENCE 583
Indemnification of officers for breaches of the right of entry regime 587
Recommendations regarding the issue, retention and revocation of permits 588
Aspects of the existing law regarding applications for permits 589
Recommendations regarding permit qualification matters 591
Recommendations regarding disclosure obligations 597
Recommendations regarding conditional permits 600
Possible reforms not recommended 601
C - RIGHTS OF ENTRY UNDER THE WORK HEALTH AND SAFETY ACT 2011 (CTH) 605
Burden of proof 613
Compulsory reports 614
D - NUIMBER OF OFFICIALS ACCESSING WORKPLACES 615
E - OFFICIALS AND INSPECTORS 616
Subject Page
CH 10 REFORM OF THE ROYAL COMMISSIONS ACT 1902 (CTH) 619
A - INTRODUCTION 619
B - POWERS UNDER THE ROYAL COMMISSIONS ACT 1902 (CTH) 620
C - SERVICE 621
D - PENALTIES 626
E - SURVEILLANCE DEVICES LEGISLATION 630
APPENDIX 1 TO VOLUME 5 - MODEL LEGISLATIVE PROVISIONS 635
APPENDIX 2 TO VOLUME 5 - POLICY SUBMISSIONS RECEIVED 637
REPORT Volume 5
Royal Commission into Trade Union Governance and Corruption
CHAPTER 1
INTRODUCTION
Subject Paragraph
A - INTRODUCTION 1
B - STRUCTURE OF VOLUME 9
C - HISTORY OF TRADE UNION REGULATION IN
AUSTRALIA
15
British settlement to Federation 16
Development of industrial arbitration 25
Move away from industrial arbitration: 1990s onwards 31
Changes to unions and union regulation from late 1980s onwards 34
D - PRESENT COMMONWEALTH STATUTORY
FRAMEWORK
40
Fair Work (Registered Organisations) Act 2009 (Cth) 41
Rights of employee organisations under the Fair Work Act 2009
(Cth)
50
1
Subject Paragraph
General observations concerning possible reform of the Fair
Work (Registered Organisations) Act 2009 (Cth)
64
E - PRESENT STATE STATUTORY FRAMEWORK 68
New South Wales, Queensland, South Australia and Western
Australia
69
Tasmania 72
Victoria 74
F - ROLES OF TRADE UNIONS IN AUSTRALIA 75
Role in assisting members and improving society 76
Commercial role 79
Statutory role in industrial relations system 82
Political role 83
2
A - INTRODUCTION
1. This Volume of the Report is devoted to recommendations in relation
to law reform.
2. The Interim Report made a number of recommendations for referral of
material to relevant regulatory and prosecutorial bodies.1 Volume 1 of
this Report lists a number of further referrals. The Interim Report,
however, did not reach any final conclusions or make
recommendations as to law reform. That was because the
Commission’s hearings and investigations were not complete at the
time of the delivery of the Interim Report.2
3. Prior to the publication of the Interim Report, the Commission released
a series of Issues Papers seeking submissions as to law reform on a
number of specific topics: (1) the protection available to
whistleblowers; (2) the duties of union officials; (3) the funding of
union elections; and (4) relevant entities. The Commission received a
total of 37 submissions in relation to these Issues Papers from a range
of interested persons and general law reform submissions from
governments, unions and employers.
4. At that time, the Commission’s factual inquiries were at a preliminary
stage. It was not possible to canvass all of those areas where law
reform might be desirable.
1 Royal Commission into Trade Union Governance and Corruption, Interim Report (2014), Vol 1, pp 30-36. 2
See Royal Commission into Trade Union Governance and Corruption, Interim Report (2014), Vol 1, p 4 [11].
3
5. On 19 May 2015, the Commission issued a more comprehensive
discussion paper titled ‘Options for Law Reform’ (Discussion Paper).3
The Discussion Paper tried to elicit informed opinions from interested
parties on a range of potential law reform options and their desirability.
It also tried to elicit the views of interested persons in respect of
whether there were other areas of law reform that the Commission had
not explored, but which should be considered. The Commission
received a total of 20 submissions (including confidential submissions)
from various government agencies, employer and union related parties.
All of them were taken into account in formulating the
recommendations for law reform set out below.
6. It is of some significance that the Commission did not receive
submissions from the Australian Council of Trade Unions (ACTU)
after it made a decision to boycott the Commission in 2014.4 The
ACTU’s decision not to engage in policy debate was unfortunate
because it meant that the Commission was not provided directly with
the views of Australia’s peak union body on matters affecting its
members. However, the Commission has had detailed regard to
various submissions made by the ACTU to a range of Parliamentary
and other inquiries.
3 Royal Commission into Trade Union Governance and Corruption, Discussion Paper - Options for Law Reform, 19/5/15. 4
Letter from the Australian Council of Trade Unions to the Royal Commission into Trade Union Governance and Corruption dated 23 June 2014.
4
7. Consistently with the theme of the Discussion Paper, this Volume of
the Report endeavours to consider possible law reform options in the
following way. First it identifies a potential problem with the existing
legal and regulatory framework exposed by the Commission’s
inquiries. Then it analyses:
(a) whether its cause is a lack of, or insufficient, regulation, and
whether it requires the introduction of new laws or
amendments to existing provisions;
(b) whether existing laws are not sufficiently clear to address the
problem or require amendment to better reflect their original
intent; and
(c) whether existing laws, while appropriately targeted towards
the problem, are being ignored or insufficiently enforced.
8. The Discussion Paper also made two key points, which should be
repeated here.
(a) While broad, the terms of reference assume that employee
associations (that is trade unions) will continue to remain an
important part of the industrial landscape, and their basic
functions and responsibilities under the Fair Work Act 2009
(Cth) and the general law will remain.
(b) Unions have historically achieved much for their members,
and for society more broadly. Some of those achievements
are discussed below. The matters for law reform identified
5
below do not arise out of the conduct of members. Nor do
they arise out of the existence of unions per se. Rather, they
arise out of the conduct of some union officials and the
employers that deal with them.
B - STRUCTURE OF VOLUME
9. This Volume of the Report is divided into the following ten Chapters:
Chapter 1 Introduction
Chapter 2 Regulation of Unions
Chapter 3 Regulation of Union Officials
Chapter 4 Corrupting Benefits
Chapter 5 Regulation of Relevant Entities
Chapter 6 Enterprise Bargaining
Chapter 7 Competition Issues
Chapter 8 Building and Construction
Chapter 9 Rights of Entry
Chapter 10 Reform of the Royal Commissions Act 1902 (Cth)
6
10. In addition, there are two Appendices. Appendix 1 contains certain
model legislative provisions for consideration. The purposes of
drafting these was merely to assist in understanding the reasons
underlying the proposals for reform. No claim whatsoever is made that
they represent satisfactory legislative drafting. Model provisions have
not been provided in relation to every recommendation made, only
those where a level of detail is necessary to understand the
recommendation. Appendix 2 sets out a list of the various submissions
received by the Commission in relation to policy and reform issues.
11. Each Chapter deals with a number of issues, or problems, with the
existing law on the same broad theme. Following identification of the
issue or problem there is consideration of possible solutions having
regard to submissions received:
(a) in response to the Discussion Paper;
(b) in response to the Issues Papers;
(c) from affected parties in relation to particular case studies; and
(d) from other parties in relation to policy issues raised by the
Commission more generally.
12. Regard has also been had to the public submissions made to, issues
papers released by, and the draft and final reports of a number of other
inquiries which have been, or are being, conducted into issues that
overlap with or complement matters arising out of the Commission’s
inquiries. These inquiries include:
7
(a) the Competition Policy Review;5
(b) the Financial System Inquiry;6
(c) the Productivity Commission Inquiry into the Workplace
Relations Framework;7 and
(d) a number of Senate committee and other parliamentary
committee inquiries into proposed legislation in the industrial
relations area.
13. Following analysis of the various arguments, there is a
recommendation for reform. A summary of each recommendation is
contained in a box at the end of the relevant section. Some
recommendations are more technical than others, and it may be
necessary in some cases to refer to the discussion concerning that
recommendation. A complete list of recommendations can be found in
Volume 1 of this Report.
14. The balance of this Chapter sets out some important matters of
background that inform questions of trade union governance.
5 Competition Policy Review, Final Report (March 2015). 6 Financial System Inquiry, Final Report (December 2014). 7
The Australian Government Productivity Commission Inquiry into the Workplace Relations Framework Inquiry Report was handed to the Australian Government on 30 November 2015. At the time of writing this report, that Inquiry Report had not been released by the Government. Regard has been had, in this Report, to the draft report released in August 2015.
8
C - HISTORY OF TRADE UNION REGULATION IN AUSTRALIA
15. A basic appreciation of the history of trade union regulation in
Australia is relevant to understanding the role of unions in Australia’s
industrial and political framework. That role necessarily underpins law
reform concerning union governance. Set out below is a summary, not
intended to be comprehensive, of key developments in terms of legal
regulation.8
British settlement to Federation
16. In CFMEU v North Goonyella Coal Mine Pty Ltd,9 Logan J referred to
the Tolpuddle Martyrs’ Case10 and the public outrage which followed
that case involving the prosecution of farm workers who swore an oath
to organise themselves to prevent the reduction of their wages. He said
that these factors provided:11
the inception of a movement which gradually throughout the 19th century led to the recognition by the British parliament and then by colonial parliaments here of trade unions as lawful organisations.
17. Whether or not that is so, the history of trade unions in Australia starts
in English law at the time of British settlement in Australia. In Britain
8 See generally J H Portus, The Development of Australian Trade Union Law (Melbourne University Press, 1958); K D Ewing, Trade Unions, the Labour Party and the Law (Edinburgh University Press, 1982); D W Smith and D W Rawson, Trade Union Law in Australia (2nd ed, Butterworths, 1985), chs 3-9; J V Orth, Combination and Conspiracy: A Legal History of Trade Unionism 1721-1906 (Clarendon Press, 1991); B Creighton and A Stewart, Labour Law (5th ed, Federation Press, 2010) chs 2, 20. See also Submissions of the Transport Workers’ Union, 14/11/14, pp 8-15. 9
[2013] FCA 1444. 10 R v Lovelass (1834) 6 Car & P 595; 172 ER 1380. 11
[2013] FCA 1444 at [30]-[31].
9
at the turn of the 19th century, the Combination Acts of 179912 and
180013 attached criminal liability to combinations of workmen for any
purpose relating to their employment.14 The consequence of those
laws was effectively to outlaw any form of trade union. The 1800 Act
was repealed in 1824 but the repeal coincided with considerable
industrial violence and unrest.15 As a result, the following year the
Combination of Workmen Act 1825 (1825 Act) was passed which had
the effect of reinstating some, but not all, of the restrictions on
combination. The legislation expressly legalised agreements between
workmen as to the wages and working hours they would accept.
However, it expressly criminalised acts of interference with an
employer or employee by way of ‘threats’, ‘intimidation’ or ‘by
molesting or in any way obstructing another’.
18. The upshot of the 1825 Act was that trade unions were not illegal
associations by statute.16 The 1825 Act applied to the Australian
colonies by virtue of the Australian Courts Act 1828 (Imp). Later
12 An Act to Prevent Unlawful Combinations of Workmen 1799 (39 Geo 111 c 81). 13 An Act to Prevent Unlawful Combinations of Workmen 1800 (39 and 40 Geo 111 c 106). 14
See J V Orth, Combination and Conspiracy: A Legal History of Trade Unionism 1721- 1906 (Clarendon Press, 1991), pp 43-67. 15 B Creighton and A Stewart, Labour Law (5th ed, Federation Press, 2010), [2.10]. 16
See Williams v Hursey (1959) 103 CLR 30 at 61-62 per Fullagar J. It appears that there was little enforcement in Australia of the restrictions in the 1825 Act, which were progressively repealed in the Australian colonies from 1878 onwards: see J H Portus, The Development of Australian Trade Union Law (Melbourne University Press, 1958), p 89.
10
cases also made it clear that, despite some statements to the contrary,17
they were not illegal associations at common law.18
19. However, at common law union members could be liable for criminal
conspiracy if they induced members to strike in breach of their
contracts of employment.19 Further, as in Britain, each of the
Australian colonies and thus after Federation the States had master and
servant laws which imposed criminal sanctions on employees who
breached their contracts of employment.20 In addition, the objects of a
trade union were commonly, although not invariably, held to be in
restraint of trade, with the result that the rules of the trade union and
any trusts set up for the holding of property were unenforceable in
court.21 A consequence was that in general no civil action would lie
against a member of trade union who misappropriated trade union
property.22 Further, in the majority of cases, there was no criminal
offence committed either.23
20. Clearly, this placed trade unions and their members in a precarious
position. The position of trade unions in Britain was substantially
17 See, eg, Hilton v Eckersley (1855) 6 El & Bl 47 at 53; 119 ER 781 at 784. 18 Hornby v Close (1867) LR 2 QB 53; R v Stainer (1870) LR 1 CCR 230; Mogul Steamship Co v McGregor, Gow & Co [1892] AC 25 at 39, 42, 46, 51, 58. 19
R v Bunn (1872) 12 Cox 316. 20 See J H Portus, The Development of Australian Trade Union Law (Melbourne University Press, 1958), pp 90-93 for discussion of the application of those laws. 21
See Williams v Hursey (1959) 103 CLR 30 at 61-62 per Fullagar J referring to Hilton v Eckersley (1855) 6 El & Bl 47; 119 ER 781 and Hornby v Close (1867) LR 2 QB 53. 22
See D W Smith and D W Rawson, Trade Union Law in Australia (2nd ed, Butterworths, 1985), p 15. 23 See J H Portus, The Development of Australian Trade Union Law (Melbourne University Press, 1958), pp 15-16.
11
improved in 1871 with the enactment of the Trade Union Act 1871
(UK). That legislation provided that the purposes of any trade union
should not, merely by reason of being in restraint of trade, be unlawful
so as to render void or voidable any agreement or trust.24 However, the
obvious consequence of this provision would have been to render the
rules of a trade union enforceable between the members on the basis of
contract and could have resulted in courts being required to enforce
agreements to strike or boycott. As a result, s 4 of the Trade Union Act
1871 (UK) provided that nothing in the Act would enable a court to
entertain any legal proceeding with the object of enforcing certain
agreements.
21. In addition to these reforms, the legislation introduced a system of
registration. Under it the property of a registered trade union was
vested in trustees and the trustees were entitled to bring or defend any
action concerning the property, rights or claims to property of the trade
union. The legislation regulated the affairs of registered trade unions
in a number of important respects:
(a) The trustees of a registered trade union were not liable to
make good any deficiency in the funds of the union, but were
liable only for the money actually received on account of the
union.25
24 Trade Union Act 1871 (UK), s 3. 25 Trade Union Act 1871 (UK), s 10.
12
(b) The treasurer and other officers of a registered trade union
were liable to account to the trustees or members, which
account was required to be audited.26
(c) Officers and members were made criminally liable for the
fraudulent misapplication of the funds of the union for any
purpose other than those specified in the rules of the trade
union.27
(d) A trade union could not be registered unless it had certain
rules including rules as to the purposes of the trade union, the
investment of funds and the annual or periodical audit of
accounts.
22. The Trade Union Act 1871 (UK), as amended by the Trade Union Act
1876 (UK), was fairly quickly adopted in each of the Australian
colonies that became States.28 However, except in New South Wales,
few trade unions appear to have obtained registration under these
Acts.29
23. In 1875, the United Kingdom Parliament enacted the Conspiracy and
Protection of Property Act 1875 (UK), which among other things
removed criminal liability for conspiracy to do acts in contemplation or
26 Trade Union Act 1871 (UK), s 11. 27 Trade Union Act 1871 (UK), s 12. 28
Trade Union Act 1876 (SA); Trade Union Act 1881 (NSW); The Trade Unions Act 1884 (Vic); Trade Unions Act 1886 (Qld); Trades Unions Act 1889 (Tas); Trade Unions Act 1902 (WA). 29
See D W Smith and D W Rawson, Trade Union Law in Australia (2nd ed, Butterworths, 1985), p 48.
13
furtherance of a trade dispute and for breaches of contract by an
employee.30 Similar legislation was later enacted in all of the
Australian colonies except New South Wales.31
24. The overall result was that at the time of Federation (or shortly
thereafter in the case of Western Australia), trade unions in Australia
were similar to their British cousins. Trade unions were legal in all
Australian States. They were capable of being registered. Registration
conferred some benefits on a union. However, the precise legal
consequences of registration under the State Acts were somewhat
obscure. Was the registered trade union a body corporate? Was it a
‘quasi-corporation’? Or was it simply an unincorporated association
with some characteristics of a body corporate?32 The internal affairs of
registered trade unions were subject to a limited degree of regulation,
but unregistered trade unions were entirely unregulated.
Development of industrial arbitration
25. Operating in parallel with these British developments was the
development in Australia from the 1890s onwards of two forms of
30 See K D Ewing, Trade Unions, the Labour Party and the Law (Edinburgh University Press, 1982), p 11. 31
Conspiracy and Protection of Property Act 1878 (SA); Conspiracy and Protection of Property Act 1889 (Tas); Employers and Employès Act 1891 (Vic); Conspiracy and Protection of Property Act 1900 (WA); Trade Union Act 1915 (Qld). 32
The seminal case was Taff Vale Railway Co v Amalgamated Society of Railway Servants [1901] AC 426. See the discussion in E Sykes, ‘The Legal States of Trade Unions’ (1956) 2(2) SLR 271; M Pittard, ‘A personality crisis: the Trade Union Acts, State registered unions and their legal status’ (1979) 6 Mon LR 49.
14
legislative regulation of industrial conditions - wages boards and
compulsory industrial arbitration.33
26. Wages boards, which operated principally in Victoria and Tasmania,
fixed wages in certain industries. Trade unions had no direct part in
such a system.34 However, they played a critical role in the
compulsory industrial conciliation and arbitration systems which were
successively established in Western Australia, New South Wales, the
Commonwealth, Queensland and South Australia. In these
jurisdictions, registered trade unions could submit industrial disputes
for compulsory conciliation and arbitration to the relevant industrial
court. That court could settle industrial disputes within the court’s
jurisdiction by overseeing agreed settlements, making non-binding
recommendations and making awards that would become binding on
the parties but also, depending on the scope of a dispute and on the
jurisdiction, on other employers and employees in the same industry.35
A valid award created rights and obligations in the employees bound
by the award which derived their force from statute. However, the
award did not form part of the employees’ contracts of employment.36
It was not possible for employers and employees to contract validly on
terms that were less favourable than the award. Under these systems,
registered trade unions could also enter into collective or industrial
33 See generally J H Portus, The Development of Australian Trade Union Law (Melbourne University Press, 1958), ch 8. 34
See B Creighton and A Stewart, Labour Law (5th ed, Federation Press, 2010), [2.31]. 35 See generally J H Portus, The Development of Australian Trade Union Law (Melbourne University Press, 1958), ch 10; B Creighton and A Stewart, Labour Law (5th ed, Federation Press, 2010), [2.45]-[2.48], [11.01]. 36
See Byrne v Australian Airlines Ltd (1995) 185 CLR 410.
15
agreements with employers or associations of employers, although this
was not the main focus of the systems.37
27. In 1904, the Commonwealth Conciliation and Arbitration Act 1904
(Cth) was enacted. Among other things it established a
Commonwealth Court of Conciliation and Arbitration with the power
to resolve interstate industrial disputes. Part V of that Act provided for
the registration of organisations being associations of employers or
associations of employees with more than 100 employees. Registered
organisations received the benefits of separate legal personality. They
became entitled to certain privileges in relation to industrial disputes.
One of these privileges was the capacity to submit industrial disputes
in which an organisation was interested to the Commonwealth Court of
Conciliation and Arbitration. Another was the capacity to be
represented before the Court in the hearing and determination of any
industrial dispute in which the organisation was interested.
28. With the growth and development of the Federal and various State
compulsory arbitration systems, trade unions inevitably came under
greater regulation:38
The arbitration system recognizes the institution of trade unionism and gives it important rights. To the extent that it does so it must take away rights of the individual employee. In such circumstances the only protection which can be given the employee is the imposition of various restrictions on trade unions to protect the interests of individual members from unfair union action. The motives behind the restrictions are twofold - the protection of the interests of the individual member and the
37 J H Portus, The Development of Australian Trade Union Law (Melbourne University Press, 1958), pp 117-124. 38
J H Portus, The Development of Australian Trade Union Law (Melbourne University Press, 1958), p 182.
16
protection of the public interest to ensure that an association which has been given power by the state does not act in a way contrary to the interests of the state.
29. Over time, both at the State and Commonwealth level legislation was
introduced regulating the activities of trade unions registered under
relevant industrial legislation.39 In short, increased regulation was the
price to be paid for the rights and privileges conferred on registered
trade unions under the industrial relations legislation. There was no
requirement on a trade union to be registered but there was an obvious
incentive to do so.
30. The Commonwealth Conciliation and Arbitration Act 1904 (Cth)
survived for over 80 years, finally being replaced by the Industrial
Relations Act 1988 (Cth).
Move away from industrial arbitration: 1990s onwards
31. Initially, the Industrial Relations Act 1988 (Cth) was little more than a
consolidation of the Commonwealth Conciliation and Arbitration Act
1904 (Cth).40 However, during the 1990s there was a shift by the
Federal Labor Government away from compulsory industrial
arbitration toward enterprise bargaining - that is, towards agreements
between unions and individual employers on an enterprise basis.41 The
shift towards enterprise bargaining was formalised by the Industrial
39 For a summary of the developments from 1900 to the 1950s, see J H Portus, The Development of Australian Trade Union Law (Melbourne University Press, 1958), pp 182-202. 40
See B Creighton and A Stewart, Labour Law (5th ed, Federation Press, 2010), [2.44]. 41 See B Creighton and A Stewart, Labour Law (5th ed, Federation Press, 2010), [2.49]-[2.56].
17
Relations Reform Act 1993 (Cth). The trend was continued by the
Coalition Government from 1996. First, there were further
amendments to the Industrial Relations Act 1988 (Cth) in 1996
(renamed the Workplace Relations Act 1996 (Cth)). Ultimately the
WorkChoices legislation was enacted in 2006.42
32. The WorkChoices legislation decoupled the Federal industrial relations
system from the ‘conciliation and arbitration’ power in the
Commonwealth Constitution. More significantly, it expanded
considerably the scope of the Commonwealth industrial relations
system by applying Commonwealth law to all employees employed by
trading or financial corporations.43 The consequence was to diminish
very significantly the importance and application of the traditional
State-based industrial relations systems.
33. Subsequently, the Federal Labor government introduced the Fair Work
Act 2009 (Cth). Although that Act differs in many respects from the
WorkChoices legislation, it still seeks to regulate industrial relations on
a national basis. In addition, in 2009 each of the States other than
Western Australia referred certain powers to the Commonwealth
concerning industrial relations.44 The result is that in those States,
subject to certain exceptions largely confined to various public sector
42 Workplace Relations Amendment (Work Choices) Act 2005 (Cth). 43 From 1996, Victorian employees were also subject to Commonwealth law after Victoria referred legislative power in relation to industrial relations to the Commonwealth: Commonwealth Powers (Industrial Relations) Act 1996 (Vic). 44
Industrial Relations (Commonwealth Powers) Act 2009 (NSW); Fair Work (Commonwealth Powers) Act 2009 (Vic); Fair Work (Commonwealth Powers) and Other Provisions Act 2009 (Qld); Fair Work (Commonwealth Powers) Act 2009 (SA); Industrial Relations (Commonwealth Powers) Act 2009 (Tas).
18
employees, all employees are subject to federal industrial relations
regulation under the Fair Work Act 2009 (Cth).45
Changes to unions and union regulation from late 1980s onwards
34. In combination with changes to the industrial relations landscape,
during and following the late 1980s there were considerable changes to
the number and structure of unions as a result of legislative changes
and direction from the ACTU:46
(a) At 30 June 1986, the Australian Bureau of Statistics (ABS)
reported a total of 326 trade unions in Australia.47 200 of
those unions (61.3%) had less than 2,000 members. Eight
unions had more than 80,000 reported members each,
together accounting for 30.7% of trade union members.
There were 146 unions registered under Commonwealth law
reflecting 81% of total reported trade union membership.48
(b) By 30 June 1996, the ABS reported a total of 132 trade
unions in Australia. 76 of those unions (57.5%) had less than
2,000 members. 12 unions had over 100,000 members each
45 See B Creighton and A Stewart, Labour Law (5th ed, Federation Press, 2010), [2.78] for a general summary of the excepted classes. 46
B Creighton and A Stewart, Labour Law (5th ed, Federation Press, 2010), [20.59]. 47 Australian Bureau of Statistics, 30 June 1986, Trade Union Statistics, Australia (ABS Catalogue No 6323.0), p 1. 48
Australian Bureau of Statistics, 30 June 1986, Trade Union Statistics, Australia (ABS Catalogue No 6323.0), pp 1, 2, 5. The membership figures are total members as opposed to financial members.
19
together accounting for 71.2% of union members.49 There
were 46 unions registered under Commonwealth law
reflecting 86% of total reported trade union membership.50
35. The reduction of the number of unions and the creation of ‘super
unions’ through amalgamation led, among other things, to the
increased concentration of power in the hands of union officials. At
the same time there was an increase in the complexity of the day-to-day operations of those amalgamated unions.
36. At the same time, as a result of a range of complex factors including
substantial changes in the structure of the economy, union membership
began to decline significantly:
(a) In August 1986, the ABS reported that 46% of Australia’s
employees were trade union members.51
(b) By August 1996, that figure reported by the ABS had dropped
to 31%, with 24% union membership in private sector
employment and 55% union membership in the public
sector.52
49 Australian Bureau of Statistics, 30 June 1996, Trade Union Statistics Australia (ABS Catalogue No 6323.0), pp 5, 7, 9-10. The membership figures are total members as opposed to financial members. 50
Australian Bureau of Statistics, 30 June 1996, Trade Union Statistics Australia (ABS Catalogue No 6323.0), p 13. 51 Australian Bureau of Statistics, August 1996, Trade Union Members Australia (ABS Catalogue No. 6325.0), p 5. 52
Australian Bureau of Statistics, August 1996, Trade Union Members Australia (ABS Catalogue No. 6325.0), pp 5-6.
20
(c) In August 2006, 20% of employees were trade union
members. A higher proportion of public sector employees
were trade union members (43%) than private sector
employees (15%).53
(d) As at August 2014, only 15% of employees were trade union
members. 11.1% of private sector employees (996,700) were
trade union members, compared with 39.5% (573,400) of
public sector employees.54
37. There were also significant changes from the 1990s onwards to the
way registered unions were regulated. Registered unions at both State
and Commonwealth level had long been subjected to various forms of
regulation concerning their rules, elections for office with the union
and accounting. However, during the 1990s various State legislatures
introduced provisions imposing statutory duties on union officials
similar to those imposed on company directors: New South Wales
introduced such duties in 1991,55 Western Australia in 199556 and
Queensland in 1997.57
38. At the Commonwealth level, equivalent duties were first introduced in
2002 when the Workplace Relations Amendment (Registration and
53 Australian Bureau of Statistics, August 2006, Employee Earnings, Benefits and Trade Union Membership (ABS Catalogue No. 6310.0), p 5. 54
Australian Bureau of Statistics, August 2014, Characteristics of Employment, Australia (ABS Catalogue No. 6333.0), data cube 16 (table 16.1), released 27/10/15. 55 Industrial Relations Act 1991 (NSW). 56
Industrial Relations Legislation Amendment and Repeal Act 1995 (WA). 57 Industrial Organisations Act 1997 (Qld).
21
Accountability of Organisations) Act 2002 (Cth) introduced
Schedule 1B to the Workplace Relations Act 1996 (Cth).
39. Despite the demise of the traditional industrial arbitration systems from
the 1990s onwards, and the changes to unions, trade unions still
possess a number of significant rights and privileges under both
Commonwealth and State laws. The current statutory framework
regulating trade unions in the various jurisdictions is outlined below.
D - PRESENT COMMONWEALTH STATUTORY FRAMEWORK
40. At the Commonwealth level, there are two relevant pieces of
legislation: the Fair Work (Registered Organisations) Act 2009 (Cth)
(FW(RO) Act) and the Fair Work Act 2009 (Cth) (FW Act). In
essence, the FW Act provides for the registration of employee
associations (that is, trade unions) and employer associations as
‘organisations’. It also contains provisions regulating such
organisations. Among other things, the FW Act confers certain rights
and powers on employee organisations and their officials.
Fair Work (Registered Organisations) Act 2009 (Cth)
41. The FW(RO) Act is largely based on Schedule 1B of the Workplace
Relations Act 1996 (Cth).
22
42. Under the FW(RO) Act, a ‘federally registrable’ association of
employees or employers or an enterprise association is eligible to apply
for registration as an ‘organisation’.58
43. An association of employees is ‘federally registrable’ if it is a
constitutional corporation (i.e. a trading, financial or foreign
corporation) or some or all of its members are ‘federal system
employees’.59 A ‘federal system employee’ is defined as a ‘national
system employee’ within the meaning of that term in the FW Act or an
independent contractor who, had he or she been an employee, would be
a ‘national system employee’.60 In turn, a ‘national system employee’
includes an employee employed or usually employed by (a) a
constitutional corporation, (b) the Commonwealth or a Commonwealth
authority, (c) a person who employs or usually employs flight crew
officers, maritime workers or waterside workers in connection with
interstate trade or commerce, or (d) an employer who carries on
activity in a Territory.61
44. By these techniques the legislation bases itself at least on the
Commonwealth legislative powers conferred by ss 51(i), (xx), (xxxix)
and 122 of the Constitution. The constitutional validity of the
predecessor to the FW(RO) Act, which in this respect was substantially
58 Fair Work (Registered Organisations) Act 2009 (Cth), s 18. 59 Fair Work (Registered Organisations) Act 2009 (Cth), s 18B. 60
Fair Work (Registered Organisations) Act 2009 (Cth), s 6. 61 Fair Work Act 2009 (Cth), ss 13, 14.
23
identical to the FW(RO) Act, was upheld by the High Court in The
WorkChoices Case.62
45. Further, as a result of the referral of powers mentioned in paragraph 33
above, the definition of ‘national system employee’ also includes
employees employed by other entities in those referring States (eg sole
traders, partnerships), except (to varying degrees in each State) certain
public sector and local government employees.63
46. The consequence is that most employees in Australia are ‘federal
system employees’ for the purposes of the FW(RO) Act.
47. An organisation registered under the FW(RO) Act is a body corporate.
That is, it is a legal entity with separate legal personality. It has certain
rights, powers and liabilities e.g. the ability to own property, to sue and
be sued.64 Most, if not all, trade unions in Australia operating federally
are organisations registered under the FW(RO) Act (or one of its
predecessors), and are therefore subject to the provisions of the
FW(RO) Act.
48. The FW(RO) Act regulates organisations in a number of ways. In very
broad terms:
(a) chapter 2 concerns the registration and cancellation of
registration of organisations;
62 New South Wales v Commonwealth (2006) 229 CLR 1 at [309]-[327]. 63 Fair Work Act 2009 (Cth), ss 30C, 30D, 30H, 30M, 30N, 30S. 64
Fair Work (Registered Organisations) Act 2009 (Cth), s 27.
24
(b) chapter 3 deals with the amalgamation and withdrawal from
amalgamation of organisations;
(c) chapter 4 sets out provisions dealing with the ability of
organisations to represent particular persons;
(d) chapter 5 prescribes and regulates the rules of organisations;
(e) chapter 6 concerns membership of organisations;
(f) chapter 7 provides for democratic control of organisations
through elections;
(g) chapter 8 imposes a range of reporting and accounting
requirements on organisations; and
(h) chapter 9 regulates the conduct of officers and employees of
organisations and branches of organisations.
49. Under the FW(RO) Act, the regulation of organisations is overseen
principally by the General Manager of the Fair Work Commission.
The General Manager of the Fair Work Commission is a separate
statutory office. The holder is appointed by the Governor-General on
the nomination of the President of the Fair Work Commission for a
period not exceeding five years.65 The Fair Work Commission itself is
a body consisting of a President, two Vice Presidents, an unspecified
number of Deputy Presidents and Commissioners and six expert panel
65 Fair Work Act 2009 (Cth), ss 656, 660.
25
members.66 Fair Work Commission members are appointed by the
Governor-General, and hold office until aged 65.67
Rights of employee organisations under the Fair Work Act 2009 (Cth)
50. Apart from the benefit of separate legal personality conferred by the
FW(RO) Act, the FW Act confers a number of significant rights and
privileges on registered employee organisations.
Participation in enterprise bargaining
51. First, employee organisations are critical participants in the enterprise
bargaining system established by the FW Act.
52. In essence, the enterprise bargaining system requires employees
(through their bargaining representatives) and their employers to
bargain in good faith for terms and conditions of an enterprise
agreement. Any agreement that is ultimately made must result in the
employees to whom it is to apply being ‘better off overall’68 than the
relevant modern award that covers them (and which would apply to
them but for the existence of the enterprise agreement).69 Together
66 Fair Work Act 2009 (Cth), s 575(2). 67 Fair Work Act 2009 (Cth), s 629. Expert panel members hold office for a period specified in their instrument of appointment, and the period must not exceed five years: s 629(4). 68
Fair Work Act 2009 (Cth), s 186(2)(d). The Fair Work Commission may, in exceptional circumstances, approve an enterprise agreement where it does not pass the ‘better off overall test’ if the approval would not be contrary to the public interest: Fair Work Act 2009 (Cth), s 189. 69
See Fair Work Act 2009 (Cth), ss 47, 48, 52, 53 in relation to when a modern award and enterprise agreement cover and apply to an employer, their employees and a registered organisation.
26
with the National Employment Standards contained in the FW Act,
modern awards set the minimum safety net for employees’ terms and
conditions within the Commonwealth industrial relations system.
53. The decision to commence bargaining is usually consensual. But in
certain circumstances, such as where a majority of employees would
like to bargain with a reluctant employer and as a consequence the Fair
Work Commission makes a ‘majority support determination’,70 an
employer can be required to engage in bargaining and in so doing to
comply with good faith bargaining requirements, even where the
employer’s preference is that its employees’ terms and conditions be
covered by a modern award. However, the good faith bargaining
requirements do not require the making of concessions or the reaching
of agreement on the terms that are to be included in an enterprise
agreement.71
54. As will be apparent from the above summary, ‘good faith bargaining’
is critical to the content of enterprise agreements. Contrary to the
position under the previous ‘WorkChoices’ legislation, trade unions
have a distinct role in that process.
55. Pursuant to s 176 of the FW Act, an employee organisation is the
default bargaining representative for a proposed enterprise agreement
(that is not a ‘greenfields agreement’) if an employee to be covered by
70 Fair Work Act 2009 (Cth), s 237. 71 Fair Work Act 2009 (Cth), s 228(2). For the tortured results that arise from being compelled genuinely to negotiate but not being required to make concessions, see Endeavour Coal Pty Ltd v Association of Professional Engineers, Scientists and Managers, Australia (2012) 206 FCR 576 and APESMA v Peabody Energy Australia Coal Pty Ltd [2015] FWCFB 1451.
27
the proposed agreement is a member of the employee organisation and
the employee organisation is entitled to represent the employee’s
industrial interests in respect of the work to be covered by the
agreement.
56. An employee who is a union member may appoint someone other than
the union to be his or her representative, but so long as there is one
union member who has not appointed someone else, the union will be a
bargaining representative and will therefore play a role in determining
the content of an enterprise agreement.72 The union will also be
entitled to give written notice to the Fair Work Commission that it
wishes to be covered by the agreement. That coverage must be noted
by the Fair Work Commission in its decision to approve the
agreement.73
57. In addition, employers who wish to engage employees in a genuinely
new enterprise may bargain with an employee organisation for a
‘greenfields agreement’. Such an agreement may be made at any time
after bargaining commences between an employer and any employee
organisation that they agree to bargain with, and which is entitled to
represent the industrial interests of the employees who will be covered
by the agreement.74
72 Fair Work Act 2009 (Cth), s 176. 73 Fair Work Act 2009 (Cth), ss 183, 201. 74
Fair Work Act 2009 (Cth), ss 172(4), 182(3).
28
Right of entry powers
58. Secondly, union officials also have extremely broad ‘right of entry’
powers under the FW Act, the Work Health and Safety Act 2011 (Cth)
and State and Territory work health and safety laws.
59. Section 512 of the FW Act allows the Fair Work Commission, on the
application of an organisation, to issue an entry permit for an official of
the organisation if the Commission is satisfied that the official is a ‘fit
and proper person to hold the entry permit’. Although this provision is
not limited to the officials of employee organisations, so that in theory
the officials of employer organisations could be granted a right of entry
permit, the rights conferred on a permit holder in effect limit the
holders of permits to trade union officials.
60. Subject to certain conditions and limitations, an entry permit holder is
permitted to enter premises to investigate suspected contraventions of
the FW Act,75 to hold discussions with workers whose industrial
interests the permit holder’s organisation is entitled to represent76 and
to exercise powers conferred by State or Territory work health and
safety laws.77 Whilst on the premises, the permit holder may inspect
anything relevant to a suspected contravention of a modern award,
enterprise agreement, workplace determination or Fair Work
Commission order, and inspect and make copies of any record or
75 Fair Work Act 2009 (Cth), s 481. 76 Fair Work Act 2009 (Cth), s 484. 77
Fair Work Act 2009 (Cth), s 494.
29
document (other than a ‘non-member record’) on the premises that is
directly relevant to the suspected contravention.78
61. The Work Health and Safety Act 2011 (Cth) contains provisions which
are similar to the FW Act. It allows a union official who has
completed relevant safety training and who holds an entry permit under
the FW Act to apply for a Work Health and Safety Permit. In general
terms, that permit allows the holder to enter premises to inquire into
suspected contraventions of the Work Health and Safety Act 2011 (Cth)
and also to consult and advise workers on health and safety matters.
Similar rights of entry are provided under State and Territory work
health and safety laws.79
62. In effect, union officials who hold an entry permit are authorised to act
in a manner in some ways akin to police officers in relation to
industrial and work health and safety laws. However, in fact their
powers exceed those of the police in at least one respect: unlike police
officers they do not need a search warrant obtained from a court prior
to entering premises and examining documents stored there. In
addition, permit holders are not required to provide advance notice of
entry where it relates to inquiries into suspected contraventions of
work health and safety laws.
78 Fair Work Act 2009 (Cth), s 482. 79 Work Health and Safety Act 2011 (ACT); Work Health and Safety Act 2011 (NSW); Work Health and Safety (National Uniform Legislation) Act 2011 (NT); Work Health and Safety Act 2011 (Qld); Work Health and Safety Act 2012 (SA); Work Health and Safety Act 2012 (Tas); Occupational Health and Safety Act 2004 (Vic).
30
Rights in relation to awards
63. Thirdly, employee organisations have broad standing rights to apply to
the Fair Work Commission to vary, revoke or make a modern award,80
to commence proceedings in the Federal Court or Federal Circuit Court
seeking a civil remedy81 or to appear before the Fair Work
Commission on behalf of a member.82
General observations concerning possible reform of the Fair Work (Registered Organisations) Act 2009 (Cth)
64. It is apparent from the above summary that in considering possible
reforms to the FW(RO) Act two matters should be kept in mind.
65. First, for the most part the FW(RO) Act draws no distinction between
employer and employee organisations. Accordingly, any changes to
the FW(RO) Act must take this into account.
66. Secondly, not all organisations, whether employee organisations or
employer organisations, are the same size. Not all have the same level
of resources. Thus, whilst a change in the law may not impose much
of a regulatory burden on a large trade union such as the CFMEU or
the AWU, it may impose a much greater burden on a smaller employee
or employer association.
80 Fair Work Act 2009 (Cth), s 158. 81 Fair Work Act 2009 (Cth), ss 539-540. 82
Fair Work Act 2009 (Cth), s 596.
31
67. As at 3 December 2015, there are 109 registered organisations, of
which 47 are unions. The remaining 62 are employer organisations or
enterprise associations.83 However, registered trade unions are
considerably larger than registered employer organisations. Based on
the 2013 annual public returns provided to the Fair Work Commission,
there were just over 2 million members of registered trade unions,
compared with just under 100,000 members of registered employer
organisations. Further, almost half of the 47 registered trade unions
were larger in terms of members than the largest employer
organisation, the Master Builders Association of Victoria.
E - PRESENT STATE STATUTORY FRAMEWORK
68. Each State has legislation that regulates trade unions to varying
degrees. Although the legislation varies between States there are three
general patterns of regulation.
New South Wales, Queensland, South Australia and Western Australia
69. In these States, the equivalents of the Trade Union Act 1871 (UK) have
been repealed and there is no legislation that regulates trade unions as
such.84 Instead, as under the FW(RO) Act, provision is made for the
registration of industrial organisations or associations of employees
83 Based on information available at Fair Work Commission website, Registered Organisations http://www.fwc.gov.au/registered-organisations/find-registered-organisations accessed 3/12/15. 84
In New South Wales and South Australia, the provisions of the Trade Union Act 1871 (UK) that excluded trade unions from the restraint of trade doctrine have been re-enacted: Industrial Relations Act 1996 (NSW), ss 303-305; Fair Work Act 1994 (SA), s 137.
32
and employers.85 Registration confers separate legal personality on the
State-registered organisation. In terms of numbers:
(a) As at August 2014, there were 45 registered employee
organisations (unions) and 43 registered employer
associations in New South Wales.86
(b) As at 30 June 2015, there were 27 employee organisations
(unions) and 19 employer organisations registered in
Queensland.87
(c) As at 30 June 2015, there were 28 employee associations
(unions) and 11 registered employee associations registered
under South Australian legislation.88
(d) As at 30 June 2015, there were 43 employee industrial
organisations (unions) and 18 registered employer industrial
organisations registered in Western Australia.89
70. Certain privileges under State industrial relations legislation are
conferred on State-registered organisations of employees, for example,
85 Industrial Relations Act 1996 (NSW), Part 3 of Chapter 5; Industrial Relations Act 1999 (Qld), Chapter 12; Fair Work Act 1994 (SA), Chapter 4; Industrial Relations Act 1979 (WA), Division 4 of Part II. 86
New South Wales Government, Policy Submission, August 2014, pp 15-16. 87 Queensland Industrial Relations Commission, Annual Report 2014-2015, (September 2015), pp 19-20. 88
Industrial Relations Commission of South Australia, Annual Report 2014-2015, (September 2015), pp 27-32. 89
Western Australian Industrial Relations Commission, Annual Report 2014-2015, (September 2015), p 11.
33
right of entry powers, and rights to negotiate and enter collective or
enterprise agreements with respect to employees who are otherwise not
covered by the federal system.
71. State-registered organisations are also subject to regulation. The
precise regulation varies between States. In South Australia, regulation
is limited largely to certain matters concerning rules of an organisation
and the preparation of accounts.90 In New South Wales, Queensland
and Western Australia there is, to varying degrees, regulation similar to
that which exists under the FW(RO) Act and in general involves
regulation of the rules of organisations, the election and duties of
officers of those organisations and reporting and accounting
requirements.91
Tasmania
72. Tasmania has a hybrid model. The Trades Unions Act 1889 (Tas),
which is based on the Trade Union Act 1871 (UK), remains in force.
But it is largely obsolete. In 2015, only four trade unions are registered
under the Trades Unions Act 1889 (Tas).92 Trade unions that are
registered have at least some attributes of separate legal personality
and are subject to the regulation (albeit fairly limited) imposed by the
90 Fair Work Act 1994 (SA), ss 124-125, 128. 91 Industrial Relations Act 1996 (NSW), Part 4 of Chapter 5; Industrial Relations Act 1999 (Qld), Parts 3-12A of Chapter 12; Industrial Relations Act 1979 (WA), ss 62, 69-70, 74-80. 92
Letter from the Solicitor-General of Tasmania to the Solicitor Assisting the Commission dated 14 May 2015. The Act has never been highly utilised. Smith and Rawson report that at the end of 1981, there were 18 unions registered under the Trades Unions Act 1889, most of which were very small: D W Smith and D W Rawson, Trade Union Law in Australia (2nd ed, Butterworths, 1985), p 48.
34
Trades Unions Act 1889 (Tas). Trade unions which are not registered
remain as unincorporated associations (unless they are incorporated
under some other legislation) and are not subject to any specific
regulation.
73. However, in addition, Part V of the Industrial Relations Act 1984 (Tas)
provides for the registration of employee or employer associations as
‘organisations’.93 Unlike the legislation in New South Wales,
Queensland, South Australia and Western Australia, registration does
not confer separate legal personality on a registered organisation.
However, it does confer a number of benefits on the organisation under
the Tasmanian industrial relations system. These benefits include the
right to appear before the Tasmanian Industrial Relations Commission,
the right to enter into industrial and enterprise agreements and the right
of its officers to enter premises. Registered organisations must comply
with certain minor requirements in relation to rule changes and
amalgamations but regulation does not otherwise affect them.
Victoria
74. Prior to 1996, Victoria also adopted the hybrid model currently
adopted in Tasmania. The Trade Unions Act 1958 (Vic), based on the
Trade Union Act 1871 (UK), regulated trade unions directly, and
Part 12 of the Employee Relations Act 1992 (Vic) provided for the
93 As at 3 December 2015, there were 29 employee associations (i.e. unions) and 25 employer associations formally registered under the Industrial Relations Act 1984 (Tas): a list of registered organisations is available on the Tasmanian Industrial Relations Commission website, http://www.tic.tas.gov.au/registered_organisations/employee_orgs, and http://www.tic.tas.gov.au/registered_organisations/employer_organisations, accessed 3/12/15.
35
recognition of employee and employer associations with consequent
benefits for the purposes of the then Victorian industrial relations
system. However, in 1996 Victoria referred most of its powers
concerning industrial relations to the Commonwealth and Part 12 of
the Employee Relations Act 1992 (Vic) was repealed.94 Consequently,
the only current Victorian legislation regulating trade unions is the
Trade Unions Act 1958 (Vic). As is the case in Tasmania, few trade
unions are registered under that Act.95
F - ROLES OF TRADE UNIONS IN AUSTRALIA
75. As noted in paragraph 15 above, any consideration of law reform in
relation to union governance must have regard to the roles and
significance of unions in contemporary Australia.
Role in assisting members and improving society
76. There can be little doubt that during the course of the 20th century,
trade unions in Australia helped improve the working conditions not
only of their members, but of workers more generally. The ACTU,
formed in 1927 as a ‘peak body’ for Australian trade unions, was
involved along with individual unions and their members in numerous
successful campaigns for better conditions including equal pay for
94 Commonwealth Powers (Industrial Relations) Act 1996 (Vic). 95 As at November 1995, there were 25 organisations registered under the Act: see Victorian Government Printer, Scrutiny of Acts and Regulations Committee Redundant and Unclear Legislation, Review of Trade Unions Act 1958, November 1995, pp 5-6. The Committee reviewing the Act recommended that it be repealed, but the recommendation was not implemented. Nevertheless, the Act is still little utilised. Information provided to the Commission by the Victorian Government indicated that as at May 2015 there were only 26 organisations registered under the Act.
36
women, increases in the minimum wage, long service leave and
occupational health and safety laws.
77. These improvements in broader social conditions were largely
achieved at a time of high trade union membership. As noted in
paragraph 36 above, the proportion of trade union membership in
Australia has consistently fallen over the last three decades from 46%
in 1986 to only 15% in 2014.96 Notwithstanding declining
membership, modern trade unions continue to provide a number of
valuable benefits to their members. They seek better, safer and fairer
working conditions for their members. They help to recover wages
and other entitlements when employers have failed to pay them. They
can investigate and help remedy safety issues in the workplace. They
can assist members in litigation, and fund it. They can provide pastoral
care and more general assistance to members.
78. The officials in charge of unions thus play an important role in the
lives of their members. They occupy a position of considerable trust.
They are in charge of substantial sums of money which is not their
own.
Commercial role
79. Despite the humble beginnings of the trade union movement, it is clear
that many modern trade unions are large and complicated commercial
96 Australian Bureau of Statistics, August 2014, Characteristics of Employment, Australia (ABS Catalogue No. 6333.0), data cube 16 (table 16.1), released 27/10/15.
37
enterprises.97 Evidence given before the Commission has shown that
large unions, such as those named in the Commission’s Terms of
Reference, receive significant revenue from commercial agreements
concerning insurance schemes, redundancy funds and training funds.
They operate complex commercial structures. They have large
numbers of staff. They operate across multiple jurisdictions. The
funds which certain unions have established, and which they and their
officials administer, are even more complex in structure: incorporated
associations, unincorporated associations, trusts and various corporate
entities.
80. Even if a trade union carries on commercial activities, it is exempt
from income tax, provided the trade union incurs its expenditure and
pursues its objectives principally in Australia, complies with all of the
substantive requirements of its governing rules and applies its income
and assets solely for the purposes for which the trade union was
established.98 Under ordinary principles of taxation law, funds
contributed by members of a not-for-profit association to the
association for the common benefit of the members (for example,
membership and subscription fees, donations by members) do not
97 See eg, R R S Tracey, ‘The Legal Approach to Democratic Control of Trade Unions’ (1985) 15 MULR 177 at 179; M Christie, ‘Legal Duties and Liabilities of Federal Union Officials’ (1986) 15 MULR 591 at 592; A Forsyth, ‘Trade Union Regulation and the Accountability of Union Office-Holders: Examining the Corporate Model’ (2000) 13 AJLL 1 at 12-13. 98
Income Tax Assessment Act 1997 (Cth), s 50-15. Similar exemptions apply in respect of employee and employer associations registered under the Fair Work (Registered Organisations) Act 2009 (Cth). The other main classes of entity which have tax exempt status are registered charities, education and health institutions, and sporting and cultural associations.
38
constitute income of the association.99 However, unless the association
has tax exempt status, income received from external sources (for
example, grants, sponsorships, third party commissions) is treated as
assessable income and subject to tax.
81. The tax exempt status which is afforded to trade unions has the
consequence that the substantial revenues which modern trade unions
generate from sources other than their members are not subject to tax.
The privilege of tax exempt status afforded to trade unions is one
justification for the interest of the Commonwealth in proper union
governance and financial accountability.
Statutory role in industrial relations system
82. The statutory role of trade unions in the State and Commonwealth
industrial relations systems has already been discussed: see paras 50-63, 70 and 73 above. In short, registered trade unions and their
officials occupy a privileged position in Australia’s industrial relations
systems. As has already been noted, the right of entry powers
conferred on trade union officials are extremely broad, exceeding those
of the police in some respects. The granting of the various statutory
privileges justifies proper legislative measures to safeguard the
interests of those affected by those privileges and the general public
interest.
99 This is so-called ‘mutuality principle’. In essence it is based on the idea that an organisation cannot derive income from itself.
39
Political role
83. The final contextual aspect that must be borne in mind is the political
power and influence exercised by the officials of trade unions. The
deep historical ties between the trade union movement and the
Australian Labor Party (ALP) are well-known, the latter emanating
from the former at the turn of the twentieth century. Those
institutional ties remain strong today. Union affiliation fees and union
donations are a core part of ALP funds. Union loans can be another
source of help. A person who is eligible to join a union must be a
financial member of a union if he or she wishes to become a member
of the ALP.
84. Apart from these general institutional ties, union officials play an
important role in the selection of ALP representatives for State and
Federal Parliament. Through the various rules of the ALP, the
Secretaries of large affiliated trade unions exercise substantial voting
power at ALP State Conferences, and have a very significant role in
determining the composition of the Australian Senate100 and State and
Federal Parliaments more generally.
85. Why is this relevant to union governance? It is relevant because, given
the substantial political power that is capable of being exercised by
trade union officials, there is a heightened public interest in
maintaining safeguards against any form of corruption by trade union
officials and those employers with whom they deal.
100 See Royal Commission into Trade Union Governance and Corruption, Discussion Paper - Options for Law Reform, 19/5/15, pp 19-20.
40
CHAPTER 2
REGULATION OF UNIONS
Subject Paragraph
A - INTRODUCTION 1
B - DUAL STATE AND COMMONWEALTH
REGULATION
7
C - REGISTERED ORGANISATIONS REGULATOR 23
The current registered organisation regulator: General Manager of
the Fair Work Commission
24
An independent standalone registered organisations regulator 28
Resources of the registered organisations regulator 49
Powers of the registered organisations regulator 50
D - FINANCIAL ACCOUNTABIILITY 62
Training of officers and employees 63
Requirements to have financial policies 73
41
Subject Paragraph
Financial disclosure requirements by organisations and branches 81
Internal compliance and audit 102
External auditing 110
E - RECORD-KEEPING REQUIREMENTS 132
Minutes of committee of management meetings 132
Financial records 145
F - WHISTLEBLOWERS 146
Background 146
Existing protected disclosure regime 153
Persons who can make a protected disclosure 159
Persons entitled to receive a protected disclosure 164
Remedies for adverse action 175
G - USE OF UNION FUNDS 180
Use of union funds in union election campaigns 181
Use of union funds as political donations or for political
expenditure
186
H - CONDUCT OF UNION ELECTIONS 193
42
Subject
APPEND
INTR A -
1.
2.
DIX A
RODUCTIO
This Chapte
unions gener
A number o
identified or
management
studies consi
(a) mis
and
(b) fail
the
(c) fail
fina
(d) a la
mis
(e) the
det
ON
er concerns
rally.
of the case
r exposed ser
t of a numb
idered disclo
sappropriatio
d/or employe
lures by com
activities of
lures by com
ances, either
ack of interna
sappropriatio
failure of
ect the misap
law reform
studies cons
rious failures
er of unions
osed:
on of union
es;
mmittees of
f union secret
mmittees of
properly or a
al accounting
on of union fu
external acc
ppropriation
in relation
sidered by th
s in the gov
s. Among o
funds by s
management
taries;
managemen
at all;
g and audit p
unds or other
counting and
of funds;
Pa
to the regu
he Commiss
ernance and
other things,
senior union
t properly to
nt to scrutini
processes to d
r irregularitie
d audit proc
aragraph
ulation of
sion have
financial
the case
n officials
o oversee
ise union
detect the
es;
cesses to
43
(f) a lack of, or unawareness about, union policies dealing with
financial matters;
(g) misuse of credit cards by union officials;
(h) bullying, intimidation and victimisation of those opposed to
the interests of the union Secretary; and
(i) failures in record-keeping.
3. More generally, a number of the case studies revealed an unhealthy
culture within many unions whereby a longstanding union Secretary,
often with an extremely autocratic leadership style, develops a cult of
personality and the committee of management becomes little more than
a rubber stamp. In the Health Services Union (HSU) and the National
Union of Workers (NUW), New South Wales Branch this culture
developed to such a point that those in charge of the union treated the
union’s money as if it were their own.
4. The remainder of the Chapter is concerned with broad scale reforms to
union governance and regulation to seek to address these issues. More
specific reforms concerning the duties of union officials are considered
in Chapter 3 of this Volume.
5. The remainder of the Chapter is divided into seven parts.
(a) Part B examines the desirability and practicality of uniform
laws throughout Australia governing the registration, de-
44
registration and regulation of registered employee and
employer organisations: see paragraphs 7-22.
(b) Part C asks which body, or bodies, should be responsible for
regulating organisations registered under the Fair Work
(Registered Organisations) Act 2009 (Cth) (FW(RO) Act)
and what investigatory and enforcement power that body, or
those bodies, should have: see paragraphs 23-61.
(c) Part D concerns a range of measures to improve the financial
accountability of registered organisations: see paragraphs 62-131.
(d) Part E deals with record-keeping: see paragraphs 132-145.
(e) Part F examines measures to improve the protections for
whistleblowers: see paragraphs 146-179.
(f) Part G considers the use of union funds, in particular for
purposes associated with promoting a cause or causes of a
union Secretary: see paragraphs 180-192.
(g) Part H deals briefly with the conduct of union elections: see
paragraphs 193-200.
6. The Commission received a range of submissions in relation to these
issues in response to the Issues Papers, the Discussion Paper and more
45
DUA B -
7.
8.
9.
1 A list of
Report. 2 See Wil Employme
generally.1
submissions
of brevity, no
AL STATE A
One overarc
existence of
As discussed
Victoria has
employees o
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The problem
multiple reg
NUW, New
(a) The
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The balance
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South Wales
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anch). It has
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MONWEAL
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providing for
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03 CLR 30; R Relations (Qld)
apter refers t
ing the issue
ived is referr
LTH REGUL
the regulatio
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this Volume,
r the registrat
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osed on reg
ween jurisdict
are created
illustrated by
on registered
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oses of the F
legal existen
W, New So
organisation
in Appendix 3
Re McJannet; (1995) 184 CL
to a number
es raised. Fo
red to.
LATION
on of union
egulatory reg
each State o
tion of assoc
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gistered orga
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by the exi
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les branch w
W(RO) Act
nce.2
outh Wales B
n under the I
3 to this Volu
Ex parte M
LR 620.
r of these
or reasons
ns is the
gimes.
other than
ciations of
n of those
anisations
stence of
ion of the
FW(RO)
which is a
(Federal
Branch is
Industrial
ume of the
Minister for
46
Relations Act 1996 (NSW) (State-registered branch). This
is a separate legal entity which is a body corporate,
incorporated by the law of New South Wales.
(c) The State-registered branch and the Federal branch have
substantially the same members and the same officers. The
two branches, and their officers, are subject both to regulation
under the FW(RO) Act and the Industrial Relations Act 1996
(NSW). All funds are held for the benefit of the State-registered branch and the Federal branch jointly.
(d) However, there are separate State and Federal rules of the
branch, which differ in important respects. There are also
different requirements under the FW(RO) Act and the
Industrial Relations Act 1996 (NSW) as to the content of the
rules. Section 154D of the FW(RO) Act currently requires
the rules of a federally-registered organisation or a branch of
that organisation to have certain rules concerning financial
training. There is no such requirement in the Industrial
Relations Act 1996 (NSW).
(e) Further, there are different duties imposed on officers under
the FW(RO) Act and the Industrial Relations Act 1996
(NSW).
47
10. These complex arrangements, stemming from the existence of dual
State and Commonwealth regulation, are far from unique to the NUW,
New South Wales Branch. In fact, they are extremely common.3
11. The potential for overlapping and conflicting State and Commonwealth
laws is not new. The problems were identified in 1969 in Moore v
Doyle.4 In 1974, the Sweeney Report sought to address some of the
issues.5 But the problems remain. In New South Wales and South
Australia, the potential for overlapping regulation in relation to newly
registered organisations is reduced by the relevant legislation drawing
a distinction between, on the one hand, State-registered organisations
that are organisations or branches of organisations registered under the
FW(RO) Act (which are not generally subject to State regulation) and,
on the other hand, those that are not registered under the FW(RO) Act
(which are subject to State regulation).6
12. It is possible that some of the problems will decline over time. There
has been a shift to a largely national industrial relations system. But
transitional arrangements were put in place to ensure that State-registered organisations that previously represented employees within
the State industrial relations systems could continue to do so in the new
Federal industrial relations system. Currently, a number of State-registered organisations are ‘transitionally recognised associations’.7
3 See Schedule 1A to the Fair Work (Registered Organisations) Regulations 2009 (Cth) for a list of State-registered organisations with federally-registered counterparts. 4
(1969) 15 FLR 59. 5 Committee of Inquiry on Co-ordinated Industrial Organisations, Report (1974). 6
See Industrial Relations Act 1996 (NSW), Parts 4 and 5 of Ch 5; Fair Work Act 1994 (SA), Parts 2 and 3 of Ch 4. Contrast the position in Queensland and Western Australia. 7 See Fair Work (Registered Organisations) Act 2009 (Cth), Sch 1.
48
The consequence of being a ‘transitionally recognised association’ is
that the State-registered organisation is regarded as a Federal
organisation for the purposes of the FW Act.8 Thus, it is able to
continue to represent its members in the Federal industrial relations
system. Transitional recognition expires on 1 January 2017, although
it can be extended by up to two years in certain circumstances.9 State-registered organisations can apply for permanent recognition as a
‘recognised State-registered association’ but only if they do not have a
‘federal counterpart’.10 The overall result is that after 1 January 2019
many State-registered organisations with a federal counterpart will
have a considerably reduced role in representing the industrial interests
of members.11 Consequently some State-registered organisations may
cease to exist.
13. However, it is not clear that this will occur. And there will remain
State-registered unions with coverage of public sector employees that
remain covered by State industrial laws.
14. The Commission received a number of submissions about whether it
was desirable and practicable to have a single set of rules in relation to
the registration, deregistration and regulation of registered
organisations throughout Australia.12 The Discussion Paper raised two
8
Fair Work (Registered Organisations) Act 2009 (Cth), Sch 1, cl 3. 9 Fair Work (Registered Organisations) Act 2009 (Cth), Sch 1, cl 6; Fair Work (Registered Organisations) Declaration 2010. 10
Fair Work (Registered Organisations) Act 2009 (Cth), Sch 2. 11 See generally the discussion in B Creighton and A Stewart, Labour Law (Federation Press, 5th ed, 2010), pp 679-680. 12
Australian Chamber of Commerce and Industry Law Reform Submissions, August 2015, pp 9-10; Associate Professor Louise Floyd Law Reform Submissions, 21/8/15, p 1 referring to L Floyd, ‘The Fair Work Act’s forgotten issues’ (2010) 33 ABR 1; Institute of Public
49
ways this could occur: by the States adopting uniform laws or by the
States referring their powers to the Commonwealth. The third way -
that the Commonwealth could unilaterally enact legislation ‘covering
the field’ - is not possible given the current constitutional basis of the
FW Act and the FW(RO) Act.
15. Apart from the submission received by the Employment Law
Committee of the Law Society of New South Wales the submissions
received were largely in favour of harmonisation of the various
existing regimes.
16. The Committee did not support uniformity on the ground that in its
perception there were insufficient benefits to be achieved.13 It argued
that any attempt to establish uniform laws would not be easy. Further,
the introduction of uniform provisions would mean that New South
Wales registered organisations operating only in the State or without a
counterpart Federal body would be exposed to more regulation in their
internal affairs. Yet, the argument ran, there is no evidence that the
regulatory regime applicable to them under the State legislation is
seriously deficient. The Committee also argued that it was undesirable
and unlikely that State governments would refer their powers over the
regulation of State registered industrial organisations to the
Commonwealth. It submitted that any referral of powers would be
Affairs Law Reform Submissions, pp 11-12; Housing Industry Association Pty Ltd Law Reform Submissions, 21/8/15, p 7; Master Builders Australia Law Reform Submissions, 21/8/15, p 5; Law Society of New South Wales, Employment Law Committee Law Reform Submissions, 21/8/15, pp 1-4. 13
Law Society of New South Wales, Employment Law Committee Law Reform Submissions, 21/8/15, pp 1-4.
50
likely to create additional complexity for the administration of
registration, deregistration and regulation.
17. If past practice is a guide, it may be accepted that it is unlikely that the
States would refer their powers concerning the regulation of employer
and employee associations to the Commonwealth. Although in 2009,
New South Wales, Queensland, South Australia, Tasmania and
Victoria each referred a broad range of legislative powers to the
Commonwealth, regulation of employer and employee associations
was explicitly excluded from the reference.14 And this was at a time
when all of those States and the Commonwealth had Labor
governments.
18. Further, given the continued existence of State-based industrial
relations systems, there will be a continued need for organisations to be
recognised under State-based industrial relations systems.
19. However, it is difficult to accept the proposition that a single set of
rules governing registration, deregistration and regulation of employee
and employer organisations could lead to additional complexity. To
the contrary, this would simplify the very complex existing legislative
frameworks. In terms of cost and efficiency, the referral of powers to
the Commonwealth would have the very significant advantage that
there would be a single statutory regulator with supervision of
registered organisations throughout Australia rather than the
14
Industrial Relations (Commonwealth Powers) Act 2009 (NSW), s 3(1) (para (m) of definition of ‘excluded subject matter’); Fair Work (Commonwealth Powers) and Other Provisions Act 2009 (Qld), s 3(1) (same); Fair Work (Commonwealth Powers) Act 2009 (SA), s 3(1) (same); Industrial Relations (Commonwealth Powers) Act 2009 (Tas), s 3(1) (same); Fair Work (Commonwealth Powers) Act 2009 (Vic), s 3(1) (para (m) of the definition of ‘State subject matters’).
51
multiplicity of current regulatory authorities. Uniform laws would
have other obvious advantages including certainty of regulation and a
reduced burden of regulation on dual registered organisations.
20. Whilst accepting the practical difficulties of implementing any uniform
scheme of regulation within Australia, it is considered that the potential
benefits justify the States and Commonwealth giving consideration to
implementing a national regime in relation to the registration,
deregistration and regulation of industrial organisations of employees
and employers.
Recommendation 1
Commonwealth and State governments give consideration to adopting a national
approach to the registration, deregistration and regulation of employee and
employer organisations, with a single regulator overseeing all such organisations
throughout Australia.
21. The balance of this Volume of the Report focuses on the governance
and regulation of organisations registered under the FW(RO) Act. The
reasons for this approach were explained in the Discussion Paper.
First, the Terms of Reference identify, non-exhaustively, five specific
unions for consideration, each of which is an organisation registered
under the FW(RO) Act. It is therefore sensible to focus on that Act.
Secondly, it is unmanageable to deal with the law in every jurisdiction.
This Report is already long and dealing with each jurisdiction
separately would make it even longer. Thirdly, the FW(RO) Act has
the greatest coverage of members. Fourthly, apart from perhaps the
52
I
22.
Recomm
State gov
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53
The current registered organisations regulator: General Manager of the Fair Work Commission
24. Currently, the regulation of organisations under the FW(RO) Act is
entrusted, albeit not completely, to the General Manager of the Fair
Work Commission (the General Manager).
25. The General Manager’s primary function is to assist the President of
the Fair Work Commission in ensuring that the Fair Work Commission
performs its functions and exercises its powers.15 The Fair Work
Commission’s functions and powers are primarily adjudicative and
concern substantive industrial relations matters. These include, for
example, resolving unfair dismissal claims, settling industrial disputes,
conducting reviews of modern awards and approving enterprise
agreements. The General Manager is subject to the direction of the
President, both generally and in relation to particular matters.16 The
President may delegate this power to a Vice President or a Deputy
President.17
26. In addition to this role, the General Manager has statutory functions
under the FW(RO) Act in relation to the regulation of registered
organisations. The General Manager’s regulatory functions are
separate from the adjudicative functions of the Fair Work Commission.
15 Fair Work Act 2009 (Cth), s 657(1). 16 Fair Work Act 2009 (Cth), s 582(2). The General Manager is not required to comply with a direction by the President that is inconsistent with the General Manager’s performance of functions or exercise of powers under the Public Governance, Performance and Accountability Act 2013 (Cth) or the Public Service Act 1999 (Cth) in relation to the Fair Work Commission: s 658. 17
Fair Work Act 2009 (Cth), s 584(1).
54
However, the General Manager remains subject to a direction of the
President, either generally or in relation to a specific matter.
27. Although the vast bulk of the regulation of organisations is entrusted to
the General Manager, the Fair Work Commission proper has a role in
registering18 and deregistering19 organisations, in relation to the
amalgamation of organisations,20 and in relation to changes to certain
aspects of the rules of organisations.21
An independent standalone registered organisations regulator
28. Since 2013, the current Federal government has attempted to introduce
legislation providing for the creation of a separate ‘Registered
Organisations Commission’ and transferring most of the General
Manager’s current regulatory functions concerning registered
organisations to the Registered Organisations Commission.22 Three
attempts have been made. Each has failed. The most recent attempt to
create a Registered Organisations Commission was the Fair Work
(Registered Organisations) Amendment Bill 2014 [No 2] (Cth), which
was defeated in the Senate on 17 August 2015.
18 Fair Work (Registered Organisations) Act 2009 (Cth), s 20 19 Fair Work (Registered Organisations) Act 2009 (Cth), s 30. 20
Fair Work (Registered Organisations) Act 2009 (Cth), s 53. 21 Fair Work (Registered Organisations) Act 2009 (Cth), ss 157, 158. 22
Fair Work (Registered Organisations) Amendment Bill 2013 (Cth), Fair Work (Registered Organisations) Amendment Bill 2014 (Cth) and the Fair Work (Registered Organisations) Amendment Bill 2014 [No 2] (Cth).
55
29. The Discussion Paper invited submissions about whether there should
be a single statutory regulator of organisations, separate and
independent from the Fair Work Commission, and if so, who that
regulator should be.
30. Most of the submissions received on this issue were in favour of a
statutory regulator separate from the Fair Work Commission.23 For
example, the Institute of Public Affairs submitted:24
…in order to ensure that the lines of responsibility and accountability are clear, and to improve standards and behaviour, all functions to do with the registration, administration, compliance and deregistration of registered organisations should be transferred to a single, stand-alone authority.
31. The case against was put by the Shop Distributive and Allied
Employees’ Association (SDA) who submitted that to remove the
regulatory function from the Fair Work Commission would:25
…be to weaken the authority of the FWC and diminish the necessary trust and confidence between the FWC and organisations of employers and employees under the federal system.
32. In its submission to an inquiry by the Senate Education and
Employment References Committee in relation to the Fair Work
23 Associations Forum Pty Ltd Law Reform Submissions, 4/9/15, p 2; Master Builders Australia Law Reform Submissions, 21/8/15, p 8; Australian Industry Group Law Reform Submissions, 21/8/15, p 4; Australian Chamber of Commerce and Industry Law Reform Submissions, August 2015, p 11; Boral Law Reform Submissions, 2015 (received 27/8/15), p 9; Associate Professor Louise Floyd Law Reform Submissions, 21/8/15, p 2; Institute of Public Affairs Law Reform Submissions, August 2015, p 11. 24
Institute of Public Affairs Law Reform Submissions, August 2015, p 11. 25 Shop, Distributive & Allied Employees Association Law Reform Submissions, 27/8/15, para 24.
56
(Registered Organisations) Amendment Bill 2014 [No 2] (Cth) the
Australian Council of Trade Unions (ACTU) submitted that:26
There is absolutely no basis for suggesting that there is any institutional limitation inherent in the present regulatory structures. The General Manager, as the investigative authority, is functionally distinct from the remainder of the Fair Work Commission. Neither the fact that the General Manager’s appointment is made by government on the nomination of the President of the Commission, nor the fact that the General Manager has administrative as well as investigative functions, is remarkable or objectionable. For example, similar provisions apply to the appointment and role of the CEO of the Australian Crime Commission. A bare assertion that the formal institutional arrangements impacted [sic] the efficacy of the HSU investigations is insufficient to justify the evisceration of the General Managers [sic] regulatory powers and, moreover, is simply incorrect.
33. There are in fact several strong arguments in favour of establishing an
independent regulator separate from the Fair Work Commission.
34. First, there are no apparent reasons why the General Manager of the
Fair Work Commission, which is an adjudicative body, should also
have the responsibility of regulating registered organisations and
investigating breaches of the FW(RO) Act. Contrary to the SDA’s
submission, it is not apparent how removing the regulatory functions
from the General Manager would in any way weaken the authority of
the Fair Work Commission or diminish ‘trust and confidence’ between
the Fair Work Commission and organisations of employers and
employees. Contrary to the ACTU’s submission, the General Manager
is not analogous to the Chief Executive Officer of the Australian Crime
Commission. The Chief Executive Officer is the head of a single
26 Australian Council of Trade Unions, Submission to the Senate Education and Employment Legislation Committee into the Fair Work (Registered Organisations) Amendment Bill 2014 [No 2] (Cth), 30/6/15, p 18.
57
regulator with a single focus. The General Manager’s administrative
and regulatory tasks have no real connection.
35. Secondly, the current regulatory regime is apt to confuse the public
about the role of the Fair Work Commission, which is essentially
adjudicative. The review of the FW Act in 2012 noted that it would be
appropriate to consider changes to the law to make clear the difference
between the functions of the Fair Work Commission (then Fair Work
Australia) ‘as a tribunal and as an administrator overseeing registered
organisations’.27
36. Thirdly, the fact that the General Manager has a range of other
important tasks in relation to the Fair Work Commission has the
potential for the regulation of organisations, and for investigations and
inquiries, to be given a lower priority. This is evidenced by the fact
that, prior to the series of well-publicised incidents involving the HSU,
Fair Work Australia (as the Fair Work Commission was then called)
gave little attention and devoted little resources to enforcing regulatory
compliance.28 Although the General Manager now has a separate
Regulatory Compliance Branch, this is only one of four branches of the
General Manager.
37. Fourthly, conducting inquiries and investigations into possible
contraventions of the law is time and resource intensive. To meet
criteria of transparency and accountability, it is better to have a
27 Department of Education, Employment and Workplace Relations, Towards more productive and equitable work places: an evaluation of the Fair Work legislation (2012), p 250. 28
See KPMG, Process Review of Fair Work Australia’s investigations into the Health Services Union (2012), pp 3, 27.
58
separate entity, with a separate budgetary allocation, to conduct that
work rather than for a general budgetary allocation to be made to the
Fair Work Commission which allocation must also cover the core
adjudicative functions of the Commission.
38. Fifthly, enforcing the FW(RO) Act requires expertise in relation to
registered organisations. It is therefore sensible to have staff who are
dedicated to dealing with issues concerning registered organisations.
39. Sixthly, appointments to the Fair Work Commission regularly give rise
to claims of bias by both sides of politics. Appointees are regularly
described as ‘union friendly’ or ‘employer friendly’. Whether those
claims have substance or not, a regulator that is not regarded as
impartial risks losing legitimacy and public confidence. The current
position whereby the President may give the General Manager a
direction, including a direction in relation to a particular case, is
accordingly not appropriate. The regulator should be free of the
suggestion of political bias.
40. A good argument against the creation of a separate Registered
Organisations Commission, as proposed in the Fair Work (Registered
Organisations) Amendment Bill 2014 [No 2] (Cth), is that a number of
regulatory functions concerning registered organisations would remain
the responsibility of the Fair Work Commission, including the
registration, deregistration and amalgamation of organisations. The
59
ACTU submitted, in respect of an earlier iteration of the Bill, that it
was:29
unconvinced that there is any necessity to establish a new statutory office to regulate Registered Organisations […] it seems counter intuitive to split the existing functions of a regulator in two and re-allocate staff across different agencies to achieve reform in this area.
41. Several readily apparent difficulties can arise out of a dual regulatory
model including inefficiency, duplication and information sharing
problems.
42. However, this problem could be resolved by transferring all regulatory
functions to a single stand-alone authority. That is the case in respect
of companies registered under the Corporations Act 2001 (Cth). They
are regulated by the Australian Securities and Investments Commission
(ASIC). The relevant functions currently reposed in the Fair Work
Commission proper, such as the registration of organisations, are
largely administrative in nature. To the extent that the Commission’s
functions may be considered judicial they should be reposed in a
Chapter III court, such as the Federal Court or the Federal Circuit
Court.
43. In relation to whether a separate regulator should be established, or
whether ASIC or some other existing body should be appointed as the
relevant regulator, a number of possibilities were canvassed in the
submissions:
29 Australian Council of Trade Unions, Submissions to the Senate Standing Legislation Committee on Education and Employment on the Fair Work (Registered Organisations) Amendment Bill 2013 (Cth), 22/11/13, p 10.
60
(a) The Institute of Public Affairs submitted that a separate
regulator should be established ‘along the lines of the
Australian Securities and Investment Commission’.30
(b) The Associations Forum Pty Ltd submitted that the regulator
for registered organisations should be the Australian Charities
and Not-for-Profits Commission, on the basis that:31
[t]he [Australian Charities and Not-for-Profits Commission] looks after tax-exempt mutual[s], and ROs are mutuals that currently pay no tax. Further, [the Australian Charities and Not-for-Profits Commission] has been recently set up with modern systems for good governance and compliance.
(c) Boral supported the proposal under the most recent bill for the
Registered Organisations Commission being appointed as the
separate statutory regulator. But Boral submitted that it
should operate within the existing Office of the Fair Work
Ombudsman.32
(d) Master Builders Australia supported the establishment of an
independent Registered Organisations Commission to be
headed by a Registered Organisations Commissioner.33
(e) Associate Professor Floyd did not support ASIC being
appointed the regulator but submitted that ‘Australia should
30 Institute of Public Affairs Law Reform Submissions, August 2015, p 11. 31 Associations Forum Pty Ltd Law Reform Submissions, 4/9/15, p 2. 32
Boral Law Reform Submissions, 2015 (received 27/8/15), p 10. 33 Master Builders Australia Law Reform Submissions, 21/8/15, p 7.
61
adopt a new, separate and independent regulator for the
regulation of trade unions’.34
44. It is not recommended that regulatory functions concerning registered
organisations be transferred to ASIC. Transferring the regulatory
functions to an existing regulator would defeat many of the main
advantages (for example, transparency and accountability of funds,
efficiency, expertise) achieved by removing the functions from the
General Manager. Further, ASIC already has a range of
responsibilities in relation to the regulation of corporations and
concerning financial services. Transferring regulatory functions in
respect of registered organisations to ASIC risks a lack of focus on
ASIC’s core responsibilities as well as a lack of focus in relation to the
regulation of registered organisations.
45. Nor it is recommended that ASIC be given partial responsibility for
regulating registered organisations. This is for the reasons identified in
the previous paragraph, as well as the practical and administrative
difficulties that are likely to arise from having two regulators.
46. For example, a number of problems would be likely to arise if ASIC
were given the power to investigate ‘serious contraventions’ of the
FW(RO) Act, but the General Manager retained the role, and its
current powers, to investigate other contraventions.35 In many
investigations, the seriousness of an allegation is not apparent until the
investigation has already commenced. Also, an allegation may seem
34 Associate Professor Louise Floyd Law Reform Submissions, 21/8/15, p 2. 35 This is the regulatory model currently proposed by the Australian Labor Party: ‘Fact Sheet: Better Union Governance’, released 7/12/15, p 1.
62
innocuous in isolation but in conjunction with other allegations or a
course of conduct, its seriousness may take on a different complexion.
In particular, an action or course of conduct which is carried out on a
systemic basis may be serious, even if a single instance of such
conduct is not.
47. Yet on the proposed model, ASIC would have no power to commence
an investigation unless it determined it was serious. Thus, there is a
potential for a waste of time and expertise involved in the transfer of
investigations from the General Manager to ASIC. At present, ASIC
staff does not necessarily have experience concerning the affairs of
registered organisations. The proposed model would be likely to
duplicate qualified personnel at both regulators. Moreover, ASIC has
very limited visibility into the affairs of registered organisations.
Although the General Manager should share information with ASIC, to
avoid ASIC staff duplicating the work of the staff of the General
Manager, in practice, ASIC’s investigation power is likely to be
limited to cases where a matter has been referred to ASIC by the
General Manager. In addition, confining ASIC’s power to cases of
‘serious contraventions’ invites legal arguments to be made that ASIC
did not have the power to conduct an investigation, because the
investigation did not concern a ‘serious contravention’ of the FW(RO)
Act. Another difficulty is that, as discussed below, there is currently a
very broad ‘derivative use’ immunity that applies to materials obtained
in any investigation by the General Manager. If that ‘derivative use’
immunity were retained, it would severely prejudice ASIC’s ability to
bring civil or criminal proceedings following an investigation by the
General Manager.
63
Recommendation 3
All regulatory functions of the General Manager and the Fair Work Commission
insofar as they apply to registered organisations under the Fair Work
(Registered Organisations) Act 2009 (Cth) be transferred to a new Registered
Organisations Commission. The Registered Organisations Commission should
be an independent stand-alone regulator. The structure of the Australian
Securities and Investments Commission may provide a useful legislative model.
48. Subsequent recommendations refer to the generic registered
organisations regulator, rather than the Registered Organisations
Commission. This is to emphasise that the subsequent
recommendations are not dependent on the acceptance of
Recommendation 3.
Resources of the registered organisations regulator
49. In order to conduct its functions, the registered organisations regulator
must be properly resourced with a separate budgetary allocation.
Recommendation 4
The Commonwealth government ensure that the registered organisations
regulator is properly resourced to carry out its functions, with a separate budget
for which it is accountable.
64
Powers of the registered organisations regulator
50. In addition, the regulator must have sufficient information-gathering,
investigatory and enforcement powers to enable it to carry out its
functions. The powers reposed in ASIC provide a useful comparison.
51. The current powers of the General Manager in relation to conducting
investigations and inquiries are set out in Part 4 of chapter 11 of the
FW(RO) Act. These powers are confined in a number of significant
respects.
52. First, the General Manager may generally only conduct inquiries or
investigations into limited aspects of the FW(RO) Act.36 Specifically,
inquiries and investigations may only be conducted into whether:
(a) Part 3 of chapter 8 of the FW(RO) Act, which deals with the
accounts and audit of registered organisations, or the
reporting guidelines or regulations made under that Part, is
being complied with;
(b) the rules of a reporting unit37 ‘relating to its finances or
financial administration’ are being complied with; or
(c) a civil penalty provision has been contravened.
36 The General Manager also has the power to conduct an investigation in certain other limited circumstances: see Fair Work (Registered Organisations) Act 2009 (Cth), ss 332-334. 37
Where an organisation is not divided into branches, the reporting unit is the whole of the organisation. Where an organisation is divided into branches, each branch is a reporting unit: see Fair Work (Registered Organisations) Act 2009 (Cth), s 242.
65
53. It is unclear what is meant by the rules of a reporting unit ‘relating to
its finances or financial administration’. For example, does this
include rules concerning the conduct of officers (for example, training
requirements, disclosure of material personal interests) that may affect
the reporting unit’s finances? More significantly, the General Manager
cannot conduct an inquiry or investigation into whether a criminal
offence, such as the offence under s 190 of the FW(RO) Act relating to
the use of an organisation’s funds, has been committed. This may be
contrasted with ASIC’s power to conduct investigations where it has
reason to suspect that there may have been a contravention of the
corporations legislation (other than certain minor excluded
provisions).38
54. Secondly, the General Manager (or authorised delegate) may require
persons to give information, produce documents, or answer questions
relating to matters relevant to an investigation. But there are limits on
the General Manager’s powers.
(a) Unlike ASIC,39 the General Manager has no power to require
the answers to be given under oath or affirmation. The
penalty for giving false or misleading information to the
General Manager is minimal. The maximum penalty for an
individual is a fine of 30 penalty units (currently $5,400).40
38 Australian Securities and Investment Commission Act 2001 (Cth), s 13(1)(a). 39 Cf Australian Securities and Investments Commission Act 2001 (Cth), s 19(2). See also, Competition and Consumer Act 2010 (Cth), s 155 in relation to the Australian Competition and Consumer Commission. 40
Fair Work (Registered Organisations) Act 2009 (Cth), s 337(1)(b), (c).
66
(b) These powers only apply in the first instance to certain
limited officers and employees (or former officers and
employees) or auditors of a reporting unit.41 It is not until the
General Manager has first sought the information from those
persons, that the General Manager can seek information from
other persons. The ACTU has sought to justify this approach
on the basis that the ‘first line of investigation should … be
the persons who are most likely to have the information the
regulator seeks’.42 It has also submitted that ‘it is almost
inconceivable that any person’ outside the limited group of
officers and employees (or former officers and employees) or
auditors could ‘provide any information of value to
investigators’.43 Both of these submissions are remarkably
unimaginative. Banks, telecommunication companies and
third party suppliers can all provide highly useful information
to investigators. To take one simple example, an
investigation into possible inappropriate use of a union credit
card will often begin by an examination of the credit card
statements. The best way of obtaining such records is to seek
their production from the credit card supplier. Further, the
consequence of the current arrangements is that a person
under investigation will often be the person to whom the
request for information or documents will be made or will
41 Cf Australian Securities and Investments Commission Act 2001 (Cth), s 19(1) which applies to any person. 42
Australian Council of Trade Unions, Submissions to the Senate Education and Employment Committee on the Fair Work (Registered Organisations) Amendment Bill 2014 [No 2] (Cth), 30/6/15, p 14. 43
Australian Council of Trade Unions, Submissions to the Senate Education and Employment Legislation Committee on the Fair Work (Registered Organisations) Amendment Bill 2013 (Cth), 22/11/13, p 35.
67
otherwise be ‘tipped off’ at a very early stage of the
investigation. The ACTU have also asserted that the General
Manager has, under s 335(2)(b) of the FW(RO) Act, a greater
power than ASIC to require certain persons to access
documents on the regulator’s behalf and supply them to the
regulator.44 This is not correct in two respects. First, what
s 335(2)(b) in fact does is to empower the General Manager
to require a person to produce documents in that person’s
custody or control or to which that person has access.
Secondly, ASIC has a power to require a person to give ASIC
‘all reasonable assistance’ in connection with an investigation
which includes the power to require a person to produce
documents to which they have access.
(c) The maximum penalties for not complying with a notice are
minimal. The maximum penalty is a fine of 30 penalty units
(currently $5,400).45 This may be contrasted with a
maximum fine of 100 penalty units (currently $18,000) or 2
years’ imprisonment, or both, for a similar failure under the
Australian Securities and Investments Commission Act 2001
(Cth).46
(d) Unlike ASIC,47 the General Manager has no general power to
inspect a registered organisation’s books and records for the
44 Australian Council of Trade Unions, Submission to the Senate Education and Employment Legislation Committee on the Fair Work (Registered Organisations) Amendment Bill 2014 [No 2] (Cth), 30/6/15, p 14. 45
Fair Work (Registered Organisations) Act 2009 (Cth), s 337. 46 Australian Securities and Investments Commission Act 2001 (Cth), s 63. 47
Australian Securities and Investments Commission Act 2001 (Cth), s 28(b), 30.
68
purposes of ensuring compliance with the FW(RO) Act. That
power would be useful in conducting ‘random audits’ of
registered organisations to ensure proper accounting practices
are being carried out.
(e) Unlike ASIC,48 the General Manager has no power to seek a
warrant from a court to seize books or documents.
55. Thirdly, although the FW(RO) Act abolishes the privilege against self-incrimination so that a person cannot refuse to give information,
produce a document or answer a question on the ground that to do so
might incriminate the person or expose the person to penalty, the Act
creates:
(a) a broad ‘direct immunity’ in relation to documents
produced;49 and
(b) an even broader ‘derivative use’ immunity that prevents ‘any
information, document or thing obtained as a direct or
indirect consequence of giving the information, producing the
document or answering the question’ from being used against
the person in a criminal proceeding (other than in relation to
failing to answer) or proceeding for a penalty.50
56. The latter, particularly having regard to the words ‘direct or indirect
consequence’, is a significant fetter on any proceeding being
48 Australian Securities and Investments Commission Act 2001 (Cth), ss 35-37. 49 Fair Work (Registered Organisations) Act 2009 (Cth), s 337(5)(a). 50
Fair Work (Registered Organisations) Act 2009 (Cth), s 337(5)(c).
69
commenced subsequent to an investigation. There were equivalent
provisions in the Australian Securities Commission Act 1989 (Cth).
But they were repealed in 1992 after they caused serious difficulties in
criminal prosecutions51 and the same difficulties apply in relation to
proceedings for a penalty. Without the derivative use immunity, the
direct immunity in relation to documents is of limited utility. On its
own the direct immunity has the consequence that if documents are
produced by a person in relation to an investigation, they cannot be
used against the person. Yet, subject to the possibility that the
documents have been lost or have been destroyed in a ‘clean up’, the
documents could be obtained again, either by subpoena in a proceeding
for a civil penalty or in relation to a criminal offence, by the police
obtaining and executing search warrants.
57. In addition to these limitations on the General Manager’s investigatory
powers, the General Manager has limitations on its enforcement
powers:
(a) Although the General Manager may investigate whether
‘rules of a reporting unit relating to its finances or financial
administration’ have been contravened, the General Manager
can only take action under s 336 if the General Manager is
satisfied that the reporting unit has contravened the rule. If so
satisfied, the General Manager may issue a notice to a
51 See Explanatory Memorandum to Corporations Legislation (Evidence) Amendment Bill 1992 (Cth), pp 1-2. See Joint Statutory Committee on Corporations and Securities, ‘Use Immunity Provisions in the Corporations Law and the Australian Securities Commission Law’ (1991), [3.1.5]; Sofronoff P, ‘Derivative use immunity and the investigation of Corporate wrongdoing’ (1994) 10 QUTLJ 122 at 129-130, 134, Australian Law Reform Commission Traditional Rights and Freedoms—Encroachments by Commonwealth Laws (ALRC Interim Report 127, 3/8/15), [12.96]-[12.97].
70
reporting unit ‘requesting that the reporting unit take
specified action’ to rectify a contravention,52 and the Federal
Court may make appropriate orders to ensure that the
reporting unit complies with the General Manager’s request.53
The consequence is that where the rule is one that requires a
particular officer to do something, rather than a reporting unit
(for example, undertake training, disclose material personal
interests), the General Manager has no power under s 336 to
do anything about a breach of such a provision. The General
Manager could seek a bare declaration of breach but there
would rarely be any public interest in doing so given the time
and expense involved.
(b) Unlike ASIC,54 the General Manager has no power to accept
an ‘enforceable undertaking’. ASIC has the power to accept
an ‘enforceable undertaking’ from a person in relation to any
of ASIC’s powers or functions. Breach of the undertaking
allows ASIC to apply to a Court for immediate relief.
58. The Fair Work (Registered Organisations) Amendment Bill 2014
[No 2] (Cth) provided for information-gathering and investigatory
powers to be given to the proposed Registered Organisations
Commission based on the powers conferred on ASIC under Part 3 of
the Australian Securities and Investments Commission Act 2001 (Cth).
52 Fair Work (Registered Organisations) Act 2009 (Cth), s 336(2)(a). Breach of the rules is not a civil penalty provision or criminal offence so the other options available to the General Manager under s 336 do not apply. 53
Fair Work (Registered Organisations) Act 2009 (Cth), s 336(4), (5). 54 Australian Securities and Investments Commission Act 2001 (Cth), s 93AA.
71
As noted above, that Bill was rejected by the Senate on 17 August
2015.
59. Submissions made to the Commission by the Australian Chamber of
Commerce and Industry,55 Master Builders Australia56 and Boral57
supported the amendments proposed in the Fair Work (Registered
Organisations) Amendment Bill 2014 [No 2] (Cth). The Institute of
Public Affairs submitted that the:58
…new regulator should be given information gathering and investigatory powers along the lines of the Australian Securities and Investment Commission, including the power to require answers under oath, seek warrants and seize documents, with penalties for non-compliance.
60. On the other hand, the ACTU has rejected the suggestion that the
regulator should have powers similar to those of ASIC.59 A number of
its submissions have been examined above. A number of its other
submissions proceed on the basis that conferring on the Registered
Organisations Commissions powers similar to ASIC could only be
intended to ‘spook’ or ‘intimidate’ members or registered organisations
or to engage in ‘state sanctioned harassment’.60 There is nothing to
55 Australian Chamber of Commerce and Industry Law Reform Submissions, August 2015, p 12. 56
Master Builders Law Reform Submissions, 21/8/15, p 7. 57 Boral Law Reform Submissions, 2015 (received 27/8/15), p 5. 58
Institute of Public Affairs Law Reform Submissions, August 2015, p 11. 59 Australian Council of Trade Unions, Submission to the Senate Committee on Education and Employment Legislation Committee on the Fair Work (Registered Organisations) Amendment Bill 2013 (Cth), 22/11/13, pp 34-36; Australian Council of Trade Unions, Submission to the Senate Committee on Education and Employment Legislation Committee on the Fair Work (Registered Organisations) Amendment Bill 2014 [No 2] (Cth), 30/6/15, pp 13-17. 60
Australian Council of Trade Unions, Submission to the Senate Committee on Education and Employment Legislation Committee on the Fair Work (Registered Organisations) Amendment Bill 2014 [No 2] (Cth), 30/6/15, pp 14-15.
72
suggest that ASIC, or any other regulator, engages in any of these
practices. And there is nothing to suggest that the regulator of
registered organisations would do so either.
61. A more compelling point that the ACTU has made is that many of the
investigations currently conducted by the General Manager may not
reveal any contravention of the law but reveal a need for an
organisation or reporting unit to improve its practices.61 That is no
doubt correct. That strongly supports a grant to the regulator of
registered organisations of a power to accept enforceable undertakings.
However, it provides no reason why the regulator of registered
organisations should not have an appropriately balanced range of
powers to deal with all eventualities to ensure that it can deal
effectively with unlawful conduct.
Recommendation 5
Sections 330 and 331 of the Fair Work (Registered Organisations) Act 2009
(Cth) be amended to allow the registered organisations regulator to make
inquiries and conduct investigations as to whether criminal offences contrary to
the Fair Work (Registered Organisations) Act 2009 (Cth) have occurred. The
meaning of the ‘rules of a reporting unit relating to its finances or financial
administration’ be clarified to include any rules concerning officers or
employees that may have a direct or indirect effect on the finances or financial
administration of a reporting unit.
61 Australian Council of Trade Unions, Submission to the Senate Committee on Education and Employment Legislation Committee on the Fair Work (Registered Organisations) Amendment Bill 2013 (Cth), 22/11/13, p 34.
73
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74
The Discussion Paper raised a number of questions about this topic62
and the Commission received a broad range of submissions in
response.63
Training of officers and employees
63. In 2012, the former Labor government introduced, in the Fair Work
(Registered Organisations) Amendment Act 2012 (Cth), a number of
amendments to the FW(RO) Act which sought to improve union
governance. One of the significant reforms was the introduction of
s 154D to the FW(RO) Act. That section relevantly provides:
(1) The rules of an organisation or branch of an organisation must require each officer of the organisation or the branch (as the case may be) whose duties include duties (financial duties) that relate to the financial management of the organisation or the branch (as the case may be) to undertake training:
(a) approved by the General Manager under section 154C; and
(b) that covers each of the officer’s financial duties.
64. Section 154C enables the General Manager to approve training if
satisfied that the training covers one or more of the duties of officers of
organisations and branches that relate to the financial management of
62 Royal Commission into Trade Union Governance and Corruption, Discussion Paper - Options for Law Reform, 19/5/15, ch 3.4 (Questions 8-17). 63
Australian Industry Group Law Reform Submissions, 21/8/15, pp 4-6; Australian Chamber of Commerce and Industry Law Reform Submissions, August 2015, pp 12-15; Associations Forum Pty Ltd Law Reform Submissions, 4/9/15, p 3; Boral Limited Law Reform Submissions, 2015 (received 27/8/15) pp 10-13; Master Builders Australia Law Reform Submissions, 21/8/15, pp 10-16; Victoria Police Law Reform Submissions, 10/9/15, pp 33-34; Woden Contractors Pty Ltd Law Reform Submissions, 24/8/15, pp 12-13.
75
organisations or branches. The training must be completed within six
months after the person begins to hold office.
65. The goal of the provision is laudatory. But there are three main
problems with the drafting.
66. First, s 154D imposes no direct obligation. It only creates a
requirement as to the content of the rules. The General Manager’s
powers to enforce the rules are limited. As discussed above,64 the
General Manager does not have a power to take action under s 336 in
relation to breaches of rules by persons other than the reporting unit
itself. Thus, if an officer fails to undertake training, the General
Manager cannot presently take action to remedy that failure (other than
seeking a bare declaration, which as explained does little to serve the
public interest).
67. Secondly, s 154D does not apply to any employees of the union. As
the case study concerning the NUW, New South Wales Branch
illustrates, employees of an organisation can have a significant degree
of control over union finances. It is important that employees of an
organisation that are involved in the finances or the financial
administration of that organisation are also required to undertake
training.
68. Thirdly, it is not clear that s 154D applies to all members of the
committee of management of an organisation or branch. It is essential
that all members of the committee of management have such training.
64 Paragraph 57.
76
69. Recommendation 7, if implemented, would alleviate the third problem.
The first and second problems would be alleviated by amendments to
the wording of s 154D.
70. However, amending s 154D would create other problems. Rule
changes are costly and time consuming both for the organisations and
branches involved and for the General Manager. An easier solution
would be to repeal s 154D and replace it with a direct statutory
obligation on officers to complete approved training. Given the
protective purpose of the section, it does not seem appropriate to
impose a monetary penalty on an officer who fails to complete the
required training within the prescribed six months. Nor is it
appropriate to penalise the organisation or branch for the officer’s
failure to complete training.
71. Instead, the registered organisations regulator should be empowered to
disqualify a person who does not complete the required training from
acting as an officer of an organisation or branch for a period of up to
two years, provided that:
(a) the registered organisations regulator is satisfied that the
person has not completed the required training; and
(b) the registered organisations regulator has provided the person
with an opportunity to show cause why the person should not
be disqualified.
72. In relation to employees required to undertake the training, there
should be an obligation upon the Secretary, or other person with day-
77
to-day control of the organisation or branch, to ensure that those
employees complete the training within six months after commencing
employment at the organisation. A similar disqualification process
should be available in relation to a Secretary who fails, without
reasonable excuse, to ensure that relevant employees have conducted
approved training.
Recommendation 8
Section 154D of the Fair Work (Registered Organisations) Act 2009 (Cth) be
repealed and replaced with a statutory provision requiring:
(a) all members of the committee of management of an organisation or
branch, and all officers whose duties relate to the financial
management of the organisation or branch, to undertake approved
training; and
(b) the Secretary of an organisation or branch to ensure that employees of
the organisation or branch involved with the finances or financial
administration of the organisation or branch complete approved
training.
The registered organisations regulator’s power to conduct inquiries and
investigations should include contraventions of this statutory provision.
Contravention by a person of the statutory obligations should entitle the
registered organisation regulator to disqualify the person from acting as an
officer of an organisation or branch for a period of up to two years.
78
Requirements to have financial policies
73. Another reform introduced by the Fair Work (Registered
Organisations) Amendment Act 2012 (Cth) was the introduction of
s 141(1)(ca) which required each organisation to have rules requiring:
…the organisation and each of its branches to develop and implement policies relating to the expenditure of the organisation or the branch (as the case may be).
74. Again, although this obligation is laudatory its ineffectiveness was
demonstrated in the NUW, New South Wales branch case study.
Consistently with the statutory requirement, the federal rules of the
NUW contained the following:65
The Union and its branches shall have in operation appropriate policies relating to the expenditure of the organisation and each branch.
75. The rule, which is in accordance with ‘model rules’ published by the
Minister for Workplace Relations,66 provides no guidance on the types
or kinds of ‘appropriate policies’ and even whether they should be in
writing. In fact, there was no evidence that the New South Wales
branch of the federal union had adopted any formal or written policies
concerning expenditure.
65 NUW National Rules, NUW MFI-13, 5/11/15, r 14E. 66 Guidelines Containing Model Rules Under the Fair Work (Registered Organisations) Act 2009 (Cth), March 2013, Gazette C2015G00378.
79
76. Developing and adopting financial policies is a basic good governance
measure. The Report to the ACTU Executive by the Independent
Panel on Best Practice for Union Governance recommended that:67
Unions should develop a comprehensive documented set of policies and procedures governing the management of union funds, and consolidate it into an appropriate policies and procedures manual.
77. The recommendation went on to recommend that unions develop
policies covering a total of 14 topics including:68
(a) how financial decisions are to be made and reported;
(b) the levels of authority or delegated authority of various
persons and bodies;
(c) the establishment, operation and governance of any subsidiary
or other entity related to the union;
(d) major procurements and the review of major costs areas and
significant supply and service contracts on an annual basis;
(e) basic market testing by seeking at least two quotations for
smaller but still substantial purchases;
(f) hospitality and gifts;
67 Independent Panel on Best Practice for Union Governance, Report to ACTU Executive to Invite Comment and Discussion, March 2013, p 6. 68
Independent Panel on Best Practice for Union Governance, Report to ACTU Executive to Invite Comment and Discussion, March 2013, pp 6-7.
80
(g) the issuance and use of, and accountability for, credit cards;
and
(h) employment and remuneration of officers and staff.
78. The law in Queensland provides a useful comparison to the FW(RO)
Act. Section 553A of the Industrial Relations Act 1999 (Qld) imposes
a statutory obligation on Queensland-registered organisations to have a
policy, complying with the requirements prescribed in regulations, in
relation to a number of specific topics. The topics are:
(a) decision-making concerning financial matters;
(b) authorisation and delegations relating to the organisation’s
spending;
(c) the organisation’s credit cards;
(d) the organisation’s contracting activities;
(e) travel and accommodation;
(f) spending on, and receipt of, entertainment and hospitality;
(g) gifts;
(h) how complaints about financial matters are dealt with; and
(i) matters relating to the financial management or accountability
of the organisation prescribed under a regulation.
81
79. Breach of the obligation is an offence carrying a maximum penalty of
85 penalty units (currently equivalent to $10,013).
80. Having regard to the importance of organisations adopting proper
financial policies, it is recommended that the Queensland legislative
model be adopted and adapted to organisations and branches or
organisations registered under the FW(RO) Act. Contravention should
attract a civil penalty, rather than be a criminal offence. In addition,
organisations and branches should be required to review their policies
on a regular basis (say every four years to reflect the term of office in
many organisations) and to lodge a copy of their current policies with
the registered organisations regulator.
Recommendation 9
Section 141(1)(ca) of the Fair Work (Registered Organisations) Act 2009 (Cth)
be repealed. A new civil penalty provision be introduced requiring
organisations and branches to adopt, in accordance with their rules, policies
binding on all officers and employees concerning financial management and
accountability.
The required policies should include policies concerning financial decision-making, receipting of money, levels of authorisation of expenditure, credit
cards, procurement, hospitality and gifts, the establishment, operation and
governance of related entities and any other matter prescribed by regulations.
Organisations or branches should be required to review their policies every four
years and to lodge a copy of their current policies with the registered
organisations regulator.
82
Financial disclosure requirements by organisations and branches
81. Another measure to improve financial accountability is to increase the
disclosure of financial information to members and the public. For
example, if members of the New South Wales branch of the NUW had
known that hundreds of thousands of dollars were being spent annually
on credit cards, it may have prompted more questions to be asked.
82. At present, the FW(RO) Act achieves financial disclosure in three main
ways.
83. The first way is through ‘s 237 statements’. Section 237(1) of the
FW(RO) Act obliges organisations (and branches of organisations,
where an organisation is made up of branches) to lodge with the Fair
Work Commission (within 90 days of the end of each financial year or
such longer period as the General Manager allows) a statement that
identifies relevant particulars in relation to each loan, grant or donation
of an amount exceeding $1,000 made by an organisation. The s 237
statement must be signed by an officer of the organisation or branch.69
The statement is not publicly available, but may be inspected by a
member of the organisation or branch concerned during office hours.70
84. The second way is through annual financial reports.
85. Part 3 of chapter 8 of the FW(RO) Act provides for a number of
obligations on ‘reporting units’ in relation to financial records,
69 Fair Work (Registered Organisations) Act 2009 (Cth), s 237(2). 70 Fair Work (Registered Organisations) Act 2009 (Cth), s 237(4).
83
accounting and auditing. Where an organisation is not divided into
branches, the reporting unit is the whole of the organisation. Where an
organisation is divided into branches, each branch is a reporting unit.71
86. At present, reporting units are required to prepare a general purpose
financial report annually.72 The report must be prepared in accordance
with the Australian Accounting Standards and reporting guidelines
issued by the General Manager under s 255. Currently, pursuant to the
reporting guidelines all reporting units are required to apply the Tier 1
reporting requirements. Further, the current reporting guidelines
require that the report must contain certain declarations by the
committee of management and must be signed by a ‘designated
officer’ within the meaning of s 243 of the FW(RO) Act.73
87. In addition to the general purpose financial report, the committee of
management must prepare an operating report.74 The financial report
must be audited by an ‘approved auditor’.75 Following the audit, the
reporting unit must provide a full report to members free of charge
consisting of the auditor’s report, the financial report and the operating
report, or provide a concise report in accordance with s 265 of the
FW(RO) Act. The full report must also be presented to a general
71 Fair Work (Registered Organisations) Act 2009 (Cth), s 242. 72 Fair Work (Registered Organisations) Act 2009 (Cth), s 253. 73
A ‘designated officer’ is an officer of the reporting unit who, under the rules of the reporting unit, is responsible (whether alone or with others) for undertaking the functions necessary to enable the reporting unit to comply with Part 3 of Ch 8 of the Fair Work (Registered Organisations) Act 2009 (Cth). 74
Fair Work (Registered Organisations) Act 2009 (Cth), s 254. 75 Fair Work (Registered Organisations) Act 2009 (Cth), s 257.
84
meeting of members of the reporting unit76 and subsequently be lodged
with the Fair Work Commission.77
88. The third way is through a number of provisions requiring
organisations and branches to have rules requiring the organisation and
branch to disclose certain information to their members. These
provisions were introduced by the Fair Work (Registered
Organisations) Amendment Act 2012 (Cth) and commenced operation
on 1 January 2014. In summary:
(a) Section 148A(4) requires organisations to have rules
requiring the disclosure to members of the organisation of the
identity of the five officers who have the largest ‘relevant
remuneration’.78 For each of those officers, the rules must
also require the disclosure of (a) either the actual amount of
the officer’s relevant remuneration or the information
specified in the rules as being ‘considered by the
organisation’ to be an appropriate disclosure79 and (b) certain
information in relation to non-cash benefits provided to the
officer.80
76 Fair Work (Registered Organisations) Act 2009 (Cth), s 266. 77 Fair Work (Registered Organisations) Act 2009 (Cth), s 268. 78
‘Relevant remuneration’ is defined as the remuneration paid to the officer by the organisation plus any relevant remuneration disclosed to the organisation by the officer pursuant to s 148A(1) of the Fair Work (Registered Organisations) Act 2009 (Cth). That subsection requires the rules to require the officer to disclose to the organisation remuneration paid to the officer (a) as a member of a Board or (b) by a related party of the organisation, in connection with the performance of the officer’s duties. 79
Fair Work (Registered Organisations) Act 2009 (Cth), s 148A(6). 80 Fair Work (Registered Organisations) Act 2009 (Cth), s 148A(7).
85
(b) Section 148A(5) requires branches of organisations to have
similar rules, but they need only identify the two officers who
have the largest ‘relevant remuneration’.81 The information
that must be disclosed is the same as in the case of
organisations.
(c) Section 148B requires organisations and branches to have
rules requiring the disclosure to members of the organisation
and its branches of material personal interests disclosed by
the officers.82 Those obligations are examined in Chapter 3
of this Volume.
(d) Section 148C requires organisations and branches to have
rules requiring the organisation or branch to disclose
payments made by the organisation or branch to a related
party.83 Those obligations are examined in Chapter 5 of this
Volume.
89. Apart from issues that arise in relation to ss 148B and 148C (which are
considered in Chapters 3 and 5 of this Volume respectively), there are
a number of problematic issues with the present financial disclosure
regime.
81 ‘Relevant remuneration’ is defined as the remuneration paid to the officer by the branch plus any relevant remuneration disclosed to the organisation by the officer pursuant to s 148A(2) of the Fair Work (Registered Organisations) Act 2009 (Cth). That subsection requires the rules to require the officer to disclose to the branch remuneration paid to the officer (a) as a member of a Board or (b) by a related party of the branch, in connection with the performance of the officer’s duties. 82
Fair Work (Registered Organisations) Act 2009 (Cth), s 148B. 83 Fair Work (Registered Organisations) Act 2009 (Cth), s 148C.
86
90. First, s 237 statements, the apparent purpose of which is to provide
more detailed information concerning loans, grants and donations than
appears in the annual reports are only available to a member upon
request to the General Manager. In contrast, the annual reports are
freely available online.
91. Secondly, there is no requirement that s 237 statements be audited.
Nor is there any requirement that the s 237 statements be approved by
the committee of management, although that may occur in practice.
92. Thirdly, understanding union accounts requires a high degree of
financial literacy. Further, most union accounts are very lengthy and
complex. Disclosures of financial remuneration and related party
transactions are invariably buried deep within the document.
Accordingly, they are of limited value.
93. Fourthly, s 148A has a number of problems:
(a) It does not actually require the rules to disclose the
remuneration of the relevant officers, but permits a rule that
allows for disclosure of information that the branch considers
appropriate disclosure.
(b) Most unions and branches satisfy the current requirement by
including a note to the annual financial statements. However,
the Commission observed numerous financial reports for the
2014 financial year which simply did not include the
disclosure required by the rules.
87
(c) The only consequence of an organisation or branch failing to
include the required disclosure is that the General Manager
may, ultimately,84 issue a notice to the relevant organisation
or branch to comply with the rule. If the branch or
organisation fails to comply, the General Manager can
commence action in the Federal Court to make orders to
require the branch or organisation to comply.85 However,
such proceedings are expensive, and in all likelihood time
consuming, and there is no civil penalty for failing to comply.
(d) The obligation of the organisation or branch to disclose
‘relevant remuneration’ depends on the obligation of the
officer under the rules required by ss 148A(1) and 148A(2) to
disclose remuneration received from related parties and
others. As has been previously discussed, the General
Manager presently has no ability to enforce the rules made in
accordance with those subsections as they are rules requiring
a person other than a ‘reporting unit’ to do something.
94. Fifthly, the scope of the financial disclosures is limited. The legislation
in Queensland provides a useful comparison. Division 2A of Part 12
of chapter 12 of the Industrial Relations Act 1999 (Qld) requires
Queensland registered industrial organisations to keep a number of
‘registers’. The required registers are registers of:
84 See Fair Work (Registered Organisations) Act 2009 (Cth), s 336(2)(a). 85 Fair Work (Registered Organisations) Act 2009 (Cth), s 336(5).
88
(a) gifts, hospitality and other benefits given and received;86
(b) political expenditure in excess of $10,000;87
(c) credit card and cab charge expenditure, including copies of
credit card statements;88 and
(d) loans, grants and donations in excess of $1,000.89
The registers must be kept for seven years and are available to the
public for inspection.90 Further, they must be published for two years
either on the organisation’s website or on the website of the
Queensland Industrial Relations Commission.91 Breach of these
requirements is a civil remedy provision.92
95. Further, s 237 does not require disclosure of ‘in kind’ benefits such as
the provision of free services. Another limitation is that the s 237
statements only require disclosure of loans, grants and donations made
by the organisation or branch, not loans, grants and donations made to
an organisation or branch. This issue is discussed in detail in
Chapter 4 of this Volume.
86 Industrial Relations Act 1999 (Qld), s 557A. 87 Industrial Relations Act 1999 (Qld), s 557B. 88
Industrial Relations Act 1999 (Qld), s 557C. 89 Industrial Relations Act 1999 (Qld), s 557E. 90
Industrial Relations Act 1999 (Qld), ss 557H-557I. 91 See Industrial Relations Act 1999 (Qld), ss 557F, 655A. 92
Industrial Relations Act 1999 (Qld), ss 557H, 557F.
89
96. Sixthly, although s 237 and the sections imposing obligations to
prepare and lodge financial reports are civil penalty provisions, the
penalties for contraventions of these provisions by a branch are
imposed on the organisation as a whole,93 rather on than the particular
officers responsible for the contravention. Thus, the failure by one
branch properly to comply with its obligations could lead to a civil
penalty being imposed against the whole organisation in circumstances
where the branch operates autonomously. To avoid this consequence,
it may be appropriate to impose civil penalties on ‘designated
officers’94 of a reporting unit if they fail to take all reasonable steps to
ensure compliance by the reporting unit with its financial obligations
under the FW(RO) Act.95
97. Having regard to the deficiencies identified above, it is recommended
that a self-contained financial disclosure regime be introduced to the
FW(RO) Act as a new division of Part 3 of chapter 8. That regime
would be designed to supplement the existing provisions concerning
annual financial reports by requiring reporting units to prepare a
number of short separate ‘financial disclosure statements’ dealing with
discrete topics, similar to the existing s 237 statement. The financial
disclosure statements should be approved by the committee of
management of the reporting unit, and signed by the Secretary and
financial compliance officer.96
93 Fair Work (Registered Organisations) Act 2009 (Cth), s 305(3). 94 Currently defined in s 243 to mean an officer of a reporting unit who under the rules of the reporting unit is responsible for undertaking the functions necessary to enable the reporting unit to comply with Part 3 of Chapter 8. 95
See Corporations Act 2001 (Cth), s 344(1). 96 See paras 102-109 below.
90
98. As is currently the position in relation to s 237, failure to lodge the
financial disclosure statements within the prescribed period should be a
civil penalty provision. Civil penalties should also apply to designated
officers who knowingly or recklessly make a false statement in a
financial disclosure statement.
99. The financial disclosure statements should include a statement in
relation to:
(a) Loans, grants and donations, including in-kind donations,
made by the reporting unit exceeding $1,000 (including a
series of payment or in-kind benefits that together exceed
$1,000). This would replace the existing s 237 statements.
(b) Remuneration of the highest paid officers of a reporting unit.
The detail required should be similar to that currently
required by s 148A but in addition should require the amount
and a breakdown of the remuneration to be disclosed.
Further, the provision should make clear that organisations
must disclose the highest remunerated officers taking into
account remuneration paid by branches. Currently, some
organisations only disclose the remuneration of officers who
are paid by the organisation rather than a branch.
(c) Credit card and charge card expenditure by officers of the
reporting unit, including the credit card statements
themselves.
91
100. Chapter 4 of this Volume considers an additional financial disclosure
statement relating to donations and other payments made to an
organisation or branch.
101. To ensure members have easy access to this information, the financial
disclosure statements should be publicly available on the Regulator’s
website.
Recommendation 10
A new division dealing with financial disclosures by ‘reporting units’ to their
members be introduced to Part 3 of Chapter 8 of the Fair Work (Registered
Organisations) Act 2009 (Cth) to replace and strengthen existing provisions
concerning financial disclosure. The regime would require ‘reporting units’ to
lodge audited financial disclosure statements with the registered organisations
regulator on discrete topics, including (a) loans, grants and donations by the
reporting unit, (b) remuneration of officers and (c) credit card expenditure.
Civil penalties should apply to reporting units that fail to comply with their
obligations under the regime. Further, civil penalties should also apply to
officers who knowingly or recklessly make a false statement in a financial
disclosure statement.
92
Recommendation 11
Officers with responsibility for ensuring compliance by a reporting unit with its
financial obligations under the Fair Work (Registered Organisations) Act 2009
(Cth) be subject to civil penalties if they fail to take all reasonable steps to
ensure the reporting unit complies with its financial obligations.
Internal compliance and audit
102. A particular problem in the case studies concerning the HSU and the
NUW was the lack of any officer at the union, other than the Secretary,
who was responsible for ensuring that the finances of the union were
being managed in accordance with the law and the rules and policies of
the union.
103. Although external auditing is very important97 it is generally limited to
expressing an opinion about whether an entity’s financial report is
prepared, in all material respects, in according with the relevant
financial reporting framework.98 There are a number of inherent
limitations to an external audit that mean that even the most
professionally conducted independent audit cannot pick up all cases of
fraud.99 Under the Australian auditing standards, ‘[t]he primary
97 See paras 110-131 for recommended changes to the external auditing provisions of the Fair Work (Registered Organisations) Act 2009 (Cth). 98
See Auditing and Assurance Standards Board, Auditing Standard ASA 200, cll 3, 11. 99 A fact recognised in the auditing standards: see Auditing and Assurance Standards Board, Auditing Standard ASA 200, cll A45-A52.
93
responsibility for the prevention and detection of fraud rests with both
those charged with governance of the entity and management’.100
104. The result is that proper internal compliance and financial controls are
critical to preventing corruption and misappropriation of funds.
105. To address this issue, it is recommended that reporting units be
required to appoint a financial compliance officer with responsibility:
(a) for ensuring that the reporting unit complies with the
provisions of the FW(RO) Act and the regulations concerning
financial administration and the financial policies of the
reporting unit;
(b) to report regularly to the committee of management, and any
finance committee that exists, concerning the finances of the
reporting unit, and in particular to report any irregularities or
deficiencies in compliance with the provisions identified in
(a) to the committee of management;
(c) together with the Secretary (or other person appointed under
the rules of the reporting unit) to prepare the annual accounts
and deal with external accountants and auditors;
(d) together with the Secretary to sign the reporting unit’s
financial disclosure statements;101 and
100 Auditing and Assurance Standards Board, Auditing Standard ASA 240, cl 4. 101 See Recommendation 10 above.
94
(e) to oversee and supervise staff who occupy positions of
responsibility in relation to the financial affairs of the
reporting unit.
106. The requirement to appoint an officer should be a statutory
requirement rather than a required rule. The first reason is that rule
changes are costly and time consuming to implement. The second
reason is that a direct statutory obligation is easier to enforce and more
likely to be complied with. The financial compliance officer should be
appointed directly by the committee of management, having regard to
the character, experience, and any relevant financial training and
qualifications of the individual. Failure to appoint such an officer
within a three month period, and to notify a change of officer within
one month should be a civil penalty provision.
107. Given the varying sizes of registered organisations and the fact that
some organisations are run largely by volunteers, it is not appropriate
to mandate legislatively any minimum qualification or training, or that
the person holding office be an employed officer. The financial
compliance officer could be an existing officer of the reporting unit,
who took on the role of finance compliance officer in addition to his or
her existing duties. The object of this proposal is to ensure that there is
at least one officer of the reporting unit in addition to, and sufficiently
independent of, the Secretary who is aware of and responsible for
financial management.
108. It is critical that the financial compliance officer be different from the
Secretary to avoid a repeat of the situation that arose in the operation of
95
the HSU and the NUW, New South Wales branch whereby the
Secretary was effectively solely in charge of the finances.
109. The financial compliance officer should be subject to a statutory
obligation to report any reasonably suspected breach of the FW(RO)
Act or regulations or reporting guidelines made under it in relation to
financial administration, or any of the reporting unit’s financial
policies or rules concerning finances to the committee of management.
Contravention should be a civil penalty provision. Such reports should
be recorded in the minutes.
Recommendation 12
All reporting units be required to appoint a financial compliance officer with
responsibility for ensuring compliance by the reporting unit with its financial
obligations under the Fair Work (Registered Organisations) Act 2009 (Cth),
regulations and reporting guidelines and the reporting unit’s financial policies
and rules concerning finances. The financial compliance officer must be
separate and independent from the Secretary. The compliance officer be subject
to a statutory obligation to report any reasonably suspected breaches to the
committee of management.
External auditing
110. As noted above, external auditing is also extremely important. The
failure of the auditors to detect the substantial misappropriation of
funds in the HSU Vic No 3 Branch and the NUW, New South Wales
branch raises a number of questions about the efficacy of the existing
96
system. In addition, the financial reports for a number of branches and
organisations reveal that the same auditor has audited the branch or
organisation over many years.
111. The Discussion Paper identified a number of potential issues with the
existing audit requirements under the FW(RO) Act.102
112. One issue identified in the Discussion Paper was the absence of any
requirement that auditors of reporting units be registered with ASIC.103
Currently, audits must be conducted by ‘approved auditors’. An
‘approved auditor’ is any person who is a member of CPA Australia,
The Institute of Chartered Accountants in Australia or the Institute of
Public Accountants and holds a current Public Practice Certificate.104
However, a person whose registration as an auditor has been suspended
under the Corporations Act 2001 (Cth) is not an approved auditor
while the suspension is in force.
113. In contrast, company auditors must be registered with ASIC.105 In
order to be registered, company auditors must have certain academic
qualifications and professional competency standards. They must also
satisfy ASIC that they are capable of performing the duties of an
auditor and otherwise be ‘fit and proper’.106 The Corporations Act
2001 (Cth) also contains detailed provisions in relation to the power of
102 Royal Commission into Trade Union Governance and Corruption, Discussion Paper - Options for Law Reform, 19/5/15, pp 31-32. 103
Royal Commission into Trade Union Governance and Corruption, Discussion Paper - Options for Law Reform, 19/5/15, pp 31-32; q 11. 104 Fair Work (Registered Organisations) Regulations 2009 (Cth), r 4. 105
See Corporations Act 2001 (Cth), s 324BA. 106 Corporations Act 2001 (Cth), s 1280.
97
the Companies Auditors and Liquidators Disciplinary Board, on the
application of ASIC, to cancel or suspend the registration of a
registered auditor.107
114. Some submissions to the Commission advocated requiring auditors of
registered organisations to be registered with ASIC.108 On the other
hand, Master Builders Australia submitted that prima facie no change
in qualifications were required.109
115. One difficulty with requiring all auditors of registered organisations to
be registered company auditors is that there are considerably fewer
registered company auditors than persons with the currently prescribed
accounting qualifications. It is therefore likely that requiring auditors
to be registered company auditors would increase, perhaps
substantially, the cost of compliance on reporting units.
116. At the same time, the absence of (a) any requirement that the persons
auditing reporting units must be ‘fit and proper’ and (b) any ability on
the part of the registered organisations regulator to seek to prevent a
person from auditing an organisation, are serious defects in the current
legislative regime.
117. The Australian Labor Party has proposed that auditors of reporting
units should be registered either with the Fair Work Commission or be
107 Corporations Act 2001 (Cth), s 1292 and following. 108 Associations Forum Pty Ltd Law Reform Submissions, 4/9/15, p 3; Boral Law Reform Submissions, 2015 (received 27/8/15) p 10. 109
Master Builders Australia Law Reform Submissions, 21/8/15, p 11.
98
a registered auditor.110 It appears to be proposed that the Fair Work
Commission would not register a person as an auditor unless, in
addition to the current qualifications, the person is of ‘good character’.
118. There is considerable merit to this approach. However, rather than
having two parallel regimes it is recommended that it be a requirement
that all auditors of reporting units must be registered with the
registered organisations regulator. The reason is that the registered
organisations regulator should have a power to prevent inappropriate
persons from auditing reporting units (for example persons who are not
fit and proper or have failed to carry out the duties of an auditor) and
the most convenient way of achieving this is if all auditors are required
to be registered and the registered organisations regulator has the
power to suspend or cancel registration. Registered company auditors
would automatically be entitled to be registered with the registered
organisations regulator. Persons who are not registered company
auditors would need to satisfy the existing qualifications, and in
addition satisfy the regulator that they are fit and proper persons to
conduct an audit of a reporting unit.
119. A second issue identified in the Discussion Paper concerning auditors
was the lack of stringent auditor independence requirements that
currently apply in relation to company auditors.111 Currently a person
cannot audit a reporting unit if they are an ‘excluded auditor’.112
Similarly, a firm cannot audit a reporting unit if a member of the firm
110 Australian Labor Party, ‘Fact Sheet: Better Union Governance’, released 7/12/15, p 2. 111 Corporations Act 2001 (Cth), Part 2M.4, Div 3. 112
Fair Work (Registered Organisations) Act 2009 (Cth), s 256(3), (5).
99
is an excluded auditor.113 Contravention of these restrictions exposes
an individual to a maximum civil penalty of 60 penalty units ($10,800)
and a body corporate to a maximum civil penalty of 300 penalty units
($54,000). Persons are excluded auditors if they are:114
(a) an officer or employee of the reporting unit or the organisation of which the reporting unit is a part; or
(b) a partner, employer or employee of an officer or employee of the reporting unit or the organisation of which the reporting unit is a part;
(c) a liquidator in respect of property of the reporting unit or the organisation of which the reporting unit is a part; or
(d) a person who owes more than $5,000 to the reporting unit or the organisation of which the reporting unit is part.
120. As will be apparent, the definition of excluded auditor is very narrow.
A person who is a former officer or employee of the reporting unit
would not be excluded. Nor would a partner, employer or employee of
such a person. Nor would a person who has a close personal or
financial relationship with an officer or employee of the reporting unit.
121. In contrast, the Corporations Act 2001 (Cth) has extremely detailed
provisions dealing with auditor independence.115
122. It is not recommended that those provisions be copied in their entirety
in respect of reporting units. For one thing, some of the provisions are
extremely complex and consequently not easy to follow. However, the
Corporations Act 2001 (Cth) does have a general exclusion that applies
113 Fair Work (Registered Organisations) Act 2009 (Cth), s 256(4), (6). 114 Fair Work (Registered Organisations) Act 2009 (Cth), s 6. 115
See Corporations Act 2001 (Cth), Part 2M.4, Div 3.
100
where an auditor is in a ‘conflict of interest situation’, which will exist
where, because of the circumstances:116
(a) the auditor is not capable of existing objective and impartial
judgment in relation to the conduct of the audit; or
(b) a reasonable person, with knowledge of all of the relevant
facts and circumstances, would conclude that the auditor is
not capable of exercising objective and impartial judgment in
relation to the conduct of the audit.
123. It would seem appropriate if the definition of ‘excluded auditor’
included a person in that position, as well as including persons referred
to in paragraph 120.
124. The Discussion Paper also raised the issue of whether the auditor
rotation requirements in the Corporations Act 2001 (Cth) should be
applied to some or all organisations.117 Division 5 of Part 2M.4 of the
Corporations Act 2001 (Cth) imposes rotation requirements on
auditors of listed companies in an attempt to promote further auditor
independence. The auditor rotation requirements provide that:118
(a) an individual who has played a significant role in the audit of
a listed company (for example the lead auditor or review
auditor) for 5 successive financial years must wait at least 2
116 Corporations Act 2001 (Cth), s 324CD. 117 Royal Commission into Trade Union Governance and Corruption, Discussion Paper - Options for Law Reform, 19/5/15, pp 31-32. 118
Corporations Act 2001 (Cth), s 324DA.
101
financial years before again playing a significant role in the
audit of the company;
(b) an individual must not play a significant role in the audit of a
listed company for more than 5 out of 7 successive financial
years.
125. Auditor rotation assists in ensuring auditor independence. But it can
also lead to additional cost to reporting units where the incoming
auditor has less experience in relation to the particular reporting unit
and may need time to develop specialised knowledge. The Discussion
Paper raised for discussion whether, having regard to the potential
compliance burdens for small organisations, auditor rotation
requirements should only be applied to large organisations.119 The
Commission received few submissions on that topic, although Master
Builders Australia did not believe there was merit in placing different
audit requirements based on size measured by turnover or some other
financial indicator.120
126. One difficulty with imposing differential requirements is determining
an appropriate definition of a large organisation. Another relevant
matter is that for smaller organisations whose finances are less
complex the costs involved in using a new auditor will be relatively
small. The reporting units that are most likely to incur additional
compliance costs for auditor rotation are those reporting units which
have the most complex finances. In other words, the regulatory burden
119 Royal Commission into Trade Union Governance and Corruption, Discussion Paper - Options for Law Reform, 19/5/15, pp 31-32. 120
Master Builders Australia Law Reform Submissions, 21/8/15, p 11.
102
is unlikely to be lessened substantially if reduced requirements are
imposed on smaller organisations.
127. On balance, it is recommended that the existing auditor rotation
requirements for listed companies be applied to all reporting units,
irrespective of size. This reform is supported by the Australian Labor
Party.121
128. A final issue is whether there should be changes to the existing
penalties for contraventions by auditors.
129. Currently, an auditor who:
(a) accepts appointment, or continues to act, whilst being an
excluded auditor;122 or
(b) makes a statement in a report that is knowingly or recklessly
false or misleading;123 or
(c) fails to report suspected breaches of the FW(RO) Act or the
reporting guidelines to the General Manager, in circumstances
where the auditor is of the opinion that the matter cannot be
dealt with by a comment in the report or by reporting the
matter to the committee of management;124
121 Australian Labor Party, ‘Fact Sheet: Better Union Governance’, released 7/12/15, p 2. 122 Fair Work (Registered Organisations) Act 2009 (Cth), ss 256(3), 256(7). 123
Fair Work (Registered Organisations) Act 2009 (Cth), s 257(10). 124 Fair Work (Registered Organisations) Act 2009 (Cth), s 257(11).
103
is subject to a maximum civil penalty of 300 penalty units ($54,000) if
the auditor is a body corporate or 60 penalty units ($10,800) otherwise.
130. By way of comparison:
(a) Contravention of various auditor independence requirements
under the Corporations Act 2001 (Cth) are criminal offences
with the maximum penalty for an individual of 6 months
imprisonment or a fine of 25 penalty units ($4,500) or both.125
The maximum penalty for a body corporate is 125 penalty
units ($22,500).126
(b) Under the Corporations Act 2001 (Cth) there is requirement
to notify ASIC in writing if the auditor has reasonable
grounds to suspect a contravention of the Corporations Act
2001 (Cth) and either (a) the contravention is a significant one
or (b) the contravention is not significant and the auditor
believes that the contravention has not been or will not be
adequately dealt with by commenting on it in the auditor’s
report or bringing it to the attention of the directors.127 An
individual who contravenes this requirement commits a
criminal offence, the maximum penalty for which is 50
penalty units ($9,000) or imprisonment for 1 year, or both.128
125 See, for example, Corporations Act 2001 (Cth), Sch 3, item 116CA, 116CC, 116CE, 116DA, 116EA, 116FA, 116FC. 126
Corporations Act 2001 (Cth), s 1312(1). 127 Corporations Act 2001 (Cth), s 311. 128
Corporations Act 2001 (Cth), Sch 3, item 105.
104
The maximum penalty for a body corporate is 250 penalty
units ($45,000).129
131. Thus, in terms of monetary penalties the existing penalties under the
FW(RO) Act are higher than those under the Corporations Act 2001
(Cth). Further, because the penalties under the FW(RO) Act are civil
penalties rather than criminal offences they are easier to obtain in
court. Accordingly, it is not recommended that the existing civil
penalties under the FW(RO) Act be made into criminal offences.
Rather, the maximum civil penalties should be increased to 200 penalty
units for contraventions by individuals and 1000 penalty units for
contraventions by bodies corporate. The reason for the recommended
increase is that the existing penalties appear to have had little effect at
encouraging auditors to perform their functions. Further, a maximum
fine of $10,800 for an auditor is, objectively, very low. Consideration
should be given to increasing the penalties under the Corporations Act
2001 (Cth).
Recommendation 13
Auditors of reporting units be required to be registered with the registered
organisations regulator. A person be entitled to be registered if the person is
either (a) a registered company auditor or (b) if the registered organisations
regulator is satisfied that the person has the required accounting qualifications
and is a fit and proper person. The registered organisations regulator be
empowered to suspend or cancel registration if satisfied that the person is (a) not
a fit and proper person or (b) has failed to comply with the duties of an auditor
under the Fair Work (Registered Organisations) Act 2009 (Cth).
129 Corporations Act 2001 (Cth), s 1312(1)
105
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106
(a) there was an absence of records of committee of management
meetings;
(b) contested allegations were made about what occurred at
meetings, including whether certain conduct was approved by
the relevant governing body;
(c) parts of minutes said to be erroneous were confirmed at later
meetings without being corrected; and
(d) certain matters had not been recorded in the minutes at the
direction of the union Secretary.
133. Although registered organisations are required to keep a number of
records, including its membership register131 and financial records132
for a minimum period of seven years, there is no requirement in
relation to the keeping of minutes. Nor is there any requirement in
s 141 of the FW(RO) Act that the rules of an organisation must require
minute books to be kept.
134. The Discussion Paper invited submissions about whether provision
should be made in the FW(RO) Act with respect to the obligations of
registered organisations to make and keep minutes of committee of
management meetings, and if so, what form any amendments should
take. The Discussion Paper also made reference to the fact that the
Fair Work (Registered Organisations) Bill 2014 [No 2] (Cth) included
131 Fair Work (Registered Organisations) Act 2009 (Cth), s 230(1)(a). 132 Fair Work (Registered Organisations) Act 2009 (Cth), s 252.
107
a provision to amend s 141(1)(b)(ii) of the FW(RO) Act to include a
requirement that rules of an organisation must provide for:133
(iia) the keeping of minute books in which are recorded proceedings and resolutions of meetings of committees of management of the organisation and its branches.
135. A number of submissions were received on this topic. Regard was also
had to submissions on this topic in the Fair Work (Registered
Organisations) Amendment Bill 2014 [No 2] (Cth) and its
predecessors.
136. There were few cogent arguments against some kind of legislative
requirement that registered organisations keep minutes of committee of
management meetings.
137. In submissions to the inquiry by the Senate Education and
Employment Legislation Committee into the Fair Work (Registered
Organisations) Amendment Bill 2013 (Cth), the Australian Nursing and
Midwifery Federation submitted that the requirement was too onerous,
and that sensitive matters were often deliberately not recorded.134 A
blanket requirement to keep minutes would encourage a lack of
transparency with more ‘off the record discussions’ and consequently
reduced accountability.
138. The flaw in that submission is the assumption that any provision would
be highly prescriptive about the matters that should be recorded. A
133
Fair Work (Registered Organisations) Amendment Bill 2014 [No 2] (Cth), Sch 2, item 19. 134 Australian Nursing and Midwifery Federation, Submission to the Senate Education and Employment References Committee Inquiry into the Fair Work (Registered Organisations) Amendment Bill 2013 (Cth), January 2014, p 5.
108
requirement to keep minutes recording the proceedings and resolutions
of committee of management meetings should not prove too onerous.
139. In its submissions to the same inquiry, the ACTU pointed out that there
is no comparable provision in the replaceable rules contained in the
Corporations Act 2001 (Cth) requiring companies to keep minutes.135
That is true but misleading. The reason there is nothing in the
replaceable rules is because s 251A creates a number of statutory
obligations on all companies to keep minutes. Breach of s 251A is a
criminal offence of strict liability carrying a maximum penalty of 10
penalty units ($1,800), or 3 months imprisonment or both.136
140. There are obvious reasons why registered organisations should make
and keep minutes of committee of management meetings. Committees
of management make numerous operational and financial decisions. It
is therefore essential that the meetings in which those decisions are
taken are properly recorded.
141. In addition or as an alternative to keeping minutes, the Discussion
Paper raised whether registered organisations should be required to
keep digital audio recordings of committee of management meetings to
avoid the disputes that have arisen in relation the HSU and the ETU.
This option is not preferred for a number of reasons. First, it is overly
prescriptive and is not a requirement imposed on companies.
Secondly, as noted in the submission of the Employment Law
135 Australian Council of Trade Unions, Submission to the Senate Education and Employment Legislation Committee Inquiry into the Fair Work (Registered Organisations) Amendment Bill 2013 (Cth), 22/11/13, p 17. 136
Corporations Act 2001 (Cth), Sch 3, item 71.
109
Committee of the Law Society of New South Wales, this method is
open to interference by the person with control of the recording device.
Thirdly, requiring an audio recording, as opposed to written minutes,
might inhibit the free flow of discussion at meetings.
142. As to the form which a requirement to keep minutes should take, the
Victorian Automobile Chamber of Commerce made the important
point that rule changes are costly and time consuming for registered
organisations:137
While in principle VACC is not opposed to this requirement, VACC found during the process of drafting rule changes to satisfy the former government’s amendments, many of our rules required multiple rewrites because they were drafted decades ago. VACC’s Constitution and Rules already address this matter and, if further change is required, it will be a further time consuming and costly process. Our rules require an extraordinary meeting of members (EGM) to endorse rule changes. Notification and postage alone to all members is costly and, having had two EGMs in 2013, members are fatigued with the process and somewhat suspicious of ongoing changes to the Constitution and Rules.
143. A simpler and easier way of requiring organisations and branches to
keep minutes is to impose a direct statutory obligation to keep minutes
- along the lines imposed under s 251A of the Corporations Act 2001
(Cth). In order to ensure compliance, the provision should be a civil
penalty provision.
144. In addition, registered organisations and branches should be required to
keep documents and papers that are necessary to understand the
minutes. Commonly, minutes of committee of management meetings
record resolutions or decisions, particularly in relation to financial
137 Victorian Automobile Chamber of Commerce, Submission of the Senate Education and Employment Legislation Committee into the Fair Work (Registered Organisations) Amendment Bill 2014 [No 2] (Cth), 30/6/15, p. 6.
110
matters, that are incapable of being understood without reference to
these documents. These documents may already be required to be kept
under s 252 of the FW(RO) Act, but it is considered desirable to make
this explicit.
Recommendation 16
A new civil penalty provision be introduced to the Fair Work (Registered
Organisations) Act 2009 (Cth) requiring organisations and branches to make
and keep minutes recording the proceedings and resolutions of committee of
management meetings. Documents and papers that are necessary to refer to in
order to understand the effect of the minutes also be kept. The documents be
retained for a minimum of 7 years. The minutes and associated documents be
available upon request by members of the organisation free of charge.
Financial records
145. Currently, s 252 of the FW(RO) Act requires reporting units to keep
certain financial records for a minimum period of seven years.
However, there are no consequences for a reporting unit that fails to
comply with these obligations. There seems no reason why this
provision, like the other record keeping requirements imposed by s 230
of the FW(RO) Act, should not be a civil penalty provision.
Recommendation 17
The obligation to keep financial records in s 252 of the Fair Work (Registered
Organisations) Act 2009 (Cth) be amended to be made a civil penalty provision.
111
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152. In June 2014, the Commission called for, and received a number of,
submissions into the adequacy of current protections for trade union
‘whistleblowers.’138 It organised an academic dialogue on 28 July
2014 as part of its policy consultation process at which the issue of
protection for ‘whistleblowers’ was one of the topics for discussion.
Counsel assisting made detailed submissions on the topic in 2014.139
The Commission received further submissions on the topic in response
to the Discussion Paper which canvassed potential areas for reform in
respect of the protected disclosures regime which currently exists in
the FW(RO) Act.140 Those submissions underpin the discussion
below.
Existing protected disclosure regime
153. Part 4A of chapter 11 of the FW(RO) Act is entitled ‘Protection for
Whistleblowers’.
154. Section 337A defines circumstances when a disclosure of information
by a person (‘the discloser’) qualifies for protection. There are
numerous requirements that apply:
138 Issues Paper 1: Whistleblower Protections, 13/6/14; See Chamber of Commerce and Industry WA Submission in response to Issues Paper 1: Whistleblower Protections, 11/7/14; New South Wales Police Force Submission in response to Issues Paper 1: Whistleblower Protections, 11/7/14; Carolyn Summers Submission in response to Issues Paper 1: Whistleblower Protections undated (received 20/8/14); Kylee Brehaut Submission in response to Issues Paper 1: Whistleblower Protections, 1/9/14; Stuart Vaccaneo, Submission in response to Issues Paper 1: Whistleblower Protections, undated (received 14/7/14). 139
Submissions of Counsel Assisting, 31/10/14, ch 19.2. 140 Australian Industry Group Law Reform Submissions, 21/8/15, p 7; Associate Professor Louise Floyd Law Reform Submissions, 21/8/15, p 3, Attachment E; Master Builders Australia Law Reform Submissions, 21/8/15, p 21-24; Victoria Police Law Reform Submissions, 10/9/15, pp 17-20.
113
(a) The discloser must be an officer, employee or member of an
organisation or branch.
(b) The disclosure must be made to one of:
(i) a member, the General Manager or member of staff
of the Fair Work Commission;
(ii) the Director or an inspector of the Fair Work
Building Inspectorate; or
(iii) a member of staff of the Office of the Fair Work
Ombudsman.
(c) The discloser must give the person’s name before making the
disclosure.
(d) The discloser must have reasonable grounds to suspect the
information indicates that the organisation or branch, or an
officer or employee of the organisation or branch, has or may
have contravened the FW Act or the FW(RO) Act.
(e) The discloser makes the disclosure in good faith.
155. Section 337B provides that if a person makes a disclosure that qualifies
for protection, the person is not subject to any civil or criminal liability
for making the disclosure. Nor can any contractual or other remedy or
right be exercised against the person.
114
156. In addition to this protection, s 337C creates a criminal offence of
victimising a whistleblower. In broad terms, a person must not
intentionally cause, or intentionally or reckless threaten to cause,
detriment to a person because the person made a disclosure that
qualifies for protection. Officers and employees of an organisation
involved in a contravention of s 337C by the organisation are also
criminally liable. The maximum penalty is 25 penalty units ($4,500)
or imprisonment for 6 months, or both.
157. Section 337D provides a victim with a right to compensation for
damage suffered as the result of victimisation.
158. Below, recommendations are made in relation to three main aspects of
the regime. They are (1) the class of persons who can make a
protected disclosure, (2) the class of persons who can receive a
protected disclosure and their obligations in dealing with a protected
disclosure and (3) the remedies available for adverse action.
Persons who can make a protected disclosure
159. The class of persons who can make a protected disclosure is too
narrow. Consistently with the Public Interest Disclosure Act 2013
(Cth)141 - which allows current and former public officials to make a
disclosure - former officers, employees and members of a registered
141 See Public Interest Disclosure Act 2013 (Cth), s 69.
115
organisation should be permitted to make a protected disclosure.
Numerous submissions were made in support of this approach.142
160. The disclosure regime in the Corporations Act 2001 (Cth) allows
disclosure by a person who has a contract for the supply of services or
goods to company, or an employee of such a person. Consistently with
this disclosure regime, protected disclosures should be permitted from
persons contracting for goods or services, or otherwise dealing, with a
registered organisation or branch. Again, a number of submissions
were made in support of this approach.143
161. Should the class of persons who can make a protected disclosure be
extended to members of the public generally, or members of the public
but only in relation to suspected criminal offences? Both Master
Builders Australia144 and Australian Industry Group opposed the
expansion of the whistleblower provisions to include the public. Ai
Group submitted that:145
[s]uch extremely wide whistleblower protections do not currently apply under other relevant laws such as the Corporations Act 2001 and the Public Interest Disclosure Act 2013.
142 Victorian Government, Submission in Response to Issues Papers, August 2014, p 13-15; Master Builders Australia Law Reform Submissions, 21/8/15, p 21; Victoria Police Law Reform Submissions, 10/9/15, p 17; Australian Industry Group Law Reform Submissions, 21/8/15, p 7. 143
Victorian Government, Submission in Response to Issues Papers, August 2014, p 13-15, 23; Master Builders Australia Law Reform Submissions, 21/8/15, p 21; Victoria Police Law Reform Submissions, 10/9/15, p 17; Australian Industry Group Law Reform Submissions, 21/8/15, p 7. 144
Master Builders Australia Law Reform Submissions, 21/8/15, p 21. 145 Australian Industry Group Law Reform Submissions, 21/8/15, p 7.
116
162. Victoria Police submitted that if the class of protected disclosers was
extended to members of the public making a disclosure about a
suspected criminal offence, it would be necessary to extend the scope
of the subject matters about which a disclosure can be made.146
Further, Victoria Police submitted that:147
[t]here are some offence provisions in the Registered Organisations Act, but they do not relate to the types of criminal activities identified by Victoria Police that involve trade unions, their officials or officers, such as the making and receiving of corrupt payments, fraud offences, blackmail and coercion and drug offences.
163. It is not recommended that the class of persons who can make a
protected disclosure be expanded to include members of the public
generally, or specifically in relation to criminal offences. Insofar as a
member of the public has a complaint that involves criminal conduct,
the criminal law can be invoked to provide members of the public with
protection.
Recommendation 18
The categories of persons who can make a protected disclosure under s 337A(a)
of the Fair Work (Registered Organisations) Act 2009 (Cth) be expanded to
include:
(a) a former officer, employee or member of an organisation or branch; and
(b) a person contracting for the supply of goods or services, or otherwise
dealing with an organisation or branch of an organisation (or an officer
or employee of an organisation or branch on behalf of the organisation
or branch); and
(c) an officer of employee of a person mentioned in (b).
146 Victoria Police Law Reform Submissions, 10/9/15, p 18. 147 Victoria Police Law Reform Submissions, 10/9/15, p 19.
117
Persons entitled to receive a protected disclosure
164. Section 26 of the Public Interest Disclosure Act 2013 (Cth) allows a
protected disclosure to any person, other than a foreign public official.
In the context of corporations, s 1317AA(1) of the Corporations Act
2001 (Cth) permits ASIC, a company’s auditor, a director, secretary or
senior manager of the company, or a person authorised by the company
to receive a protected disclosure.
165. A particular issue about which the Commission received conflicting
submissions is whether State or Federal police officers should be
entitled to receive a protected disclosure, or at least some protected
disclosures.148
166. In response to the question about whether State and Federal police
should be authorised to receive protected disclosures under the
FW(RO) Act, Victoria Police submitted that:149
Since the Registered Organisations Act primarily relates to industrial law, it may not be appropriate to make amendments to the Registered Organisations Act provisions extending the types of conduct that is protected to cover criminal offences, particularly those contrary to state law. However, as indicated above, conduct that relates to breaches of the Registered Organisations Act and the Fair Work Act may also be information about possible criminal conduct.
148 See, for example, Joel Silver Submission in response to Issues Papers, undated (received 14/7/14), p 3; New South Wales Police Force Submission in response to Issues Paper 1: Whistleblower Protections, 11/7/14; Victoria Police Law Reform Submissions, 10/9/15, p 18. 149
Victoria Police Law Reform Submission, 10/9/15, p 18.
118
167. Victoria Police also submitted that:
(a) Under s 335C(2)(b) of the Fair Work (Registered
Organisations) Act 2009 (Cth) the General Manager or staff
of the FWC may refer information acquired in the course of
an investigation about criminal conduct to the Australian
Federal Police or other state or territory police forces,
provided ‘disclosure is likely to assist in the administration or
enforcement of a law of the Commonwealth or a State or
Territory’;150 and
(b) it may not be appropriate for Victoria Police to receive
disclosures in its own right, but through an effective referral
mechanism.151
168. In a similar vein, Master Builders Australia submitted that the single
regulator for registered organisations should receive the relevant
disclosures and that, if those disclosures reveal criminal conduct, the
regulator should refer the matters to the police.152
169. The NSW Police Force submitted that:153
It is not appropriate for NSW Police Force officers to be named recipients to receive protected disclosures under the Act as police are primarily concerned with investigating complaints of criminal conduct and should
150 Victoria Police Law Reform Submissions, 10/9/15, p 18. 151 Victoria Police Law Reform Submissions, 10/9/15, p 19. 152
Master Builders Australia Law Reform Submissions, 21/8/15, p 22. 153 New South Wales Police Force Submission in response to Issues Paper 1: Whistleblower Protections, 11/7/14.
119
not deal with complaints about possible breaches of the Act (unless they involve allegations that a crime or other offence has been committed).
170. What about even broader disclosures? As noted, under the Public
Interest Disclosure Act 2013 (Cth), disclosures are permitted to any
third party, except foreign public officials. This would include, for
example, journalists.
171. The Australia Labor Party has announced that, in relation to registered
organisations, it proposes to extend the existing protections so that
whistleblowers will be protected from adverse action if they disclose
‘to any third party (including the media), as long as they first raised the
matter with one of the Fair Work Regulators and the union itself’.154
To limit whistleblower protections to situations where the
whilstleblower is first required to notify the union would deprive the
whilstleblower provisions of any real value.
172. In the context of public sector disclosures there is arguably a real need
to allow protected disclosures to be made to persons other than
government or statutory authorities. In many cases, there may be a real
risk that, if information adverse to government is disclosed to a
government authority, the relevant agency will do nothing about it
because it will not want to embarrass the government.
173. However, that risk is reduced in the context where the information
disclosed concerns the conduct of registered organisations and their
officials and the persons receiving protected disclosures are
154 Australian Labor Party, ‘Fact Sheet: Better Union Governance’, released 7/12/15, p 3.
120
independent statutory authorities.155 In the context of registered
organisations, expanding the class of persons to include the media also
risks increasing the chance of defamatory or exaggerated claims being
made as part of the internal disputes within trade unions.
174. Rather than extending the class of persons who can receive a protected
disclosure, it is recommended that additional measures be introduced
to safeguard against the possibility of regulatory inaction or
information leakage. To that end, it is recommended that, in
accordance with similar provisions in the Public Interest Disclosure
Act 2013 (Cth)156 the regulatory authorities permitted to receive a
protected disclosure be subject to an obligation to undertake an
investigation in relation to a protected disclosure within a prescribed
time period.
Recommendation 19
The Fair Work (Registered Organisations) Act 2009 (Cth) be amended to
require the regulatory authorities entitled to receive a protected disclosure to
investigate the disclosure within a specified period.
Remedies for adverse action
175. There are a number of defects with the existing remedies available for
adverse action taken against whistleblowers.
155 This is another matter that reinforces the need for an independent regulator of registered organisations. 156
See Public Interest Disclosure Act 2013 (Cth), Pt 3.
121
176. First, despite submissions to the contrary from the Ai Group157 and
Master Builders Australia,158 the criminal penalties for breach of
s 337C are too low. In comparison, the maximum penalty for reprisal
action taken against a person who makes a protected disclosure under
the Public Interest Disclosure Act 2013 (Cth) is imprisonment for two
years, or a fine of 120 penalty units ($21,600) or both. The Australian
Labor Party has proposed to increase the penalties under the FW(RO)
Act to match the penalties available under the Public Interest
Disclosure Act 2013 (Cth).159 This is a sensible reform.160
177. Secondly, the offence under s 337C of the FW(RO) Act (and also the
Corporations Act 2001 (Cth)) is considerably narrower in scope than
the offence of taking or threatening reprisal action under the Public
Interest Disclosure Act 2013 (Cth). Section 337C should be replaced
with the broader offence of taking or threating reprisal action.
178. Thirdly, currently a person who engages in adverse action against a
whistleblower (for example, a Secretary or officer of an organisation)
can still continue to hold office. Persons who victimise whistleblowers
have no place in managing registered organisations. Section 212 of the
FW(RO) Act should be amended to provide that a person convicted of
157 Australian Industry Group Law Reform Submissions, 21/8/15, p 7. 158 Master Builders Australia Law Reform Submissions, 21/8/15, p 23. 159
Australian Labor Party, ‘Fact Sheet: Better Union Governance’, released 7/12/15, pp 2-3. 160 See also Chamber of Commerce and Industry WA Submission in response to Issues Paper 1: Whistleblower Protections, 11/7/14, p 3.
122
an offence against s 337C is automatically disqualified from holding
office in an organisation or branch of an organisation.161
179. Finally, as was noted in the Discussion Paper, there is, in contrast with
the Public Interest Disclosure Act 2013 (Cth),162 no specific provision
made for reinstatement of a victim whose employment is terminated as
part of reprisal action, nor is there a provision entitling the court to
give appropriate mandatory injunctions to prevent reprisal action.
Through a complex set of provisions of the FW Act, a person whose
employment was terminated as a result of making a protected
disclosure may be entitled to seek a remedy under the general
provisions of the FW Act concerning ‘adverse action’, including
reinstatement.163 However, it is recommended to put the issue beyond
any doubt. It is also recommended to adopt the broad remedial
provisions found in the Public Interest Disclosure Act 2013 (Cth).
Recommendation 20
Section 337C of the Fair Work (Registered Organisations) Act 2009 (Cth) be
repealed and replaced with a provision in similar terms to s 19 of the Public
Interest Disclosure Act 2013 (Cth) prohibiting reprisal action against
whistleblowers. This would lead to an increase in the existing maximum penalty
for reprisal to two years’ imprisonment, or a fine of 120 penalty units, or both.
161 See Australian Industry Group Law Reform Submissions, 21/8/15, p 7; Master Builders Australia Law Reform Submissions, 21/8/15, p 23; Chamber of Commerce and Industry WA Submission in response to Issues Paper 1: Whistleblower Protections, 11/7/14, p 4. 162
See ss 15 (injunctions, apologies and other orders) and 16 (reinstatement). 163 Fair Work Act 2009 (Cth), ss 340(1)(a), 341(1)(b), 341(1)(c), 341(2), 342(1), 539(1), 545(1), 545(2)(c).
123
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182. One issue concerning s 190 is whether it only prohibits an organisation
or branch rendering assistance to one candidate over another in an
election for an office or position in that organisation or branch (the
narrow construction), or whether it applies also to a different
organisation or branch (the broad construction).
183. In Chapter 2.2 of the Interim Report, the view was expressed that, as a
matter of statutory construction, the broad construction of s 190 was
clearly preferable.164 As was noted in the Interim Report:165
Parliament could easily have inserted words of limitation to confine the reach of s 190. It did not.
184. Further, it was noted it was desirable to amend s 190 to provide as
follows:166
An organisation or branch commits an offence if it uses, or allows to be used, its property or resources to help a candidate against another candidate in an election under this Part (in respect of any organisation or branch) for an office or position.
185. The submissions to the Commission generally supported the
amendment to s 190 proposed in the Interim Report.167 However, the
164 Royal Commission into Trade Union Governance and Corruption, Interim Report (2014) Vol 1, ch 2.2, pp 64-65. 165
Royal Commission into Trade Union Governance and Corruption, Interim Report (2014), Vol 1, ch 2.2, p 64 [15]. 166 Royal Commission into Trade Union Governance and Corruption, Interim Report (2014), Vol 1, ch 2.2, p 65. 167
Association Forum Pty Ltd Law Reform Submissions, 4/9/15, p 3; Australian Chamber of Commerce and Industry Law Reform Submissions, August 2015, p 16; Master Builders Australia Law Reform Submissions, 21/8/15, p 16.
125
Employment Law Committee of the Law Society of New South Wales
was against any amendment.168
Recommendation 23
Section 190 of the Fair Work (Registered Organisations) Act 2009 (Cth) be
amended to prohibit an organisation or branch using, or allowing to be used, its
property or resources to help a candidate in an election for office in any
registered organisation or branch.
This recommendation is reflected in the model legislative provisions in
Appendix 1 of this Volume of the Report.
Use of union funds as political donations or for political expenditure
186. The Discussion Paper raised for consideration whether restrictions
should be placed on the use of an organisation’s funds for the purposes
of making political donations or incurring political expenditure, and in
particular whether organisations should be required to make political
donations or expenditure only from a separate fund containing
voluntary contributions raised from members specifically for political
purposes.169
168 Law Society of New South Wales, Employment Law Committee Law Reform Submissions, 21/8/15, pp 4-5. 169
The Discussion Paper traced briefly the history in Australia of restricting trade unions from making political donations, at least unless the donation was made out of a separate fund to which no member of the union could be required to contribute: Discussion Paper, pp 35-36.
126
187. The reasons for raising this issue were twofold. First, political
donations are capable of being used by senior officials in a union,
particularly the union Secretary, to establish patronage and influence.
The dangers associated with an ‘all powerful’ union Secretary have
already been discussed. Secondly, given that the eligibility rules for
registered organisations must not discriminate between persons on the
basis of political opinion,170 and that many individuals join a union not
to engage in political activities but to obtain better working conditions,
arguably individual members should decide whether to contribute
funds to a political party, rather than the union executive.
188. Some submissions were in favour of restricting the use of funds for
political purposes.171 Master Builders Australia172 advocated a system
similar to that which applies in the United Kingdom, whereby trade
unions can expend money for political objects but only if:
(a) the furtherance of political objects is approved as an object of
the union at a ballot by a majority of members; and
(b) payments in furtherance of political objects are made out of a
separate fund, no member can be forced to contribute to the
separate fund and contributions to the fund cannot be made a
condition of membership.173
170 Fair Work (Registered Organisations) Act 2009 (Cth), s 142(1)(d). 171 Australian Chamber of Commerce and Industry Law Reform Submissions, August 2015, p 17; Master Builders Australia Law Reform Submissions, 21/8/15, pp 17-18. 172
Master Builders Australia Law Reform Submissions, 21/8/15, pp 18-19. 173 Trade Union and Labour Relations (Consolidation) Act 1992 (UK), s 71. These restrictions originated in the Trade Union Act 1913 (UK), which followed the decision of the
127
189. On the other hand, the Associations Forum Pty Ltd submitted that it
was up to the elected officials of an organisation to decide to expend
money in the furtherance of political objects.174
190. Despite the attractiveness of the United Kingdom model in preventing
union members being compelled to contribute money to a political
cause they do not support, there are several matters that militate against
adopting similar legislation federally.
191. In the first place, although restrictions similar to those that currently
apply in the United Kingdom have been enacted previously in a
number of Australian States,175 restrictions of this kind have not been
applied to organisations registered under Commonwealth legislation.
Secondly, as the Discussion Paper noted, there is a cogent argument
that registered organisations, just like corporations and other legal
persons, should be free to spend their funds for political purposes. The
officers of such organisations are democratically accountable to the
members and, if the majority of members are unhappy with the
decisions taken concerning political donations and expenditure, the
officers can be voted out of office at the next election. Thirdly, there
may be arguments that the United Kingdom model infringes the
freedom of political communication which has been implied from the
Constitution. In relation to this point, although in 1999 the Full Court
of the Supreme Court of Western Australia rejected this argument in
House of Lords in Osborne v Amalgamated Society of Railway Servants [1910] AC 87 preventing trade unions registered under the Trade Union Act 1871 (UK) from using their funds for political purposes.
174 Associations Forum Pty Ltd Law Reform Submissions, 4/9/14, p 3. 175 See the legislation cited in Discussion Paper, p 36.
128
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satisfied that the rules of the organisation comply with the
requirements of the Act in relation to the conduct of elections and that
elections will be conducted under the rules of the organisation and in a
manner that will afford voting members an adequate opportunity for
voting without intimidation.179
195. In 2014 and 2015, the Commission received a number of submissions
about whether s 186 remains appropriate, and whether any
amendments to that provision are desirable. Both the Ai Group and the
CFMEU submitted that no change to s 186 was appropriate, and that
the exemption system allows organisations to conduct their own
elections in a cost-effective way in accordance with the requirements
of the legislation.180 The CFMEU submission concluded that ‘[t]here
is no valid reason from the perspective of the Union and the members
it represents, to alter a system that is working effectively.’181
196. Other submissions received, however, argued that the current regime
was defective. Master Builders Australia supported the current regime
but subject to an additional requirement that the exemption should not
be available to a registered organisation that has breached ‘any of the
provisions of the law relating to registered organisations.’182 Stuart
Vaccaneo, a former Executive Vice-President of the Queensland
District Branch of the Mining and Energy Division of the CFMEU,
179 Fair Work (Registered Organisations) Act 2009 (Cth), s 186. 180 Slater & Gordon on behalf of Construction, Forestry, Mining and Energy Union Submission in Response to Issues Paper 3: Funding of Trade Union Elections, 1/8/14, p 1; Australian Industry Group, Submission in Response to Issues Papers 1-3, 11/7/14, p 11. 181
Slater & Gordon on behalf of Construction, Forestry, Mining and Energy Union Submission in Response to Issues Paper 3: Funding of Trade Union Elections, 1/8/14, p 39. 182
Master Builders Australia Submission in Response to Issues Paper 3: Funding of Trade Union Elections, 11/7/14, pp 2, 4.
130
argued that the current regime was inappropriate because of the
absence of provisions dealing with how unions with exemptions handle
complaints about the conduct of elections, and the absence of any
requirement for unions with exemptions to produce a post-election
report as the AEC is required to do.183 In short, the submission was
made that the current system allows a complete lack of independent
scrutiny in respect of elections. The Employment Law Committee of
the Law Society of New South Wales submitted that the exemption
provisions should be repealed, but if this is not done, then the
requirement to provide a post-election report should be extended to the
alternative person who conducts the election.184
197. Subsequently to the receipt of submissions in 2015, there have been
considerable developments in relation to this topic. On 30 October
2015, Chris Enright, Director of the Regulatory Compliance Branch,
acting on behalf of the General Manager of the Fair Work
Commission, revoked the exemption granted to the Queensland
District Branch of Mining and Energy Division of the CFMEU which
had been granted in 1996 and remained in force since that time.185
That decision canvassed a number of matters including the history and
operation of the exemption in s 186. At the time of writing this Report,
the decision is subject to appeal to the Fair Work Commission.
183 Stuart Vaccaneo Submission in Response to Issues Paper 3: Funding of Trade Union Elections, undated (received 11/7/14), p 1. 184
Law Society of New South Wales, Employment Law Committee Law Reform Submissions, 21/8/15, p 6. 185 Queensland District Branch of the Mining and Energy Division of the Construction, Forestry, Mining and Energy Union [2015] FWCD 7109.
131
198. In light of that decision and the pending appeal, it is not considered
appropriate to make any recommendations concerning the repeal of
ss 182(2), 183 and 186 (and consequently ss 184 and 185) of the
FW(RO) Act. If the appeal is unsuccessful, then arguably the
processes for revocation of an exemption under the FW(RO) Act are
capable of operating effectively, subject to the matter identified
immediately below. If the appeal is successful, then there may be a
range of matters that Parliament would need to give consideration to
concerning the conduct of union elections. These are not the only
possibilities.
199. However, an important matter noted in the decision referred to above
was the following:186
Elections conducted by organisations or branches with AEC exemptions are not subject to review by any external body. Essentially, the only review mechanism for AEC exemptions is the power to revoke in s 186(2) of the [FW(RO) Act].
200. If the exemption in s 186 is to remain it is desirable that the FW(RO)
Act be amended to require an organisation or branch that has been
granted an exemption to lodge a report with the Registered
Organisations Commission, similar to the report required to be lodged
by the Australian Electoral Commission under s 197. This will at least
ensure that there is some oversight of elections conducted by
organisations and branches.
186 Queensland District Branch of the Mining and Energy Division of the Construction, Forestry, Mining and Energy Union [2015] FWCD 7109 at [12].
132
Recommendation 24
No recommendation is made to repeal ss 182(2), 183-186 of the Fair Work
(Registered Organisations) Act 2009 (Cth) at this time. On the assumption that
those sections remain, that Act be amended to require an organisation or branch
that has an exemption under s 186 to lodge a report with the registered
organisations regulator after the completion of an election conducted pursuant to
the exemption. The report should include details about how the election was
conducted, whether any complaints were received and how those complaints
have been addressed.
133
134
APPENDIX A
Mark Hardacre
1. Michael Williamson was for some years General Secretary of the HSU
NSW Branch. By all accounts he was a domineering and powerful
individual who wielded significant influence over others and was an
autocratic and authoritarian leader.
2. The evidence of Mark Hardacre about Michael Williamson’s treatment
of him and Katrina Vernon following the 1995 HSU NSW Union
elections was particularly confronting both in the ruthlessness of
Michael Williamson’s treatment of them and the lengths to which he
went to seek to remove from the Union Mark Hardacre and Katrina
Vernon - elected officials he felt were opposed to his interests.
3. The background to the 1995 elections is as follows. Mark Hardacre
and Katrina Vernon ran on a ticket in opposition to Michael
Williamson in the 1995 HSU NSW election.1 Michael Williamson
was ultimately elected State Secretary. Michael Williamson’s
candidates for the offices of Assistant Secretary were defeated and
Mark Hardacre and Katrina Vernon were each elected Assistant
Secretary.2
1 Hardacre MFI-1, 16/6/14, p 19. 2 Mark Hardacre, witness statement, 16/6/14, paras 127-140.
135
4. Thereafter commenced a campaign of bullying, isolation and terror
directed towards Mark Hardacre and Katrina Vernon, apparently
spearheaded by Michael Williamson.
5. Mark Hardacre gave evidence that, inter alia:
(a) Mark Hardacre and Katrina Vernon were seated in a
‘demeaning’ work environment, and were denied benefits to
which the outgoing officers were entitled - including to a car
and office. Following the election, the outgoing Assistant
Secretaries were immediately hired as consultants and kept
their cars and offices. In that way, in effect, they kept their
jobs as de facto Assistant Secretaries;3
(b) Mark Hardacre and Katrina Vernon were isolated, at the
direction of Michael Williamson, were not given any work,
and were denied access to the weekly Labor Council
delegation and to the ALP Annual Conference held annually
in the Sydney Town Hall;4
(c) Katrina Vernon ultimately suffered from a breakdown and
successfully bought a workers’ compensation claim against
the Union;5
(d) Katrina Vernon was made redundant from the Union on the
basis of a report Michael Williamson had commissioned
3 Mark Hardacre, witness statement, 16/6/14, para 37; Hardacre, 16/6/14, T:543.14-23. 4 Mark Hardacre, witness statement, 16/6/14, paras 37-40. 5
Mark Hardacre, witness statement, 16/6/14, para 41.
136
which recommended that one or both Assistant Secretary
positions be abolished. Mark Hardacre gave evidence to the
effect that this report was contrived and engineered to achieve
this outcome. Mark Hardacre said that he saw a document on
a photocopying machine which revealed that Katrina Vernon
was paid a redundancy payment of $88,000. Mark Hardacre
described this as ‘one way [Michael] Williamson removed his
opponents.’6 Michael Williamson approached Mark Hardacre
about leaving the Union in exchange for a substantial amount
of money, but he declined. After Katrina Vernon left, Mark
Hardacre was isolated and had no-one to talk to. Mark
Hardacre said that this treatment persisted for the balance of
his four year term. He said of his experience:7
It was total containment and isolation. I could not get out of the office to visit Union Members. [Michael] Williamson would arrange for the organisers to go out there to members saying that [Katrina] Vernon and I were useless in our roles as executive officials because we were never out with members. [Michael] Williamson had direct supervision and control over those officers and he also put this proposition to the State Council, which fully supported him.
(e) Executive Council meetings were held once a month on
Mondays, and the Council meetings the following Wednesday
were ‘very daunting’ for Mark Hardacre as ‘[n]ormally [he]
would be set up to have to explain [his] conduct.’ He gave
evidence that at these meetings he would be accused of
breaching union rules, allegations which he would have to
answer because the next step would be removal from his
6 Mark Hardacre, witness statement, 16/6/14, para 47. 7 Mark Hardacre, witness statement, 16/6/14, para 54.
137
office. On one occasion Michael Williamson moved a motion
against him for being defiant in breach of the Union rules. He
had to get legal support to fight those charges from the
Council.8
6. In 1999 Mark Hardacre was again part of a ticket contesting the HREA
elections. In the middle of the election campaign, Mark Hardacre, his
wife and three others (two of whom were on Mark Hardacre’s ticket)
were sued in defamation. Mark Hardacre and his wife each had to pay
about $20,000 to meet the legal costs they incurred and had to borrow
against their house to do so. The proceedings were eventually settled.9
7. Michael Williamson won that election in ‘one of the biggest union
landslides in history.’10 Mark Hardacre gave evidence that he still has
concerns about how Michael Williamson won the election, and noted
that it was normal to get about 300 or 400 votes in each day but that on
one day during the 1999 elections, some 2,500 votes came in which
was unheard of. Mark Hardacre also gave evidence about a printing
press purchased by the HREA in 1999 to which no-one but Michael
Williamson and Cheryl McMillan had access. He is not aware of
whether ballot papers were printed off for the 1999 elections but is
aware that there were occasions on which people were recorded as
having voted twice without correction.11
8 Mark Hardacre, witness statement, 16/6/14, para 58. 9 Mark Hardacre, 16/6/14, T:560.33. 10
Mark Hardacre, witness statement, 16/6/14, para 83. 11 Mark Hardacre, witness statement, 16/6/14, paras 83, 85.
138
8. Michael Williamson ruthlessly bullied Mark Hardacre and Katrina
Vernon, and used the members’ funds to do so (by commencing legal
proceedings against them with members’ money and paying out
substantial amounts of money to remove his enemies from the
Union).12
Katrina Hart
9. More than a decade after Mark Hardacre’s experience, Katrina Hart,
the President of one of HSU NSW’s largest sub-branches, was
similarly marginalised by those whose conduct she questioned.
10. Intercepted phone calls tendered to the Commission demonstrated that
Michael Williamson, who was at this point on leave because of serious
allegations concerning his conduct - conspiring with senior officers of
the union to defeat Katrina Hart’s requests for transparency and
accountability.13
Officers and employees of Victoria No. 1 Branch
11. In 2013, in yet another branch of the troubled HSU, allegations of
bullying and intimidation of whistleblowers again resurfaced, this time
concerning the Victoria No. 1 Branch under the control of Diana
Asmar and her General Manager, Kimberley Kitching. The
Commission heard from a number of witnesses: Leonie Flynn,14 Peggy
12 See Christopher Brown, witness statement, 29/8/14, para 96-97. 13 Hayes MFI-1, 26/9/14, T:3:28-30; Hayes MFI-2, 26/9/14, T:11.19-21. 14
Leonie Flynn, witness statement, 25/8/14, paras 16-100, 202-207.
139
Lee15 and Robert McCubbin. Each spoke of the conduct of Diana
Asmar and her supporters when they raised concerns about misconduct
by branch officers and employees.
Brian Fitzpatrick
12. The adverse consequences that affect whistleblowers was not limited to
the HSU. The CFMEU’s treatment of persons who gave evidence to
the Commission is a case in point. Many of these persons were made
the subject of false and irrelevant accusations and character slurs. In
relation to its own officers those who speak out are marginalised and
abused. Brian Fitzpatrick is a case in point.16
13. Brian Fitzpatrick was employed by the NSW Branch of the CFMEU
for some 25 years as both an organiser, or coordinator of teams of
organisers.17 In March 2013 Brian Fitzpatrick discovered that
companies operated by George Alex (see Chapter 7.2 which examines
the relationship between George Alex and the CFMEU in detail) had
not been paying employees their entitlements.18
14. After making enquiries and following the matter up with George Alex,
On 27 March 2013, Brian Fitzpatrick received a telephone call from
15 Pik ki (Peggy) Lee, witness statement, 25/8/14, paras 41, 60-64, 84-92. 16 See Royal Commission into Trade Union Governance and Corruption, Interim Report (2014), Vol 2, ch 8.5. 17
Brian Fitzpatrick, witness statement, 14/7/14, para 9. 18 Brian Fitzpatrick, witness statement, 14/7/14, para 44.
140
Darren Greenfield, another organiser of the NSW Branch of the
CFMEU threatening to kill him and telling him that he was ‘dead.’19
15. When the matter was reporting to Brian Parker, he responded with
indifference and the matter was not properly or promptly investigated.
16. On 12 April 2013, a Committee of Management meeting was held at
which a discussion took place, not about the death threat, but about a
union official calling the police about another official.20 Brian
Fitzpatrick had been invited to attend the meeting as a visitor, but was
told to leave the room during the relevant discussion.21
17. In and after May 2013 Brian Fitzpatrick continued to pursue George
Alex about his outstanding entitlements to workers. Thereafter
followed a sustained campaign within the NSW Branch to force Brian
Fitzpatrick out of the Union. He was demoted and many of his
responsibilities were taken away.22 He was vilified and threatened
with dismissal.23 He was eventually offered an amount in the order of
$300,000 to leave the Union.24 Brian Fitzpatrick agreed to leave the
union with 12 months’ pay and a car after being persuaded by a long-
19 Brian Fitzpatrick, witness statement, 14/7/14, para 61. 20 Fitzpatrick MFI-1, 15/7/14, Vol. 1, p 27. 21
Brian Fitzpatrick, 15/7/14, T:33.4-8. 22 Brian Fitzpatrick, 15/7/14, T:37.39-41. 23
Brian Fitzpatrick, witness statement, 14/7/14, p 179; Fitzpatrick MFI-I, 15/7/14, p 229. 24 Brian Fitzpatrick, witness statement, 14/7/14, para 117.
141
time union representative based in Melbourne, Frank O’Grady, to do
so.25
Jose ‘Mario’ Barrios
18. The treatment of Jose ‘Mario’ Barrios is also noteworthy. He was
summoned to give evidence to the Commission and was compelled by
law to attend and answer questions about a matter that he had reported
to the police.
19. Mario Barrios had not sought out the Commission and was not
working with it. Nevertheless, Brian Parker (the most senior CFMEU
officer in New South Wales) branded Mario Barrios as a ‘dog’ who he
wanted to ‘bash’. He said that that everyone in the Union now hated
him, because he had given honest answers under compulsion. 26
David Hanna
20. David Hanna was the President of the CFMEU Queensland
Construction Workers’ Divisional Branch and President of the
Construction and General Division of the CFMEU. He resigned from
these positions effective 30 July 2015.27 In the evidence heard by this
25 Fitzpatrick MFI-1, 15/7/14, pp 232-237. 26 Evidence in relation to the experience of Mario Barrios is set out in the Royal Commission into Trade Union Governance and Corruption, Interim Report (2014), Vol 2, ch 8.5, paras 28-48. 27
David Hanna, 18/9/15, T:645.26-36. See CFMEU’s annual returns for 2014 available at https://www.fwc.gov.au/documents/documents/organisations/registered-orgs/105N/105n-AR2014-75.pdf.
142
inquiry, he is the most senior union official to have fallen out with his
union. Before the BLF Qld merged with the CFMEU Qld, he was the
State Secretary of the BLF. After the merger he was President of the
CFMEU.
21. The findings about the conduct of David Hanna in respect of Cornubia
House are set out at Chapter 8.1 of Volume 4 of this Report. His role
in the destruction of CFMEU and BLF documents is described in
Chapter 8.2 of Volume 4 of this Report.
22. Separately to the evidence before the Commission about Cornubia
House, David Hanna gave evidence about the circumstances in which
he left the Union.
23. Michael Ravbar is and was at all relevant times the Secretary of the
CFMEU Construction and General Division, Queensland Northern
Territory Divisional Branch and Secretary of the CFMEU Industrial
Union of Employees, Queensland.
24. In 10 June 2015 Michael Ravbar laid charges against David Hanna in
accordance with the CFMEU Construction and General Rules.28
Michael Ravbar alleged that David Hanna had, in or about April 2015,
engaged in ‘gross misbehaviour’ and ‘gross neglect of duty’ by, inter
alia, procuring $3,000 from certain employers to the BLF Charity
Foundation Pty Ltd for the purpose of the BLF Charity making
payments to assist with IVF treatment for the partner of a CFMEU
organiser.
28 CFMEU DD MFI-26, 20/10/15, pp 3-6.
143
25. On 19 June 2015, a motion was circulated among the members of the
CFMEU National Executive Committee to appoint a person to
investigate the subject matter of the charges against David Hanna with
a view to the preparation of a report to the National Executive
Committee.29 Leo Skourdoumbis was appointed, and conducted an
investigation and reported to the CFMEU National Executive.
26. Leo Skourdoumbis concluded in his report that he believed that David
Hanna had acted in a seriously inappropriate manner. He stated that in
his view it was appropriate, at the least, for David Hanna to be
censured and reprimanded.30 David Hanna resigned from the Union on
30 July 2015. He addressed the circumstances of his resignation in his
evidence in the following excerpt: 31
…at the time when that report come [sic] out, the relationship between myself and Michael Ravbar was past the word of toxic, if there could be another - you know, it was - you know, we wouldn’t be able to continue together. You know, I wouldn’t be able to refrain myself around him, so I had a view for best interests of the Union - I also had some, you know, health issues with my back, so I took the view, in the best interests of the Union and for my own health and family that I would resign and I did so.
27. David Hanna also gave evidence about a discussion he had with Leo
Skourdoumbis during the investigation in which Leo Skourdoumbis
says ‘[t]hose National officials, Michael O’Connor included, they want
you looked after in whatever way possible.’32
29 CFMEU DD MFI-26, 20/10/15, pp 9, 16-18. 30 CFMEU DD MFI-25, 16/10/15, p 7. 31
David Hanna, 22/9/15, T:95.31-39. 32 Document Disposal Case Study MFI-5, 22/9/15.
144
28. David Hanna gave evidence about the importance of being ‘looked
after’ by the National officials, saying:33
My understanding from the discussions that I had before giving my resignation was that no-one would stand in my way from finding other employment. The issue - when you work for a Union and you leave, whether you leave on good terms or bad terms, if you leave on good terms, you normally - you know, you’re not too stressed about finding another job, but when you leave on bad terms, and particularly in Queensland, with the terms - the hatred between Michael and I, I underline “hatred”, it would be very hard for me to have continued employment in Queensland. So I wanted to ensure that no-one would stand in my way for other employment. I wasn’t guaranteed employment but it was certainly that no-one would - you wouldn’t be on the black-ban list.
Q. What does that mean, the black-ban list?
A. That, you know, every time you go for a job, “You’re too hot to handle. We don’t want you”, you know.
Q. Did you understand that when you left, the National officials still wanted to look after you in whatever way possible?
A. In terms of - yes, in terms of whatever way possible, like, if I was having problems with Michael standing in my way of getting a job, that they would have talks.
29. David Hanna’s evidence about the ‘black-ban list’ and his belief that it
was within Michael Ravbar’s power to stop him obtaining employment
in Queensland after his career with the Union is illuminating. It
explains why many officials and employees are reluctant to blow the
whistle on corruption for fear of leaving the Union on ‘bad’ terms.
33 David Hanna, 22/9/15, T:96.5-29.
145
Jimmy Kendrovski
30. Jimmy Kendrovski was a part owner of Elite Access Scaffolding
(NSW) Pty Ltd. He was called to the Commission to give evidence
about payments by companies associated with George Alex to Brian
Parker and Darren Greenfield of the CFMEU NSW (see Chapter 7.2 of
Volume 3 of this Report).
31. At the time he gave evidence before the Commission, Jimmy
Kendrovski was serving a custodial sentence. In his evidence he said
that he was the victim of an assault in gaol after he had been served
with his summons and shortly prior to the day appointed for him to
give evidence.34
32. During his evidence Jimmy Kendrovski showed signs of significant
discomfort. When he was asked questions about whether he had seen
union officials receive cash payments there were often lengthy pauses,
sometimes combined with a lowering of his head towards his lap.
33. He refused to comment on whether the aggressor had said anything to
him about him giving evidence to the Commission, and explained that
refusal by saying ‘because I have a wife and three kids outside on their
own and I just can’t comment on that’.35
34. At one point in his evidence, in answer to a question about whether he
felt unable to give truthful evidence because of the recent assault on
34 Jimmy Kendrovski, 1/9/14, T:105.13. 35 Jimmy Kendrovski, 1/9/14, T:106.6.
146
him, Jimmy Kendrovski said ‘I am being as truthful as I can.’36 When
later asked to explain that answer, he said that he was telling the
Commission and counsel assisting as much as he truthfully could
having regard to the fears for his safety and that of his family.37 The
examination then continued as follows:38
Q: If you didn’t have those fears, might you be saying something else?
A: I can’t comment.
Q: Do I take it from that, that the answer is, “Yes”?
A: I just can’t comment. If you were in my position, where I am at the moment - I can’t comment on that.
35. It was apparent that Jimmy Kendrovski was, due to concerns over his
safety and that of his family, unable to provide the Commission with
truthful answers to the questions he was being asked in relation to what
he had seen and heard in relation to the payment of the cash withdrawn
for ‘union payments’.
36. Thus Jimmy Kendrovski did not give truthful evidence before the
Commission out of fear for him and his family’s safety.
Paul Sinclair
37. Paul Sinclair was the Assistant Secretary of the ETU NSW, a position
he had held since July 2007. Since July 2011 he also held the elected
36 Jimmy Kendrovksi, 1/9/14, T:106:16. 37 Jimmy Kendrovski, 1/9/14, T107.18. 38
Jimmy Kendrovski, 1/9/14, T:107.24-30.
147
position of Organiser in the Electrical Division of the CEPU NSW.39
Paul Sinclair gave evidence that he had been a member of the ETU
NSW for 28 years, and a member of the Officers’ Fund for 25 years.40
His duties included being the minute taker for all of the minutes of
Council meetings.
38. On 27 April 2015 and 5 June 2015 Paul Sinclair gave evidence before
the Commission, predominately concerning his recollection of whether
the ALP Loan was discussed at the State Council meeting in December
2010. Contrary to every other member of the State Council’s
recollection, he did not recall, and nor did he record, the ALP Loan
being discussed at the meeting.41
39. In connection with the topics covered in the ETU NSW case study,
issues arose concerning the expenditure of the ETU NSW’s election
fund - the Officers’ Fund. Paul Sinclair was one of the trustees of the
Officers’ Fund and a signatory to the account. Paul Sinclair gave
evidence that at every election (held quadrennially), the Officers’ Fund
invited him to run on its ticket.42
40. On 5 June 2015 Paul Sinclair gave evidence that three days prior to his
giving evidence, he had ceased to be a member of the Officers Fund43
because the Officers Fund had withdrawn support for him to run on its
39 Paul Sinclair, witness statement, 27/4/15, para 4. 40 Paul Sinclair, 5/6/15, T:855.11. 41
Paul Sinclair, witness statement, 27/4/14, paras 33-34. 42 Paul Sinclair, 5/6/15, T:855.16-17. 43
Paul Sinclair, 5/6/15, T:854.31.
148
ticket.44 He gave evidence that his reputation around the office had
changed ‘significantly’ since the earlier occasion on which he gave
evidence before the Commission.45 Specifically he gave evidence as
follows:46
Q. So has your reception around the office or your dealings with people around the office changed since you gave evidence before the Commission?
A. Significantly.
Q. In what respect?
A. They don’t - I no longer get allocated any work. I don’t get communicated. No-one talks to me - or rarely talks to me.
Q. Has that been a dramatic change - before you gave evidence and after you gave evidence?
A. Most definitely.
Q. When you say you’re not being allocated work, what do you mean by that?
A. Well, the responsibilities I had before I was invited, or, well, before I was called to this hearing was that I had my
responsibilities as the Assistant Secretary in regards to the day-to-day operations, running of the office, the likes of that. I don’t get involved or I’m not involved in any of those decision-making processes now. I effectively sit in my office.
Q. Has that been the case since you gave evidence to this
Commission on 27 April 2015?
A. Yes.
Q. Was the change sudden?
A. Yes.
44 Paul Sinclair, 5/6/15, T:854.34, 854.37-39. 45 Paul Sinclair, 5/6/15, T:855.42-45. 46
Paul Sinclair, 5/6/15, T:855.42-857.21.
149
Q. Is this the position: before you gave evidence you were
performing your duties in the ordinary way that you had done for many years?
A. Correct.
Q. And then, after you gave evidence, there was a sudden change?
A. Yes.
Q. Have you made any protest or complaint to anyone about this?
A. Who am I going to talk to?
Q. Is the answer no, you haven’t made any complaint or protest?
A. As I said, who am I going to talk to? You know, I was replaced - I don’t know - some three weeks ago now: I’m no longer required to attend the Executive meetings; no longer required to take the minutes of the Executive meetings. They will take their own minutes in future. That was the decision of the Secretary. I have no control over that.
Q. You are the Assistant Secretary, are you not?
A. I am until at least the declaration of the 2015 ballot.
Q. Are you going to stand as Assistant Secretary in the impending elections?
A. As I sit here today, I’ve made no firm decision about my future. I have up until the second week in July to make that decision.
Q. But if you did stand for Assistant Secretary, you would have to do it, as it were, on your own?
A. Correct.
Q. Using your own resources?
A. Correct.
Q. Will you have any access to moneys in the Officers Fund
account?
A. I’ve made a request for the reimbursement of that money. No decision had been made as yet.
150
41. Paul Sinclair agreed that it was probably a fair summation to say that
he was being ‘frozen out’.47
42. Paul Sinclair is no longer the Assistant Secretary of the ETU, NSW
Branch. As a consequence of the ETU NSW Branch election held in
August 2015, Paul Sinclair was succeeded by Dave McKinley.48
Katherine Jackson
43. The most controversial and well-known whistleblower of misconduct
by union officials is Katherine Jackson. Whatever else may be said
about Katherine Jackson (see Chapters 5.1 and 5.2), she exposed
corruption on the part of Michael Williamson and Craig Thomson, and
suffered adverse treatment because of that.
44. For example, after commenting publicly on allegations against Craig
Thomson for misuse of his credit card, Katherine Jackson awoke two
days later to a shovel on her doorstep.49
45. She was the subject of all sorts of verbal abuse, including obscene and
racist abuse, and a deluge of media articles making allegations against
her. This was a powerful demonstration of the extent to which
whistleblowers who expose serious corruption may be the subject of
reprisals of many sorts from their opponents in the organisation, and
supporters of those whose conduct the whistleblowing has exposed.
47 Paul Sinclair, 5/6/15, T:858:22. 48 ETU, ETU & CEPU Quadrennial Election Results, http://www.etunsw.asn.au/general-trade-manufacturing-and-mining/etu-cepu-quadrennial-election-results, accessed 10/12/15. 49
Katherine Jackson, witness statement, 18/6/14, para 196.
151
46. The problems that have plagued the HSU in recent years have been
extensively documented in Chapter 5.2 of Volume 2 of this Report.
That chapter considers the lawless culture in which misappropriation
and corruption by Michael Williamson, Craig Thomson and Katherine
Jackson was allowed to flourish.
Robert Kernohan
47. Robert Kernohan was a member of the AWU Vic who was appalled by
the making of redundancy payments to Bruce Wilson and others while
they were under internal investigation for fraud. He made attempts to
uncover other abuses within the AWU. He went to the police about his
fraud allegations. He began to experience being treated with silence,
being elbowed or nudged in corridors, receiving abusive anonymous
telephone calls, having his office trashed, receiving hate mail and other
unpleasant experiences.50
50 See Royal Commission into Trade Union Governance and Corruption, Interim Report (2014), Vol 1, ch 3.2, pp 233-236, paras 289-294.
152
CHAPTER 3
REGULATION OF UNION OFFICIALS
Subject Paragraph
A - INTRODUCTION 1
B - DUTIES OF UNION OFFICERS TO THEIR UNION 7
Statutory duties of union officers 7
Appropriateness of corporate governance model for trade unions:
submissions received
22
Appropriateness of corporate governance model: consideration 27
Are union officers subject to the duties in the Corporations Act
2001 (Cth)?
32
Meaning of ‘officer’ 39
Limitation of statutory duties to those in relation to financial
management
49
Good faith duty 64
Civil penalties for breach of statutory duties 76
153
Subject Paragraph
Criminal penalties for breach of statutory duties 117
Indemnity for civil and criminal penalties 132
Disclosure of material personal interests of officers 139
Requirement of officers in a position of conflict not to participate
in decision-making
149
Enforcement of officers’ duties by members 152
C - STATUTORY DUTIES IN RESPECT OF COURT
ORDERS
162
The problem 162
Remedies under the Fair Work (Registered Organisations) Act
2009 (Cth)
163
D - DISQUALIFICATION OF UNION OFFICERS 167
Existing disqualification regime 167
Defects in the current regime 171
Options for reform: ‘fit and proper person’ qualification 179
Options for reform: banning orders 182
154
A - INTRODUCTION
1. This Chapter considers the regulation of union officials.
2. As appears from the discussion in this Chapter, a number of the case
studies considered by the Commission raised significant issues about
the scope and effectiveness of the existing law concerning the duties of
union officers. For example, the existing law appears to have done
nothing to prevent the apparent egregious misappropriations of NUW
assets through abuse of credit cards and the like which Derrick Belan,
his brother and their niece may have perpetrated.1 The same is true of
the unrelated misappropriations of HSU assets carried out through
many techniques by Michael Williamson, Craig Thomson and
Katherine Jackson. It is also true of the misappropriations of TWU
assets via the wrongful acquisition of expensive cars and a false claim
to redundancy which may have been organised by James McGiveron
and Richard Burton. That apparent misappropriation, which TWU
officials may have approved, though carried out within a very short
period of time, was large: over $600,000. Further, the existing law did
not stop Dean Mighell, Branch Secretary of the Victorian Divisional
Branch of the Electrical Energy and Services Division of the CEPU,
from wasting union funds in litigation against his political enemies
which may have been in abuse of process.
3. The balance of the Chapter is divided into three parts.
1 See Report, Vol 2, ch 4.
155
4. The first part, which is the largest, examines the duties of union
officials to their union. It examines the following issues:
(a) whether the officers of trade unions should be subject to
statutory duties and, if so, what statutory duties they should
be subject to;
(b) the appropriate penalties for breach of statutory duties by
officers of registered organisations;
(c) whether it is appropriate to impose criminal penalties for the
most egregious breaches of duty by officers of registered
organisations;
(d) the indemnification of officers of registered organisations for
penalties imposed personally on officers;
(e) the disclosure of material personal interests by officers of
registered organisations; and
(f) the remedies available to members of a registered
organisation to enforce the duties imposed on officers of the
organisation.
5. The second part deals with the statutory duties of union officers and
employees in relation to obeying court orders.
6. The third part deals with the disqualification of persons from holding
office in a registered organisation.
156
B - DUTIES OF UNION OFFICERS TO THEIR UNION
Statutory duties of union officers
7. A threshold question that arose out of detailed submissions made to the
Commission by the TWU is whether the officers of trade unions should
be subject to statutory regulation at all.
8. In short, those submissions argued that trade unions, unlike
corporations, are not-for-profit organisations that operate
democratically: ‘a union is a collective which is the expression of the
majority of its members’.2 According to the TWU submission, once
this critical difference between a corporation and trade union is
recognised:3
[I]t becomes apparent that the control and regulation of the union be in the hands of the members rather than placed in the hand of regulators, governments and others who are not members of the union.
9. This submission was made in support of the proposition that there was
no need for greater regulation of trade unions and their officials.4 This
in turn was made in support of an even broader submission that the
‘fundamental distinction between union and corporation … means that
entirely different regulatory systems need to be established for
unions.’5
2 Submissions of the TWU, 14/11/14, para 70. 3 Submissions of the TWU, 14/11/14, para 70 (emphasis added). 4
Submissions of the TWU, 14/11/14, para 61. 5 Submissions of the TWU, 14/11/14, para 22.
157
10. The ‘entirely different regulatory systems’ which need to be
established for trade unions were not specified in the TWU submission.
However, it may be inferred from the TWU’s earlier submission that
the ‘control and regulation of the union be in the hands of the
members’ that the TWU envisaged no external regulation at all,
leaving the members of the union to regulate themselves. Although
not expressly stating as much, the TWU’s submission appears to
envisage a return to the early years of the 20th century when trade
unions were subject to minimal regulation under the Australian
equivalents of the Trade Union Act 1871 (UK).
11. Those who are opposed to statutory regulation of trade unions and their
officials often suggest that particular regulation would be inconsistent
with Australia’s international legal obligations under the International
Labour Organisation (ILO) Convention (No 87) concerning Freedom
of Association and Protection of the Right to Organise.6 However,
there are at least two difficulties with that argument. First, ILO
Convention No 87, like any other treaty that has not been expressly
implemented by Parliament, does not form part of Australian law.7
Secondly, the ILO has recognised the right of States to enact statutory
provisions in relation to trade unions that are eligible to become
registered and which obtain a range of benefits by virtue of
registration.8 Further, the ILO has also recognised the ability of States
6 San Francisco, 9 July 1948 ([1974] ATS 3). Australia ratified the convention on 28 February 1973 and it entered into force for Australia on 28 February 1974. 7
See, eg, Chow Hung Ching v The King (1948) 77 CLR 449 at 478; Bradley v The Commonwealth (1973) 128 CLR 557 at 582; Minster for Immigration and Ethnic Affairs v Teoh (1995) 183 CLR 273 at 286-287, 298, 303-304, 315. 8
See International Labour Organization, Freedom of Association: Digest of decisions and principles of the Freedom of Association Committee of the Governing Body of the ILO (International Labour Office, 5th (revised) ed, 2006), para 306.
158
to enact measures for the protection of members and measures of
supervision over administration to prevent abuses and protect the
members of the trade union from mismanagement of their funds.9
12. Another argument in favour of abandoning statutory regulation of trade
unions officers is that given the substantial changes in Australia’s
industrial relations system from the 1990s onwards the original
justification for that regulation no longer exists.
13. Contrary to the TWU’s argument, there are clear and convincing
arguments in favour of maintaining statutory duties upon trade union
officers backed by appropriate sanctions that can be requested by an
independent regulator.
14. First, the existence of an appropriate statutory sanction acts as an
incentive for union officers to comply with their existing general law
duties to their members. Australian courts, drawing an analogy
between the officers of trade unions and directors of companies, have
repeatedly held that union officers are fiduciaries10 and have general
law duties analogous to those owed by company directors.11 While the
scope of these general law duties has not been exhaustively stated, the
general law duties on union officers include:
9 See International Labour Organization, Freedom of Association: Digest of decisions and principles of the Freedom of Association Committee of the Governing Body of the ILO (International Labour Office, 5th (revised) ed, 2006), paras 369, 489. 10
Carling v Platt (1953) 80 CAR 283 at 292-293 per Dunphy J (dissenting), 306-7 per McIntyre J; Allen v Townsend (1977) 31 FLR 431 at 483 per Evatt and Northrop JJ; Stephenson v Squires (unreported, Federal Court of Australia, Sweeney J, 19 June 1980); Jess v Scott (1984) 3 FCR 263 at 287 per Gray J (FC); Ludwig v Harris (1991) 30 FCR 377 at 379 per Beaumont J (Black CJ agreeing); Robertson v State Public Sector Services Federation (1993) 49 IR 356 at 363 per French J. 11
Allen v Townsend (1977) 31 FLR 431 at 483-484 per Evatt and Northrop JJ.
159
(a) a duty to avoid a conflict of interest between the officer’s
interest and duty;12
(b) a duty not to make any secret profit out of the officer’s
position;13
(c) a duty to exercise the officer’s powers bona fide and for a
proper purpose;14 and
(d) a duty to exercise the officer’s powers for purposes honestly
and reasonably believed to be in the best interests of the
members of the union as a whole.15
15. In addition, the ability of an independent regulator to seek the
imposition of penalties helps meet the problem of enforcement.
Generally,16 a union officer’s duties are owed to the union itself, so
that the union is the proper plaintiff to take action to enforce those
duties.17 The practical reality is that the prospect of civil action by a
12
Carling v Platt (1953) 80 CAR 283 at 292-293 per Dunphy J (dissenting), 306-7 per McIntyre J. 13
Carling v Platt (1953) 80 CAR 283 at 292-293 per Dunphy J (dissenting), 306-7 per McIntyre J. 14 Allen v Townsend (1977) 31 FLR 431 at 483-487 per Evatt and Northrop JJ. 15
Ludwig v Harris (1991) 30 FCR 377 at 379 per Beaumont J (Black CJ agreeing). 16 Carling v Platt (1953) 80 CAR 283 at 292-293 per Dunphy J (dissenting), 306-7 per McIntyre J; Allen v Townsend (1977) 31 FLR 431 at 483 per Evatt and Northrop JJ; Stephenson v Squires (unreported, Federal Court of Australia, Sweeney J, 19 June 1980); Jess v Scott (1984) 3 FCR 263 at 287 per Gray J (FC); Ludwig v Harris (1991) 30 FCR 377 at 379 per Beaumont J (Black CJ agreeing); Robertson v State Public Sector Services Federation (1993) 49 IR 356 at 363 per French J. 17
Bailey v Krantz (1984) 55 ALR 345 at 356; Tanner v Darroch (1986) 12 FCR 235 at 253. See generally, Foss v Harbottle (1843) 2 Hare 461; 67 ER 189.
160
union against an officer of the union whilst that officer is in charge of
the union is remote.
16. Secondly, a union registered under the FW(RO) Act is an incorporated
body. By force of s 27 of the FW(RO) Act a registered union is a body
corporate, has perpetual succession, is capable of owning and dealing
with property in its own name and is capable of suing and being sued.
Similar provisions have existed federally since 1904. By virtue of a
registered union’s independent legal existence,18 its members are not
liable for the union’s debts, unless they independently agree to
indemnify the union.19 With the benefits of incorporation come the
burdens of increased regulation on those who conduct the affairs of the
organisation.
17. Thirdly, associations that are incorporated under State law are subject
to legal regulation not dissimilar to that applying to corporations. In
Victoria, the office holders of incorporated associations are subject to
duties very similar to those imposed on directors of companies under
the Corporations Act 2001 (Cth).20 In South Australia, there are
criminal penalties for officers of incorporated associations who breach
their duty to act with reasonable care and diligence, their duty not to
misuse information and their duty not to misuse their position.21 In
18 Williams v Hursey (1959) 103 CLR 30 at 52. 19 Salomon v Salomon & Co [1897] 2 AC 22. It has been said that trade unions are not endowed with ‘one of the main benefits of incorporation - limited liability’: A Forsyth, ‘Trade Union Regulation and the Accountability of Union Office-Holders: Examining the Corporate Model’ (2000) 13 AJLL 1 at 13. However, this misunderstands the concept of limited liability. The liabilities of a corporation are not limited. Rather, it is the members of the corporation whose liability to contribute to the corporation is limited. 20
Associations Incorporation Reform Act 2012 (Vic), ss 83-85. 21 Associations Incorporation Act 1985 (SA), s 39A.
161
New South Wales, there are criminal penalties for committee members
of an incorporated association who dishonestly misuse their position or
information obtained as a committee member.22 Thus, even if
registered employee organisations were thought to be analogous to
small incorporated associations, it would be expected their officers
would be subject to statutory regulation.
18. Fourthly, there are important differences between the relationship
among the officers of a trade union and their members and the
relationship among the officers of the typical incorporated association
and its members. Union officers occupy an important position of trust
and confidence vis-Ã -vis their members, particularly in relation to an
area critical to a member’s financial affairs - employment. In addition,
many trade unions in modern Australia are large organisations with
substantial assets. Union officers have control of substantial sums of
‘members’ money’. Control of someone else’s money can create a
strong temptation to misapply it. This supports the need for statutory
regulation of union officers.
19. Fifthly, the statutory rights and privileges conferred on registered
employee organisations and their officials under the FW Act23 justifies
stringent statutory regulation. As one commentator has put it:
‘[U]nions have traditionally accepted this level of regulation as the
22 Associations Incorporation Act 2009 (NSW), ss 32-33. 23 See Chapter 1 of this Volume.
162
price to be paid for the substantial benefits that they have obtained
from participation in the formal industrial relations framework.’24
20. Sixthly, in addition to these privileges, trade unions have the additional
privilege of tax exempt status.25 This too generates a significant public
interest in regulating trade unions and their officers.
21. The majority of submissions received by the Commission in relation to
this issue did not cavil with the proposition that the officers of
registered employee organisations should be subject to statutory
regulation. The more controversial question, as discussed below, is the
appropriate model for that regulatory framework.
Appropriateness of corporate governance model for trade unions: submissions received
22. The central tenet in the submissions advanced by the TWU,
summarised above, is that there is a ‘fundamental difference’ between
companies and trade unions, the former being formed solely to make a
profit and the latter being formed solely to benefit their members. A
related tenet is that there is a difference in functions between trade
union officers and company directors. The argument is that this
difference in purpose and function means that the regulatory regime
that applies to union officers must be different from that which exists
under the Corporations Act 2001 (Cth) in relation to company
directors.
24 A Forsyth, ‘Trade Union Regulation and the Accountability of Union Office-Holders: Examining the Corporate Model’ (2000) 13 AJLL 1 at 2. 25
See Chapter 1of this Volume, paras 80-81.
163
23. A similar submission was made by the SDA. The SDA submitted that
attempting to equate registered organisations and corporations ‘evinces
unawareness of the history character and purposes for which
organisations are registered and conducted.’26 The submission went
on:27
The elements of trust and responsibility are (to say the least) not less for officials of registered organisations than for directors of companies but they are different.
24. The ACTU advanced this argument in more detail in its submissions to
the Senate Education and Employment Legislation Committee
concerning the Fair Work (Registered Organisations) Amendment Bill
2013:28
A trend in the mode of regulation of registered unions in Australia is to attempt to adopt some elements of corporate regulation into the scheme for regulating unions … Corporate regulation of course is directed toward the protection of the economic interests of investors and creditors (and, to an extent, consumers), and serves a different purpose than [sic] the protection of the interests of union members.
There are some aspects of good governance that are universal (such as honesty, openness and accountability) and some lessons have been learned from regulation (including self-regulation) of other types of entity.
While the rhetoric of ‘regulate unions like corporations’ has some superficial appeal, in reality it is based on a false-equivalence [sic]. Unions are different to [sic] corporations (and to charities and clubs) and Australia rightly regulates each type of entity differently.
Unions do not believe that it is appropriate that unions be regulated in the same way as corporations because the nature of the rights and interests
26 Shop, Distributive and Allied Employees Association Law Reform Submissions, 27/8/15, para 25. 27
Shop, Distributive and Allied Employees Association Law Reform Submissions, 27/8/15, para 26. 28 Australian Council of Trade Unions, Submission to the Senate Education and Employment Legislation Committee on the Fair Work (Registered Organisations) Amendment Bill 2013 (Cth), 22/11/13, pp 5-6.
164
that union members have in their union and its activities are [sic] not the same as the economic interests that shareholders have in companies.
We also not [sic] that in corporate regulation, the regulatory regime, investigatory powers and maximum penalties need to be sufficient to cover all types of corporations, including the largest multi-billion businesses and largest and most complicated corporate structures and transactions. In contrast, registered organisations are relatively small, simple organisations with non-commercial purposes.
25. The ACTU made a similar submission to the Senate Education and
Employment Legislation Committee reporting on the Fair Work
(Registered Organisations) Amendment Bill 2014 [No 2]:29
The policy objective of regulating Registered Organisations like corporations becomes increasingly problematic the further the analogy is pressed.
Most corporations are formed for the purpose of generating profit. The members of such a corporation are its shareholders - persons or indeed other corporations that invest their finances in the hope and expectation of a financial return. The obligation upon company directors to act in the best interests of the corporation and its members is an obligation directed to prudent financial management and commercial risk assessment so as to guard against members [sic] funds or return on investment being compromised through careless business decisions or, in an extreme case, fraud. The reasons corporations are regulated the way they are regulated is because they have significant economic power in financial markets, in asset holdings and in the labour market - they directly determine citzens [sic] financial fortunes.
26. On the other hand, a number of other submissions were received which
supported a corporate governance model being applied to the officers
of registered organisations.30 Boral, for example, submitted that the
29 Australian Council of Trade Unions, Submission to the Senate Education and Employment Legislation Committee into the Fair Work (Registered Organisations) Amendment Bill 2014 [No 2] (Cth), 30/6/15, p 19. 30
See, eg, Housing Industry Association Pty Ltd Law Reform Submissions, 21/8/15, pp 4-6; Institute of Public Affairs Law Reform Submission, August 2015, pp 6-8; Grace Collier Submission in response to Issues Paper 2: Duties of Union Officials, 10/7/14; Associations Forum Pty Ltd Law Reform Submissions, 4/9/15, p 1 (Grace Collier submitted that trade union officials should have higher and greater obligations to members than the directors of publicly listed companies have to their shareholders); Carolyn Summers Submission in
165
role that union officials play within trade unions is analogous to that
played by directors within corporations and there should be a
harmonisation of union officials’ duties with those of company
directors.31
Appropriateness of corporate governance model: consideration
27. It is obvious that there is a strong analogy between the officers of
registered organisations and company directors. The analogy has
already been drawn, repeatedly, in the case law.32 Both manage the
affairs of a corporate organisation. Both are responsible for acting in
the best interests of the members of the organisation. Both may be
described, in a practical sense, as being in charge of other people’s
money, with all the responsibilities and temptations that arise from that
state of affairs. Both are fiduciaries.
28. The real issue is the extent to which the analogy is inapt. Accordingly,
there is considerable danger when considering possible changes to the
duties of unions officers with reference to a ‘corporate governance
model’ of adopting a broad ‘all or nothing approach’ without having
response to Issues Paper 2: Duties of Union Officials, undated (received 20/8/2014), p 3 (Carolyn Summers submitted that the fiduciary duties of executive members of a committee of management should be defined similarly to those of a company director); Boral Law Reform Submissions, 2015; Victoria Police Law Reform Submissions,10/9/15, p 26; Australian Chamber of Commerce and Industry Law Reform Submissions, August 2015, p 18 (the Australian Chamber of Commerce and Industry submitted that officers of trade unions be subject to statutory regulation and existing regulation be strengthened with regard to transparency and disclosure obligations); Institute of Public Affairs Law Reform Submissions, August 2015, p 2; New South Wales Government, Policy Submission, August 2014, p 2. 31
Boral Law Reform Submissions, 2014, p 1; Boral Law Reform Submissions, 2015, pp 9, 14. 32 See the cases cited in footnote 10 above.
166
regard to the detail. An approach that denies the equivalence of unions
and companies and then concludes therefore there should be no
changes to the statutory duties imposed on union officers is an illogical
and unthinking approach. It is necessary to consider carefully the
differences between the current statutory duties imposed on the officers
of registered organisations and those imposed on company directors.
29. The main statutory duties on officers of registered organisations are set
out in Parts 2 and 3 of Chapter 9 of the FW(RO) Act. Those
provisions replicate the duties introduced into the Workplace Relations
Act 1996 (Cth) in 2002 by the Workplace Relations (Registration and
Accountability of Organisations) Act 2002 (Cth).
30. The duties in Part 2 are based very heavily on the equivalent duties
imposed on company directors by the Corporations Act 2001 (Cth).
However, there are some critical differences. Those critical
differences, which are discussed further below, are as follows:
(a) The statutory form of the duties imposed on the officers of
registered organisations is limited to only those powers and
duties related to the financial management of the organisation
or branch.33
(b) The statutory duty upon the officers of a registered
organisation to act in good faith is only to act in good faith in
33
Fair Work (Registered Organisations) Act 2009 (Cth), s 283. This limitation does not appear in the Corporations Act 2001 (Cth). Statutory duties are also imposed on certain Commonwealth officials by the Public Governance, Performance and Accountability Act 2013 (Cth) in similar terms to those set out in the Corporations Act 2001 (Cth): see ss 25-29. The duties in the Public Governance, Performance and Accountability Act 2013 (Cth) are not limited in the way as those in the Fair Work (Registered Organisations) Act 2009 (Cth).
167
what they believe to be in the interests of the organisation,
rather than in what is objectively the best interests of the
organisation.34
(c) The maximum civil penalties in relation to breaches by the
officers of registered organisations are smaller to a very
remarkable degree than the corresponding maximum civil
penalties for breaches by company directors. The maximum
civil penalty that may be imposed on an officer of a registered
organisation for breach of the statutory duties under ss 285-288 of the FW(RO) Act is $10,800. The maximum civil
penalty that may be imposed on a company director for
equivalent conduct is $200,000.
(d) Officers of a registered organisation are not subject to
possible criminal penalties for dishonest breaches of their
statutory duties. The directors of companies are.35
(e) In contrast to the position under the Corporations Act 2001
(Cth), there are no provisions of the FW(RO) Act prohibiting
a registered organisation from indemnifying its officers for
civil penalties imposed for breach of duty.
(f) The FW(RO) Act does not contain provisions equivalent to
ss 191-196 of the Corporations Act 2001 (Cth) which require
the disclosure by company directors of material personal
interests, and restrict the directors of public companies from
34 Fair Work (Registered Organisations) Act 2009 (Cth), s 286. Compare Corporations Act 2001 (Cth), s 181. 35
Corporations Act 2001 (Cth), s 184.
168
voting on matters in which they have material personal
interests. As noted in Chapter 2, s 148B of the FW(RO) Act
does require organisations to have rules requiring the
disclosure of certain material personal interests.
31. There is an important point that should be emphasised immediately.
Apart from the matter identified in paragraph 30(f), where there are
certain differences between private and public companies, the
additional requirements that apply in respect of companies apply to all
companies whether for profit or not-for-profit, whether big or small.
That is, the directors of small companies (often persons related by
blood or marriage) and the (many) directors of companies having not-for-profit and charitable purposes are all subject to the increased
penalties and the possibility of criminal sanctions.
Are union officers subject to the duties in the Corporations Act 2001 (Cth)?
32. Before analysing in more detail the differences between the duties
imposed on the officers of registered organisations under the FW(RO)
Act and the duties imposed on officers of companies under the
Corporations Act 2001 (Cth), there is a preliminary point.
33. In Health Services Union v Jackson (No 4),36 Tracey J, accepting the
argument of the HSU, expressed the view that the officers of trade
unions were subject to the provisions in ss 180-182 of the
Corporations Act 2001 (Cth). If this were correct, the debate about the
36 [2015] FCA 865.
169
differences between the FW(RO) Act and the Corporations Act 2001
(Cth) would be academic.
34. His Honour’s reasoning37 was that ss 180-182 (and for that matter
ss 183-184) of the Corporations Act 2001 (Cth) apply to ‘officers’ of a
‘corporation’. ‘Corporation’ is defined to include ‘any body corporate
(whether incorporated in this jurisdiction or elsewhere)’. By operation
of s 27 of the FW(RO) Act, registered organisations are bodies
corporate. ‘Officer’ is defined to include a person who makes, or
participates in making, decisions that affect the whole, or a substantial
part of the business of the corporation. Accordingly, senior officers of
a trade union would be ‘officers’ of a ‘corporation’.
35. However, it appears that Tracey J was not taken by the HSU to s 190A
of the Corporations Act 2001 (Cth). That section provides that
Division 1 of Part 2D.1 of the Corporations Act 2001 (Cth), which
includes ss 180-184 of the Corporations Act 2001 (Cth):
does not apply to an act or omission by a director or other officer or employee of a corporation that is a registrable Australian body unless the act or omission occurred in connection with:
(a) the body carrying on business outside its place of origin; or
(b) an act that the body does or proposed to do outside its place of origin; or
(c) a decision by the body whether or not to do or refrain from doing outside its place of origin.
36. ‘Registrable Australian body’ includes a body corporate which is not a
company, an exempt public authority or a corporation sole.38 An
37 [2015] FCA 865 at [55]-[59]. 38 Corporations Act 2001 (Cth), s 9.
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organisation registered under the FW(RO) Act is thus a ‘registrable
Australian body’. The ‘place of origin’ of a body registered under the
FW(RO) Act is the place of the body’s incorporation, which would
presumably be Australia.39
37. Accordingly, it would seem that the effect of s 190A is that the duties
in ss 180-184 of the Corporations Act 2001 (Cth) only apply to
conduct of the officers of a registered organisation if the conduct
occurs in connection with:
(a) the carrying on of business by registered organisation outside
Australia;
(b) an act that the registered organisation does or proposes to do
outside Australia; or
(c) a decision by the registered organisation whether or not to do
or refrain from doing something outside of Australia.
38. Some registered organisations will not do anything outside Australia,
in which case the duties in the Corporations Act 2001 (Cth) will not
apply. However, some other registered organisations - for example,
the Maritime Union of Australia - may engage in a variety of conduct
outside of Australia. In those cases, the officers of the organisation
would be subject to ss 180-184 of the Corporations Act 2001 (Cth) and
in particular criminal liability pursuant to s 184.
39 An alternative may be the State where the head office of the organisation is located.
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Meaning of ‘officer’
39. An initial issue is the scope of the persons subject to statutory duties
contained in ss 285-288 of the FW(RO) Act. Those duties are confined
to ‘officers’ of registered organisations and the branches of registered
organisations.
40. ‘Officer’ is defined in s 6 of the FW(RO) Act as a person who holds an
‘office’ in an organisation or branch. ‘Office’ is currently defined in
s 9 of the FW(RO) Act as follows:40
(1) In this Act, office, in relation to an organisation or a branch of an organisation means:
(a) an office of president, vice president, secretary or assistant secretary of the organisation or branch; or
(b) the office of a voting member of a collective body of the organisation or branch, being a collective body that has power in relation to any of the following functions:
(i) the management of the affairs of the
organisation or branch;
(ii) the determination of policy for the organisation or branch;
(iii) the making, alteration or rescission of rules of the organisation or branch;
(iv) the enforcement of rules of the organisation or branch, or the performance of functions in relation to the enforcement of such rules; or
(c) an office the holder of which is, under the rules of the organisation or branch, entitled to participate directly in any of the functions referred to in subparagraphs (b)(i) and (iv), other than an office the holder of which
40 See also Fair Work Act 2009 (Cth), s 12 which contains an analogous definition of ‘office’ in an industrial organisation.
172
participates only in accordance with directions given by a collective body or another person for the purpose of implementing:
(i) existing policy of the organisation or branch; or
(ii) decisions concerning the organisation or
branch; or
(d) an office the holder of which is, under the rules of the organisation or branch, entitled to participate directly in any of the functions referred to in subparagraphs (b)(ii) and (iii); or
(e) the office of a person holding (whether as trustee or otherwise) property:
(i) of the organisation or branch; or
(ii) in which the organisation or branch has a
beneficial interest.
41. This definition of ‘office’ is also relevant when considering the
circumstances in which a person will be disqualified from holding
‘office’ in a registered organisation.41
42. In submissions to the Commission in response to the Issues Paper,
Master Builders Australia drew attention to the fact that appointed staff
who determine policy will not hold ‘office’ unless the rules of the
organisation expressly provide that they are entitled to exercise that
function.42 They argued that the definition of ‘office’ should be
clarified to include any person involved in the management or control
of a registered organisation.
41 See para 167 and following. 42 Master Builders Australia Submissions in response to Issues paper 2: Duties of Union Officials, 11/7/2014, Attachment B, Submission on Strengthening Corporate Governance of Industrially Registered Organisations - Introducing a New Fit and proper Person Test, 26/8/13, p 10.
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43. In contrast, the Australian Industry Group was opposed to any
amendment to the definition of ‘office’ stating that any such
amendment would create ‘numerous complications’, although the
submission did not state what the numerous complications were.43 It
also submitted that officers are typically elected and are appropriately
differentiated from unelected employees.44 This submission suggested
that the definition of ‘office’ ought not to be expanded to unelected
employees of a registered organisation.
44. The difficulty with excluding unelected officials from the definition of
‘officer’ is that, as was stated in the March 2013 report to the ACTU
Executive by the Independent Panel on Best Practice for Union
Governance:45
… employees of a union or branch may have decision-making roles and responsibilities despite the fact that such employees have no voting rights.
45. The Independent Panel reflected this fact by making a number of
governance recommendations with reference to both officers of a
registered organisations but also relevant employees with decision-making responsibilities.46
43 Australian Industry Group Law Reform Submissions, 21/8/15, p 8. 44 Australian Industry Group Law Reform Submissions, 21/8/15, p 8. 45
Independent Panel on Best Practice for Union Governance, Report to the ACTU Executive to Invite Comment and Discussion, March 2013, p 54. 46 Independent Panel on Best Practice for Union Governance, Report to the ACTU Executive to Invite Comment and Discussion, March 2013, pp 53-56.
174
46. By way of comparison, the definition of ‘officer’ of a corporation in
s 9 of the Corporations Act 2001 (Cth) in addition to number of
specified positions (for example, director, secretary) includes a person:
(i) who makes, or participates in making, decisions that affect the whole, or a substantial part, of the business of the corporation; or
(ii) who has the capacity to affect significantly the corporation's financial standing; or
(iii) in accordance with whose instructions or wishes the directors of the corporation are accustomed to act (excluding advice given by the person in the proper performance of functions attaching to the person's professional capacity or their business relationship with the directors or the corporation).
47. Thus, the definition focuses on substance, rather than form. It is
important to capture in the definition of ‘office’ those senior
employees who, although not elected, in fact have management roles
and decision-making responsibilities within a registered organisation or
a branch of a registered organisation and thus to ensure that they are
also held to the same levels of accountability as elected officers. It is
recommended that the definition of ‘office’ be amended to include
additional provisions capturing such persons.
48. A further proposal which has been put forward to the Commission is to
the effect that the definition of office should be deleted and a definition
of ‘officer’ inserted. In this respect it has been submitted that that the
definition of an officer be based on ‘an objective assessment of the
position, responsibilities and role held’.47 The current definition of
‘office’ seems to address the responsibilities and roles and this
submission seems to overlook that a definition of ‘officer’ is already
set out in s 6 of the FW(RO) Act.
47 Associations Forum Pty Ltd Law Reform Submission, 4/9/15, p 5.
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Recommendation 25
The definition of ‘office’ in s 9 of Fair Work (Registered Organisations) Act
2009 (Cth) be amended to include, in addition:
(a) an office of financial compliance officer of the organisation or branch;
(b) an office of a person who makes, or participates in making, decisions
that affect the whole or a substantial part, of the organisation or branch;
(c) an office of a person who has the capacity to affect significantly the
financial standing of the organisation or branch; and
(d) an office of a person in accordance with whose instructions or wishes
the members of the committee of management of the organisation or
branch are accustomed to act (excluding advice given by the person in
the proper performance of functions attaching to the person’s
professional capacity or their business relationship with the organisation
or branch).
Limitation of statutory duties to those in relation to financial management
49. Section 283 of the FW(RO) Act provides as follows:
This Part [ss 282-293] only applies in relation to officers and employees of an organisation or a branch of an organisation to the extent that it relates to the exercise of powers or duties of those officers and employees related to the financial management of the organisation or branch.
Section 283 was originally introduced to the Workplace Relations Act
1996 (Cth) in the Workplace Relations (Registration and
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Accountability of Organisations) Act 2002 (Cth) and has remained
unchanged.
50. Submissions received from Master Builders Australia, the Associations
Forum and the State of Victoria supported the repeal of s 283 of the
FW(RO) Act.48 The Employment Law Committee of the Law Society
of New South Wales neither supported nor opposed the suggestion that
s 283 be repealed.49 However, the Committee submitted that there was
no need for any definition of ‘financial management’ in s 283.50
51. Several issues arise in relation to this section.
52. First, the section confuses the operation of the statutory duties imposed
by ss 285-288 of the FW(RO) Act and the general law duties that are
owed by officers of registered organisations.
53. Section 283 limits the scope of the statutory duties imposed by ss 285-288 of the FW(RO) Act. However, subject to one exception, these
statutory duties are expressly stated51 to be in addition to the existing
equitable and common law duties imposed on the officers of registered
organisations. The exception is that the statutory ‘business judgment
rule’ defence in s 285(2) of the FW(RO) Act is also a defence to the
equitable and common law duties to take reasonable care.
48 Submissions of the Government of Victoria, 28/10/14, p 38; Master Builders Australia Law Reform Submissions, 21/8/15, p 26; Associations Forum Pty Ltd Law Reform Submission, 4/9/15, p 4. 49
Law Society of New South Wales, Employment Law Committee Law Reform Submissions, 21/8/15, p 8. 50 Law Society of New South Wales, Employment Law Committee Law Reform Submissions, 21/8/15, p 8. 51
Fair Work (Registered Organisations) Act 2009 (Cth), s 291.
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54. The general law duties - a number of which are collected in
paragraph 14 above - are almost identical to the statutory duties. Yet
the general law duties are not limited to powers and duties ‘related to
the financial management’ of the registered organisation, but extend
across the entire field of possible activity by officers of the
organisation.
55. It is thus very difficult to understand what legitimate purpose s 283 of
the FW(RO) Act could be thought to have. There are a several reasons
why general law duties may be enacted in statutory form. They
include the following:
(a) Enactment of statutory duties simplifies the law and makes
the law able to be more easily understood.
(b) Penalties (whether civil or criminal) for breach of the
statutory duties indicate society’s disapproval of the conduct
in breach of duty.
(c) Penalties (whether civil or criminal) for breach of the
statutory duties act as a deterrent and encourage the proper
performance of the general law duties.
(d) The ability of an independent statutory regulator to take
action further encourages the performance of the general law
duties.
56. The inclusion of s 283 of the FW(RO) Act serves none of these
purposes. Rather, it would seem that its only purpose is to prevent
officers of registered organisations from being exposed to action by an
178
independent regulator in relation to certain types of breaches of duty.
The obvious implication is that breaches of duty by officers in relation
to matters other than those ‘in relation to financial management’ are
unimportant.
57. Secondly, there is no definition of ‘financial management’ set out in
the FW(RO) Act. On a narrow view, only decisions about the actual
management of the finances of a registered organisation are caught by
the section. That would give the statutory duties in ss 285-288 of the
FW(RO) Act a fairly restricted operation. On a broader view,
decisions that have an effect, whether direct or indirect, on the finances
of a registered organisation will be caught. On the current drafting of
s 283, one difficulty with the broader construction is that if it were
accepted it would tend to render s 283 otiose because many decisions
will have an effect on an organisation’s financial position.
58. The problems with the current provision were exposed in the Industry
2020, Building Industry 2000 and IR 21 case studies considered in
2014.52 Submissions by counsel assisting were to the effect that the
conduct by union officers in deciding to host certain events as Building
Industry 2000 (in the case of the CFMEU), Industry 2020 (in the case
of the AWU) or IR21 events (in the case of the NUW) rather than as
union events was conduct in relation to the financial management of
the union.53
52 Royal Commission into Trade Union and Governance, Interim Report (2014), Vol 1, chs 3.3, 3.4, 3.5 respectively. 53
Royal Commission into Trade Union and Governance, Interim Report (2014), Vol 1, ch 3.3, p 377 [124]; ch 3.4, p 419 [103]; ch 3.5, pp 474-475 [123].
179
59. However, counsel for Cesar Melhelm argued that conduct in deciding
to host certain events as Industry 2020 events rather than AWU events
was not conduct ‘in relation to the financial management’ of the AWU.
The submission was to the effect that a decision about how to raise
funds was not in relation to the management of funds.54 Given the
uncertainty, the Interim Report did not make any findings as to
whether conduct of this nature was or was not ‘in relation to financial
management’. However, the uncertainty illustrates that reform of
s 283 of the FW(RO) Act is desirable.
60. Thirdly, conduct by officers which may have no direct relation to the
financial management of the organisation may have a very significant
financial effect on its financial position. For example, the conduct of
union officials which amounts to contraventions of laws or breach of
court orders may lead to the imposition of significant penalties or fines
for contempt. The legal costs of proceedings defending this conduct
and the imposition of fines and penalties could substantially diminish
the assets of the relevant union. It seems peculiar that union officers’
statutory duties to the union should not extend to conduct that has an
adverse financial effect on the union.
61. Fourthly, conduct by officers which has no relation to the financial
management of the union may be such an egregious breach of fiduciary
duty that there is a public interest in the officer being liable to pay a
penalty so as to deter future wrongdoing by other officers. For
example, a union official who uses his or her position to obtain a
personal benefit (for example, the provision of free building work)
54 See Royal Commission into Trade Union and Governance, Interim Report (2014), Vol 1, ch 3.3, p 383 [138].
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which could not be obtained by the union arguably cannot breach s 287
of the FW(RO) Act because the officer’s conduct does not relate to the
financial management of the union. Although, depending on the
particular circumstances, it may be that the official is criminally liable
for receiving a secret commission, that will not always be the case.
62. Fifthly, the statutory duties imposed on officers of State registered
organisations in New South Wales, Queensland and Western Australia,
are not limited to matters relating to financial management:
(a) In New South Wales,55 officers are subject to criminal
penalties for acting dishonestly in the exercise of their powers
or the discharge of their duties, with an intention to defraud.
They are also subject to criminal penalties for breaches of the
equivalent of s 287 of the FW(RO) Act up to a maximum of
100 penalty units. There is no provision equivalent to s 283.
(b) In Queensland,56 officers of State registered organisations are
subject to very substantial criminal liability, including
imprisonment for up to five years and a penalty of 3,091
penalty units ($340,010), for breaches of the duties equivalent
to those imposed by ss 285 and 286 of the FW(RO) Act.
There is no provision equivalent to s 283 of the FW(RO) Act.
(c) In Western Australia,57 ‘financial officials’ of State registered
organisations are subject to duties equivalent to those
55 Industrial Relations Act 1996 (NSW), ss 267-268. 56 Industrial Relations Act 1999 (Qld), ss 527-528. 57
Industrial Relations Act 1979 (WA), s 74.
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imposed by ss 285, 287 and 288 of the FW(RO) Act.
‘Financial officials’ are officers of the organisation entitled to
participate directly in the financial management of the
organisation. There is no provision equivalent to s 283 of the
FW(RO) Act.
63. For the reasons above, it is recommended that s 283 of the FW(RO)
Act be repealed to bring the statutory duties on the officers of
registered organisations into line with the duties imposed on those
officers by the general law.
Recommendation 26
Section 283 of Fair Work (Registered Organisations) Act 2009 (Cth) be
repealed to align the statutory duties of officers of registered organisations with
their general law duties.
Good faith duty
64. Section 286 of the FW(RO) Act imposes a duty of good faith on
officers of registered organisations. This section provides that:
286 Good faith—civil obligations
(1) An officer of an organisation or a branch must exercise his or her powers and discharge his or her duties:
(a) in good faith in what he or she believes to be the best interests of the organisation; and
(b) for a proper purpose.
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(2) A person who is involved in a contravention of subsection (1) contravenes this subsection.
[Emphasis added]
65. The effect of the italicised words is that an officer of a registered
organisation could only ever breach the duty in s 286(1)(a) of the
FW(RO) Act if the officer did not subjectively believe that what he or
she was doing was in the best interests of the organisation.58 The
italicised words have the further consequence that proof of a
contravention of s 286(1)(a) of the FW(RO) Act will require proof that
the officer did not have a particular subjective belief. Except in
egregious cases, that will often pose a considerable practical challenge.
It may arise in relation to some of the expenditures made by Derrick
Belan on himself at the cost of the NUW when those expenditures
come to be fully investigated.59
66. The comparable duty under s 181(1) of the Corporations Act 2001
(Cth) obliges officers of a corporation to exercise their powers and
discharge their duties ‘in good faith in the best interests of the
corporation’ and ‘for a proper purpose’. Significantly, the language
does not include the words ‘what he or she believes to be’.
67. The language of s 181(1), the structure of the Corporations Act 2001
(Cth) and the section’s legislative history60 point inexorably to the
conclusion that the statutory duty is not satisfied merely because an
officer has a subjective belief that what was done was in the best
58 See, eg, General Manager of the Fair Work Commission v Thomson (No 3) [2015] FCA 1001 at [27], [39], [47]. 59
See Report, Vol 2, ch 4. 60 See Ford, Austin and Ramsay’s Principles of Corporations Law (LexisNexis, October 2015, looseleaf), [8.065], [8.065.6], [8.070.3].
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interests of the corporation. During the Parliamentary debates
concerning the introduction of s 181(1) of the Corporations Act 2001
(Cth), the Labor opposition successfully amended the Corporate Law
Economic Reform Program Bill 1998 (Cth) to remove the additional
words that are presently contained in s 286 of the FW(RO) Act in order
to turn a subjective test into an objective test.61 There are many cases
to the effect that the section imports an objective standard that has
regard to what a comparable person having the same knowledge and
skills as the officer would reasonably have done in the circumstances.62
68. However, more recently some confusion has been sown in this area,
particularly by the decision in Bell Group Ltd (in liq) v Westpac
Banking Corporation, where a range of different views were expressed
about the equivalent general law duty on directors. At first instance,
Owen J expressed the view that the general law duty to act in the best
interests of the corporation has both subjective and objective elements,
that it is largely subjective but that there may be a breach of duty even
if the director believes it is in the best interests of the corporation if it is
a decision no reasonable director could judge to be in the bests in the
corporation.63 On appeal, a variety of views were expressed. Lee AJA
indicated that the general law duty would usually be satisfied if the
61 Commonwealth, Senate, Parliamentary Debates (Hansard), 13 October 1999, pp 9622-9624 (Senator Conroy). 62
See, eg, ASIC v Sydney Investment House Equities Pty Ltd (2008) 69 ACSR 1 at 12 [34], 14 [41] per Hamilton J; Mernda Developments Pty Ltd v Alamanda Property Investments No 2 Pty Ltd (2011) 86 ACSR 277 at 286 [32]-[33] per curiam (VCA); Re Idylic Solutions Pty Ltd [2012] NSWSC 1276 at [1487] per Ward J; ASIC v Australian Property Custodian Holdings Ltd (No 3) [2013] FCA 1342 at [612] per Murphy J. See generally, Ford, Austin and Ramsay’s Principles of Corporations Law (LexisNexis, October 2015, looseleaf), [8.065], [8.065.6], [8.070.3], [8.100] and [8.140]. 63
Bell Group Ltd (in liq) v Westpac Banking Corporation (No 9) (2008) 38 WAR 1 at [4619].
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director subjectively thought the decision was in the best interests of
the corporation, but there would be a breach if the conduct was plainly
unreasonable or irrational.64 Drummond AJA, at the same time as
approving Owen J’s conclusion, said that the test was purely
subjective.65 Carr AJA appeared to accept Owen J’s conclusion.66
69. An obvious reason for adopting the wording of s 181(1) of the
Corporations Act 2001 (Cth) rather than the wording of s 286(1) of the
FW(RO) Act was stated more than 130 years ago by Bowen LJ:67
Bona fides cannot be the sole test, otherwise you might have a lunatic conducting the affairs of the company, and paying away its money with both hands in a manner perfectly bona fide yet perfectly irrational.
70. A similar point was made by the Companies and Securities Advisory
Committee when it was asked by the Minister for Financial Services
and Regulation to review s 181(1)(a) of the Corporations Act 2001
(Cth) after its enactment. The Committee stated:68
The language of s 181(1)(a) is consistent with the common law test of acting in the best interests of the company, which contains an objective element. A subjective belief, while necessary, does not suffice. By contrast, the original formulation, namely “in good faith in what they believe to be in the best interests of the corporation”, may have permitted directors to act on the basis of eccentric or irrational beliefs. This purely subjective test would therefore be inappropriate.
64 Westpac Banking Corporation v Bell Group Ltd (in liq) (No 3) (2012) 44 WAR 1 at [923]. 65 Westpac Banking Corporation v Bell Group Ltd (in liq) (No 3) (2012) 44 WAR 1 at [1988]-[1995]. 66
Westpac Banking Corporation v Bell Group Ltd (in liq) (No 3) (2012) 44 WAR 1 at [2795]-[2796]. 67 Hutton v West Cork Railway Co (1883) 23 Ch D 654 at 671. 68
Companies and Securities Advisory Committee, Report to the Minister for Financial Services and Regulation on Sections 181 and 189 of the Corporations Law, October 2000, p 2.
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71. Various submissions to the Commission in relation to this issue
support the removal of the purely subjective test currently found in the
FW(RO) Act.69
72. One significant argument in support of the difference between s 286 of
the FW(RO) Act and the analogous duty in s 181 of the Corporations
Act 2001 (Cth) is that registered organisations, particularly trade
unions, have a range of different and possibly competing interests and
that it would not be possible for officers to act so as to promote the
interests of all of the members.70 Accordingly, it would often not be
possible to make any assessment of what was objectively in the best
interests of the organisation, and so inappropriate to impose a duty on
the officers of registered organisations to act in what is objectively the
best interests of the organisation.
73. Master Builders Australia submitted, in effect, that in the context of
industrial organisations an objective approach to s 286 of the FW(RO)
Act is unworkable and that s 286 of the FW(RO) Act should be
repealed in its entirety and replaced with a statutory rendering of a
fiduciary’s duties.71
74. There is considerable force to the argument that an assessment of what
is in the best interests of an organisation is not readily susceptible of a
single objective answer. There is less force to the argument that this is
more of a problem in relation to industrial organisations. For example
69 Associations Forum Pty Ltd Law Reform Submission, 4/9/15, p 5; Housing Industry Association Pty Ltd Law Reform Submissions, 21/8/15, pp 4-5; Boral Law Reform Submissions, 2014, pp 28-29; Boral Law Reform Submissions, 2015, p 15. 70
Master Builders Australia Law Reform Submissions, 21/8/15, pp 26-27. 71 Master Builders Australia Law Reform Submissions, 21/8/15, pp 26-27.
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there are many cases where the directors of a company will have to
make decisions balancing the competing interests of different classes
of members. In such cases, the duty to act in the best interests of the
company (which ordinarily means the members as a whole) requires
directors to act fairly between the various classes of member.72 The
general law in relation to trade union officials is to the same effect.73
75. An approach that balances the need to avoid a purely subjective
standard at the same as recognising the difficulties of a court imposing
what it thinks to be in the best interests of the organisation is to require
the officer’s belief to be held honestly and reasonably. This is the
general law formulation of the duty on union officers,74 and is
consistent with the cases that have interpreted s 181(1) of the
Corporations Act 2001 (Cth) referred to above.75 Under this test, it is
not enough that the officer holds a particular view. It must be a view
which a person in the same position as the officer, having the same
knowledge and skills, could reasonably have formed.
Recommendation 27
Section 286(1)(a) of the Fair Work (Registered Organisations) Act 2009 (Cth)
be amended by inserting the words ‘honestly and reasonably’ before the word
‘believes’.
72
Mills v Mills (1938) 60 CLR 150 at 164 per Latham CJ; Howard Smith Ltd v Ampol Petroleum Ltd [1974] AC 821 at 835 per Lord Wilberforce. 73 Allen v Townsend (1977) 31 FLR 431 at 486 per Evatt and Northrop JJ. 74
Ludwig v Harris (1991) 30 FCR 377 at 379 per Beaumont J (Black CJ agreeing). 75 See the cases cited in footnote 62 above.
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Civil penalties for breach of statutory duties
76. The duties created by ss 285-288 of the FW(RO) Act are civil penalty
provisions.76 The consequence is that the General Manager of the
FWC may apply to the Federal Court for the imposition of a pecuniary
penalty for contravention of those provisions.
77. Presently, the maximum penalty for a contravention of a civil penalty
provision is 300 penalty units for a body corporate and 60 penalty units
‘in any other case’.77 Currently, a penalty unit is $180.78
Consequently, the current maximum penalty that can be imposed on an
officer of a registered organisation for breach of one of the duties in
ss 285-288 of the FW(RO) Act is $10,800.79
78. This penalty may be contrasted with s 1317G(1) of the Corporations
Act 2001 (Cth) which imposes a maximum civil penalty of $200,000
for contraventions of the equivalent directors’ duties that:
(a) materially prejudice the interests of the corporation, or its
members; or
(b) materially prejudice the corporation’s ability to pay its
creditors; or
76 Fair Work (Registered Organisations) Act 2009 (Cth), s 305. 77 Fair Work (Registered Organisations) Act 2009 (Cth), s 306. 78
Crimes Act 1914 (Cth), s 4AA. From 1 July 2018, the amount is subject to annual CPI indexation. 79 A body corporate that is involved in a contravention by an officer of an organisation (which obviously cannot be the organisation itself) is subject to a maximum civil penalty of 300 penalty units, which is equivalent to $54,000.
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(c) is serious.
No pecuniary penalty is payable if the contravention does not fall
within one of those three classes.
79. The difference between the maximum penalties is stark. The directors
of not-for-profit companies are subject to a maximum possible penalty
of $200,000 for breach of their duties. Yet the officers of a registered
trade union are subject to a maximum penalty of only $10,800 for the
same conduct.
80. Since 2013, the current Federal government has attempted three times
to introduce legislation increasing the maximum penalties for breach of
ss 285-288 of the FW(RO) Act.80 The most recent attempt to increase
the penalties was set out in the Fair Work (Registered Organisations)
Amendment Bill 2014 [No 2] (Cth), which was introduced to the House
of Representative on 19 March 2015. On 17 August 2015 the Senate
negatived the Bill. That Bill proposed amending the penalties for
breach of ss 285-288 of the FW(RO) Act to provide for a maximum
penalty of:
(a) 1,200 penalty units (currently $216,000) for a ‘serious
contravention’ of those sections; and
80 Fair Work (Registered Organisations) Amendment Bill 2013 (Cth), Fair Work (Registered Organisations) Amendment Bill 2014 (Cth) and the Fair Work (Registered Organisations) Amendment Bill 2014 [No 2] (Cth) have each proposed increasing the maximum pecuniary penalties for breach of ss 285-288 of the Fair Work (Registered Organisations) Act 2009 (Cth).
189
(b) 100 penalty units (currently $18,000) for all other breaches of
those sections by officers.81
81. A ‘serious contravention’ was defined in the Bill82 as a contravention
that:
(a) materially prejudices the interests of the organisation or
branch, or members of the organisation or branch; or
(b) materially prejudices the ability of the organisation or branch
to pay its creditors; or
(c) is serious.
The definition of serious contravention was based on s 1317G(1)(b) of
the Corporations Act 2001 (Cth).
82. More recently, the Australian Labor Party has, notwithstanding its
repeated opposition to the various Bills referred to above, adopted a
policy that, subject to one important matter, is very similar to the
current government’s proposal. The Australian Labor Party’s policy is
to increase the existing penalties to $216,000 for serious breaches by
paid officers of their statutory duties. A ‘serious’ breach will include a
breach that ‘materially prejudices’ the interest of the organisation or its
81 See Fair Work (Registered Organisations) Amendment Bill 2014 [No 2] (Cth), Sch 2, Part 1, items 149-162. 82
See Fair Work (Registered Organisations) Amendment Bill 2014 [No 2] (Cth), Sch 2, Part 1, item 4.
190
members.83 The important distinction is, of course, that the increased
penalties will only apply to paid officials of the organisation.
83. The Commission received a number of submissions supporting the
introduction of higher penalties for breaches of ss 285-288 of the
FW(RO) Act.84
84. The MUA however, has argued (although not in submissions to the
Commission) that the increase in penalties proposed by the Federal
government is ‘manifestly unfair’.85 The ACTU has also argued that
the proposed maximum penalties are ‘excessive’.86 It has also
criticised the fact that because the proposed maximum penalties in
relation to registered organisations are expressed in terms of penalty
units, the proposed maximum penalty in relation to breaches by
officers of registered organisations is in fact greater than those
penalties imposed on company directors.87 It has also argued that the
83 Australian Labor Party, ‘Fact Sheet: Better Union Governance’, released 7/12/15, pp 1-2. 84 Boral Law Reform Submissions, 2015, p 18; Master Builders Australia Law Reform Submissions, 21/8/15, p 28; Grace Collier Submission in response to Issues Paper 2: Duties of Union Officials, 10/7/2014, p 2; Institute of Public Affairs Law Reform Submissions, August 2015, pp 6-7. 85
Maritime Union of Australia, Submission to the Senate Education and Employment Legislation Committee into the Fair Work (Registered Organisations) Amendment Bill 2013 (Cth), 22/11/13, p 9. 86
Australian Council of Trade Unions, Submission to the Senate Education and Employment Legislation Committee into the Fair Work (Registered Organisations) Amendment Bill 2013 (Cth), 22/11/13, p 17. 87
Australian Council of Trade Unions, Submission to the Senate Education and Employment Legislation Committee into the Fair Work (Registered Organisations) Amendment Bill 2013 (Cth), 22/11/13, p 16; Australian Council of Trade Unions, Submission to the Senate Education and Employment Legislation Committee into the Fair Work (Registered Organisations) Amendment Bill 2014 [No 2] (Cth), 30/6/15, p 11.
191
proposed definition of ‘serious contravention’ is not well-suited to
registered organisations and is, in part, circular.88
85. The Australian Industry Group had previously expressed concerns
similar to the ACTU. They suggested that there be a maximum civil
penalty of 200 penalty units (or $36,000) for an individual who
contravenes ss 285-288 of the FW(RO) Act.89
86. The various submissions raise two main issues. First, should the civil
penalties for breach of ss 285-288 be increased? Secondly, if so,
should the civil penalties be brought in line with the penalties imposed
on directors of corporations? If not, how else should the existing
maximum penalties be altered?
87. In relation to the first issue, it is difficult to see how, objectively, a
maximum penalty of $10,800 imposes much of a deterrent to officers
who breach their duties, or is much of a punishment. It must be
recalled that courts rarely, if ever, impose the maximum penalty. By
way of comparison, the secretaries of many large unions are paid in
excess of $150,000 per year, with some - such as Michael Williamson
and Katherine Jackson - paid well in excess.
88. Of course, it is true that a union or other registered organisation that
suffers damage as a result of a breach of statutory duty may seek to
88 Australian Council of Trade Unions, Submission to the Senate Education and Employment Legislation Committee into the Fair Work (Registered Organisations) Amendment Bill 2013 (Cth), 22/11/13, p 17. 89
Australian Industry Group, Submission to the Senate Education and Employment Legislation Committee into the Fair Work (Registered Organisations) Amendment Bill 2013 (Cth), pp 14-15.
192
recover that damage from the officer.90 But the recovery of
compensation is directed at restoring the union or registered
organisation to the position it should have been in, rather than seeking
to punish the wrongdoer and seeking to deter further wrongdoing.
89. Put shortly, the existing civil penalties under the FW(RO) Act for
breaches of ss 285-288 of the FW(RO) Act are manifestly inadequate
to act as an effective deterrent. They are manifestly inadequate to
protect members of organisations from improper conduct by officers.
They are manifestly inadequate to mark society’s disapproval of the
conduct concerned. They are utterly derisory. They should be
increased. It must be remembered that the present suggestion is only
that the maximum possible penalty be increased. The amount of
penalty actually awarded in each case will be determined by a court
after close consideration of all relevant facts.
90. The leads to the second issue. Should the penalties be aligned
generally with those in the Corporations Act 2001 (Cth)?
91. There appear to be two main, and interlinked, arguments why the
penalties should not mirror those in the Corporations Act 2001 (Cth).
92. The first is that registered organisations are different from corporations
and that it is therefore not appropriate for the penalties to be the same.
The main relevant differences identified by the ACTU are:91
90 Fair Work (Registered Organisations) Act 2009 (Cth), s 307. 91 See the extracts from the submissions quoted in paras 24-25 above.
193
(a) Corporations are formed for the purpose of generating profit
and the reason that they are regulated is because they can
directly determine the ‘financial fortunes’ of members. In
contrast, unions are not formed to generate profit for members
and the interests of union members in their union are different
from the financial interests of shareholders in their company;
(b) The Corporations Act 2001 (Cth) needs to cover the whole
range of corporations including multi-billion dollar
businesses. In contrast, registered organisations are
‘relatively small, simple organisations with non-commercial
purposes’.
93. The second argument is that, unlike corporations, many employee and
employer organisations are run solely by volunteers for the benefit of
members, and the imposition of substantial penalties on officers of
those organisations might deter individuals from taking up office in
such organisations.
94. The first argument does not withstand scrutiny.
95. First, not all companies are formed to generate profit. There are a
number of not-for-profit companies, companies having charitable
purposes and mutual companies limited by guarantee which are not
directed to deriving profit for their members. Yet they are all subject
to the same regulation under the Corporations Act 2001 (Cth).
96. Secondly, far from all registered organisations are ‘relatively small,
simple organisations’. Large national unions, such as the CFMEU,
MUA and the AWU, have substantial assets. They have many
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thousands of members. They operate branches across different
jurisdictions. They employ large numbers of employees. They
generate tens of millions in membership dues annually. They generate
millions in commercial enterprise and agreements with third parties.
They are trading corporations in the constitutional sense. They are big
businesses.
97. Thirdly, whilst the interest that union members have in their union is
different from the interest that shareholders have in a company it is no
less important. Arguably it is more important. In the main, workers
join a union because the union provides, in return for the membership
dues paid, many services that are essential to the workers’ livelihoods
and working conditions and some services that are beneficial for
workers who fall on evil days. Union officials are fiduciaries. They
must act for the benefit of the members.
98. The second argument does not fare much better.
99. First, the penalties are only available for wrongdoing. Honest and
diligent officers have nothing to fear. In relation to the possibility of
liability for negligence, s 285(2) of the FW(RO) Act provides a very
broad business judgment defence.
100. Secondly, the penalties are maximum penalties, not minimum penalties.
101. Thirdly, many employee organisations at least are not run by
volunteers but by officers who receive substantial salaries.
102. Fourthly, not-for-profit and charitable corporations can also be run by
volunteers. It is has not been suggested to the Commission that the
195
obligations under the Corporations Act 2001 (Cth) have had a chilling
effect on the charity and not-for-profit sector.
103. Fifthly, officers of State registered organisations in Queensland are
already subject to criminal penalties of up to 5 years imprisonment or a
penalty of $340,010 for breaches of the duties equivalent to those in
ss 285-286 of the FW(RO) Act. It was not suggested that this penalty
had deterred honest individuals from participating in the affairs of
Queensland registered organisations.
104. In short, the distinctions between corporations and registered
organisations are, in relation to the question of civil penalties, either
false or employed to lead to misleading conclusions. Registered
organisations are not the same as corporations. But in determining
what maximum civil penalties should be available for breaches of the
same duties there is no relevant difference.
105. Further, any residual concern about the effect of substantial penalties
can be accommodated by adopting a differential maximum penalty
regime.
106. One type of regime would be to have different maximum penalties
depending on the size of the organisation. However, as noted in the
Discussion Paper, there are considerable practical difficulties with such
an approach.92
107. The other type of regime is to have different maximum penalties
depending on the gravity of the contravention involved. Such a regime
92 Royal Commission into Trade Union Governance and Corruption, Discussion Paper - Options for Law Reform, 19/5/15, p 53.
196
should alleviate any remaining concern that officers of organisations
would be unduly deterred from standing for office by the potential for
heavy penalties being imposed for honest and trivial breaches of
duty.93 This differential regime is the approach in the Corporations
Act 2001 (Cth) and is the current approach proposed by the Federal
government.
108. The differential regime proposed by the Australian Labor Party, which
only applies higher penalties to paid officers, is not recommended.
Why should an unpaid officer who misappropriates funds be
automatically subject to a lesser maximum penalty? An unpaid officer
who dishonestly misappropriates a substantial amount of members’
funds may be deserving of a substantially greater penalty than a paid
officer who negligently wastes a much smaller amount. Furthermore,
whether or not an officer is paid is merely one matter that should be
considered the gravity or seriousness of the conduct involved. It is
recommended that this be left to the courts to determine on a case by
case basis.
109. At this point, two criticisms of the proposals in the Fair Work
(Registered Organisations) Amendment Bill 2014 [No 2] (Cth) should
be discussed.
110. The first criticism, made by the ACTU, is that the government’s
current proposals will mean that the officers of registered organisations
are subject to greater penalties than company directors. That is so for
two reasons. First, because the proposed amendments to the FW(RO)
Act are made with reference to ‘penalty units’ rather than a fixed
93 See Master Builders Australia Law Reform Submissions, 21/8/15, p 28.
197
amount of $200,000, officers of a registered organisations are subject
to potentially greater penalties. Secondly, under the Corporations Act
2001 (Cth), unless the breach of duty falls into one of the relevant
classes of more serious contravention, the director is not liable to any
penalty. In contrast, under the proposed reforms to the FW(RO) Act,
officers will be subject to a maximum penalty of 100 penalty units for
contraventions of ss 285-288 of the FW(RO) Act that are not serious.
111. The second criticism, made by the ACTU and the Australian Industry
Group, is that the definition of ‘serious contravention’ (set out in para
81 above) is inappropriate. The ACTU’s submission to the Senate
Education and Employment Legislation Committee on the Fair Work
(Registered Organisations) Amendment Bill 2013 (Cth) (which is
relevantly identical to the most recently rejected Bill) on this topic was
as follows:94
[T]he provision does not translate well into the sphere of regulating registered organisations. The first limb (“a serious contravention is … a contravention that materially prejudices the interests of the organisation or branch, or the members of the organisations or branch”) is problematic because its function in the Corporations Act is to address conduct which impinges in the capacity of the company to achieve profit for the company and deliver a financial return to shareholders (i.e. “members” of the Company). These are not the bases of association that underpins unionism. The second limb (“a serious contravention is … a contravention that materially prejudices the ability of the organisation or branch to pay its creditors”) has little relevance where registered organisations are under no general obligation to generate profit or indeed remain solvent. The third limb is [sic] (“a serious contravention is … a contravention that is serious”) is circular in this context given the result and function the definition serves - is the necessary implication the legislature intends to impose penalties of 100 or 500 penalty units for contraventions that a Court would not regard as serious?
94 Australian Council of Trade Unions, Submission to the Senate Education and Employment Legislation Committee into the Fair Work (Registered Organisations) Amendment Bill 2013 (Cth), 22/11/13, p 17.
198
112. There is considerable force to the ACTU’s first criticism, so far as it
goes. There is no obvious justification for subjecting the officers of
registered organisations to greater maximum penalties than officers of
corporations.
113. However, an obvious solution to the different maximum penalties is to
amend the Corporations Act 2001 (Cth) so that the civil penalties in
s 1317G are not made with reference to a fixed amount. The
maximum amount of $200,000 in s 1317G(1) of the Corporations Act
2001 (Cth) has remained unchanged since 2002. Since 2002, the value
of a penalty unit has increased from $110 to $180 largely reflecting
increases in the consumer price index. Most penalties in
Commonwealth legislation are fixed with reference to penalty units.
114. In relation to the criticism about the two levels of penalty proposed
under the FW(RO) Act, the ACTU’s criticism also has force. If a court
does not consider the contravention ‘serious’ it is unlikely that the
court will impose a penalty anywhere close to 100 penalty units.
Further, it is precisely in relation to this kind of conduct (non-serious
breaches) that the registered organisations regulator would be expected
not to commenced proceedings but to use its proposed power to obtain
an enforceable undertaking.
115. The ACTU’s criticisms of the definition of ‘serious contravention’ are
less cogent. The first and second limbs are perfectly capable of ready
application to registered organisations. The policy proposed by the
Australian Labor Party recognises this in respect of the first limb.
Further, the third limb in substance is not circular. Instead, it means
that if the Court concludes that a contravention is serious for reasons
other than those specified in the first and second limbs the Court may
199
impose a civil penalty. A contravention might be serious for a number
of reasons, for example:
(a) because the contravention was dishonest, reckless or grossly
negligent;
(b) because the contravention was negligent and led to significant
loss or damage to the organisation; or
(c) because a particular contravention was part of a repeated
pattern or course of conduct.
116. Rather than seeking to state prescriptively the circumstances when a
contravention may be serious it is considered better to leave the matter
to the courts to determine on a case by case basis.
Recommendation 28
The civil penalties for contravention of ss 285-288 of the Fair Work (Registered
Organisations) Act 2009 (Cth) be substantially increased. A distinction should
be drawn between a ‘serious contravention’ and other contraventions. The
maximum penalty for a ‘serious contravention’ should be 1,200 penalty units
(currently $216,000) with no penalty for a contravention that is not a ‘serious
contravention’. No distinction should be drawn between paid officers and
volunteers. ‘Serious contravention’ should be defined as proposed in the Fair
Work (Registered Organisations) Amendment Bill 2014 [No 2] (Cth).
Consideration also be given to amending the Corporations Act 2001 (Cth) to
specify the maximum penalty for breaches of directors’ duties by reference to
1,200 penalty units rather than the fixed amount of $200,000.
200
Criminal penalties for breach of statutory duties
117. A further important difference between the duties under the FW(RO)
Act and the Corporations Act 2001 (Cth) relates to the sanctions for
breach of these duties. Unlike the position under s 184 of the
Corporations Act 2001 (Cth), there are no provisions in the FW(RO)
Act that make dishonest or reckless breaches of ss 286, 287 or 288 of
the FW(RO) Act a criminal offence. The maximum penalty for an
officer who is convicted of an offence under s 184 of the Corporations
Act 2001 (Cth) is five years imprisonment or 2,000 penalty units
($360,000) or both.95
118. Since 2013, the current Federal government has attempted three times
to introduce provisions to the FW(RO) modelled on s 184 of the
Corporations Act 2001 (Cth).96 The most recent attempt was set out in
the Fair Work (Registered Organisations) Amendment Bill 2014 [No 2]
(Cth). That bill proposed the introduction of a new s 290A to the
FW(RO) Act. In substance, the proposed amendment would expose an
officer of a registered organisation who intentionally or recklessly
breaches his or her statutory duties under ss 286-288 of the
Corporations Act 2001 (Cth) to criminal sanctions. On 17 August
2015 the Bill was defeated in the Senate.
119. Although the Commission did not receive many submissions on this
topic, all those received supported the introduction of criminal
95 Corporations Act 2001 (Cth), Sch 3, item 30. 96 Fair Work (Registered Organisations) Amendment Bill 2013 (Cth), Fair Work (Registered Organisations) Amendment Bill 2014 (Cth) and the Fair Work (Registered Organisations) Amendment Bill 2014 [No 2] (Cth) have each proposed the introduction of criminal penalties.
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penalties for certain breaches of statutory duties by officers of
registered organisations.97
120. However, in its submission in response to the Issues Papers, the
Australian Industry Group expressed its view that it was not necessary
to introduce criminal offences into the FW(RO) Act.98 A number of
reasons were given:
(a) Criminal liability for recklessness was too great a burden on
the many unpaid volunteers who are officers of registered
organisations.
(b) Criminal offences would operate as a major disincentive to
existing voluntary officers of registered organisations
continuing in their roles, and would deter other people from
holding office.
(c) There are existing criminal law offences (for example, fraud
and theft) that already apply.
97 Boral Law Reform Submissions, 2015, pp 22-23; Master Builders Australia Law Reform Submissions, 21/8/15, pp 28-29; Joel Silver, Submission in Response to Issues Papers, undated (received 14/7/14), p 7. 98
Australian Industry Group, Submissions in Response to Issues Papers 1-3, 11/7/14, p 10.
202
121. In its submissions in relation to the Fair Work (Registered
Organisations) Amendment Bill 2013 (Cth), the ACTU said in relation
to proposed s 290A:99
Whilst we recognise that the conduct that would amount to breaches of the proposed duties are sufficiently serious to attract criminal sanctions, we question whether the amendments would add any value to the existing legal framework.
122. The ACTU went on to make two arguments. First, that it was ‘self
evident that there is no parallel between the nature of the power
exercised by corporations and the power exercised by unions’100 and
hence if criminal penalties were appropriate for corporations they are
not appropriate for unions. Secondly, the ACTU argued that the
criminal offences created by s 184 of the Corporations Act 2001 (Cth)
are in fact inappropriate vis-Ã -vis corporations and accordingly should
not be extended to registered organisations. In short, the ACTU argued
that ‘it is the regulation of corporations, not registered organisations,
that is out of step.’101
99 Australian Council of Trade Unions, Submission to the Senate Education and Employment Legislation Committee into the Fair Work (Registered Organisations) Amendment Bill 2013 (Cth), 22/11/13, p 18. 100
Australian Council of Trade Unions, Submission to the Senate Education and Employment Legislation Committee into the Fair Work (Registered Organisations) Amendment Bill 2013 (Cth), 22/11/13, p 20. 101
Australian Council of Trade Unions, Submission to the Senate Standing Legislation Committee on Education and Employment on the Fair Work (Registered Organisations) Amendment Bill 2013, 22/11/13, p 28.
203
123. The ACTU again advanced this submission in response to the Fair
Work (Registered Organisations) Amendment Bill 2014 [No 2]
(Cth):102
We have made the case in previous submissions that specialised statutory offences for conduct that is already punishable by the criminal law is an entirely unnecessary addition to the Act, that the corresponding provisions in the Corporations Act have been likewise criticised.
124. The submission continued:103
The matters concerning the HSU provide concrete evidence that that [sic] such criminal matters are capable of being pursued using criminal law. It is true that the penalty of $25,000 plus a compensation order of $5,650 ultimately imposed upon Thomson after his appeal was less than that which might have been expected by some observers. This is because only theft charges survived the appeal. The findings on the charges of obtaining a financial advantage by deception were set aside on appeal essentially because the Police [sic] had incorrectly particularised the “financial advantage”…
125. The last point in the ACTU’s submission immediately highlights one
of the weaknesses in relying solely on specific State law criminal
offences. The State laws dealing with fraud and theft are highly
complex. For example, in New South Wales,104 there are different
offences with differing elements of larceny, larceny by a bailee,
larceny by a servant, embezzlement by a servant and fraud. The
offences differ between jurisdictions. The existence of a standalone
general criminal offence for serious breaches of officers’ duties can be
a useful weapon in punishing and deterring wrongdoing.
102 Australian Council of Trade Unions, Submission to the Senate Education and Employment Legislation Committee into the Fair Work (Registered Organisations) Amendment Bill 2014 [No 2] (Cth), 30/6/15, p 12. 103
Australian Council of Trade Unions, Submission to the Senate Education and Employment Legislation Committee into the Fair Work (Registered Organisations) Amendment Bill 2014 [No 2] (Cth), 30/6/15, p 12. 104
Crimes Act 1900 (NSW), ss 116, 125, 156, 157, 192E.
204
126. A further argument by the ACTU against the introduction of criminal
penalties has been put thus:105
In relation to companies, the public sector regulator ASIC has not been much attracted to the use of criminal proceedings. No doubt the very high standards of proof attaching to such proceedings have been a factor in this.
127. This argument is not made out factually. Statistics provided to the
Commission by ASIC in relation to prosecutions for offences against
s 184 of the Corporations Act 2001 (Cth) show that since 2002, ASIC
has instituted 102 criminal prosecutions, 79 of which resulted in the
offence being proved. Of these 79 successful prosecutions, there were
45 in which a term of imprisonment was imposed.
128. The argument that the imposition of criminal penalties would operate
as a major disincentive for individuals to act in employer or employee
organisations must also be rejected.
129. There can be no serious suggestion that the introduction of criminal
penalties for dishonest or reckless breaches of ss 286-288 of the
FW(RO) Act will deter honest and diligent individuals from
volunteering to participate in employee or employer organisations.
Under the Criminal Code (Cth) ‘recklessness’ requires the accused to
be aware of a substantial risk of a result or circumstance occurring, and
105 Independent Panel on Best Practice for Union Governance, Report to the ACTU Executive to Invite Comment and Discussion, March 2013, p 31. See also Australian Council of Trade Unions, Submission to the Senate Education and Employment Legislation Committee into the Fair Work (Registered Organisations) Amendment Bill 2013 (Cth), 22/11/13, p 27.
205
in the circumstances known to the accused it must be unjustifiable to
take that risk.106 That is a relatively demanding standard.
130. Further, any provision based on s 184 of the Corporations Act 2001
(Cth) would only apply to those individuals who are dishonest or
reckless in their breaches of duty. Most rational observers would agree
that there is no place for dishonest or reckless persons in the affairs of
registered organisations. Significantly, s 184 of the Corporations Act
2001 (Cth) does not apply in relation to an officer’s duty to take due
skill and care, so that persons who are merely negligent (even grossly
negligent) cannot be criminally liable.
131. Overall, it is recommended that provisions modelled principally on
s 184 of the Corporations Act 2001 (Cth) be introduced into the
FW(RO) Act. As s 184(1) of the Corporations Act 2001 (Cth) is
currently drafted, it is not clear what, if anything, the word
‘intentionally’ adds in the phrase ‘intentionally dishonest’, particularly
when regard is had to the fact that under the Criminal Code (Cth),
dishonesty usually means dishonest according to the standards of
ordinary people, and known by the defendant to be dishonest according
to the standards of ordinary people.
106 Criminal Code (Cth), s 5.4.
206
Recommendation 29
The Fair Work (Registered Organisations) Act 2009 (Cth) be amended by
introducing a new s 290A that imposes criminal liability on officers of
registered organisations or branches who dishonestly or recklessly breach the
statutory duties imposed on them by ss 286-288 of the Fair Work Registered
Organisations Act 2009 (Cth).
The section be modelled principally on s 184 of the Corporations Act 2001
(Cth), except that the reference in s 184(1) to ‘intentionally dishonest’ should be
replaced by ‘dishonest’. The maximum penalty should be the same as that
under the Corporations Act 2001 (Cth), being 2,000 penalty units ($360,000) or
five years’ imprisonment, or both.
Indemnity for civil and criminal penalties
132. In a relatively recent decision concerning the imposition of civil
penalties against CFMEU officials for contraventions of right of entry
provisions, Flick J noted in relation to the penalty to be imposed on the
individuals concerned that:107
A penalty, if it were to be paid or reimbursed by an employing union, would cease to act as a deterrent to the contravening “individual”. An “individual” so reimbursed could act with impunity in full knowledge that his employing union conferred what could be seen as a licence for him to continue his past transgressions.
133. Accordingly, Flick J made an order requiring the CFMEU officials
concerned to pay the penalties imposed for contraventions of the
FW Act personally.
107 Director of the Fair Work Building Industry Inspectorate v Bragdon (No 2) [2015] FCA 998 at [26].
207
134. In a subsequent decision, Jessup J refused to make such an order in
relation to another CFMEU official on the basis that such an order
would be difficult to enforce.108
135. Currently, there are no provisions in the FW(RO) Act that prohibit
organisations exempting, indemnifying or reimbursing their officers
for penalties imposed for breach of duty or other contraventions of the
FW Act or the FW(RO) Act or for fines incurred during their activities
undertaken into connection with the registered organisation. The
consequence of such reimbursement is that penalties imposed on
individual have no deterrent effect.
136. Provisions prohibiting companies indemnifying their officers for
liabilities are found in ss 199A-199C of the Corporations Act 2001
(Cth).109 Section 199A of the Corporations Act 2001 (Cth) prohibits a
company exempting or indemnifying a company director or officer
from various liabilities, including pecuniary penalties for breach of
duty. Contravention of s 199A of the Corporations Act 2001 (Cth) is a
criminal offence of strict liability.110 The maximum fine is a paltry
five penalty units ($900) for a contravention by an individual and 25
penalty units ($4,500) for a contravention by a body corporate.111
Section 199B of the Corporations Act 2001 (Cth) prevents a company
from paying insurance premiums for an insurance contract against a
liability arising out of conduct involving a wilful breach of duty in
108
Director of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2015] FCA 1173 at [37]-[40]. 109 For consideration of the scope of these provisions see P Herzfeld, ‘Still a troublesome area: Legislative and common law restrictions on indemnity and insurance arrangements effected by companies on behalf of officers and employees’ (2009) 27 C&SLJ 267. 110
Corporations Act 2001 (Cth), s 1311(1), (5), (6). 111 Corporations Act 2001 (Cth), s 1311(1), (5).
208
relation to the company, or a contravention of ss 182 or 183 of the
Corporations Act 2001 (Cth). It too is an offence of strict liability,
with a similar paltry penalty.112 Section 199C of the Corporations Act
2001 (Cth) provides that nothing in ss 199A or 199B authorises
anything that would otherwise be unlawful and anything the purports
to indemnify or insure a person against a liability is void to the extent it
contravenes ss 199A or 199B.
137. The principle behind ss 199A-199C of the Corporations Act 2001
(Cth) is straightforward. If company directors are entitled to be
indemnified for civil penalties imposed on them for breach of their
duties to the company or for other breaches the penalties will not have
much of a deterrent effect, particularly where the directors in question,
or other directors sympathetic to them, control the board.
138. Clearly, as Flick J pointed out, the same policy argument applies in the
context of registered organisations. If an officer of a registered
organisation subject to a civil penalty for contravention of a provision
of the FW Act or the FW(RO) Act can have the benefit of an
indemnity, the deterrent effect of the penalty is substantially lessened if
not extinguished. Similarly, if an official fined for contempt is
indemnified by the union no consequences are felt personally by the
official. More generally, members’ funds should not be used, whether
directly or indirectly, to pay for breaches of the law by union officials.
112 Corporations Act 2001 (Cth), Sch 3, item 34.
209
Recommendation 30
New s 293A be introduced to the Fair Work (Registered Organisations) Act
2009 (Cth) prohibiting an organisation or a branch of an organisation (or any
related entity of the organisation or branch including any State registered
organisation or branch) from indemnifying, paying or reimbursing an officer of
the organisation or branch for any fine or civil penalty imposed on the officer
for conduct in connection with the organisation or branch.
The provision may usefully be based on ss 199A-199C of the Corporations Act
2001 (Cth). Contravention should be a criminal offence of strict liability. An
organisation that contravenes the provision should be subject to a maximum
penalty of 500 penalty units ($90,000) and every officer involved in a
contravention should be subject to a maximum penalty of 100 penalty units
($18,000). Consideration should be given to reviewing the penalties under
ss 199A and 199B of the Corporations Act 2001 (Cth).
Disclosure of material personal interests of officers
139. The FW(RO) Act was amended in 2012113 to introduce new obligations
in s 148B of the FW(RO) Act in relation to the disclosure of material
personal interests by officers of organisations. Section 148B of the
FW(RO) Act came into operation on 1 January 2014.
140. Relevantly, s 148B of the FW(RO) Act requires that the rules of a
registered organisation or branch of a registered organisation must
require:
113 Fair Work (Registered Organisations) Amendment Act 2012 (Cth).
210
(a) disclosure by each officer of the organisation (or branch) to
the organisation (or branch) of any material personal interest
in a matter than relates to the affairs of the organisation (or
branch) that the officer has or acquires, or a relative of the
officer has or acquires;114 and
(b) disclosure to the members of the organisation (or branch) of
any interests disclosed by officers under the rules.115
141. This provision was introduced by an Australian Labor Party
government as part of its response to the well-publicised misconduct
by officers within the HSU. The requirement of officers to disclose
material personal interests has obvious sense. It is important that those
who are making decisions in an organisation or branch are aware of
any matters that may potentially influence others in the decisions they
make.
142. Section 148B of the FW(RO) Act differs in a number of respects from
a provision in the Corporations Act 2001 (Cth) which is comparable
but not equivalent. Section 191(1) of the Corporations Act 2001 (Cth)
requires a director of a company who has a material personal interest in
a matter that relates to the affairs of the company to give the other
directors notice of the interest, unless one of the various exceptions in
s 191(2) applies. Directors are permitted to give standing notice of an
114 Fair Work (Registered Organisations) Act 2009 (Cth), s 148B(1), (2). 115 Fair Work (Registered Organisations) Act 2009 (Cth), s 148B(4), (5).
211
interest.116 Contravention of s 191(1) is a criminal offence, punishable
by imprisonment for three months, or ten penalty units or both.117
143. The obvious differences between s 148B of the FW(RO) Act and
s 191(1) of the Corporations Act 2001 (Cth) include the following.
(a) Disclosure under s 148B of the FW(RO) Act applies to all
‘officers’, whereas s 191(1) of the Corporations Act 2001
(Cth) applies only to directors.
(b) Disclosure under s 148B of the FW(RO) Act must be made to
the organisation or branch (it is not clear to whom disclosure
is in fact made), and any disclosure of material personal
interests to the organisation or branch must then be made to
members. Disclosure under s 191 of the Corporations Act
2001 (Cth) only requires disclosure to the directors, not to the
members.
(c) Under s 148B of the FW(RO) Act an officer must disclose
material personal interests of relatives.
(d) Contravention of s 191(1) of the Corporations Act 2001 (Cth)
is a criminal offence. In contrast, the mechanisms for
external enforcement of the rules that must be established by
s 148B of the FW(RO) Act in relation to the disclosure of
interests by officers are limited. As explained in Chapter 2 of
116 Corporations Act 2001 (Cth), s 192. 117 Corporations Act 2001 (Cth), Sch 3, item 32.
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this Volume,118 the ability of the General Manager to enforce
rules requiring an individual to do anything is limited.
144. The last matter substantially undermines the effectiveness of the
disclosure requirements.
145. The Fair Work (Registered Organisations) Bill 2013 (Cth) would have
recast the disclosure obligations on officers as a civil penalty provision
(with a maximum penalty of 1,200 penalty units for a serious
contravention and 100 penalty units otherwise).119 However, the
Senate Education and Employment Legislation Committee
recommended, after considering the submissions of a number of
parties, that disclosure should only be required of those officers whose
duties relate to the financial management of organisations.120 The
Senate committee was persuaded that:121
…the disclosure regime in relation to material personal interests proposed by the bill may create unnecessary administrative burdens for officers, some of whom are volunteers. The bill should be amended to ensure that the disclosure regime in the bill is consistent with the requirements in the Corporations Act 2001.
146. The Senate Committee was also persuaded that the disclosure
requirement should have a list of exceptions similar to those in
s 191(2) of the Corporations Act 2001 (Cth), and not require the
disclosure of the material personal interests of an officer’s relatives.
118 See Chapter 2 of this Volume, para 57. 119 Fair Work (Registered Organisations) Amendment Bill 2013 (Cth), Sch 2, Part 1, item 166 (s 293C). 120
The Senate, Education and Employment Legislation Committee, Fair Work (Registered Organisations) Amendment Bill 2013, December 2013, pp 10-11. 121
The Senate, Education and Employment Legislation Committee, Fair Work (Registered Organisations) Amendment Bill 2013, December 2013, p 10.
213
147. The most recent form of the Bill - the Fair Work (Registered
Organisations) Amendment Bill 2014 [No 2] - limits the proposed duty
to disclose to only those officers of an organisation whose duties relate
to the ‘financial management’ of the organisation or branch.122 The
Bill also contains exceptions similar to those found in s 191(2) of the
Corporations Act 2001 (Cth). It does not require the disclosure of the
material personal interests of an officer’s relatives.
148. A balance clearly needs to be struck. On the one hand, there are the
objectives of transparency and disclosure. On the other hand there is
the possibility of a regime imposing too great an administrative
burdens on individuals in registered organisations. Bearing this is
mind, it would seem prudent for the disclosure regime to have the
following features:
(a) There should be a requirement on an officer of an
organisation or branch (i) who is a member of the committee
of management or (ii) whose duties relate to financial
management to disclose material personal interests which
they have or acquire that relate to the affairs of the
organisation or branch.
(b) The duty to disclose should also extend to material personal
interests which the relatives of an officer have or acquire that
relate to the affairs of the organisation or branch. A particular
problem within some trade unions - for example, the HSU
122 Fair Work (Registered Organisations) Amendment Bill 2014 [No 2] (Cth), Sch 2, Part 1, item 166 (s 293C).
214
(the Williamsons) and the NUW (the Belans) - is that the
union is run, at least in part, as a ‘family affair’.
(c) The disclosure should be made to the committee of
management of the organisation or branch. Officers should
be permitted to give ‘standing disclosures’ in similar terms to
those proposed in s 293D of the Fair Work (Registered
Organisations) Amendment Bill 2014 [No 2]. Exceptions to
the obligation to disclose based on s 191(2) of the
Corporations Act 2001 (Cth)123 should also be permitted.
(d) An officer that fails to disclose should be subject to a civil
penalty. The proposed penalties in the Fair Work (Registered
Organisations) Amendment Bill 2014 [No 2] seem excessive
having regard to the purpose of disclosure, and the fact that
officers are under statutory obligations under ss 286-288 of
the FW(RO) Act. Further, it does not seem necessary to draw
a distinction in this respect between serious and non-serious
contraventions. A maximum civil penalty of 100 penalty
units ($18,000) seems appropriate.
(e) The organisation or branch should be required to record
disclosures made by officers in the minutes of the committee
of management.
123 See proposed s 293C(4) of the Fair Work (Registered Organisations) Amendment Bill 2014 [No 2] (Cth).
215
Recommendation 31
Section 148B of the Fair Work (Registered Organisations) Act 2009 (Cth) be
repealed and replaced with a civil penalty regime that, broadly speaking,
requires officers of registered organisations and branches of registered
organisations to disclose material personal interests that they, or their relatives,
have or acquire in relation to the affairs of the organisation or branch. Key
features of a suggested regime are set out in the body of the report.
Consideration should also be given to increasing the penalty for contravention
of s 191 of the Corporations Act 2001 (Cth).
Requirement of officers in a position of conflict not to participate in decision-making
149. Subject to certain exceptions, s 195(1) of the Corporations Act 2001
(Cth) makes it an offence for directors of a public company who have a
disclosable124 personal interest in a matter that is being considered at a
director’s meeting to be present at the meeting while that matter is
being considered, or to vote on the matter. There are two exceptions:
(1) the non-interested directors may give the director approval, or (2)
ASIC may grant approval. The offence is one of strict liability.125 The
maximum penalty is a paltry five penalty units.126
150. Section 195(1) of the Corporations Act 2001 (Cth) seeks to protect the
members of a public company by seeking to ensure that those directors
who have a potential relevant conflict of interest in a matter are not
124 That is, a personal interest that must be disclosed under s 191. 125 Corporations Act 2001 (Cth), s 195(1B). 126
Corporations Act 2001 (Cth), Sch 3, item 33.
216
involved in decision-making. The same rationale applies in respect of
employer and employee organisations.
151. The Fair Work (Registered Organisations) Amendment Bill 2014
[No 2] (Cth) proposed to introduce a new s 293F equivalent to s 195 of
the Corporations Act 2001 (Cth). Subject to the question of penalty, it
is recommended that the provision be adopted (albeit amended to
include any disclosable material personal that an officer’s relative has).
The maximum proposed penalty in the Bill was 1,200 penalty units for
a serious contravention and 100 penalty units otherwise. Having
regard to the purpose of s 195(1), which is to seek to avoid more
serious breaches of duty such as the duties set out in ss 286-288 of the
FW(RO) Act, the proposed penalty appears excessive. A maximum
penalty of 100 penalty units is more appropriate.
Recommendation 32
A provision similar to s 195 of the Corporations Act 2001 (Cth) be introduced to
the Fair Work (Registered Organisations) Act 2009 that, in broad terms,
prevents officers of an organisation or branch who have a disclosable material
interest in a matter from being present during any deliberation, or being
involved in any decision, about the matter. The provision should be a civil
penalty provision with a maximum penalty of 100 penalty units.
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Enforcement of officers’ duties by members
152. There is authority that generally union officers owe their duties to the
union itself, rather than to the members as a whole.127 Of course, in
some circumstances union officials will owe additional duties to a sub-class of members, and as discussed in Volume 4, Chapter 10.2 of the
Report, there are some circumstances in which union officials owe
duties to the members as a whole. The consequence of the general rule
is that the union may be regarded as the proper plaintiff to bring any
proceeding against an officer for breach of his or her fiduciary duties.
When the union is the proper plaintiff a member of the union who
endeavoured to sue an officer on behalf of an organisation would,
unless one of the narrow exceptions to the so-called ‘rule in Foss v
Harbottle’128 applied, fail.129
153. In relation to the statutory duties, a registered organisation may bring a
proceeding seeking compensation as a result of an officer’s breach of
statutory duty.130 In addition, pursuant to s 310(1) of the FW(RO) Act,
the General Manager of the FWC or ‘some other person authorised in
writing by the General Manager’ may bring civil penalty proceedings
in relation to conduct in contravention of the civil penalty provisions of
the Act (which relevantly includes officers’ duties) or a proceeding to
recover compensation for the organisation. This means that, at least in
127 Carling v Platt (1953) 80 CAR 283 at 292 per Dunphy J (dissenting), 306 per McIntyre J; Scott v Jess (1984) 3 FCR 263 at 287 per Gray J. Cf Allen v Townsend (1977) 31 FLR 431 at 483 per Evatt and Northrop JJ. 128
Foss v Harbottle (1846) 2 Hare 461; 67 ER 189. 129 See Bailey v Krantz (1984) 55 ALR 345 at 356 per Gray J; Tanner v Darroch (1986) 12 FCR 235 at 253 per Gray J. 130
Fair Work (Registered Organisations) Act 2009 (Cth), s 310(3).
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theory, a member could apply to the General Manager of the FWC
under s 310(1) of the FW(RO) Act to be authorised to bring civil
penalty proceedings against an officer who has breached duties to the
organisation. However, s 310(1) of the FW(RO) Act does not provide
any guidance for when the General Manager should grant authorisation
and the provision is framed in terms of a discretion rather than a duty.
The Commission is not aware that the General Manager has granted an
authorisation.
154. A further difficulty arises. Section 329 of the FW(RO) Act states that
a person who is a party to a proceeding in a matter arising under the
FW(RO) Act must not be ordered to pay costs unless the person
instituted the proceedings vexatiously or without reasonable cause.
Thus, even if a member was granted authorisation under s 310(1) of the
FW(RO) Act, a member will not be able to recover the legal costs of
commencing proceedings.
155. The result is that currently the members of registered organisations
have extremely limited avenues of recovering from the organisation
compensation for breaches of officers’ duties. The absence of a
mechanism by which members can take action on behalf of a registered
organisation has an undesirable consequence. That consequence is that
even if a powerful officer of an organisation (for example, the
secretary) may breach his or her duty to the registered organisation, no
action may be taken against that officer, either at all or not until a long
time after the conduct occurred when it will be more difficult to
establish what occurred. This is because the proper person to bring any
action will be the registered organisation itself and whilst the officer
remains in office there is little or no prospect of that occurring. Even
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after the officer has left, legal action is not certain against the former
officer, who may have close associations with the other officers of the
organisation.
156. The conduct of the committee of management of the NUW NSW in
releasing its former secretary, Derrick Belan, from liability is a good
example of the unlikelihood of a union taking against a former
secretary, unless forced to by bad publicity.
157. Submissions to the Commission suggested that a possible solution131 to
this problem would be to introduce provisions similar to ss 236 and
237 of the Corporations Act 2001 (Cth) enabling a ‘derivative action’
to be commenced i.e. an action commenced by a member of the
organisation on behalf of the organisation.
158. Sections 236 and 237 of the Corporations Act 2001 (Cth) enable a
member, former member, person entitled to be a member, officer or
former officer of a company to apply to the Supreme Court or Federal
Court for leave to bring a proceeding on behalf of an organisation. The
Court must grant leave if satisfied that certain conditions, which
operate as safeguards against frivolous or vexatious claims, are
established.132 A proceeding is then commenced in the name of the
registered organisation.
131 On this topic see Victorian Government, Submission in Response to Issues Papers, August 2014, pp 20-21; Boral Law Reform Submission, 2015, pp 43-44. 132
Corporations Act 2001 (Cth), s 237(2).
220
159. Applying these provisions by analogy to registered organisations, a
Court would only grant leave if satisfied that:
(a) it is probable that the organisation would not otherwise bring
the proceedings;
(b) the applicant is acting in good faith;
(c) there is a serious question to be tried;
(d) allowing the application is in the best interests of the
registered organisation; and
(e) appropriate notice has been given to the registered
organisation.
160. Master Builders Australia has expressed support for provisions of this
nature, provided the class of persons who could bring the application is
limited to a current or former member.133 It would also seem
appropriate that a current or former officer of the organisation, or one
of its branches, should be able to seek leave to take action.
161. In its submissions, Boral raised an issue about costs. Boral submitted
that if provision was made for this kind of ‘derivative action’,
provision would need to be made concerning the costs of the action as
union members bringing the action on behalf of the organisation are
unlikely to have the financial capacity to fund the proceeding
133 Master Builders Law Reform Submission, 21/8/15, p 31.
221
themselves.134 Boral further submitted that this problem could be
alleviated by introducing a provision equivalent to s 242 of the
Corporations Act 2001 (Cth) allowing the Court to order the
applicant’s costs to be paid by the organisation or by a party to the
proceeding (for example, an officer of the organisation). Master
Builders Australia agreed with this proposal.135
Recommendation 33
New provisions, modelled on ss 236-242 of the Corporations Act 2001 (Cth), be
introduced to the Fair Work (Registered Organisations) Act 2009 (Cth) allowing
a current or former member or current or former officer of a registered
organisation or branch of the organisation to apply to a State Supreme Court or
the Federal Court for leave to bring, or intervene in, a proceeding on behalf of a
registered organisation.
C - STATUTORY DUTIES IN RESPECT OF COURT ORDERS
The problem
162. One important matter that arose in relation to the Boral and Hindmarsh
case studies concerning the CFMEU was conduct undertaken by union
officials in breach of court orders and orders of the Fair Work
134 Boral Law Reform Submission, 2014, pp 43-44; Boral Law Reform Submissions, 2015, pp 26-27. 135
Master Builders Australia Law reform Submission, 21/8/15, p 31.
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Commission. In the Interim Report, the following view was expressed
in respect of the CFMEU’s conduct in relation to Boral:136
A legal system which does not provide swift protection against the type of conduct which Boral alleges it has suffered at the hands of the CFMEU, and which does not have a mechanism for the swift enforcement of court orders, is fundamentally defective. The defects are so great as to make it easy for those whose goal is to defy the rule of law. The defects reveal a huge problems for the Australian state and its numerous federal, State and Territory emanations. The defying of the Victorian Supreme Court’s injunctions for nearly two years, and the procedural history outlined above, will make the Australian legal system an international laughing stock. A new form of ‘sovereign risk’ is emerging - for investors will not invest in countries where their legal rights receive no protection in practice. At least so far as the courts are concerned, it may be appropriate for consideration to be given to procedures which ensure the swift determination of contempt applications, complemented where necessary by appropriate court rules and legislation.
Remedies under the Fair Work (Registered Organisations) Act 2009 (Cth)
163. As discussed in Chapter 2.1 of the Interim Report and in more detail in
Chapter 8.3 of Volume 4 of this Report, Part 3 of Chapter 9 of the
FW(RO) Act contains various provisions137 prohibiting officers and
employee of organisations from knowingly or recklessly contravening,
or being involved in a contravention of, orders made by the Federal
Court or the Fair Work Commission under the FW Act or the FW(RO)
Act. Breach is a civil penalty provision. The maximum penalty is 60
penalty units ($10,800).
164. There are two obvious defects in the current regime.
136 Royal Commission into Trade Union Governance Corruption, Interim Report (2014), Vol 2, ch 8.2, pp 1114-1115. 137
Fair Work (Registered Organisations) Act 2009 (Cth), ss 297-303.
223
165. First, there is a lacuna in the provisions because they do not capture
orders made by the Federal Circuit Court, which is empowered to grant
a variety of orders under the FW Act.
166. Secondly, the penalties are far too low. It is fundamental to Australia’s
legal system that court orders be obeyed. The obvious purpose of
Part 3 of Chapter 9 of the FW (RO) Act is to penalise officers and
employees who fail to obey court orders, and to deter future breaches.
The maximum penalties for breach of the provisions in Part 3 of
Chapter 9 should be increased to 1,200 penalty units ($216,000) to
align with the recommendations in Chapter 2 concerning the increase
in penalties in relation to other breaches of officers’ duties. Since
every knowing or reckless contravention of a court order is serious, it
is not recommended that there be any distinction between serious and
non-serious contraventions.
Recommendation 34
The provisions in Part 3 of Chapter 9 of the Fair Work (Registered
Organisations Act 2009 (Cth) (ss 297-303A) concerning breach of orders be
amended to include orders made by the Federal Circuit Court.
Recommendation 35
The maximum penalty for breach of the provisions in Part 3 of Chapter 9 of the
Fair Work (Registered Organisations Act 2009 (Cth) be increased to 1,200
penalty units.
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D - DISQUALIFICATION OF UNION OFFICERS
Existing disqualification regime
167. The current disqualification regime for officers of registered
organisations is set out in Part 4 of Chapter 7 of the FW(RO) Act
(ss 210-220). It is relatively limited. The key provision is s 215 of the
FW(RO) Act which relevantly provides:
(a) A person ‘convicted of a prescribed offence’ is ineligible to
be a candidate, or to be elected, or to hold an ‘office’ in an
organisation, unless the conviction and any term of
imprisonment was more than five years ago (or such other
reduced period as may be determined by the Federal Court
under ss 216 or 217 of the FW(RO) Act), or the person
obtains leave of the Federal Court under ss 216 or 217 of the
FW(RO) Act.
(b) Where a person who holds an ‘office’ in an organisation is
‘convicted of a prescribed offence’, the person ceases to hold
office 28 days after the conviction, unless the person obtains
leave of the Federal Court under ss 216 or 217 of the FW(RO)
Act.
168. Although there is an automatic disqualification in s 215(2) of the
FW(RO) Act upon conviction for a prescribed offence, there is no
prescribed sanction for a person who continues to act in the office after
automatic disqualification takes effect. However, the Federal Court
can grant a declaration that a person has ceased to hold an office in an
225
organisation,138 and make such orders as it considers appropriate to
give effect to a declaration that a person is not eligible or has ceased to
be an officeholder.139
169. ‘Prescribed offence’ is defined in s 212 of the FW(RO) Act as follows:
(a) an offence under a law of the Commonwealth, a State or
Territory, or another country, involving fraud or dishonesty and punishable on conviction by imprisonment for a period of 3 months or more; or
(b) an offence against section 51, 72, 105, 185, 191, subsection 193(2), section 194, 195, 199 or subsection 202(5);140 or
(c) any other offence in relation to the formation, registration or management of an association or organisation; or
(d) any other offence under a law of the Commonwealth, a State or Territory, or another country, involving the intentional use of violence towards another person, the intentional causing of death or injury to another person or the intentional damaging or destruction of property.
170. However, this is cut down by s 213 of the FW(RO) Act, which
relevantly provides that:
(a) a person is not ‘convicted of a prescribed offence’ if the
person is convicted summarily of one of the offences
mentioned in para (c) of the definition; and
(b) a person is not ‘convicted of a prescribed offence’ referred to
in para (d) of the definition unless the person was sentenced
to a term of imprisonment for the offence and the person
138 Fair Work (Registered Organisations) Act 2009 (Cth), s 215(5). 139 Fair Work (Registered Organisations) Act 2009 (Cth), s 219(1). 140
These provisions all relate to the conduct of elections of registered organisations.
226
served, or is serving, a term of imprisonment or the sentence
was suspended.
Defects in the current regime
171. One obvious lacuna in the current provisions in the FW(RO) Act is that
there is no prescribed consequence for a person who continues in an
office after disqualification. In contrast, s 206A(1) of the Corporations
Act 2001 (Cth) specifies that a person who is disqualified from
managing corporations and continues so to act commits a criminal
offence of strict liability. The maximum penalty is 50 penalty units or
imprisonment for one year, or both.141 Given the gravity of the
conduct this is surprisingly low. An equivalent provision should be
introduced into the FW(RO) Act. The maximum penalty should be
increased to 100 penalty units or imprisonment for two years, or both.
172. The Commission received a range of submissions identifying a number
of defects, apart from this lacuna, with the current disqualification
regime under the FW(RO) Act.142
141 Corporations Act 2001 (Cth), Sch 3, item 49. 142 Australian Industry Group Law Reform Submissions, 21/8/15, pp 8-9; Boral Law Reform Submissions, 2015, pp 19-21; Housing Industry Association Law Reform Submissions, 21/8/15, p 8; Master Builders Australia Law Reform Submissions, 21/8/15, p 23.
227
173. One defect is that the list of prescribed offences is relatively narrow,
with the result that officers of registered organisations who have
committed significant criminal offences can still continue to hold
office. For example, the definition of ‘prescribed offence’ does not
include:
(a) contempt of court or other administration of justice offences;
(b) the offence of trespass to land or any other offences relating
to entry onto premises;
(c) indictable offences not involving dishonesty, for example the
cartel provisions in the Competition and Consumer Act (2010)
(Cth) or obstructing a Commonwealth public official under
s 149.1 of the Criminal Code (Cth); or
(d) blackmail or extortion offences under State law, which do not
necessarily involve fraud or dishonesty.143
174. It is anomalous that the definition of prescribed offence does not
include a general category of serious offence. It is recommended that
the definition of prescribed offence should be amended to include any
offence under a law of the Commonwealth, State or Territory
punishable on conviction by a maximum penalty of imprisonment for
life or a period of 5 years or more.
143 See for example Crimes Act 1958 (Vic), s 87; Crimes Act 1900 (NSW), s 249K; and Criminal Code (Qld), s 359. See for example, analysis in the Interim Report in relation to the Crimes Act 1958 (Vic): Royal Commission into Trade Union Governance and Corruption, Interim Report (2014), Vol 2, ch 8.2, p 1100; analysis in relation to Criminal Code (Qld), s 359, Royal Commission into Trade Union Governance and Corruption, Interim Report (2014), Vol 2, ch 8.7, pp 1475-1476.
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175. Secondly, at present, para (c) of the definition of ‘prescribed offence’ is
largely redundant. The current FW(RO) Act creates few, if any,
offences that would fall within that paragraph. An officer of a
registered organisation found to have breached his or her statutory
duties under ss 285-288 of the FW(RO) Act and who has been required
to pay a civil penalty would still be entitled to hold office within the
organisation, because there is currently no criminal offence for
breaching any of these provisions.
176. Thirdly, a number of submissions to the Commission raised concerns
that trade union officials who have had their right of entry permits
revoked or denied on the basis that they are not fit and proper persons
for the purposes of s 512 of the FW Act nevertheless continue to be
involved in a management or decision-making or other official role for
a trade union.144
177. Fourthly, there is no mechanism under the current provisions of the
FW(RO) Act to disqualify officials who repeatedly act in contravention
of the FW Act, particularly the provisions that relate to right of entry
privileges conferred upon trade union officials.
178. Overall, a key defect of the current regime is that the FW(RO) Act
only provides for automatic disqualification. Naturally enough for an
automatic disqualification regime, it is confined to circumstances
where an officer is convicted of certain offences. The consequence,
amongst other things, is that officers of organisations who repeatedly
contravene civil penalty provisions of the FW Act, the FW(RO) Act
144 Housing Industry Association Pty Ltd Law Reform Submission, 21/8/15, p 8; Master Builders Australia Law Reform Submissions, 21/8/15, pp 32-33.
229
and court orders made in relation to such provisions, are still entitled to
hold office within a registered organisation. Examples of repeated
contraventions of the law in the building and construction industry,
particularly by officers of the CFMEU, are considered in Chapter 8 of
this Volume.
Options for reform: ‘fit and proper person’ qualification
179. One reform option was suggested by Master Builders Australia. It
proposed that in addition to the existing disqualification regime, an
additional ‘fit and proper person test’ should be introduced as a
qualification for persons intending to stand for office in a registered
organisation.145 As part of this regime, a candidate for office would
provide the Fair Work Commission with a declaration attesting to
certain matters including that he or she was a person of ‘good
character’.
180. Registered organisations act through their officers. The officers of
employee organisations have significant statutory rights and privileges.
They play an important part in the fabric of Australian politics. Their
role as fiduciaries requires them to maintain the highest standards of
propriety. It is therefore right that the officers of registered
organisations should be seen to be ‘fit and proper’.146
145 Master Builders Australia, Submission on Strengthening Corporate Governance of Industrially Registered Organisations - Introducing a New Fit and Proper Person Test, 26 August 2013, pp 11-13, attachment B to the Master Builders Submission in response to Issues Paper 2: Duties of Union Officials, 11/7/2014. 146
See Royal Commission into the Building and Construction Industry, Final Report (2003), Vol 11, p 100.
230
181. However, imposing a ‘fit and proper’ person test as a ground for
qualification for office, as opposed to disqualification from office,
would have a number of difficulties. Chiefly it would require an
assessment to be made, presumably by the regulator, of the fitness for
office of a person in advance of a person taking up office. Apart from
anything else, such a requirement would be administratively
burdensome and expensive not only for the regulator, but also for
registered organisations and persons standing for office. It is not
recommended.
Options for reform: banning orders
182. Rather than imposing a qualification requirement for officer of
organisations, an alternative would be to amend the current
disqualification regime in the FW(RO) Act to allow the relevant
regulator to make an application to a court for an order banning a
person from holding office in a registered organisation or branch for a
period of time.
183. These powers exist in the Corporations Act 2001 (Cth) in respect of
company directors. Pursuant to ss 206C-206EEA of the Corporations
Act 2001 (Cth), ASIC has the power to apply to a State Supreme Court
or the Federal Court for orders disqualifying a person from managing a
corporation for a period the Court thinks just. ASIC may apply in a
range of circumstances including where:
231
(a) a declaration has been made that the person has contravened a
civil penalty provision;147 or
(b) the person has at least twice been an officer of a body
corporate that has contravened the Corporations Act 2001
(Cth) while the person was an officer and each time the
person failed to take reasonable steps to prevent the
contravention;148 or
(c) the person has at least twice contravened the Corporations
Act 2001 (Cth) while the person was an officer of a body
corporate.149
184. In addition to the ability to apply to a court for a banning order ASIC
also has the power under s 206F of the Corporations Act 2001 (Cth) to
issue a banning notice of up to five years if certain conditions are
met.150 Before issuing such a notice, ASIC must give the person an
opportunity to be heard on why they should not be disqualified.151
185. Submissions to the Commission on this topic were generally in support
of the introduction of a provision allowing the regulator to apply for a
147 Corporations Act 2001 (Cth), s 206C. 148 Corporations Act 2001 (Cth), s 206E(1)(a)(i). 149
Corporations Act 2001 (Cth), s 206E(1)(a)(ii). 150 Namely, where the person concerned has been an officer of two or more corporations and whilst the person was an officer, or within 12 months after the person ceased to be an officer, the corporations were wound up because they were unable to pay their debts. 151
Corporations Act 2001 (Cth), s 206F(1)(b).
232
banning order.152 The State of Victoria submitted that there should be
the ability to disqualify officials who have ‘consistently or seriously
ignored his or her legal obligations’.153
186. The Fair Work (Registered Organisations) Amendment Bill 2014
[No 2] (Cth) proposed the introduction of a new s 307A to the FW(RO)
Act which would have allowed the relevant regulator to apply to the
Federal Court for an order disqualifying a person from holding office
in a registered organisation. It was proposed that the Federal Court
could make such an order if the person had contravened a civil penalty
provision and the Court was satisfied that the disqualification was
justified.154
187. The ACTU previously argued that the provision proposed was ‘ill
suited to regulation of registered organisations’.155 The thrust of the
argument appears to be that there are certain civil penalty provisions
imposed on officers of registered organisations under the FW(RO) Act
that should not lead to disqualification including:156
152 Boral Law Reform Submissions, 2015, pp 19-21; Australian Industry Group Law Reform Submissions, 21/8/15, p 8; Master Builders Australia Law Reform Submissions, 21/8/15, pp 34-35; State of Victoria Submissions in Response to Issues Papers, August 2014, p 21. 153
State of Victoria Submissions in Response to Issues Papers, August 2014, p 21. 154 Fair Work (Registered Organisations) Amendment Bill 2014 [No 2] (Cth), item 209. 155
Australian Council of Trade Unions, Submission to the Senate Education and Employment Legislation Committee into the Fair Work (Registered Organisations) Amendment Bill 2013 (Cth), 22/11/13, p 32. 156
Australian Council of Trade Unions, Submission to the Senate Education and Employment Legislation Committee into the Fair Work (Registered Organisations) Amendment Bill 2013 (Cth), 22/11/13, pp 32-33.
233
(a) an officer knowingly or recklessly making false or misleading
statements about membership or resignation (ss 175, 176 of
the FW(RO) Act);
(b) an officer knowingly or recklessly making false or misleading
statements in relation to the accounts or financial statements
provided to members (s 267 of the FW(RO) Act); and
(c) an officer knowingly or recklessly failing to comply with a
court order (ss 299, 300 of the FW(RO) Act).
188. These are precisely the kinds of contraventions that should lead to the
prospect of disqualification: the first two contraventions are species of
fraud and the third is contempt. The Commission’s inquiries have
revealed a worrying and recurring phenomenon, particularly within the
CFMEU, of union officials deliberately disobeying court orders or
causing the union to disobey court orders. Officials who deliberately
flout the law should not be in charge of registered organisations.
189. Subject to specific situations where the registered organisations
regulator should be entitled to disqualify an officer because of certain
easily verifiable objective matters,157 it is preferable that the power to
ban be conferred on a court. First, any decision by the regulator would
be subject to judicial review and the reviewing court would be able to
review the jurisdictional facts supporting the regulator’s decision. In
practice, this would often lead to increased delays, cost and expense.
Secondly, the judicial process provides a greater safeguard against the
157 See Chapter 2, recommendation 8 of this Volume.
234
possibility of the power being misused. Thirdly, ASIC only has the
power to issue a banning notice in limited circumstances.
190. Having regard to the problems identified by the Commission, the
Federal Court should be permitted to make an order disqualifying a
person from holding an office within a registered organisation or
branch if:
(a) the person:
(i) has or has been found to have contravened a civil
remedy provision of the FW Act, or a civil penalty
provision of the FW(RO) Act or the Work Health
and Safety Act 2011 (Cth);
(ii) has been found liable for contempt;
(iii) has been at least twice an officer of a registered
organisation that has, or has been found to have,
contravened a provision of the FW Act or the
FW(RO) Act or has been found liable for contempt
while the person was an officer and each time the
person failed to take reasonable steps to prevent the
contravention or the contempt;
(iv) has, or has been found to have, at least twice
contravened a provision of the FW Act or the
FW(RO) Act; or
235
(v) is otherwise not a fit and proper person to hold
office within a registered organisation or branch; and
the Court is satisfied that the disqualification is justified.
Recommendation 36
The definition of ‘prescribed offence’ in s 212 of the Fair Work (Registered
Organisations) Act 2009 (Cth) be amended to include an offence under a law of
the Commonwealth, a State or Territory, or another country, which is punishable
on conviction by a maximum penalty of imprisonment for life or 5 years or
more.
Recommendation 37
The Fair Work (Registered Organisations) Act 2009 (Cth) be amended to make
it a criminal offence for a person who is disqualified from holding office in a
registered organisation to continue to hold an office. The offence should be an
offence of strict liability with a maximum penalty of 100 penalty units or
imprisonment for two years, or both.
Recommendation 38
The Fair Work (Registered Organisations) Act 2009 (Cth) be amended by
inserting a new provision giving the Federal Court jurisdiction, upon the
application of the registered organisations regulator, to disqualify a person from
holding any office in a registered organisation for a period of time the court
considers appropriate. The court should be permitted to make such an order if
the conditions set out in paragraph 190 are satisfied.
236
CHAPTER 4
CORRUPTING BENEFITS
Subject Paragraph
A - INTRODUCTION 1
Reasons for outlawing corrupting benefits 6
B - EXISTING LAWS REGULATING CORRUPTING
BENEFITS
11
Blackmail and extortion 12
Secret or corrupt commissions 14
Overseas approach 19
C - INADEQUACY OF EXISTING LEGAL FRAMEWORK 29
D - REFORM TO EXISTING LEGAL FRAMEWORK 42
Disclosure of benefits made to registered organisations 44
Corrupting benefits offence in relation to officers of registered
organisations
53
237
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238
Chapter concludes that the payments were not made by
employers completely voluntarily for legitimate purposes.
They were made to secure industrial peace from, or to keep
favour with, the MUA. In some cases the payments had to be
made repeatedly.
(c) Chapter 6.2 of Volume 3 of the Report deals with Halafihi
Kivalu, who was formerly a senior official and long-term
employee of the ACT Branch of the Construction, Forestry,
Mining and Energy Union (CFMEU). During the course of
hearings in Canberra in July 2014, Halafihi Kivalu conceded
receiving approximately $100,000 from two employers. He
contends that these payments were gifts. Following his
giving evidence a number of other employers came forward
and made allegations concerning payments that they had
made to Halafihi Kivalu. After the hearings Halafihi Kivalu
was charged. The matter is presently before the criminal
courts of the ACT. Accordingly no conclusions were
expressed in this Report concerning the lawfulness of Halafihi
Kivalu’s conduct.
(d) Chapter 7.2 of Volume 3 deals with the affairs of George
Alex and Darren Greenfield. The principal issue addressed in
Chapter 7.2 is whether cash payments were made to Darren
Greenfield, an organiser with the CFMEU NSW, for
favouring businesses associated with George Alex and Joseph
Antoun. During 2013 regular cash withdrawals of $2,500
were made from a bank account held by a scaffolding
business called ‘Elite’. These payments were referred to
239
within Elite as ‘Union payments’. A substantial body of
documentary evidence, principally text messages between
George Alex and others, demonstrates that cash payments in
the amount of $2,500 were made by George Alex and Joseph
Antoun to Darren Greenfield.
(e) Chapter 7.3 of Volume 3 of the Report deals with donations
and enterprise agreement. The central issue in this Chapter is
whether the CFMEU NSW improperly obtained or managed
donations from various companies. It has been found that a
number of persons including persons within the CFMEU
NSW may have committed a number of criminal offences
against the Charitable Fundraising Act 1991 (NSW). This
Report and all relevant materials have been referred to the
Minister ministering the Charitable Fundraising Act 1991
(NSW) in order that consideration be given to conducting an
inquiry pursuing to Division 1 of Part 3 of that Act into all of
the CFMEU NSW’s practices concerning charitable
fundraising.
(f) Chapter 7.4 of Volume 3 of the Report examines the payment
in 2006 by the Thiess Hochtief Joint Venture operating the
Epping to Chatswood Rail Project of $100,000 to the
Building Trades Group Drug & Alcohol Committee. In truth,
this was a disguised payment to the CFMEU NSW. The
finding is that the payment may have been a secret
commission in contravention of s 249B of the Crimes Act
1900 (NSW).
240
(g) Chapter 8.1 of Volume 3 of the Report makes findings that in
2013, David Hanna, then Secretary of the Builders’
Labourers’ Divisional Branch of the CFMEU in Queensland,
received free work and materials in relation to his house at
Cornubia from Adam Moore and Mathew McAllum, then
employees of Mirvac. The finding made is that each of David
Hanna, Adam Moore and Mathew McAllum may have
committed criminal offences against the Criminal Code 1899
(Qld).
(h) Chapter 10.2 of Volume 4 of the Report makes findings that
in 2010, the Australian Workers’ Union (AWU) Vic Branch
and Cleanevent entered into an arrangement pursuant to
which Cleanevent would make a payment of $25,000 per
annum for three years to the AWU, in exchange for the
AWU’s agreement to extend the operation of a Workchoices-era enterprise agreement beyond its nominal expiry date. The
agreement to make the payment was recorded in a side letter
that was not disclosed to the National Office of the AWU or
to Cleanevent employees. The finding made was that Cesar
Melhem and the AWU may have committed criminal
offences of soliciting corrupt commissions in contravention of
s 176 of the Crimes Act 1958 (Vic).
(i) Chapter 10.3 of Volume 4 of the Report concerns an
agreement by the Thiess John Holland joint venture to make
payments of $100,000 per year plus GST to the AWU Vic
Branch over the life of a road construction project. The
payments were made in accordance with falsified invoices
241
that disguised the payments as being in respect of services
that were, for the most part, not delivered by the AWU Vic
Branch. The finding made was that Cesar Melhem and the
AWU, and John Holland Pty Ltd and Julian Rzesniowiecki,
may have committed criminal offences in relation to corrupt
commissions in contravention of s 176 of the Crimes Act
1958 (Vic).
(j) Chapter 10.5 of Volume 4 of the Report concerns three
payments made by ACI of about $160,000 between 2003 and
2005 described as being made in respect of ‘Paid Education
Leave’, and further payments of $5,400 between 2008 and
2012 described as being made in respect of ‘Membership
yearly fees’. Findings are made in respect of the former
payments that Cesar Melhem and the AWU, and Mike
Gilhome, may have committed criminal offences in relation
to corrupt commissions in contravention of s 176 of the
Crimes Act 1958 (Vic).
(k) Chapter 10.6 of Volume 4 of the Report concerns six
payments of $4000 made to the AWU in 2003-2004 by
Chiquita Mushrooms. The finding was that these payments
may have been corrupt commissions procured by Frank Leo
and the AWU and offered by Chiquita Mushrooms in
contravention of s 176 of the Crimes Act 1958 (Vic).
3. These case studies - which involved different unions in different states
at different times - throw up two recurring and often overlapping
patterns of conduct:
242
(a) A person - usually an employer of workers - makes, offers or
agrees to make a payment or provide a benefit to a union,
union official or to an entity associated with a union, in order:
(i) to avoid expressly or impliedly threatened conduct
by a union or union official which, if it occurred,
would be harmful to the person; or
(ii) to obtain a favour for the person in connection with
the union’s affairs.
(b) A union official obtains or solicits a payment or other benefit
for himself or herself, or the union or an entity associated
with the union, in return for which the union official agrees:
(i) not to engage in threatened conduct which if it
occurred would be detrimental to the person -
usually an employer - from whom the payment is
obtained or solicited; or
(ii) to provide the person making or agreeing to the
payment or benefit with a favour in connection with
the union’s affairs.
4. The legal characterisation of such payments or benefits given or
received depends on the particular circumstances of the case. Some
can be described, at least in ordinary language, as ‘bribes’, others as
‘secret commissions’, others as ‘blackmail money’, others still as
payments for industrial peace.
243
5. These payments all have a tendency to ‘corrupt’ a union official, in the
sense that they have a tendency to cause a union official to exercise
improperly the official’s duties and powers, or have a tendency to
cause a union official to act unlawfully. For the purposes of this
Chapter, it is convenient to describe all such payments and benefits as
‘corrupting benefits’. Commonly, the benefit will be in the form of a
payment of money. However, particularly in the construction industry,
benefits can be provided in kind, such as the provisions of free building
work or materials.
Reasons for outlawing corrupting benefits
6. At this point, it is worth summarising briefly a number of reasons why
a democratic society claiming to be governed by the rule of law should
adopt measures that seek to eliminate the giving and receiving of
corrupting benefits.
7. First, the making of corrupting payments increases the cost of
employers and other persons doing business, which consequently:
(a) where the cost of the payment is simply passed on, leads to an
increase in prices for consumers; or
(b) where the cost of the payment cannot be passed on, acts as
competitive disadvantage for the business making the
payment.
These payments are inherently anti-competitive.
244
8.
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245
benefit might in some circumstances give rise to a fraud-type criminal
offence such as obtaining financial advantage by deception. However,
the main relevant criminal laws are those concerning blackmail and
secret commissions. There are also relevant rules of civil law.
Blackmail and extortion
12. Each State and Territory has legislation outlawing blackmail or
extortion. For present purposes these are synonymous.1 Although that
legislation varies between jurisdictions, in substance it criminalises the
making of an unwarranted demand with menaces. Thus, where a union
official demands a payment or other benefit with menaces, which may
include an express or implied threat of adverse action, the union
official may commit the criminal offence of blackmail or extortion, if
the demand is unwarranted.
13. Apart from the criminal liability, there is also considerable overseas
authority that a person who threatens to do an unlawful act and thereby
intimidates another into doing some act which causes that other person
loss (e.g. making a payment) may be civilly liable for damages for the
tort of two-party intimidation.2 It does not appear to have been
resolved whether such an action is available in Australia, although in
1
Criminal Code 2002 (ACT), s 342 (blackmail); Crimes Act 1900 (NSW), s 249K (blackmail); Criminal Code (NT), s 228 (blackmail and extortion); Criminal Code (Qld), s 415 (extortion); Criminal Law Consolidation Act 1935 (SA), s 172 (blackmail); Criminal Code (Tas), s 241 (blackmail); Crimes Act 1958 (Vic), s 87 (blackmail); Criminal Code (WA), ss 397-398 (demanding property with threats with intent to extort or gain). 2
Rookes v Barnard [1964] AC 1129 at 1182-1183 and 1205; D & C Builders v Rees [1966] 2 QB 617 (CA) at 625; Huljich v Hall [1973] 2 NZLR 279 at 285. See generally H Carty, An Analysis of the Economic Torts (OUP, 2nd ed, 2010), pp 157-158.
246
2014 the Victorian Court of Appeal reaffirmed the existence of the tort
of three-party intimidation in Australian law.3 Even if such a civil
action for two-party intimidation did exist in Australia, instances of
litigation are likely to be relatively uncommon: a person intimidated
into making a payment or conferring a benefit is usually unlikely to
have the inclination to commence legal action against the person doing
the intimidating.
Secret or corrupt commissions
14. Each of the States and Territories have laws criminalising the giving or
taking of what are variously described as secret commissions, corrupt
commissions, corrupt benefits, corrupt rewards or bribes.4 Until 2000,
there was also a separate Secret Commissions Act 1905 (Cth) but that
was repealed and replaced with more modern provisions dealing with
‘corrupting benefits’ in the Criminal Code (Cth).5 However, the
provisions in the Criminal Code (Cth) only deal with bribery of
Commonwealth public officials and foreign public officials.
3
Construction, Forestry, Mining and Energy Union v Boral Resources (Vic) Pty Ltd (2014) 318 ALR 107 at [59] (VCA). 4
Criminal Code 2002 (ACT), ss 356-357 (bribes and corrupting benefits); Crimes Act 1900 (NSW), s 249B (corrupt commissions or rewards); Criminal Code (NT), s 236 (secret commissions); Criminal Code (Qld), ss 442B-BA (secret commissions); Criminal Law Consolidation Act 1935 (SA), ss 150 (bribes); Criminal Code (Tas), s 266(1) (secret commissions); Crimes Act 1958 (Vic), s 176 (secret commissions); Criminal Code (WA), ss 529-530 (corrupt rewards). 5
For an overview of the reasons for this change, see the Explanatory Memorandum to the Criminal Code Amendment (Theft, Fraud, Bribery and Related Offences) Bill 1999 (Cth).
247
15. Unfortunately, the laws differ from jurisdiction to jurisdiction.
Maximum penalties range from 3 years in the Northern Territory to 21
years in Tasmania.
16. The laws in New South Wales, Queensland, Victoria and Western
Australia are similar. They apply in respect of ‘agents’. A typical
example is s 249B of the Crimes Act 1900 (NSW), which relevantly
provides:
249B Corrupt commissions or rewards
(1) If any agent corruptly receives or solicits (or corruptly agrees to receive or solicit) from another person for the agent or for anyone else any benefit:
(a) as an inducement or reward for or otherwise on account of:
(i) doing or not doing something, or having done or not having done something, or
(ii) showing or not showing, or having shown or not having shown, favour or disfavour to any person,
in relation to the affairs or business of the agent’s principal, or
(b) the receipt or any expectation of which would in any way tend to influence the agent to show, or not to show, favour or disfavour to any person in relation to the affairs or business of the agent’s principal,
the agent is liable to imprisonment for 7 years.
(2) If any person corruptly gives or offers to give to any agent, or to any other person with the consent or at the request of any agent, any benefit:
(a) as an inducement or reward for or otherwise on account of the agent’s:
248
(i) doing or not doing something, or having done or not having done something, or
(ii) showing or not showing, or having shown or not having shown, favour or disfavour to any person,
in relation to the affairs or business of the agent’s principal, or
(b) the receipt or any expectation of which would in any way tend to influence the agent to show, or not to show, favour or disfavour to any person in relation to the affairs or business of the agent’s principal,
the firstmentioned person is liable to imprisonment for 7 years.
17. In some circumstances, a union official will be an ‘agent’ within the
meaning of the statutes.6 The solicitation or receipt of the payment by
a union official which would tend to cause the official to exercise his
or her duties improperly may give rise to criminal liability under these
provisions. Likewise, the payment by an employer may give rise to
criminal liability on the part of the employer.
18. Turning to civil remedies, the solicitation or receipt of bribes or secret
commissions by a union officer involving a breach of the officer’s
fiduciary duty will expose the officer to claims for compensation, or to
an obligation to account, and in some circumstances also an obligation
to hold the bribe or commission on trust for the fiduciary’s principal.7
Where an employer induces a union official to breach his or her
fiduciary duty, or knowingly assists the union official to breach his or
6 See R v Gallagher [1986] VR 219 (CA); R v Gallagher (1987) 29 A Crim R 33 (CA). 7 See generally Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296 at [188]-[193], [569]-[584] per curiam.
249
her fiduciary duty as part of a dishonest and fraudulent scheme, the
employer may be civilly liable to the union.8
Overseas approach
19. It is also useful to summarise briefly the approach taken to corrupting
benefits in some comparable foreign jurisdictions.
20. Both New Zealand9 and Canada10 have similar laws to those in the
Australian jurisdictions outlawing blackmail/extortion and secret
commissions.
21. Until relatively recently, the United Kingdom had laws similar to those
in the various Australian jurisdictions. Blackmail was, and still is,
outlawed by s 21 of the Theft Act 1968 (UK). Bribery of public
officials was prohibited by the Public Bodies Corrupt Practices Act
1889 (UK). And The Prevention of Corruption Act 1906 (UK)
prohibited the giving and receiving of secret commissions to ‘agents’
in very similar terms to the current laws applying in the various
Australian jurisdictions.
8 See generally Royal Commission into Trade Union Governance and Corruption, Interim Report (2014), Vol 1, ch 2.1, pp 44-45 paras 19-20 and particularly Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296 (FC) at 356-357 [242]-[246] per curiam and Hasler v Singtel Optus Pty Ltd (2014) 87 NSWLR 609 (CA) at [3], [6], [140] (Leeming JA, Barrett, Gleeson JJA agreeing). 9
Secret Commissions Act 1910 (NZ); Crimes Act 1961 (NZ), s 237 (blackmail). 10 Criminal Code (Can), ss 346 (extortion), 426 (secret commissions).
250
22. However, in 2010, the United Kingdom dramatically reformed its
bribery laws introducing a single Act, the Bribery Act 2010 (UK), to
deal with bribery in both the private and public sector. That Act
commenced from 1 July 2011 and repealed both the Public Bodies
Corrupt Practices Act 1889 (UK) and The Prevention of Corruption
Act 1906 (UK). A significant justification was that the existing
criminal laws had not been seriously updated for over a century, were
complex and potentially difficult to apply.
23. The Bribery Act 2010 (UK) introduced two general bribery offences.
Broadly speaking, one involved bribing another person and the other
involved receiving a bribe. In general terms, the legislation abandoned
the previous model of requiring an agent and principal relationship in
favour of a model based on an intention to induce the improper
exercise of a ‘relevant function or activity’. The expression ‘relevant
function or activity’ is defined broadly and includes functions in
connection with business or employment or performed by or on behalf
of a body of persons.
24. The United States too has a variety of general laws prohibiting
blackmail, extortion and bribery. In addition, the United States has
specific provisions intended to prevent corrupt payments by employers
to ‘labor organizations’.
251
25. The Taft-Hartley Act11 makes it a crime, among other things, for an
employer:
to pay, lend, or deliver or agree to pay, lend, or deliver, any money or other thing of value -
… (2) to any labor organization, or any officer or employee thereof, which represents, seeks to represent or would admit to membership, any of the employees of such employer who are employed in an industry affecting commerce…
26. There are a number of exceptions to the prohibition including
payments or other benefits:
(a) to a person who is also employed by the employer for work
done by that person;
(b) in satisfaction of a judgment or settlement;
(c) with respect to the sale or purchase of an article or
commodity at the prevailing market price in the regular
course of business;
(d) deducted from the wages of employees in payment of
membership dues of the labor organization, provided that the
employer has a written assignment of the wages from the
employee; and
(e) to a variety of trust and worker entitlement funds.
11 29 USC § 186(a).
252
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253
(BLF) and State Secretary of the Victorian Branch of the
BLF, and various other officials of the BLF had received
secret commissions in the form of work done, and materials
provided, in relation to the construction of various beach
houses.12 Norman Gallagher was subsequently tried and
convicted,13 as were a number of building developers who
had provided the work and materials. On the findings in
Volume 4 of this Report, there are clear factual similarities
between those events and the construction of a house for
David Hanna, the Secretary of the BLF in Queensland.
(b) The 1992 Gyles Royal Commission found a number of
corrupt or improper payments made by employers and others
to officials associated with the New South Wales Branch of
the Building Workers’ Industrial Union.14
(c) In 2003, the Cole Royal Commission also identified several
instances of employers making improper payments to or at
the direction of unions which were described as donations.15
In many instances donations were made to maintain industrial
harmony or achieve industrial objectives. These donations
12 Royal Commission into the Activities of the Australian Building Construction Employees’ and Builders’ Labourers’ Federation, Report (1982), pp 31-36, 246-251, 274-275. 13
His first conviction was overturned by the Victorian Court of Appeal and a new trial was ordered: R v Gallagher [1986] VR 219. At his second trial, he was convicted again, and his application for leave to appeal against conviction was dismissed: R v Gallagher (1987) 29 A Crim R 33 (CA). 14
See Royal Commission into Productivity in the Building Industry in New South Wales, Report of the Hearings Part II Illegal Activities (1992), ch 2, pp 37-68. 15 Royal Commission into the Building and Construction Industry, Final Report (2003), Vol 9, pp 221-228.
254
were either made for the direct benefit of the union (for
example, for the purposes of a union picnic day16) or for the
benefit of a third party (for example, a bereavement fund for
families of deceased workers or a charity17 ). Some of these
payments were disguised through the use of false invoices
and false contracts. The Cole Royal Commission also
identified the purchase of ‘casual tickets’ on building sites in
Western Australia whereby a builder would make payments
to a union for ‘casual tickets’ in the hope of avoiding
impliedly threatened unlawful industrial action.18 Payments
for ‘casual tickets’ were payments to a union notionally to
pay for persons to join the union in circumstances where the
persons had not joined the union. Again, there are parallels
with the matters considered in Chapters 10.2 and 10.9 of
Volume 4 of this Report.
31. Why has the existing legal framework not proved especially effective
at deterring corrupting benefits? There are several reasons.
32. First, the substantive criminal laws relating to secret commissions
differ significantly between jurisdictions both in terms of the elements
of the offence and the penalties. Moreover, the substantive criminal
16 Royal Commission into the Building and Construction Industry, Final Report (2003), Vol 9, pp 226-227; Vol 13, pp 239-250, 253-254. 17
Royal Commission into the Building and Construction Industry, Final Report (2003), Vol 9, p 204; Vol 13, p 262. 18 Royal Commission into the Building and Construction Industry, Final Report (2003), Vol 3, p 207; Vol 7, pp 237-238, 245-246, 311-312.
255
laws in many jurisdictions do not apply well to officers of registered
organisations.
33. One issue is that the provisions in many jurisdictions turn on the
identification of an ‘agent’ and ‘principal’ and the principal’s ‘affairs
or business’. Although these terms are capable of application to
registered organisations, they are not well suited to that purpose.
Further, a union official may be at the same time an agent for the
union, an agent for the members of the union as a whole, and an agent
for some sub-class of the members of the union.19 This can lead to
confusion as to who the official’s principal is for the purposes of a
charge, and the scope of the principal’s ‘affairs or business’.
34. Another difficulty is that there is a conflict of authority between
Victoria and Queensland on the one hand20 and New South Wales and
Western Australia on the other21 about the meaning of the word
‘corruptly’ in the various sections. In the latter two jurisdictions, it has
been said that in addition to the payment being made or received with
various mental elements, the payment must be ‘corrupt’ according to
ordinary concepts. That adds further complexity to the operation of the
provisions.
19 R v Gallagher [1986] VR 219 (FC). 20 R v Gallagher [1986] VR 219 (FC); R v Nuttall [2010] QCA 64. 21
R v Turner (2001) 25 WAR 258; Mehajer v R [2014] NSWCCA 167.
256
35. Another complexity with the provisions was highlighted in Victoria
Police’s submissions in response to the Discussion Paper:22
… [T]o establish an [sic] SC [secret commission] offence, it is necessary for the agent to receive the SC without the authority of the principal. For example, where union officials, particularly at senior ranks, receive gifts and benefits from companies, it could be a possible defence that this was not ‘secret’, as everyone at the ‘union’ received a benefit.
36. Where the official is an agent for the member or a sub-class of the
members, there may also be complexities if it is alleged that some, but
not all of the members, were aware of the payment.
37. Secondly, the investigation of blackmail, extortion and secret
commission offences is inherently difficult. Blackmailers do not report
their crimes to police. Nor, generally, do those being blackmailed.
They fear the repercussions that will occur if they report the matter to
authorities. Both those who pay and those who receive secret
commissions have an interest in keeping the payment secret. Further,
there is a general culture of silence within many unions which means
that individuals fear reporting corruption. Without individuals who are
willing to assist the police, it is difficult for prosecutions to be
instituted.
38. Further, as Victoria Police noted in its submissions to the
Commission:23
There is also a large disincentive for companies who have been coerced into making corrupt payments, as the price of industrial peace, to come
22 Victoria Police Law Reform Submissions, 10/9/15, p 15, para 1.2.14. 23 Victoria Police Law Reform Submissions, 10/9/15, p 16, para 1.2.2.
257
forward and take action against the union or union official who have demanded the payment. When companies take such action, it takes a long time before any penalties are meted out to those responsible. Companies take pragmatic decisions to succumb to demands made, rather than face costly and prolonged civil proceedings or continuous work stoppages.
39. Thirdly, employers and unions are adept at disguising corrupt
payments or benefits as membership fees, donations or payments for
services. Chapters 7.4, 10.2, 10.3, 10.5, 10.7, 10.8, 10.9 and 10.10
provide useful examples. Again, this adds to the challenge of
investigating and prosecuting existing criminal laws. Currently, the
Fair Work (Registered Organisations) Act 2009 (Cth) (FW(RO) Act)
does not require unions to disclose separately donations and other
payments made by employers to the union. Trade unions which are
affiliated with a registered political party are presently required to
lodge annual returns with the Australian Electoral Commission
disclosing payments from persons, where the total amount received is
in excess of $13,000.24
40. Fourthly, traditionally at least there appears to have been a reluctance
on the part of police to become involved with ‘industrial relations’
matters.
41. Fifthly, particularly in the construction industry where delays or
stoppages to a project can have a financially crippling effect, and can
have it almost instantaneously, the cost to a business of making a
payment to a union or union official will often be much less than the
cost of refusing to make the payment. Accordingly, in the absence of
any real likelihood that the business will be exposed to a criminal
24 See Commonwealth Electoral Act 1918 (Cth), s 314AEA. The disclosure threshold specified in the legislation is $10,000 but it increases each year with inflation.
258
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Disclosure of benefits made to registered organisations
44. One relatively simple mechanism that may help to discourage the
making and receiving of corrupting benefits is increased disclosure in
relation to payments to unions. As was observed in the Final Report of
the Cole Royal Commission:25
Union representatives would be less likely to suggest or promise that industrial unrest or some other adverse consequence would be averted if a ‘donation’ is made to the union if they know that such donations must be included in statements of the organisation that might be scrutinised by a third party. Clients and contractors would be more likely to resist inappropriate demands for payments if they know that such payments will come to the attention of a regulatory body.
45. The Discussion Paper sought submissions on whether registered
organisations, and any relevant entities, should be required to disclose
publicly information in respect of all payments to them exceeding a
monetary threshold.
25 Royal Commission into the Building and Construction Industry, Final Report (2003), Vol 1, p 132.
260
46. In their submissions to the Commission, both the Australia Industry
Group and Master Builders Australia supported recommendations 145
and 147 of the Final Report of the Cole Royal Commission.26 Those
recommendations were as follows:27
Recommendation 145
The Building and Construction Industry Improvement Act require registered organisations, as soon as practicable after the end of each financial year, to lodge with the Industrial Registrar a statement showing the following particulars in relation to each donation exceeding $500 received by the organisation during that financial year:
(a) the amount of the donation;
(b) the purpose for which the donation was made; and
(c) the name and address of the person who made the donation.
Recommendation 147
The Building and Construction Industry Improvement Act require clients, head contractors and subcontractors to promptly notify the Australian Building and Construction Commission of any request or demand that a donation exceeding $500 be made to, or at the direction of, a registered organisation or an official, employee, delegate or member of a registered organisation.
47. Recommendation 148 was that substantial civil penalties apply where
it is proved that a person failed to comply with their disclosure
obligations.
26 Australian Industry Group Law Reform Submissions, 21/8/15, p 11; Master Builders Australia Law Reform Submissions, 21/8/15, pp 44-45 27
Royal Commission into the Building and Construction Industry, Final Report (2003), Vol 1, pp 132-3.
261
48. Despite supporting a provision requiring the disclosure of donations,
the Australian Industry Group argued strongly that it was not
appropriate to require public disclosure of all payments made to
registered organisations above a monetary threshold. It argued that this
put employer organisations at a competitive disadvantage if they had to
disclose their pricing or payments made under commercially sensitive
agreements.28
49. Another related argument is that disclosure of all payments to
registered organisations would be administratively burdensome. For
example, if the disclosure threshold was set too low, it would require
disclosure of many membership contributions to an organisation.
Further, if organisations were required to disclose all payments the
usefulness of the disclosure for exposing inappropriate payments
would be limited.
50. On the other hand, the obvious difficulty with any proposal to limit
disclosure to donations only is that, as various case studies considered
by the Commission demonstrate, unions and employers have a
proclivity to disguise what are truly donations as membership
payments for persons who are not members or payments for services
that are never provided or that are provided at an inflated price or that
are undesired.
51. The Australian Labor Party has recently announced its policy in
relation to ‘Better Union Governance’ which includes the reduction of
the disclosure threshold under the Commonwealth Electoral Act 1918
28 Australian Industry Group Law Reform Submissions, 21/8/15, pp 11-12.
262
(Cth) from $13,000 to $1,000. It is not clear, but it would appear to
involve disclosure by registered political parties as well as entities
associated with those parties (which would include many but not all
trade unions) of all payments made to them over $1,000. Discussion
here of that proposal would go well beyond the Commission’s Terms
of Reference.
52. However, a $1,000 threshold appears sensible at least in relation to
loans, grants and donations. Having regard to the consideration
identified in paragraph 49, it is recommended that a higher disclosure
threshold be imposed for payments other than loans, grants or
donations. The disclosure should be in the form of a financial
disclosure statement considered in Chapter 2.
Recommendation 39
The Fair Work (Registered Organisations) Act 2009 (Cth) be amended to
require reporting units to lodge an audited financial disclosure statement (see
Recommendation 10) providing details in respect of (a) loans, grants and
donations (including in-kind donations) made to reporting units in excess of
$1,000 and (b) other payments made to reporting units in excess of $10,000.
Corrupting benefits offence in relation to officers of registered organisations
53. The Discussion Paper raised for consideration the introduction of
Commonwealth criminal provisions outlawing the giving or receiving
of benefits that corrupt union officials, with significant penalties both
for those who give such payments and those who solicit such
263
payments.29 A suggested possible approach was to adapt, to the
particular context of registered organisations, State laws concerning
secret and corrupt commissions along with existing Commonwealth
criminal laws prohibiting the bribery of foreign public officials30 and
the giving and receiving of corrupting benefits in relation to
Commonwealth public officials.31
54. Given the widely varying State criminal laws concerning secret
commissions, and the potential complexities identified with applying
those laws to officers of registered organisations, it is recommended
that the Federal Parliament enact a standalone corrupting benefits
provision in the Fair Work Act 2009 (Cth)32 in relation to officers of
registered organisations. As with current laws, the provision would
criminalise both the giving of a corrupting benefit and the soliciting or
receiving of a corrupting benefit. The provision would ensure that
there is a uniform, clear and relatively simple regime applying
throughout Australia.
55. What penalty for contravention would act as an effective deterrent?
Having regard to the size of some of the companies involved in making
corrupting payments, it would have to be substantial. The penalties for
those who bribe foreign public officials provide a useful guide. An
individual found guilty of the offence is liable to imprisonment for ten
29 Royal Commission into Trade Union Governance and Corruption, Discussion Paper - Options for Law Reform, 19/5/15, p 98. 30
See, eg, Criminal Code (Cth), s 70.2. 31 See, eg, Criminal Code (Cth), s 142.1. 32
It would seem appropriate to include the provision in a new Part 3-7 of the Fair Work Act 2009 (Cth).
264
years, or a fine not exceeding 10,000 penalty units (currently $1.8
million). A body corporate found guilty of the offence is liable to a
fine which is the greater of:33
(a) 100,000 penalty units ($18 million);
(b) where the value of the benefit provided can be determined,
three times the value of the benefit; and
(c) where the value of the benefit provided cannot be determined,
ten percent of the annual turnover of the body corporate.
56. In the Discussion Paper, it was suggested that it might be appropriate
to introduce a specific defence to a person who gives or receives a
benefit under duress. Further reflection suggests that that is
unnecessary. The general defence of duress available under the
Criminal Code (Cth) would apply.34
57. In drafting any such offence, it would be prudent, given the divergence
as to its meaning in the existing authorities, to avoid using the word
‘corruptly’ in the elements of the offence, and to state expressly what
fault element is required to establish the offence. A provision for
consideration is set out in Appendix 1 to this Volume of the Report.
33 Criminal Code (Cth), s 70.2(5). 34 Criminal Code (Cth), ss 2.2(2), 10.2.
265
Recommendation 40
Legislation be enacted amending the Fair Work Act 2009 (Cth) to include a
provision criminalising the giving or receiving of corrupting benefits in relation
to officers of registered organisations, with a maximum term of imprisonment of
ten years.
This recommendation is reflected in the model legislative provisions in
Appendix 1 to this Volume of the Report.
Prohibition on payments by employers to employee organisations or their officials
58. Introducing disclosure requirements and improving the clarity of
existing criminal laws are measures which are unlikely, on their own,
to have a significant effect in discouraging or preventing the giving and
taking of corrupting benefits. The provision of corrupt payments and
other benefits by employers to unions or union officials has been a
recurring problem in Australia that has been identified by successive
Royal Commissions over more than 30 years. It is insidious. It is
immensely damaging. Not only is the criminal activity involved
longstanding. It is also clandestine because both employers and union
officials have an interest in keeping it quiet.
59. A broader approach is recommended which takes account of these
facts.
60. Seeking simply to prohibit payments made or received with a
particular intention has consequent difficulties of investigation and
266
proof. Instead it is recommended that, subject to certain exceptions, all
payments by employers to a relevant union or officials of that union be
outlawed. The employers covered are those employing persons who:
(a) are members of the relevant union and whose industrial
interests the union is entitled to represent; or
(b) are entitled to be members of the relevant union and whose
industrial interests the union is entitled to represent.
61. What are the justifications for this approach? They include the
following:
(a) History shows that there has been a particular problem of
employers giving bribes and secret commissions to unions
and union officials. The material before the Commission
shows that that problem is continuing.
(b) Even with a clearer corrupting benefits provision, the
difficulties of investigation and proof will remain.
(c) Outside certain specific categories of payment there are few,
if any, legitimate reasons why employers should make
payments to unions or union officials.
(d) A blanket prohibition (except for certain categories of
payment) will be easier to police and enforce.
267
62. It is recommended that the prohibition be a criminal offence, albeit
with a lower penalty than the corrupting benefits offence. The
corrupting benefits offence would be available where it can be shown
that a person, which may be someone other than an employer, has
intended to bribe or obtain a favour from a union official, or where an
official solicits a bribe. The prohibition on employer payments would
not require any proof of an intention to bribe. Accordingly, a lower
penalty is appropriate.
63. Obviously, there would need to be categories of permissible payment
or benefit. The Taft-Hartley Act in the United States, considered
above, provides a useful starting place. In principle, the categories of
permissible benefits in the Australian union context would include:
(a) deductions from employee wages to pay membership dues for
persons who are genuinely members of the union (i.e. have
already signed up to be members of the union);
(b) genuine wage claim payments i.e. payments to a union
receiving the payment solely as agent for a group of
employees in settlement of a claim or dispute between the
employees and the employer;
(c) payments to a union to be used solely for a charitable or
benevolent purpose;
(d) genuine payments for goods or services provided by the union
in the ordinary course of business at the prevailing market
price; and
268
(e) payments made pursuant to a court order, judgment or award.
There may be other categories of legitimate payment.
64. It would also be necessary to adopt strict safeguards to ensure that
employers and unions could not circumvent the restrictions, for
example, by disguising a bribe as a charitable donation which finds its
way into union coffers.
65. Currently, reporting units are required to include a note in their annual
general purpose financial report concerning their wage claims activity
for the year.35 However, given that unions are collecting money on
behalf of workers it would seem appropriate that there be additional
accounting requirements similar to those imposed in relation to trust
accounts.
66. Similarly, there is current legislation in many States and Territories
regulating the collection of charitable monies, and preventing the
person collecting the monies from misusing it.36 However, Chapter 7.3
of this Report identified numerous possible breaches of the relevant
New South Wales legislation by the CFMEU. It may, therefore, be
prudent to introduce to the FW(RO) Act provisions dealing with how
charitable monies are dealt with by registered organisations.
35 This is as a consequence of the reporting guidelines issued under s 255 of the FW(RO) Act: see Fair Work Commission, Reporting guidelines for the purposes of section 253, 13/6/14, pp 7-8. 36
Charitable Collections Act 2003 (ACT); Charitable Fundraising Act 1991 (NSW); Collections Act 1966 (Qld); Collections for Charitable Purposes Act 1939 (SA); Collections for Charities Act 2001 (Tas); Fundraising Appeals Act 1998 (Vic); Charitable Collections Act 1946 (WA).
269
67. It is not intended to deal comprehensively or prescriptively with the
safeguards that would need to be introduced. Rather, it is intended
simply to raise for consideration the proposition that safeguards would
be needed.
Recommendation 41
Legislation be enacted amending the Fair Work Act 2009 (Cth) making it a
criminal offence for an employer to provide, offer or promise to provide any
payment or benefit to an employee organisation or its officials. Certain
legitimate categories of payment should be permitted, subject to strict
safeguards. An equivalent criminal offence should apply to any person
soliciting, receiving or agreeing to receive a prohibited payment or benefit. A
two year maximum term of imprisonment should apply to the commission of
these offences.
This recommendation is reflected in the model legislative provisions in
Appendix 1 to this Volume of the Report.
270
CHAPTER 5
REGULATION OF RELEVANT ENTITIES
Subject Paragraph
A - INTRODUCTION 1
B - DISCLOSURE OF FINANCIAL RELATIONSHIPS
BETWEEN UNIONS AND RELEVANT ENTITIES
7
C - REGULATION OF RELEVANT ENTITIES
GENERALLY
14
D - ELECTION FUNDS 18
Prohibition of any compulsion on employees to contribute to an
election fund
23
Basic regulation of election funds 33
E - WORKER ENTITLEMENT FUNDS 47
Regulation under Corporations Act 2001 (Cth) 54
Fringe benefits tax exemption 59
Problems with existing regulation 63
271
Subject
Options f
Options f
F - EMP
Introduct
Existing r
INTR A -
1.
2.
for reform: su
for reform: co
PLOYEE IN
ion
regulation
RODUCTIO
A significan
lesser extent
Reference a
separate fro
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Although it m
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Terms of Ref
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272
union. These are often described as ‘fighting funds’ or
‘election funds’ and will be referred to as election funds;
(b) funds established for the purpose of funding redundancies for
employees in an industry including members of the union
(redundancy funds), or funding the payment of other worker
entitlements such as sick leave, which may be classed
together as worker entitlement funds;
(c) funds established for the purpose of providing training to
members of a union or employees more generally (training
funds) or providing welfare services (welfare funds);
(d) schemes established to provide insurance, typically sickness
and/or accident insurance, to employees in an industry
including union members (employee insurance schemes);
(e) industry superannuation funds;
(f) charities established to assist union members and employees
more generally (for example, by providing welfare services or
drug and alcohol treatment services); and
(g) other generic accounts, associations or funds.
3. Several potential issues can arise in relation to relevant entities.
4. One issue is that a number of unions promote forms of enterprise
agreements that require employers to make payments to certain
273
5.
6.
DISC B -
UNIONS
7.
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274
union’s finances, and has the potential to concentrate power in the
hands of a few union officials at the expense of the committee of
management.
8. Some provisions in the Fair Work (Registered Organisations) Act 2009
(Cth) (FW(RO) Act) seek to ensure proper accountability and
transparency of related party transactions.
9. The first provision is s 253. It requires that the general purpose
financial accounts prepared by reporting units2 must comply with the
Australian Accounting Standards. Those standards include standards
requiring:
(a) the preparation of consolidated financial statements;3
(b) the disclosure of interests in other entities;4 and
(c) related party disclosures.5
10. One problem revealed by the financial reports considered during the
course of public hearings was that many were not prepared on a
consolidated basis. They provided only the most basic of information
about related party transactions. Often the relationships between a
2 As discussed in Chapter 2, a ‘reporting unit’ is a registered organisation (if the organisation is not divided into branches) or a branch of a registered organisation. 3
Australian Accounting Standards Board, AASB 10: Consolidated Financial Statements, July 2015. 4 Australian Accounting Standards Board, AASB 12: Disclosure of Interests in Other Entities, August 2015. 5
Australian Accounting Standards Board, AASB 124: Related Party Disclosures, July 2015.
275
union and trusts controlled by the union were not disclosed at all. The
income from the trust was simply included in miscellaneous income.
11. To ensure that the financial reports are as useful as possible, it is
recommended that consideration be given, in consultation with the
Australian Accounting Standards Board, to amending the FW(RO) Act
to require:
(a) reporting units to prepare their financial reports on a
consolidated basis (i.e. the reporting unit report on a
consolidated basis including its controlled entities); and
(b) reporting units to prepare separate financial statements for
their controlled entities.
12. The second measure in the FW(RO) Act that seeks to ensure proper
accountability and transparency of related party transactions is s 148C,
which was introduced in 2012. It requires the rules of an organisation
and branch to require disclosure to the members of either or both of the
following:
(a) the amount of each payment made by the organisation or
branch to a ‘related party’ or a ‘declared person or body’; or
(b) the total amount of the payments made by the organisation or
branch to a ‘related party’ or a ‘declared person or body’.
13. As a practical matter, most reporting units will comply with these
obligations by including the relevant related party disclosures in their
276
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277
15. The first class consists of the respective laws that govern the specific
legal structure employed, such as:
(a) the Corporations Act 2001 (Cth) in respect of companies
registered under that Act;
(b) trustee legislation in each State or Territory and equitable
principle in in respect of trusts;
(c) the Superannuation (Industry) Supervision Act 1993 (Cth)
and equitable principle in respect of superannuation funds;
(d) the financial services provisions of the Corporations Act 2001
(Cth) and the provisions of the Insurance Act 1973 (Cth) in
respect of employee insurance schemes;
(e) incorporated associations legislation in each State or Territory
in respect of incorporated associations; and
(f) common law and equitable principles concerning contract and
equitable principles concerning trusts in respect of
unincorporated associations.
16. The second class of laws consists of the FW(RO) Act (or other State-based industrial relations legislation) to the extent that the provisions in
that Act (or those Acts) are relevant.
17. It is apparent that the laws within the first class vary so widely - from
those that impose very significant regulation to those which impose
278
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Vol 2, ch 10 Vol 2,
Commissio Royal Com Vol 1, ch 4
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279
(contributors) contributing money to a fund controlled by one or more
individuals who hold elected office within the union or aspire to do so.
The primary purpose of the election fund is to fund future election
campaigns for offices within the union. However, as a result of the
fact that in many unions contested ballots are uncommon, money in the
fund tends to accumulate and be used for other purposes.
20. The Interim Report identified a number of key problems in relation to
the use and operation of election funds by various unions.11 In
summary:
(a) There is commonly insufficient disclosure of the sources of
revenue for election funds both to contributors and to voters
in union elections.
(b) There is commonly insufficient disclosure of the activities
and expenditure of election funds to contributors and to voters
in union elections.
(c) There is a lack of clarity in the legal status of contributions to
an election fund and the entitlement (if any) which
contributors have to the money in the fund.
(d) Money is used for purposes unconnected with the purpose for
which the election fund was formed, with little knowledge of
or oversight over the use of the money.
11 Royal Commission into Trade Union Governance and Corruption, Interim Report (2014), Vol 1, ch 4.1, pp 516-517.
280
(e) In a number of cases, it is questionable whether contributors’
decisions to contribute are truly voluntary, particularly where
contributions by union employees are automatically deducted
pursuant to the terms of contributors’ employment contracts
with the union.
(f) Incumbent union officers are able to entrench their positions
by the establishment of a substantial election fund, funded
through the use of automatic payroll deductions, conferring a
disproportionate advantage on incumbents, over and above
the benefit of incumbency itself.
(g) There appears to be a lack of governance and record-keeping
in relation to a number of union election funds.
21. The election fund operated in connection with the NUW NSW
Branch12 provides a useful example of the problems. That campaign
fund was funded by deductions from the wages of union officials.
Transfers were made from the NUW NSW Branch to an account styled
the ‘Derrick Belan Team Account’ from which withdrawals were
made, despite there being no contested election at the Branch between
2002 and 2014. Payments made from the campaign funds instead went
to fund the costs of a breakaway union in Queensland, a car for Derrick
Belan, and unidentified cash withdrawals. Following closure of the
account, the balance was withdrawn, and further deductions on account
of campaign fund contributions from union staff were eventually kept
in cash in Derrick Belan’s personal possession. They were not
12 Vol 2, ch 4, paras 165-207.
281
accounted for in any way. There was no constitutive document
explaining the purposes and setting out the rules of the fund. There
were no records of any oral agreement dealing with those matters. It
was unclear whether the arrangements were to be seen as contractual,
agency or trust arrangements.
22. These problems with election funds have the potential to affect
adversely the democratic processes of the union. In many unions,
employees of the union are compelled to contribute to an election fund,
which in practice is commonly controlled by the Secretary. Over time
the Secretary accumulates a substantial war chest that the Secretary can
use to further his or her influence within the union. The election fund
thus operates to reinforce the power and influence of the current
Secretary. Further, because of the lack of transparency and oversight
associated with election funds, members of the union do not know who
is funding a particular candidate in an election and where the
candidate’s allegiances may lie as a result of funds received.
Prohibition of any compulsion on employees to contribute to an election fund
23. As was noted in the Discussion Paper, there is nothing wrong with
members of an employee or employer organisation joining together to
pool resources to fund a particular candidate or ticket of candidates in
an election. However, any steps taken with the effect of legally or
practically compelling contributions infringe basic principles of
freedom of association.
282
24. As to legal compulsion, s 326 of the Fair Work Act 2009 (Cth) (FW
Act) prohibits certain unreasonable payments and deductions from an
employee’s salary that are for the benefit of the employer, or a party
related to the employer. Given that the employer is the union, and the
election fund is (deliberately) not related to the union, the provision is
unlikely to prohibit terms requiring union employees to make
payments to an election fund.
25. A further problem with any arrangement by which employees of the
union are legally required to contribute to an election fund arises from
s 190 of the FW(RO) Act. Any direct diversion of an organisation’s
funds for the purposes of the election of a particular candidate is
outlawed by s 190. Yet, if the current management of an organisation
mandates in employment contracts between the union and its
employees that some part of the employees’ salaries must be paid to
the election fund, then the management have achieved indirectly what
they cannot do directly. By the use of their powers, the union officials
have caused the union to enter into a particular contract providing for a
benefit to be provided to an election fund. Arguably, this is an
improper exercise of powers to achieve a result that is prohibited by
s 190, and would be a breach of the official’s duties under ss 286 and
287 of the FW(RO) Act.
26. In its submissions to the Commission, the Shop, Distributive & Allied
Employees Association (SDA) attacked this reasoning on the basis that
the funds diverted were not the organisation’s funds, but the wages of
the employee.13 However, this ignores that the union officials
13 Shop, Distributive & Allied Employees Association Law Reform Submissions, 27/8/15, para 19.
283
negotiating with the employee have a power to influence, if not set,
those wages and it is the union officials who have caused the union to
enter into a particular contract the practical effect of which is to divert
union funds to an election fund via the device of a payment to the
employee.
27. The Discussion Paper canvassed two measures to address these issues.
One was prohibiting the use of direct debit and other similar
arrangements whereby contributions are automatically deducted from
the salary or wages payable to the employees of an organisation. The
other was prohibiting any condition of employment requiring an
employee of an organisation to contribute to an election fund.
28. The SDA attacked both options on the basis that such measures would
prevent employees of registered organisations from making
contributions to a mutual fund for the re-election of those employees.14
The proposals were said to be a ‘denial of the right of employees
identified by reference to their membership in or employment by a
registered organisation of employees’.15 The submission continued
that the proposals if enacted:16
could be reasonably seen to mark the first step in a successive legislative progression to banning all employers from transacting any deductions authorised by any employees where those deductions are to be made to a trade union of which they are members.
14 Shop, Distributive & Allied Employees Association Law Reform Submissions, 27/8/15, para 14. 15
Shop, Distributive & Allied Employees Association Law Reform Submissions, 27/8/15, para 14. 16 Shop, Distributive & Allied Employees Association Law Reform Submissions, 27/8/15, para 15.
284
29. These submissions proceed on a false premise. There was,17 and is, no
suggestion that employees should be prohibited from contributing to a
mutual fund. Rather, the suggestion is that measures should be
implemented to seek to ensure voluntariness of contributions.
30. The second option - prohibiting any condition of employment
requiring an employee of an organisation to contribute to an election
fund - is preferable and could be achieved by an amendment to s 326
of the FW Act. Direct debit arrangements can be a convenient way of
employees making genuine contributions to a cause they believe in,
provided they are entered into voluntarily and independently of a
contract of employment. Accordingly, they should not be prohibited.
31. Apart from legal compulsion, there is also the question of practical
compulsion. Often a contribution is voluntary as a matter of theory,
but an employee is left with little, if any, real choice. It will be a rare
union employee, who is presented on the first day of a work with a
form by the union Secretary asking for regular contributions to the
‘fighting fund’ and who is told that everyone else contributes to the
fighting fund, who does not agree to make contributions.
32. Section 344(e) of the FW Act deals with this issue to some extent by
preventing an employer from exerting ‘undue influence’ or ‘undue
pressure’ on an employee in relation to a decision by the employee to
agree, or not agree, to a deduction from amounts payable to the
employee in relation to the performance of work. However, that
provision only protects against ‘undue’ pressure which appears to
17 See Royal Commission into Trade Union Governance and Corruption, Discussion Paper - Options for Law Reform, 19/5/15, para 259.
285
connote inappropriate, excessive or disproportionate pressure.18 The
difficulty with amending this provision so that it refers only to
‘influence’ or ‘pressure’ is that it would arguably stop any solicitation
of payments by employees to an election fund, thereby potentially
outlawing election funds altogether. The preferable solution
concerning practical compulsion is to introduce basic governance
requirements for election funds. If election funds are operated
properly, and not used for the personal benefit of particular union
officials, the prospect of practical compulsion is likely to be
considerably reduced.
Recommendation 43
The Fair Work Act 2009 (Cth) be amended to prohibit any term of a modern
award, enterprise agreement or contract of employment permitting an employer
to deduct, or requiring an employee to pay, from an employee’s salary an
amount to be paid towards an election fund.
Basic regulation of election funds
33. Apart from the issue of voluntariness of contributions, the other
problems previously identified have the potential to affect adversely
the democratic governance of unions. As discussed in Chapter 1,
office holders in employee organisations are capable of exercising
substantial power, not only in relation to their members but in the
broader political environment. In addition, they exercise substantial
statutory powers under the FW Act. Accordingly, there is a significant
18 See Australian Federation of Air Pilots v Jetstar Airways Pty Ltd [2014] FCA 15 at [13].
286
public interest in ensuring free and fair elections within employee
organisations (and for that matter employer organisations), ensuring
that there is no possibility of corruption or undue influence arising
from donations and electoral expenditure, and ensuring that election
funds are not misused.
34. It is generally accepted that an important element of a free and fair
election process is that voters in the election are fully informed about
the sources of funds and the expenditure incurred in election
campaigns. Legislation has been introduced at both State and
Commonwealth levels that attempts to regulate political donations and
expenditures in State and Commonwealth elections.19 The legislation
varies between jurisdictions but there are common elements. These
include:
(a) caps on the amounts of political donations which can be made
to candidates and parties;
(b) caps on the amount of political expenditure which can be
made by candidates, parties and third parties, usually during a
period prior to the election;
(c) a requirement that donations be paid into, and expenditure be
paid out of, specially established campaign accounts; and
19 See eg, Commonwealth Electoral Act 1918 (Cth), Part XX; Electoral Act 1992 (ACT), Part 14; Election Funding, Expenditure and Disclosures Act 1981 (NSW); Electoral Act 2002 (Vic), Part 12; Electoral Act 1907 (WA), Part VI. Until relatively recently, Queensland had detailed election funding laws, but these were substantially repealed under the former Newman Government: see Electoral Act 1992 (Qld), Part 11.
287
(d) requirements that political donations and political expenditure
be publicly disclosed.
35. Not all of these requirements are appropriate in respect of elections for
officers in registered organisations. On the present evidence, there is
no obvious need for caps on the amounts of donations and
expenditures. However, some of the measures, with adaptations,
would assist in tackling the various issues identified above.
36. The Discussion Paper set out a possible regime which would have
required all donations and electoral expenditure in connection with
elections for office in a registered organisation or branch to be
channelled through regulated campaign accounts.20 Those accounts
would have been subject to certain operating and disclosure
requirements designed to inform contributors and voters, and ensure
appropriate minimum levels of governance. The effect of the proposal
was indirectly to regulate and improve the governance of election
funds, which are currently operated through a multitude of different
legal structures, by requiring them to be operated through regulated
campaign accounts. At the same time it would have improved the
transparency and accountability of union elections.
37. A difficulty with the proposal identified in the Discussion Paper was
that by seeking indirectly to regulate election funds by requiring all
donations and electoral expenditure to pass through regulated
campaign accounts, a range of reporting and administrative
requirements (for example, disclosure of donations and expenditure)
20 Royal Commission into Trade Union Governance and Corruption, Discussion Paper Options for Law Reform, 19/5/15, ch 3.5, pp 34-37.
288
would also have been imposed on individual candidates and groups of
candidates in elections for registered organisations. While those
requirements may be necessary in State and Commonwealth elections,
arguably they could have a disproportionately burdensome effect on
individual candidates in elections for office in a registered
organisation. In some ways, those requirements could have had the
perverse effect of discouraging individual candidates from standing
against well-resourced incumbents.
38. More recently, the Australian Labor Party has proposed subjecting
union elections managed by the Australian Electoral Commission to
the same electoral funding laws in relation to the disclosure of
donations and electoral expenditure as apply to Federal elections.21
The proposal would require any entity, however constituted, associated
with candidates in such elections to disclose publicly the total value of
payments made, receipts and debts each year, and the particulars of
debts and donations, exceeding the disclosure threshold. Candidates
would also be required to make similar disclosures. The proposal also
envisages a reduction in the current disclosure threshold from $13,000
to $1,000.
39. This proposal rightly recognises the importance of transparency in
elections in registered organisations. One weakness with the proposal
is that, as discussed in Chapter 2 of this Volume, a number of elections
in registered organisations are not conducted by the Australian
Electoral Commission because the organisation or branch has an
exemption under s 186 of the FW(RO) Act. Another issue is the same
21 Australian Labor Party, Fact Sheet: Better Union Governance, released 7/12/15, p 3.
289
as the one discussed above i.e. the disclosure requirements, particularly
if the disclosure threshold were reduced to $1,000, may be
disproportionately burdensome and adversely affect individual
candidates.
40. The Commission favour a more limited approach, which is to:
(a) focus on the existing problems with election funds (however
constituted) and subject them to minimum governance
requirements, and ensure that both contributors and voters are
aware of their activities; and
(b) consult with registered organisations and their members about
the effects of broader disclosure requirements on candidates.
41. More specifically, it is recommended that election funds (however
constituted) associated with a registered organisation or branch of such
an organisation be regulated as follows:
(a) Election funds that meet certain minimum requirements
should be entitled to be registered.
(b) Among the requirements to be satisfied in order to be
registered, there must be a document setting out how the
election fund is to operate, the purposes for which the fund
may be used, and the circumstances in which contributors are
entitled to a return or refund of their contributions.
290
(c) A registered election fund must also have a separate bank
account (an election account) maintained solely to receive
contributions made for the purpose of funding current or
future election campaigns and to pay electoral expenditure in
connection with elections for office in a registered
organisation or branch.
(d) Election funds that are not registered would not be permitted
to receive election donations or make electoral expenditure in
connection with elections for office in any registered
organisation or branch.
(e) Registered election funds would be required to lodge regular
returns with the registered organisations regulator disclosing
the activities of the election account, including donations and
expenditures. Those returns would be available to
contributors to the fund and also to members of the
organisation or branch with which the election fund is
associated.
42. One issue raised in the Discussion Paper was whether laws regulating
the funding of elections in registered organisations have the potential
to collide with the freedom of political communication which is
implied from the Constitution.
43. The content of that freedom was recently recast by four members of
the High Court in McCloy v State of New South Wales.22 In that case it
22 (2015) 325 ALR 15.
291
was said that the test to be applied in deciding whether a law is invalid
for infringing the freedom was as follows:23
(a) Question 1 is - does the law effectively burden the freedom
of political communication on governmental and political
matters in its terms, operation or effect? If ‘no’, then the law
does not exceed the implied limitation and the enquiry as to
validity ends.
(b) If ‘yes’ to question 1, question 2 is - are the purpose of the
law and the means adopted to achieve that purpose legitimate,
in the sense that they are compatible with the maintenance of
the constitutionally prescribed system of representative
government? If the answer to question 2 is ‘no’, then the law
exceeds the implied limitation and the enquiry as to validity
ends.
(c) If ‘yes’ to question 2, question 3 is - is the law reasonably
appropriate and adapted to advance that legitimate object?
This question involves what was described as ‘proportionality
testing’ to determine whether the restriction which the
provision imposes on the freedom is justified. The
proportionality test involves consideration of the extent of the
burden effected by the impugned provision on the freedom.
There are three stages to the test - these are the enquiries as to
whether the law is justified as suitable, necessary and
adequate in its balance in the following senses:
23 (2015) 325 ALR 15 at [2] per French CJ, Kiefel, Bell and Keane JJ.
292
(i) suitable - as having a rational connection to the
purpose of the provision;
(ii) necessary - in the sense that there is no obvious and
compelling alternative, reasonably practicable means
of achieving the same purpose which has a less
restrictive effect on the freedom; and
(iii) adequate in its balance - a criterion requiring a value
judgment, consistently with the limits of the judicial
function, describing the balance between the
importance of the purpose served by the restrictive
measure and the extent of the restriction it imposes
on the freedom.
If the measure does not meet these criteria of proportionality
testing, then the answer to question 3 will be ‘no’ and the
measure will exceed the implied limitation on legislative
power.
44. Applying this test, it is difficult to see how imposing certain minimum
governance requirements on election funds, and requiring those
election funds to disclose their activities to contributors and members
of the organisation could be thought effectively to burden the freedom
of political communication on governmental and political matters.
However, on the High Court’s existing authorities almost every law
will fail the test set out in question 1 above.
293
45. In relation to the test in question 2, the purposes of:
(a) improving governance of election funds; and
(b) improving transparency in relation to donations and election
spending in connection with elections in registered
organisations;
are properly regarded as being legitimate. Among other things,
improved governance seeks to avoid the misuse of funds. Increased
transparency seeks to avoid the possibility of undue influence or
corruption in elections by shining a light onto the flow of money from
election funds to candidates, and from persons to election funds to
candidates.
46. As to the test in question 3, it is considered that the model identified
above is a suitable, necessary and balanced way of addressing the
problems identified.
294
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295
49. The Commission considered some worker entitlement funds in detail,
including:
(a) the Building Employees Redundancy Trust (BERT) Fund, a
redundancy fund covering the Queensland construction
industry which is primarily associated with the Construction,
Forestry, Mining and Energy Union (CFMEU);24
(b) the Protect Scheme, which operates a redundancy fund for
electrical trades employees in Victoria;25 and
(c) Incolink, which operates a number of redundancy funds and
sick leave schemes for construction industry employees in
Victoria and Tasmania.26
50. There are a number of other such funds. For example, the Australian
Construction Industry Trust (ACIRT) is a large redundancy fund for
construction industry employees in New South Wales.
51. The basic structure of these funds is typically as follows:
(a) Pursuant to enterprise agreements negotiated with a particular
union, employers make regular payments on behalf of
workers into a particular worker entitlement fund.
24 Royal Commission into Trade Union Governance and Corruption, Interim Report (2014), Vol 1, ch 5.2, pp 777-852. 25
Royal Commission into Trade Union Governance and Corruption, Interim Report (2014), Vol 1, ch 5.3, pp 853-896. 26
Vol 4, ch 11 of this Report.
296
(b) The fund will commonly provide a financial benefit to the
industry parties. As a result the union negotiating enterprise
agreements will have a strong incentive to require the
employer to make contributions to a particular fund.
(c) Under the rules of the relevant fund, employees will be
entitled to receive certain benefits (for example, sick leave or
redundancy pay) if certain conditions are satisfied.
(d) The rules of the fund will be set out in a trust deed entered
into between the corporate trustee and the industry parties.
These trust deed can be, and often is, amended from time to
time.
52. Collectively, worker entitlement funds in the construction industry
hold around $2 billion in assets under management:
(a) As at 30 June 2015, Incolink managed in excess of
$714 million in investment assets in its various redundancy
funds with worker entitlements of $577 million.27
(b) As at 30 June 2015, ACIRT had total assets of $594 million.28
(c) The Protect Severance Scheme considered in the Interim
Report held assets in excess of $245 million as at 30 June
2013.29
27 Vol 4, ch 11, para 3 of this Report. 28 Australian Construction Industry Redundancy Trust Pty Ltd Law Reform Submissions, undated (received 31/8/15), p 1.
297
(d) The BERT funds considered in the Interim Report held over
$130 million in assets as at 30 June 2013.30
(e) As at 31 July 2015, the Metal and Electrical Redundancy
Trust (MERT) held over $125 million in assets.31
(f) As at 30 June 2015, the Contracting Industry Redundancy
Trust (CIRT) held over $67 million in assets.32
53. Despite their size, worker entitlement funds, unlike superannuation
funds, have very little specific legislation regulating their activities.
The main relevant laws are summarised below.
Regulation under Corporations Act 2001 (Cth)
54. As noted above, most worker entitlement funds are operated by
corporate trustees. They will be subject to the ordinary provisions of
the Corporations Act 2001 (Cth) regulating companies. They will also
be subject to the terms of the trust deed. However, subject to the
possible effect of the Fringe Benefits Tax Assessment Act 1983 (Cth)
discussed below, there is no restriction on the terms of the trust deed.
Many worker entitlement funds - ACIRT being a notable exception -
distribute the profit of the funds to industry parties.
29 Royal Commission into Trade Union Governance and Corruption, Interim Report (2014), Vol 1, p 861. 30
Royal Commission into Trade Union Governance and Corruption, Interim Report (2014), Vol 1, p 789. 31
Mechanical and Electrical Redundancy Trust (MERT) Annual Report for the year ended 30/6/15, p 13. 32 CIRT Redundancy Scheme, 2015 Members Annual Report, p 6.
298
55. A worker entitlement fund is generally considered a managed
investment scheme under the definition in s 9 of the Corporations Act
2001 (Cth), and an interest in the fund is a financial product for the
purposes of Chapter 7 of the Corporations Act 2001 (Cth).33 Further,
subject to any relief by way of class order, a worker entitlement fund
would ordinarily be required to be registered under s 601ED of the
Corporations Act 2001 (Cth).
56. Thus, subject to any relief by way of class order:
(a) Pursuant to s 601ED a worker entitlement fund would need to
be registered, and the corporate trustee would need to hold an
Australian Financial Services Licence (AFSL). Together,
this would subject the corporate trustee of the fund to a range
of additional requirements including:
(i) requirements to have a compliance plan and
compliance committee;
(ii) capital requirements;
(iii) audit requirements;
(iv) an obligation to maintain certain competence
requirements and ensure that its representatives were
adequately trained and competent; and
33 Corporations Act 2001 (Cth), s 764A(1)(b), (ba).
299
(v) a requirement to ensure responsible officers are of
good fame and character.
(b) Sections 992A and 992AA, which contain prohibitions on the
hawking of certain financial products and interests in a
managed investment scheme, would apply.
(c) The corporate trustee, as an AFSL holder, would be required
to provide a variety of disclosures under Part 7.7 of the
Corporations Act 2001 (Cth). In addition, Part 7.9 of the
Corporations Act 2001 (Cth) would apply, requiring among
other things a Product Disclosure Statement (PDS) to be
provided to persons acquiring an interest in the fund before
they acquire their interests.
57. However, Class Order [CO 02/314] made by the Australian Securities
and Investments Commission (ASIC) exempts worker entitlement
funds from these requirements. More particularly, that class order
exempts ‘a person who operates or promotes’ a certain type of scheme
from the operation of ss 601ED, 992A, 992AA and Part 7.9 of the
Corporations Act 2001 (Cth), and the requirement to hold an AFSL.
The type of scheme referred to is one which involves:
[m]aking offers for the issue of an interest in, or making recommendations to acquire an interest in, or making offers to arrange the issue of interests in, or operating a scheme to which employers may make, or are required by an award or agreement to make, contributions where the primary objective of the scheme is to fund redundancy entitlements and other entitlements incidental to employment, for employees of the employers
58. The class order is due to terminate on 1 October 2016. Recently, ASIC
released a consultation paper indicating that it proposed to remake
300
Class Order [CO 02/314] to extend its relief until 1 October 2017
pending the release of this Final Report.34 That consultation paper
usefully summarised the history of the class order:35
Relief was initially provided on an interim basis on 25 May 2000, pending a public consultation process and finalisation of our approach to regulating such funds. After considering preliminary comments, we formed the view that the regulation of these funds may be an issue of law reform rather than through the use of ASIC powers, and relief continue pending Government consideration of the issue.
Fringe benefits tax exemption
59. Worker entitlement funds are subject to a kind of regulation pursuant
to provisions of the Fringe Benefits Tax Assessment Act 1986 (Cth).
60. Employer contributions to a worker entitlement fund may be ‘fringe
benefits’ within the meaning of the Fringe Benefits Tax Assessment Act
1986 (Cth).36 If so, unless an exemption applies, the employer paying
the contributions will be liable to pay Fringe Benefits Tax (FBT). At
the same time, when a worker receives a payment from the fund, the
payment may be taxed in the worker’s hands as ordinary income or as
an employment termination payment. To avoid the possibility of
double taxation, s 58PA of the Fringe Benefits Tax Assessment Act
1986 (Cth) provides that an employer contribution will be exempt from
34 Australian Securities and Investments Commission, Consultation Paper 238: Remaking ASIC class order on employee redundancy funds: [C0 02/314], 4 September 2015, p 8 [15]-[16]. 35
Australian Securities and Investments Commission, Consultation Paper 238: Remaking ASIC class order on employee redundancy funds: [C0 02/314], 4 September 2015, p 8 [14]. 36 Although at least in some circumstances the contributions may not be fringe benefits: FCT v Indooroopilly Children Services (Qld) Pty Ltd (2007) 158 FCR 325 (FC) at [36]-[38] per Edmonds J (Stone and Allsop JJ agreeing).
301
FBT if the contribution is made to an ‘approved worker entitlement
fund’.
61. A fund may apply to the Commissioner of Taxation to be approved as
an ‘approved worker entitlement fund’ provided the fund satisfies
certain basic governance requirements and the fund’s constituting
documents limit the uses to which contributions to the fund and the
income of the fund may be used.37
62. Thus, although these provisions do not impose any direct regulation on
worker entitlement funds, the fact that the FBT exemption is
contingent on satisfying the requirements in the Fringe Benefits Tax
Assessment Act 1986 (Cth) imposes a form of practical regulation on
many worker entitlement funds.
Problems with existing regulation
63. There are a number of problems with the existing regulatory
framework surrounding worker entitlement funds.
64. First, the startling consequence of Class Order [CO 02/314], which
was initially intended to operate as an interim measure, is that worker
entitlement funds are not subject to any mandatory disclosure
requirements. For example:
37 See Fringe Benefits Tax Assessment Act 1986 (Cth), s 58PB(4).
302
(a) There is no requirement on worker entitlement funds to
disclose the commissions and other payments made by the
fund to unions and employer organisations.
(b) There is no required disclosure of the amounts deducted by
the funds by way of fees and charges.
(c) There is no requirement to explain to workers the
circumstances in which they will, or will not, be entitled to a
payment from the fund.
65. Further, there is no statutory requirement on worker entitlement funds
to provide annual reports or accounts to persons with an interest in the
fund.
66. Secondly, another consequence of Class Order [CO 02/314] is that the
entities operating worker entitlement funds are not subject to the
requirement in s 601FC(1)(d) of the Corporations Act 2001 (Cth) to
treat members38 (for example, workers) who hold interests of the same
class equally and those who hold interests of different classes fairly.
The BERT case study illustrates the potential for worker entitlement
funds under current law to give preferential treatment to union
members over non-union members with the aim of generating union
membership.39 In circumstances where there is no difference of
interest between union and non-union members of the funds, there is
no justification for differential treatment.
38 Meaning persons who have a right to benefits produced by the scheme: Corporations Act 2001 (Cth), s 9. 39
Royal Commission into Trade Union Governance and Corruption, Interim Report (2014), Vol 1, ch 5.2.
303
67. Thirdly, apart from ACIRT, worker entitlement funds invariably
distribute the income generated on contributions received to industry
parties (for example, unions and employer organisations) to be used for
purposes they see fit.
68. There are a number of reasons why this is a problem.
69. One reason is that there is an inherent unfairness in taking
contributions paid by employers on behalf of employees, generating
substantial income from those contributions, and then distributing the
money to other persons in circumstances where many employees will
never receive the benefit, either directly or indirectly, of the income
generated. The point is starkly illustrated by the submission by
ElecNet (Aust) Pty Ltd (ElecNet), the trustee of the Protect Severance
Scheme, that:40
Approved worker entitlement funds, such as Protect, do not share the purpose of managed investment schemes: producing maximum financial benefits for members of the scheme. Their aim is to protect workers’ entitlement to ensure workers’ financial security when faced with the insolvency of employers and cycles in the economy. Workers have no entitlement to financial benefits above the return of amounts contributed to the fund for them by their employer.
It may be accepted that the purpose of a worker entitlement fund is to
secure the payment of entitlements. Consequently such funds might
prudently adopt a risk adverse investment strategy. However, it does
not follow that, because the generation of income is not the purpose of
the fund, workers should not be entitled to any return which is made on
the contributions. In fact, it is contrary to the underlying premise of
40 ElecNet Pty Ltd Law Reform Submissions, undated (received 21/8/15), p 13 (emphasis added).
304
such a fund - to operate solely for the benefit of employees - that the
income should be used to benefit others.
70. It is also worth making the point that apart from ‘genuine redundancy
accounts’,41 most so-called redundancy funds are not limited to making
a payment in circumstances of genuine redundancy: workers (or their
estates) are commonly entitled to a benefit when they cease
employment, retire, reach a particular age or die. Thus, the
contributions paid by employers are, in effect, a deferred entitlement of
the employees on whose behalf the contributions are made. The
consequence of the circumstances revealed in ElecNet’s submission is
that worker entitlements are subject to the effect of inflation, thereby
reducing their value in real terms, whilst all returns generated from
those entitlements are skimmed off to be used by unions and employer
organisations.
71. Another problem is that the very substantial revenue flows to unions
generate significant conflicts of interest and potential breaches of
fiduciary duty on the part of unions and union officials negotiating
enterprise agreements. The reasons for this are dealt with at length in
earlier Volumes of this report.42 In short, the union and union officials
owe a duty to act in the interests of union member employees when
negotiating enterprise agreements. At the same time, there is a
41 These are accounts established by funds which are only paid out in case of a genuine redundancy. Unlike many other payments made to a worker in consequence of termination of employment, ‘genuine redundancy payments’ are tax-free up to a certain amount: see Income Tax Assessment Act 1997 (Cth), ss 83-170, 83-175 and TR 2009/2. 42
See Vol 3, chs 6.6 (CFMEU ACT), chs 7.1, 7.6 (CFMEU NSW), Vol 4, ch 10.4 (AWU, Paid Education Leave), for a discussion of the problems, not limited to redundancy or other worker entitlement funds.
305
significant potential and incentive for the union to act in its own
interests to generate revenue.
72. The substantial revenue flows to unions also lead to a greater potential
for coercive conduct by unions who seek to compel employers in
enterprise negotiations to contribute to funds from which the union will
derive a financial benefit. Circumstances in which this has occurred
are explored in the case studies relating to Universal Cranes43 and the
ACT CFMEU.44
73. Fourthly, as explained in detail in the Chapter of this Report
concerning Incolink,45 although on a proper construction of s 58PB of
the Fringe Benefits Tax Assessment Act 1986 (Cth) ‘approved worker
entitlement funds’ are not permitted to distribute income to persons
other than to the employers who make contributions and the employees
on whose behalf those contributions are made, many ‘approved worker
entitlement funds’ avoid this limitation in practice.46 They do this by
treating the income generated in a prior financial year as capital, and
they then distribute the capital to industry parties.
74. The Commissioner of Taxation has given his imprimatur to this state of
affairs. On one view the Commissioner is adopting an open
interpretation of an ambiguous statutory provision. The preferable
43 Royal Commission into Trade Union Governance and Corruption, Interim Report (2014), Vol 2, ch 8.7. 44
See Vol 3, ch 6.3 of this Report. 45 Vol 4, ch 11 of this Report. 46
ElecNet Pty Ltd Law Reform Submissions, undated (received 21/8/15), pp 11-12.
306
view is that the Commissioner is maladministering the law. Either
way, the law needs clarification.
75. Fifthly, the absence of any requirement for one or more independent
directors on the board of directors of companies operating worker
entitlement funds can lead to significant deadlocks where, as is
commonly the case, unions and employer organisations have equal
representation. The deadlock in the board of BERT provides a good
example of the dysfunctional results that can arise in the absence of
independent directors.47
76. Sixthly, although the Fringe Benefits Tax Assessment Act 1986 (Cth)
has the effect of imposing some minimum governance requirements on
worker entitlement funds, these requirements are by no means
comprehensive. For example, there is no requirement that directors
and managers involved in the fund be of good fame and character.48
Another example is that, as exemplified in the Chapter concerning
Incolink,49 the absence of legislative provisions dealing specifically
with the forfeiture of workers’ interests leads in practice to the
substantial forfeiture of entitlements.
77. Seventhly, it is not usual to impose indirect regulation on an entity
through taxation legislation such as the Fringe Benefits Tax Assessment
Act 1986 (Cth).
47 Royal Commission into Trade Union Governance and Corruption, Interim Report (2014), Vol 1, pp 779-780. 48
Cf Corporations Act 2001 (Cth), s 913B(3)-(4). 49 Vol 4, ch 11 of this Report.
307
Options for reform: submissions
78. Many of the problems identified are not new. The Final Report of the
Cole Royal Commission made a number of recommendations
concerning redundancy funds, including recommendations that:50
Surpluses in redundancy funds either be credited to the employee members’ accounts to be payable only in the event of redundancy or, if funds held are sufficient to meet redundancy obligations, used to reduce any contributions required. The distribution of surpluses in accordance with this recommendation should be a prerequisite for a redundancy fund being prescribed as a fund exempt from fringe benefits tax.
Legislation be enacted to implement a uniform system of financial reporting, external auditing, actuarial assessment and annual reporting to a prudential authority for redundancy funds. The systems presently applying for superannuation and long service leave funds should be points of reference. Documents produced, in compliance with the legislation, be public documents. Compliance with those requirements should be a prerequisite for a redundancy fund being prescribed as a fund exempt from fringe benefits tax.
79. The Discussion Paper invited submissions on three possible options for
reform. They were:
(a) revocation or amendment of Class Order [CO 02/314];
(b) amendment of the conditions in s 58PB(4) of the Fringe
Benefits Tax Assessment Act 1986 (Cth); and
(c) introduction of specific legislation subjecting worker
entitlement funds to governance, supervision and reporting
requirements overseen by an appropriate regulator.
50 Royal Commission into the Building and Construction Industry, Final Report (2003), Vol 10, ch 13, pp 287-288, recommendations 168-170.
308
80. The Commission received helpful submissions on these issues from
Australian Industry Group, ACIRT, Master Builders Australia and
ElecNet, along with broader submissions from Incolink. Submissions
were also received from BERT Pty Ltd, but they were later withdrawn.
Given that withdrawal, those submissions are not referred to.
81. Neither ACIRT nor ElecNet supported the revocation of Class Order
[CO 02/314], which would require worker entitlement funds to be
regulated as managed investment schemes and corporate trustees
operating the funds to hold AFSLs. In short, ElecNet submitted that
this would impose unnecessary governance and administrative burdens
without any compensating advantage.51
82. ACIRT’s submission adopted a more nuanced view. It, like ElecNet,
argued that requiring redundancy funds to comply with all of the
requirements of Chapters 5C and 7 of the Corporations Act 2001 (Cth)
would result in funds having to incur additional expense without
additional benefit to members.52
83. However, it supported improved disclosure by redundancy funds. In
particular, ACIRT submitted that redundancy funds should be required
to provide the following information to members and participating
employees:53
51 ElecNet Law Reform Submissions, undated (received 21/8/15), pp 12-14. 52 Australian Construction Industry Redundancy Trust Pty Ltd Law Reform Submissions, undated (received 31/8/15), p 6. 53
Australian Construction Industry Redundancy Trust Pty Ltd Law Reform Submissions, undated (received 31/8/15), p 4.
309
(a) Information similar to, but not as detailed as, that required to
be included in a Product Disclosure Statement including:
(i) information about the nature of the redundancy fund;
(ii) significant risks and benefits associated with the
fund;
(iii) costs and amounts payable by way of fees;
(iv) commission and other payments made by the fund
(if any) including payment to employer
organisations and trade unions;
(v) general information about tax implications; and
(vi) information about how other information can be
obtained.
(b) Information about the governance arrangements of the fund’s
governing entity.
(c) An up-to-date copy of the fund’s constituting documents to be
provided on the fund’s website.
(d) The fund’s most recent financial statements, including any
auditor’s report, to be provided on the fund’s website.
310
84. ACIRT also noted that it is not possible in the context of a redundancy
fund to enrol members on an application form attached to a PDS before
contributions are received.54
85. As to the terms of s 58PB of the Fringe Benefits Tax Assessment Act
1986 (Cth), ACIRT did not believe there were grounds for making any
amendment to the provision.55 The Australian Industry Group
submitted that the ‘current FBT exemption is very important to
employers and Ai Group does not see a need for any changes to the
exemption.’56 ElecNet submitted that, given that the directors of the
trustees of employee benefit funds are already subject to specific duties
and obligations under the Corporations Act 2001 (Cth), it was neither
necessary nor appropriate to impose further conditions upon them
under the Fringe Benefits Tax Assessment Act 1986 (Cth).57
86. In relation to the broader question of specific statutory regulation of
employee benefit funds, the Australian Industry Group submitted that
its earlier proposals, referred to in the Discussion Paper,58 should be
adopted. Those proposals called for the introduction of specific
legislation similar to the superannuation laws, to be called the Worker
Entitlement Funds (Governance, Reporting and Supervision) Act
containing:
54 Australian Construction Industry Redundancy Trust Pty Ltd Law Reform Submissions, undated (received 31/8/15), p 7. 55
Australian Construction Industry Redundancy Trust Pty Ltd Law Reform Submissions, undated (received 31/8/15), p 8. 56 Australian Industry Group Law Reform Submissions, 21/8/15, p 10. 57
ElecNet Pty Ltd Law Reform Submissions, undated (received 21/8/15), p 17. 58 Royal Commission into Trade Union Governance and Corruption, Discussion Paper Options for Law Reform, 19/5/15, pp 86-87 [294].
311
(a) provisions imposing duties on directors, trustees and officers
of worker entitlement funds;
(b) a ‘fit and proper person’ test for directors, trustees and
officers and a process for the removal of persons who fail the
test;
(c) regulatory oversight of worker entitlement funds by the
Australian Prudential Regulation Authority (APRA),
including reporting obligations to APRA;
(d) a prohibition on redundancy funds distributing any amount to
a member other than for the purpose of genuine redundancy;
(e) a prohibition on redundancy funds making distributions to a
sponsoring union and employer associations other than the
payment of reasonable fees to directors;
(f) a prohibition on redundancy funds making payments to
employees who are taking industrial action;
(g) a prohibition on funds discriminating between union members
and non-union members when providing any fund benefits;
(h) statutory privacy protection for information relating to
contributing employers and funds members;
(i) a prohibition on persons employed by funds carrying on
union business;
312
(j) a prohibition on funds paying unions for recruiting new
members; and
(k) penalties for breach of the legislation, modelled on the
Corporations Act 2001 (Cth).
87. ElecNet’s submission rejected the Australian Industry Group’s
proposals. It submitted that the proposals appear to be directed at
protecting workers’ contributions from potential fraud, and that it was
not aware of any such behaviour.59 A ‘fit and proper person’ test, it
was argued, would be more onerous than the existing ‘good fame and
character’ test that would apply to worker entitlement funds, but for
Class Order [CO 02/314].60 ElecNet dismissed the possibility of a
conflict of interest, arguing that there was no evidence that ‘members
of employee benefit funds are suffering any financial detriment’ as a
result of conflicts of interest.61 That submission is difficult to
understand. Clearly at least some employees are worse off by reason
of the fact that they do not receive income on their contributions which
is instead distributed, in part, to trade unions.
88. ACIRT noted that given that ‘employee entitlement funds now hold
around $2bn in assets … some degree of regulation may be appropriate
and even inevitable.’62 For that reason it is accepted that there should
be some specific regulation of funds. In those circumstances it saw
59 ElecNet Pty Ltd Law Reform Submissions, undated (received 21/8/15), p 19. 60 ElecNet Pty Ltd Law Reform Submissions, undated (received 21/8/15), p 20. 61
ElecNet Pty Ltd Law Reform Submissions, undated (received 21/8/15), p 21 (emphasis added). 62 Australian Construction Industry Redundancy Trust Pty Ltd Law Reform Submissions, undated (received 31/8/15), p 2.
313
reduced managed investment and financial services type regulation as
appropriate.63 It was argued that it would not be appropriate to impose
the same level of regulation as on superannuation funds. ACIRT
argued that APRA would not be an appropriate regulator as the product
was in the nature of a managed investment rather than in the nature of
a product regulated prudentially by APRA.64 ACIRT supported the
introduction of standards for redundancy funds, including:65
(a) a requirement for an audit committee, and for the accounts to
audited by an independent auditor;
(b) a requirement for clear delegations of authority and
delineation of the respective roles of staff and officers; and
(c) a requirement for a sound management framework.
Options for reform: consideration
89. In 2003, Commissioner Cole noted the following in his Final Report:66
Redundancy funds have matured throughout Australia to become a significant component of the industry’s financial structure. Approximately $500 million is currently under management yet they function without any prudential control. The repercussions would be enormous should any of
63 Australian Construction Industry Redundancy Trust Pty Ltd Law Reform Submissions, undated (received 31/8/15), p 8. 64
Australian Construction Industry Redundancy Trust Pty Ltd Law Reform Submissions, undated (received 31/8/15), p 8-9. 65 Australian Construction Industry Redundancy Trust Pty Ltd Law Reform Submissions, undated (received 31/8/15), p 4. 66
Royal Commission into the Building and Construction Industry, Final Report (2003), Vol 10, ch 13, p 288.
314
these funds diminish or collapse for reasons of mismanagement, misappropriate or abuse. The opportunity for any of these events to occur is manifest.
90. In the 12 years since that report, worker entitlement funds (principally
but not exclusively redundancy funds) in the construction industry
have grown fourfold to around $2 billion. Having regard to the size of
the sector alone, prudence requires reconsideration of the current
regulatory environment. Combined with the problems identified
above, there is a compelling case for legislative reform.
91. The retention of Class Order [CO 02/314] after its sunset date is
inappropriate. It was designed as an interim measure pending broader
reform. It is in the interests of workers and employers that worker
entitlement funds be subject to certain mandatory disclosure
requirements. Having regard to the importance of the securing of
contributions by funds, officers and staff of entities operating worker
entitlement funds should, at a minimum, be persons of good fame and
character. At the same time, there is force in the arguments advanced
that revoking the Class Order and subjecting worker entitlement funds
to the full requirements of Chapter 5C and 7 of the Corporations Act
2001 (Cth) would amount to excessive regulation.
92. The current provisions of the Fringe Benefits Tax Assessment Act 1986
(Cth) also require amendment. For one thing, s 58PB(4)(d) needs
clarification.67 More generally, it is not appropriate to impose de facto
regulation through the Fringe Benefits Tax Assessment Act 1986 (Cth).
67 See Vol 4, ch 11 of this Report.
315
93. The preferable course is as follows:
(a) Introduce specific legislative provisions governing worker
entitlement funds, either in the Corporations Act 2001 (Cth)
or in a standalone Act.
(b) The legislation should entitle worker entitlement funds to
apply to ASIC to become registered, and contain a prohibition
on any person conducting or operating an unregistered worker
entitlement fund which has more than a minimum number of
members (say 50).
(c) A worker entitlement fund ought not be entitled to be
registered unless the entity operating the fund, its officers and
staff and the constituting documents (for example, the trust
deed) of the fund satisfy specified criteria. In order to remain
registered a fund would need to:
(i) comply with its constituting documents and provide
annual audited reports to ASIC;
(ii) adopt appropriate governance and capital adequacy
policies; and
(iii) ensure its officers and staff meet continuing training
and competence requirements.
316
(d) Registered funds should also be required to provide specified
disclosure:
(i) to contributing employers before a contributing
employer begins to make payments to the fund; and
(ii) to members as soon as practicable after a
contributing employer begins to make payments to
the fund on their behalf.
Registered funds should also provide ongoing disclosure of
relevant changes to the constitution or operation of the fund.
Annual reports should be provided to members and
contributing employers, and be made publicly available.
(e) The reference to ‘an approved worker entitlement fund’ in
s 58PA of the Fringe Benefits Tax Assessment Act 1986 (Cth)
should be replaced by reference to a registered worker
entitlement fund, and s 58PB should be repealed. The fringe
benefits tax exemption would still exist but it would require
the fund to remain registered.
(f) The legislation should exclude registered worker entitlement
funds from the operation of Chapters 5C and 7 of the
Corporations Act 2001 (Cth): they would instead be subject
to the specific legislative provisions. Accordingly,
Class Order [CO 02/314] should be revoked as unnecessary.
317
94. The reason for selecting ASIC as the reporting agency is that, although
worker entitlement funds have some characteristics similar to
insurance and superannuation funds - which are subject to detailed
prudential regulation by APRA - a worker entitlement fund is more
akin to a managed investment. Further, at least at this time, there does
not appear to be any demonstrated need for the very detailed prudential
control which is imposed on insurers and general superannuation
funds.
95. The precise terms of the criteria with which registered worker
entitlement funds would be required to comply should be a matter for
consultation. However, the following elements should be part of any
scheme:
(a) Officers and staff of the entity managing a registered worker
entitlement fund should be required to be persons of good
fame and character. This requirement is imposed on all
holders of an AFSL. It is a basic good governance
requirement.
(b) Corporate trustees of registered worker entitlement funds
should be required to have a minimum number of
independent directors. A number of redundancy funds
already do this. Again, this is a basic governance measure
directed to avoiding deadlocks, and conflicts of interest.
(c) The disclosure requirements should require disclosure of all
fees charged to a member’s account, along with a summary of
318
the circumstances in which a member will or will not be
entitled to a payment.
(d) The legislation should prohibit a fund discriminating as to the
benefits provided between persons of the same class. In
particular, a fund should not be permitted to discriminate
solely on the ground that a person is or is not a union
member.
(e) Registered worker entitlement funds should be subject to the
conditions presently stated in s 58PB(4) of the Fringe
Benefits Tax Assessment Act 1986 (Cth), subject to
clarification that prior year income cannot be distributed other
than for the prescribed purposes. After the payment of
necessary expenses to manage the fund (which would include
reasonable directors’ fees) all of the money of the fund should
be used solely for the purposes of benefiting employees, or if
there are surplus funds, returning those funds to employer
contributors. It is true that this will prevent redundancy funds
from making payments to unions and employer organisations,
which could use the money for legitimate purposes such as
training and welfare. However, unions and employer
organisations can and do establish separate training and
welfare funds that receive separate levy contributions under
enterprise agreements. The interest in avoiding conflicts of
interest and possible coercion as well as improving financial
transparency requires that funds not make any payment to a
union or employer organisation (or a related entity), other
319
than for the payment of reasonable directors’ fees or
reasonable expenses in administering the fund.
(f) The legislation should deal specifically with the forfeiture of
interests in a registered worker entitlement fund.68 The
provisions applying to lost and forfeited superannuation
accounts should provide a useful guide.
Recommendation 45
Legislation, either standalone or amending the Corporations Act 2001 (Cth), be
enacted dealing comprehensively with the governance, financial reporting and
financial disclosures required by worker entitlement funds. The legislation
should provide for registration of worker entitlement funds with the Australian
Securities and Investments Commission, and contain a prohibition on any
person carrying on or operating an unregistered worker entitlement fund above a
certain minimum number of persons. Key recommended features of the
legislative scheme are explained at paragraphs 93 and 95 above.
Recommendation 46
In consequence of the enactment of the above legislation, Class Order
[CO 02/314] not be extended. In further consequence, s 58PB of the Fringe
Benefits Tax Assessment Act 1986 (Cth) be repealed and the fringe benefits tax
exemption in s 58PA(a) be amended to refer to registered worker entitlement
funds.
68 See Vol 4, ch 11 of this Report.
320
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98. For present purposes, the significant issue exposed by the evidence is
that the unions involved in the income protection insurance schemes
examined by the Commission often received very substantial
commissions that were not disclosed properly, if at all, to the
participants (both employers and employees) involved in the schemes.
What changes, if any, are needed to the laws regulating the operation
of such schemes to ensure adequate disclosure?
Existing regulation
99. As with worker entitlement funds, entities involved in the group
purchase of insurance products or in the promotion of such schemes
would ordinarily be subject to the financial services licensing
requirements under the Corporations Act 2001 (Cth), particularly
insofar as those provisions apply to the provisions of financial product
advice, and possibly also the provisions concerning managed
investment schemes.
100. As is the case in relation to worker entitlement funds, there is a class
order, Class Order [CO 08/1], exempting group purchasing bodies
from this regulation provided the conditions in the class order are
satisfied.70 Relevantly, relief is provided for a body that arranges for
the issue of insurance or for a person to be covered by an existing
insurance policy, provided either (a) the person is independent and
received no financial benefit for arranging insurance (subject to limited
exceptions) or (b) arranging the cover is incidental to another
70 See Australian Securities and Investments Commission, Group purchasing bodies for insurance and risk product, Regulatory Guide 195, June 2010.
322
relationship between the body and the persons to be covered by the
insurance. In addition, in order to be entitled to relief under the class
order the group purchasing body must, as soon as practicable after it
has reason to believe that a person will receive financial services,
provide disclosure of any payments the body will receive from the
issuer of the insurance product or any person arranging the product.
101. The Class Order therefore may provide relief for a worker entitlement
fund that receives employer insurance premiums and uses those
contributions to purchase insurance coverage for its members.
102. However, as explained earlier in Chapter 7.6 of Volume 3 concerning
Coverforce, a trade union promoting a particular insurance scheme to
employers in return for commission will often not be entitled to rely on
Class Order [CO 08/1] because they will not be a group purchasing
body,71 nor will they satisfy the conditions for relief.
103. Further, as the analysis concerning Coverforce demonstrates, in the
usual case it is unlikely that the trade union will be merely providing a
referral service. This is because the union will do more than merely
refer the employer to the relevant insurance broker or insurer: it will
actively seek to agree upon a particular insurance product with the
employer, in return for which the union will receive an undisclosed
commission. In truth, in these circumstances unions are akin to
insurance brokers.
104. Consequently, the union will either need an AFSL or will need to be an
authorised representative of the holder of an ASFL. In either case, the
71 Although a union may be if it is the holder of policy.
323
trade union, or the AFSL holder which the union represents, will be
subject to a range of disclosure requirements under Chapter 7.7 of the
Corporations Act 2001 (Cth) (concerning the provisions of Financial
Services Guides) and Chapter 7.9 of the Corporations Act 2001 (Cth)
(concerning Product Disclosure Statements).
105. Thus, in many cases, if the existing laws under the Corporations Act
2001 (Cth) were applied, there would be disclosure of the remuneration
and benefits received by trade unions in connection with employee
insurance schemes.
106. The difficulty is that the provisions of Chapter 7 of the Corporations
Act 2001 (Cth) are extremely complex and consequently difficult to
enforce and apply. Further, Financial Services Guides and Product
Disclosure Statements are often very lengthy and complex documents
with critical information buried in a mass of detail.
107. In the Discussion Paper, submissions were invited on whether Class
Order [CO 08/1] should be revoked or amended. ElecNet submitted
that it should not be revoked, on the basis that it would not be
economical for most group purchasing bodies to obtain an AFSL or
register a management investment scheme.72 The Class Order extends
well beyond union associated employee insurance schemes. For
example, it applies to sporting associations and clubs purchasing group
insurance for players and members.
108. Having regard to the broad scope of Class Order [CO 08/1], it is not
appropriate to revoke or amend it.
72 ElecNet Pty Ltd Law Reform Submissions, undated (received 21/8/15), pp 15-16.
324
109. The more suitable course is to introduce, whether by legislation or
regulation, provisions specifically dealing with disclosure to employers
of the nature and quantum of the pecuniary benefits received
(including amounts that can reasonably be expected to be received) by
unions from the operation of employee insurance schemes. The
quantum should include both the total amount received, but also the
proportion of the payment made by the employer that will be received
by the union. The benefits disclosed should include:
(a) direct cash payments to the union;
(b) direct cash payments to an entity related to the union or at the
direction of the union, or to any entity where the money, or
part of it, is eventually paid to the union;
(c) other financial benefits provided to the union, such as the
payment of insurance premiums on the union’s behalf;
(d) other financial benefits provided to an entity related to the
union, or to any entity where the value of the financial
benefit, or part of it, is transferred to the union; and
(e) financial benefits provided solely to union members (for
example, ambulance or health benefits).
The disclosure should be short, simple and would capture any form of
commission or fees.
325
Recommendation 47
Amendments be made to Chapter 7 of the Corporations Act 2001 (Cth), or
relevant regulations, requiring specific disclosure by registered organisations of
the direct and indirect pecuniary benefits obtained by them in connection with
employee insurance products. The detail and mechanism should be a matter of
consultation. In broad terms, the provisions should require:
(a) a branch of a registered organisation, and an officer of a branch of a
registered organisation,
(b) that arranges or promotes a particular insurance product providing
cover for employees of an employer, or refers an employer to a
person who arranges or provides such a product (whether in
enterprise bargaining or otherwise),
(c) to disclose in writing to the employer in no more than two pages the
nature and quantum of all direct and indirect pecuniary benefits that
the branch or any related entity receives or expects to receive, or
which are available only to the branch’s members, from the issuer
of the product, or any arranger or promoter, or any related entity.
110. It is important to emphasise that the disclosure envisaged by
Recommendation 47 is separate from any disclosure that occurs as part
of enterprise bargaining. Disclosure in that context is addressed in the
following Chapter of the Report.
326
CHAPTER 6
ENTERPRISE AGREEMENTS
Subject Paragraph
A - INTRODUCTION 1
B - TERMS REQUIRING CONTRIBUTIONS TO
EMPLOYEE BENEFIT FUNDS OR EMPLOYEE
INSURANCE SCHEMES
7
Introduction 7
Submissions received in response to the Discussion Paper 14
Options for reform 22
C - SUPERANNUATION FUNDS 32
Mandatory superannuation fund clauses 32
Default superannuation fund clauses 45
D - PATTERN BARGAINING 46
Introduction 46
327
Subject Paragraph
Current provisions relating to pattern bargaining 52
History of legislative attempts to address pattern bargaining 55
Options for reform - pattern bargaining 61
A - INTRODUCTION
1. This chapter examines certain issues concerning enterprise agreements
thrown up by the Commission’s inquiries.
2. The first issue was identified in Chapter 5.1 Many unions promote
forms of enterprise agreements that require employers to make
payments to certain funds, such as redundancy funds or other worker
entitlement funds, training funds, welfare funds and superannuation
funds in order to generate income for a union. For convenience these
funds, other than superannuation funds, are described in this Chapter as
employee benefit funds. There are similar clauses requiring
contributions to be made in respect of particular employee insurance
schemes.
3. These clauses can give rise to actual and potential conflicts of interest,
breaches of fiduciary duty and the potential for coercion. Part B of this
Chapter considers the most effective means of combatting these
problems.
1 See Chapter 5, paras 4, 71-72 of this Volume of the Report.
328
4. The second issue concerns clauses in enterprise agreements that require
superannuation contributions to be paid to a particular superannuation
fund. This issue is discussed in Part C of this Chapter.
5. The third, and final, issue considered in the Chapter is pattern
bargaining.
6. A number of the issues considered in this chapter were raised in the
Commission’s Discussion Paper. Relevant submissions were received
from various parties, and are referred to below where appropriate.
B - TERMS REQUIRING CONTRIBUTIONS TO EMPLOYEE BENEFIT
FUNDS OR EMPLOYEE INSURANCE SCHEMES
Introduction
7. The Commission’s inquiries have disclosed a number of examples of
enterprise agreements negotiated by a union containing provisions
requiring employers to make contributions to a particular employee
benefit fund or employee insurance scheme in which the union has a
pecuniary interest.2 This is not a new phenomenon. The Cole Royal
Commission identified the problem more than a decade ago.3 The
means by which the union benefits varies from case to case but may
2 See Vol 3, chs 6.6, 7.4 and 7.6 and Vol 4, ch 11 of this Report. See also Royal Commission into Trade Union Governance and Corruption, Interim Report (2014), Vol 1, chs 5.2, 5.3, 6.2. 3
Royal Commission into the Building and Construction Industry, Final Report (2003), Vol 10.
329
include the payment of directors’ fees, commissions, trust distributions
or grants.
8. The income that flows to unions from the operation of these terms has
several potential consequences.
9. First, it may induce a union, and its officials and employees, to engage
in coercive conduct to compel employers to contribute to a fund from
which the union derives a benefit, or to agree to terms in an enterprise
agreement requiring such contribution. The Universal Cranes case
study provides an example of such conduct.4
10. Secondly, the income creates an actual or potential conflict of interest,
and can lead to breaches of fiduciary duty by union officials.5 The U-Plus/Coverforce and CSI case studies are examples of how such
conflicts arise.6
11. Thirdly, the predominance of clauses that benefit particular unions is
likely to diminish competition. Coercive conduct taken by employee
organisations to secure such clauses in enterprise agreements is akin to
the types of conduct prohibited by the exclusive dealing provisions in
the Competition and Consumer Act 2010 (Cth).
4 Royal Commission into Trade Union Governance and Corruption, Interim Report (2014), Vol 2, ch 8.7. 5
See Volume 4, ch 10.2 of this Report for an explanation of why union officials and unions owe fiduciary duties to the members of the union on whose behalf they act in enterprise bargaining. 6
See Volume 3, chs 6.6, 7.6 of this Report.
330
12. The Discussion Paper considered a number of means by which these
problems could be addressed. These are considered further below. As
already noted, these issues are not new. In the context of the building
and construction industry, the Cole Royal Commission recommended
that:7
… there be full disclosure, in writing, of any direct or indirect financial benefit that may by derived by any negotiating party to an industrial agreement from any term sought in the enterprise bargaining agreement, such as commissions or other income.
13. The Building and Construction Industry Improvement Act 2005 (Cth)
was enacted to implement around 120 of the Cole Royal Commission’s
212 recommendations. This recommendation was not adopted.
Submissions received in response to the Discussion Paper
14. As noted, the Discussion Paper sought comment in relation to a
number of proposed measures to address the problems identified
above. Those measures included amendments to ss 172 and/or 194 of
the Fair Work Act 2009 (Cth) (FW Act) prohibiting an enterprise
agreement from containing terms requiring employers to make
payments:
(a) to any employee benefit fund;
(b) to a specific employee benefit fund, or to a fund or scheme
with reference to a specific employee benefit fund;
7 Royal Commission into the Building and Construction Industry, Final Report (2003), Vol 10, ch 14, p 319, recommendation 171.
331
(c) to a specific employee benefit fund other than as a default;
(d) to an employee benefit fund in which an employee
organisation or official of an employee organisation
negotiating an enterprise agreement has an interest or from
which the employee organisation or its officials derives a
benefit; or
(e) to any employee benefit fund which is not an approved
employee benefit fund.
15. The Discussion Paper also addressed whether there should be a
requirement for employee organisations bargaining for an enterprise
agreement to disclose financial benefits, whether direct or indirect, that
would be derived by the employee organisation from the terms of a
proposed enterprise agreement, and the consequences of any breach of
that requirement.
16. The Australian Construction Industry Redundancy Trust (ACIRT),8
ElecNet (Aust) Pty Ltd in its capacity as trustee of the Protect
Severance Scheme Submissions (Protect),9 Master Builders
Australia,10 the Australian Chamber of Commerce and Industry,11 and
8 Australian Construction Industry Redundancy Trust Pty Ltd Law Reform Submissions, undated (received 31/8/15), pp 9-10. 9
ElectNet Pty Ltd Law Reform Submissions, undated (received 21/8/15), pp 17-21. 10 Master Builders Australia Law Reform Submissions, 21/8/15, pp 42-43. 11
Australian Chamber of Commerce and Industry Law Reform Submissions, August 2015, pp 29-30.
332
the Australian Industry Group12 each made submissions regarding the
issues referred to above.
17. ACIRT and Protect submitted that terms requiring employers to make
payments to any employee benefit fund, a specific fund or a fund other
than as a default should not be prohibited from inclusion in enterprise
agreements because these funds provide a number of benefits to
employees such as reliable access to funds in the event of employer
insolvencies, which in turn results in less dependence on the welfare
system and greater financial security for employees.13
18. Protect submitted that such a prohibition would effectively shift the
risk of conflicts of interest to employers. Because of the transitory
nature of employment in the building and construction industry in
particular and the high risk of employer insolvency, Protect submitted
that there would be ‘little or no benefit to employees or employers’
from prohibiting access to such funds.14
19. Moreover, Protect submitted that the suggestion that unions should not
receive benefits from the income generated by employee entitlement
funds misunderstands how those funds work, because, it said, there
12 Australian Industry Group Submissions in Response to Issues Paper 4: Relevant Entities, 22/8/14, pp 6, 12-13. 13
Australian Construction Industry Redundancy Trust Pty Ltd Law Reform Submissions, undated (received 31/8/15), pp 9-10; ElectNet Pty Ltd Law Reform Submissions, undated (received 21/8/15), pp 17-21. 14
ElectNet Pty Ltd Law Reform Submissions, undated (received 21/8/15), p 19.
333
would be administrative difficulties in managing funds so that income
from them was invested and allocated to member accounts.15
20. On the other hand, ACIRT submitted that it is inappropriate for unions
to derive a benefit other than for reasonable director’s fees.16 It did not
support the concept of restricting inclusion of terms in enterprise
agreements nominating particular funds outright, but supported the
concept of approved funds and disclosure requirements.17 Master
Builders Australia took a similar stance, supporting ‘disclosure rather
than prohibition’ and that ‘there should remain the ability for any
approved benefits fund to be nominated as a default fund in an
enterprise agreement’.18
21. The Australian Industry Group submitted (in the context of
recommending that there should be a separate Act regulating worker
entitlement funds) that enterprise agreement terms requiring payments
to funds that do not meet stringent governance, reporting and
supervision standards should be included as unlawful terms within
s 194 of the FW Act.19 It also submitted that terms requiring an
employer to pay for a particular income protection insurance product
should be unlawful if the insurance provider is paying substantial
commissions or fees to a union or an entity controlled or jointly
15 ElectNet Pty Ltd Law Reform Submissions, undated (received 21/8/15), pp 11-12. 16 Australian Construction Industry Redundancy Trust Pty Ltd Law Reform Submissions, undated (received 31/8/15), p 10. 17
Australian Construction Industry Redundancy Trust Pty Ltd Law Reform Submissions, undated (received 31/8/15), pp 10-11. 18 Master Builders Australia Law Reform Submissions, 21/8/15, pp 43-44. 19
Australian Industry Group Submissions in Response to Issues Paper 4: Relevant Entities, 22/8/14, p 6.
334
controlled by a union.20 It further submitted that a specific anti-coercion provision should be inserted into the FW Act prohibiting
coercion of an employer to contribute to an employee entitlement
fund.21 In addition, it argued that unions should be required to disclose
financial interests derived from the terms of any enterprise
agreements.22
Options for reform
22. The Commission has considered a number of options for dealing with
the problems identified earlier in this Chapter. Two observations may
be made at the outset. First, it is not suggested that clauses requiring
payments to employee benefit funds, or employee insurance schemes,
should be prohibited. Secondly, it is unlikely that any single
mechanism will avoid all of the problems already identified.
23. Having regard to the various competing submissions, three reforms to
the FW Act are recommended.
24. The first is to require an organisation that is a bargaining representative
to disclose all financial benefits, whether direct or indirect, that would
or could reasonably be expected to be derived by the organisation, an
officer of the organisation or a related entity as a direct or indirect
20 Australian Industry Group Submissions in Response to Issues Paper 4: Relevant Entities, 22/8/14, p 9. 21
Australian Industry Group Submissions in Response to Issues Paper 4: Relevant Entities, 22/8/14, p 6. 22 Australian Industry Group Submissions in Response to Issues Paper 4: Relevant Entities, 22/8/14, p 12.
335
consequence of the operation of the terms of a proposed enterprise
agreement. This would include fixed payments such as commissions
and directors fees as well as discretionary payments such as trust
distributions and grants.
25. Disclosure is a basic first step to avoid the conflicts of interest
discussed above. Further, it seeks to ensure that employees who are
asked to vote for an enterprise agreement are properly informed about
its effect.23
26. The duty of disclosure should extend to all employees proposed to be
covered by the agreement. The disclosure should be made in a written
document which contains specified information about the nature and
quantum of the pecuniary benefits. The disclosure document should be
short (for example, no more than 2 pages), simple and easy for a
layperson to understand.24 The disclosure document should be
provided to the employer and all other bargaining representatives in the
first instance and then form part of the material to which employees are
given access prior to voting on the agreement pursuant to s 180(2) of
the FW Act. The disclosure document should also be required to be
annexed to the enterprise agreement that is lodged with the Fair Work
Commission so that new employees are aware of the benefits flowing
to an employee (or employer) organisation.
27. As noted in Chapter 7.6, the CFMEU argued that a duty of disclosure
would be ungainly and make bargaining more complicated than it
23 See Fair Work Act 2009 (Cth), s 180(5). 24 The information provided should be similar to that discussed in Chapter 5, para 109 of this Volume.
336
already is. The proposed disclosure should not be particularly onerous
for organisations, particularly given the pattern nature of many
enterprise agreements.
28. The second recommendation is to amend s 194 of the FW Act to make
unlawful any term of an enterprise agreement requiring or permitting
contributions for the benefit of an employee to be made to any fund
(other than a superannuation fund)25 providing for, or for the payment
of, employee entitlements, training or welfare unless the fund is:
(a) a registered worker entitlement fund; or
(b) a registered charity.
This would include worker entitlement funds, training funds and
welfare funds.
29. The purpose of this recommendation is to reduce further the potential
for conflicts of interest and for coercion by ensuring that contributions
made to various funds intended to benefit employees are made to
entities that are subject to a degree of regulation. Registered worker
entitlement funds are discussed in Chapter 5, and are proposed to be
subject to regulation by ASIC. The practical consequence is that
training and welfare funds nominated in enterprise agreements would
need to be registered charities and subject to the oversight of the
Australian Charities and Not-for-Profits Commission.
25 The reasons for excluding superannuation funds is that s 194(h) of the Fair Work Act 2009 (Cth) already deals with unlawful terms in relation to superannuation funds.
337
30. The third recommendation is to introduce a specific civil remedy
provision prohibiting a person from organising or taking (or
threatening to organise or take) any action, other than protected
industrial action, with intent to coerce an employer to pay amounts to a
particular employee benefit fund, superannuation fund or employee
insurance scheme. The reason for recommending this specific
prohibition is that it is questionable whether the existing prohibitions
on coercion in the FW Act capture coercion which occurs outside the
enterprise bargaining process. Thus, s 343 of the FW Act prohibits
action done with an intent to coerce a person to exercise a ‘workplace
right’ in a particular way. A ‘workplace right’ includes participating in
the process of making an enterprise agreement.26 Accordingly, action
done to coerce an employer to agree to a particular term of an
enterprise agreement requiring contributions to a particular employee
benefit fund is prohibited. However, it is doubtful whether action
taken outside the enterprise bargaining process, for example, as part of
seeking to come to a ‘side deal’ between employer and union, would
be caught. The maximum penalty should be the same as for the other
forms of coercion.
31. The ongoing situation should be monitored to assess whether further
legislative reforms are required. Should there be a continuation of the
present position where unions derive substantial disguised income
from largely unregulated funds and schemes, it may be necessary to
consider a broader prohibition on permissible terms of enterprise
agreements.
26 Fair Work Act 2009 (Cth), s 341(2)(e).
338
Recommendation 48
The Fair Work Act 2009 (Cth) be amended to require an organisation that is a
bargaining representative to disclose all financial benefits, whether direct or
indirect, that would or could reasonably be expected to be derived by the
organisation, an officer of the organisation or a related entity as a direct or
indirect consequence of the operation of the terms of a proposed enterprise
agreement. A short, simple and clear disclosure document should be provided
to all employees before they vote for an enterprise agreement.
Recommendation 49
Section 194 of the Fair Work Act 2009 (Cth) be amended to make unlawful any
term of an enterprise agreement requiring or permitting contributions for the
benefit of an employee to be made to any fund (other than a superannuation
fund) providing for, or for the payment of, employee entitlements, training or
welfare unless the fund is:
(a) a registered worker entitlement fund (see Recommendation 45); or
(b) a registered charity.
339
Recommendation 50
A new civil remedy provision be added to the Fair Work Act 2009 (Cth)
prohibiting a person from organising or taking (or threatening to organise or
take) any action, other than protected industrial action, with intent to coerce an
employer to pay amounts to a particular employee benefit fund, superannuation
fund or employee insurance scheme.
C - SUPERANNUATION FUNDS
Mandatory superannuation fund clauses
32. The potential for coercive conduct and conflicts of interest in
enterprise bargaining identified in respect of employee benefit funds
also exists in respect of superannuation funds. Examples of this may
be found in the case studies examining TWU Super27 and LUCRF.28
33. Employees in Australia are generally entitled to choose their
superannuation fund. However, employees employed under a
collective agreement, enterprise agreement, State award or State
agreement are not always able to choose their superannuation fund. It
27 Royal Commission into Trade Union Governance and Corruption, Interim Report (2014), Vol 1, ch 6.2. 28
Royal Commission into Trade Union Governance and Corruption, Interim Report (2014), Vol 1, ch 6.3.
340
remains lawful for such agreements and awards to mandate the fund to
which employers must make contributions.29
34. In the Interim Report, the view was expressed that there were strong
reasons to repeal s 32C(6)(d) and (h) of the Superannuation Guarantee
(Administration Act) 1992 (Cth).30 After the Interim Report was
finalised but before its publication, the Final Report of the Financial
System (the Murray Report) was released. It included, among other
things, a recommendation that these provisions of s 32C, and others
that deny employees the ability to have a choice of fund, be repealed.31
The Government response to the Murray Report agreed to the repeal of
these provisions.32
35. The Murray Report concluded that there was no good reason why
some, but not other, employees should be denied a choice of
superannuation fund. The Commission invited any interested party to
make submissions to the contrary so that the Commission could be
properly informed of the arguments in favour of maintaining the status
quo.
36. Only two submissions were made identifying arguments in favour of
maintaining the status quo.
29
Superannuation Guarantee (Administration) Act 1992 (Cth), ss 32C(6), (6A), (6B), (7), (8). 30 Royal Commission into Trade Union Governance and Corruption, Interim Report (2014), Vol 1, ch 6.1, p 898; ch 6.2, p 943. 31
Commonwealth, Financial System Inquiry, Final Report, November 2014, pp 131-132, Recommendation 12. 32 Australian Government, Improving Australia’s financial system: Government response to the Financial System Inquiry, 20/10/15, p 14.
341
37. The Australian Industry Group submitted that:33
In Ai Group’s experience, the main argument here is that employees in effect express their choice of fund when they vote to approve the agreement. The existing provisions are supported by many employers as administration costs are reduced.
38. The Retail Employees Superannuation Trust submitted that there
would be a number of adverse impacts associated with the removal of
the relevant sections of the Superannuation Guarantee
(Administration) Act 1992 (Cth) including:34
(a) potential transitional issues meaning that employers could be
required to make two payments for an employee. That is not
an argument against, but it is an argument for consequential
amendments to the FW Act to avoid such an outcome;
(b) time and cost spent by employers administering employees’
individual fund choices;
(c) additional compliance and audit costs;
(d) employers having to act as de facto advisers to assist an
employee’s choice; and
(e) reduction in the size of funds leading to a loss of the benefits
of scale, in turn leading to erosion of employee benefits,
including higher fees and less favourable insurance.
33 Australian Industry Group Law Reform Submissions, 21/8/15, p 11. 34 Retail Employees Superannuation Trust Law Reform Submissions, 20/8/15, pp 2-4.
342
39. The Retail Employees Superannuation Trust35 further submitted that
employees do not tend to exercise a choice of fund even where they
have the right to do so and if employees wished to have the ability to
exercise a choice of fund, it would be open to them to engage their
union representatives to negotiate suitable choice of fund rules in their
enterprise agreement. Accordingly, it was submitted that the removal
of the statutory provisions is unnecessary.
40. The arguments raised concerning the burden of administrative costs to
employers in administering employee default fund choices are
increasingly less relevant for the reasons identified in the Murray
Report.36 Additionally, suggestions that strong industry funds are more
likely to act in the interests of workers than commercial funds provided
no reason for forcing employees to participate in those funds if they
wish their money to be managed elsewhere.37
41. Other arguments against allowing choice of fund for all Australian
employees are outweighed by the benefits choice provides such as
increased competition and member engagement in the superannuation
system.
42. Two other arguments require consideration. The first is the contention
that the proposed amendments are unnecessary because employees are
35 Retail Employees Superannuation Trust Law Reform Submissions, 20/8/15, pp 2-4. 36 Commonwealth, Financial System Inquiry, Final Report, November 2014, p 320. 37
As to which, see Royal Commission into Trade Union Governance and Corruption, Interim Report (2014), Vol 1, ch 6.2, pp 926-927.
343
effectively exercising choice by voting for an enterprise agreement,38
or because it is open to them to raise their choice of fund requirements
during negotiations for an enterprise agreement. A related notion is
that the proposed amendments are unnecessary because many
employees do not, in fact, exercise their choice of fund rights.
43. These arguments are unsound. As to the first, the need for the tyranny
of the majority to prevail has not been established. Further, not every
employee votes on an enterprise agreement. In particular, employees
that commence employment on existing enterprise agreements, or on
greenfields agreements, will not have an opportunity to vote or to raise
any concerns regarding their choice of fund. As to the second, the
reality is that some employees do wish to exercise a choice in relation
to their super fund. The stories of Peter Bracegirdle39 and Katherine
Coles40 are examples of some that did, for sound reasons.
44. In short, none of the arguments made against freedom of choice are
compelling.
38 A similar argument was put forward by the TWU in relation to its industry fund: see Royal Commission into Trade Union Governance and Corruption, Interim Report (2014), Vol 1, ch 6.2, p 925. 39
Royal Commission into Trade Union Governance and Corruption, Interim Report (2014), Vol 1, ch 6.2 (TWU Super Case Study). 40
Royal Commission into Trade Union Governance and Corruption, Interim Report (2014), Vol 1, ch 6.3 (LUCRF Case Study).
344
Recommendation 51
Sections 32C(6), (6A), (6B), (7) and (8) of the Superannuation Guarantee
(Administration) Act 1992 (Cth) be repealed, and all other necessary
amendments be adopted to ensure all employees have freedom of choice of
superannuation fund.
Default superannuation fund clauses
45. The Discussion Paper raised for consideration whether unions (or
indeed other bargaining representatives) should be able to negotiate for
terms in an enterprise agreement which specify a specific default
superannuation fund with financial links with the union negotiating the
agreement. The potential for conflicts of interest and coercion are
similar to those considered in Part B. It is considered that
Recommendations 48 to 50 sufficiently address these issues.
D - PATTERN BARGAINING
Introduction
46. The CFMEU ACT case study41 revealed the operation in Canberra of
what one CFMEU organiser referred to as ‘the system’42: a process by
which the major contractors in a sector of the industry agree to
identical enterprise agreements, and the rest of the contractors are then
41 See Chapter 6, and in particular Chapters 6.3, 6.4, 6.5. 42 Lomax MFI-8, 7/10/15, p 8.4.
345
told that this is the industry enterprise agreement and that they need to
sign it. The agreements contain terms that confer financial benefits on
the CFMEU, and ‘jump up’ clauses that require subcontractors to pay
CFMEU enterprise agreements rates. Contractors who refuse to sign
are targeted by the CFMEU in different ways, by abuse of rights of
entry provisions, by using audit clauses in an existing enterprise
agreement, and by applying similar pressure to builders to engage only
‘preferred contractors’.43
47. None of the contractors who signed up to CFMEU enterprise
agreements who gave evidence said that they had particular desire to
do so. Most said they felt they did not have any practical choice.44 But
once they sign up, contractors tend to encourage the CFMEU to apply
such pressure to their competitors. The repeated instruction from one
participant in the bricklaying industry to a CFMEU official to
‘hammer’ a bricklayer without an enterprise agreement and who was
charging lower prices is an example.45 Encouragement of this nature
occurs because the contractors who sign up to CFMEU enterprise
agreements cannot compete with those who do not have such
agreements.
48. The CFMEU’s position in Canberra was summed up by the comment
of an organiser, in the presence of the Branch Assistant Secretary, to an
43 Similar arrangements featured in evidence before the Cole Royal Commission: Royal Commission into the Building and Construction Industry, Final Report (2003), Vol 1, pp 27-28. 44
See for example Elias Taleb, 13/7/15, T:25.15-20; Pietro Marcantonio, witness statement, 16/7/15, para 7; Pietro Marcantonio, 16/7/15, T:321.21-322.4, 334.1-32; Adam McEvilly, witness statement, 29/7/15, para 6; Horace Watt, 30/7/15, T:1582.3-16, 1584.6-8. 45
Lomax MFI-6, 7/10/15.
346
industry participant: ‘without the EBA, you won’t be doing any work
on commercial sites’.46
49. The above features of the CFMEU conduct in the ACT are not
confined to that Branch of the union. For example, the Universal
Cranes47 case study involved similar issues.
50. The ‘system’ has many unsatisfactory features. Some are dealt with by
the existing law. Some (such as the benefits that flow to the CFMEU
under pattern enterprise agreements and anti-competitive aspects) are
dealt with in some of the recommendations to this report.
51. A fundamental part of the ‘system’ is industry wide pattern bargaining.
This is not a matter prohibited under the existing law. Nor was it
considered in the Discussion Paper. The Commission has considered
whether to make recommendations on this topic. Stopping industry
wide pattern bargaining would go a long way towards redressing the
unsatisfactory aspects of the construction industry referred to above.
However, for the reasons discussed in what follows, no
recommendation is made. This is not an endorsement of pattern
bargaining, but merely a recognition that abolishing it per se is too
radical a solution to the above problems.
46 O’Mara MFI-3A, 8/10/15, pp 3.23-4.4. 47 Royal Commission into Trade Union Governance and Corruption, Interim Report (2014), Vol 2, Ch 8.7.
347
Current provisions relating to pattern bargaining
52. Section 412(1) of the FW Act defines pattern bargaining as a course of
conduct by a bargaining representative for two or more proposed
enterprise agreements (covering separate employers) whereby an
endeavour is made to have common terms included in those enterprise
agreements. However, s 412(2) provides that conduct falls outside the
definition of pattern bargaining if the relevant bargaining
representative ‘is genuinely trying to reach an agreement’.
53. Whether a bargaining representative is genuinely trying to reach
agreement with a particular employer for the purposes of s 412(2)
depends on a number factors including whether the bargaining
representative is:
(a) demonstrating a preparedness to bargain for the agreement
taking into account the individual circumstances of that
employer, including in relation to the nominal expiry date of
the agreement;
(b) bargaining in a manner consistent with the terms of the
agreement being determined as far as possible by agreement
between that employer and its employees; and
(c) meeting the good faith bargaining requirements.48
48 Fair Work Act 2009 (Cth), s 412(3).
348
54. To engage in pattern bargaining is not prohibited by the FW Act. The
only consequences are as follows:
(a) Industrial action taken in support of an enterprise agreement
in respect of which a bargaining representative is engaging in
pattern bargaining cannot be protected industrial action.49
That action can therefore be the subject of a stop order under
s 418 of the FW Act as well as an action for common law
remedies.
(b) The Federal Court and Federal Circuit Court also have the
power to grant injunctive relief in respect of such action.50
History of legislative attempts to address pattern bargaining
55. Pattern bargaining was considered in some detail by the Cole Royal
Commission. It identified that, in areas of high union density within
the building and construction sector, the process of enterprise
bargaining contemplated by Workplace Relations Act 1996 (Cth) had
been ‘effectively circumvented and displaced by pattern bargaining
leading to pattern agreements’.51 The Cole Royal Commission
49 Fair Work Act 2009 (Cth), s 409(4). 50 Fair Work Act 2009 (Cth), s 422. 51
Royal Commission into the Building and Construction Industry, Final Report (2003), Vol 1, pp 27-28.
349
recommended that pattern bargaining in the construction industry be
prohibited.52
56. The Cole Royal Commission summarised the deleterious effects that
pattern bargaining has on productivity outcomes, and its fundamental
inconsistency with the shift to enterprise bargaining that was
introduced by the Keating Government (and which has been continued
under the FW Act):53
One form of centralised wage and condition fixation has been replaced by another. Initiative is stifled; the scope for creativity is denied. The reforms introduced by successive Governments, to make agreements struck at enterprise level the principal instruments whereby terms and conditions of employment are established, are circumvented and negated. The results have been detrimental to both workers and employers, to the industry and to the national economy.
The unions and the major contractors which negotiate pattern agreements perceive it to be in their best interests to adopt this method of determining wages and conditions in the industry. They have the economic and industrial strength to enforce their wishes on workers and their employers. Unless pattern bargaining is prohibited by legislation it will continue to be the principal means by which many important terms and conditions of employment are determined in the commercial sector of the industry.
57. An attempt to implement this recommendation was defeated in the
Senate.
58. In the ACT (and NSW) building and construction industry, pattern
agreements are sought by the CFMEU in each of the major trades.
Consistently with this, in 2014 the Productivity Commission noted in
its Draft Report on the Workplace Relations Framework that pattern
52 Royal Commission into the Building and Construction Industry, Final Report (2003), Recommendation 2, Vol 1, p 28. 53
Royal Commission into the Building and Construction Industry, Final Report (2003), Vol 1, p 28.
350
bargaining was ‘rife’ in Australia’s construction industry.54 However,
there is no evidence suggesting that pattern bargaining is a systemic
problem outside the construction industry.
59. The Productivity Commission stated that:55
Pattern bargaining is problematic where it is imposed by a party with excessive leverage. If pursued on a mutually convenient basis by employer and union, it can also be seen as a form of anti-competitive conduct. Moreover, as also noted by some participants, pattern bargaining can conflict with the WR system’s goal to develop agreements that reflect the circumstances of the enterprise and its employees…
… it is not per se, the presence of common features across bargaining agreements that is problematic, but the extent to which those common outcomes reflect the excessive power of one party over another, and an unwillingness to allow negotiation of some different set of conditions. (emphasis added)
60. The Productivity Commission also noted that in some circumstances
pattern agreements may not be disadvantageous or coercive but
desirable for both parties as they can reduce the costs of negotiating
enterprise agreements, reduce risk in large projects and provide
guidance for smaller enterprises.56 In industries that exhibit a truly
competitive market, and low barriers to entry, ‘the existence in
negotiations of very similar proposals from either side is unlikely to
represent the adverse aspect of pattern bargaining that should concern
public policy’.57 The Productivity Commission indicated that it is
54 Commonwealth of Australia, Productivity Commission Inquiry into the Workplace Relations Framework, Draft Report, August 2015, p 561. 55
Commonwealth of Australia, Productivity Commission Inquiry into the Workplace Relations Framework, Draft Report, August 2015, pp 561-562. 56
Commonwealth of Australia, Productivity Commission Inquiry into the Workplace Relations Framework, Draft Report, August 2015, p 561. 57
Commonwealth of Australia, Productivity Commission Inquiry into the Workplace Relations Framework, Draft Report, August 2015, p 563.
351
interested in exploring a ‘nuanced approach’ to pattern bargaining
which discriminates between pattern agreements where the
negotiations are genuine and those that are imposed through excessive
leverage, and has asked for further feedback on that topic pending its
final report.58
Options for reform - pattern bargaining
61. The comments of Commissioner Cole quoted above aptly describe
some of the problems with the type of pattern bargaining engaged in by
the CFMEU in the ACT. It undermines the point of the collective
bargaining provisions in the Act: that is, to facilitate bargaining at the
enterprise level. Such concerns are exacerbated by evidence that in at
least one case there were significant doubts about whether pattern
enterprise agreements lodged by the ACT CFMEU with Fair Work
Australia were approved by employees of the companies in question.59
62. Is the answer then to prohibit pattern bargaining? One difficulty with
abolishing pattern bargaining entirely is that some forms of pattern
bargaining may be less insidious than that adopted in the ACT building
and construction industry and can in some cases even be advantageous.
One example might be a multi-enterprise agreement in respect of a
major project. One would hesitate to impose on employers and
employees arbitrary obligations that their agreements be different
58 Commonwealth of Australia, Productivity Commission Inquiry into the Workplace Relations Framework, Draft Report, August 2015, p 562. 59
See Vol 3, ch 6.3, paras 287-289, 299 (MPR Scaffolding).
352
simply for the sake of difference, or in the belief that such difference
necessarily creates productivity gains.
63. The true evil is an inequality of bargaining power that can lead to anti-competitive and unproductive outcomes, as when a powerful union like
the CFMEU presses for the same outcomes across an industry or range
of employers within an industry.
64. In the circumstances, no amendments to the existing provisions under
the FW Act relating to pattern bargaining are proposed.
353
354
CHAPTER 7
COMPETITION ISSUES
Subject Paragraph
A - INTRODUCTION 1
B - SECONDARY BOYCOTTS 5
Introduction 5
Penalties 9
Secondary boycotts engaged in for a market sharing purpose 15
Restraint on competitors of secondary boycott target 33
General obligation to report boycott activity? 40
Appropriate regulator 46
C - ANTI-COMPETIVE CONDUCT IN ENTERPRISE
BARGAINING
59
Introduction 59
Discussion 63
355
Subject
Conclusio
INTR A -
1.
2.
ons
RODUCTIO
This Chapter
and Consum
considered in
A number o
on the part
Mining and E
(a) The
of
and
(b) The
of
pos
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(c) The
the
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con
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ON
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mer Act 2010
n 2014 and 2
of case studie
of unions,
Energy Unio
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the Interim
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Volume 2 o
ssible secon
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CFMEU p
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nformed to t
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0 (Cth). Th
2015.
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and in parti
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study, consi
Report, disc
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Cranes case
of the Interi
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ACT case stu
placed press
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the prices s
eements (EB
sues in relatio
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possible anti
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).
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losed possib
FMEU in Vic
study, consi
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tt conduct
udies reveale
sure on co
or the supp
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BAs) (prices
Pa
on to the Co
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onstruction,
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ble secondary
ctoria.
idered in Ch
revealed inst
by the CF
ed instances
ontractors w
ply of serv
ractors with
which wer
aragraph
72
ompetition
se studies
e conduct
Forestry,
Volume 2
y boycott
hapter 8.7
tances of
FMEU in
in which
within the
vices that
CFMEU
re set to
356
accommodate the pay terms and conditions allowed for in
those EBAs). Chapter 6.5 of Volume 3 of the Report
considers whether such conduct amounted to seeking an
arrangement or understanding having the purpose or effect of
fixing, controlling or maintaining the price for services in
contravention of the cartel provisions of the Competition and
Consumer Act 2010 (Cth).1
(d) The CFMEU ACT case studies also revealed instances of
pattern EBAs containing provisions requiring employers to
procure training for their employees provided by a particular
training authority operated for the benefit of the union, or to
obtain income protection insurance for employees with an
particular provider. Chapter 6.6 of Volume 3 of the Report
considers whether this conduct amounted to possible
contraventions of the exclusive dealing provisions in s 47 of
the Competition and Consumer Act 2010 (Cth).
(e) The Chiquita Mushrooms case study, which is dealt with in
Chapter 10.6 of Volume 4 of the Report, revealed instances of
AWU EBAs containing provisions limiting the procurement
of contract labour by an employer to an identified provider, in
circumstances in which the employer received advice that
such a clause may contravene s 45E of what was then the
Trade Practices Act 1974 (Cth).
1 No findings were made in relation to these issues because on 1 September 2015 the Australian Competition and Consumer Commission commenced an investigation of this conduct. It is continuing. However, the evidence before the Commission does provide useful background for a consideration of the policy issues addressed in this Chapter.
357
3.
4.
SEC B -
Introduc
5.
6.
2 Related p 2010 (Cth) competitio provisions
Many of the
the context
competition
approach of
Consumer A
generally. S
problems in
recommenda
The balance
a number of
anti-competi
CONDARY B
ction
The Boral an
Report raise
of the curren
that indirectl
the Competit
The terms a
Chapter 8.2
provisions also ), ss 45DA (sec n), 45DB (bo contravening s
ese competiti
of the buil
laws are of
f considering
Act 2010 (C
Some of the r
the building
ations made i
of the Chapt
f issues conc
itive conduct
BOYCOTTS
nd Universal
a number of
nt provisions
ly leads to a
tion and Con
and operation
of the Interim
o considered in condary boyco oycotts affecti s 45E).
ion law issue
lding and c
f general app
g the proper
Cth) as it
recommenda
g and constru
in Chapter 8
ter is divided
cerning seco
t in relation to
S
l Cranes case
f issues conce
s preventing
a secondary b
nsumer Act 20
n of ss 45D
m Report co
n the section in otts for the purp ing trade or
es that have
onstruction
plication. Th
r scope of
relates to
ations, howev
uction industr
of this Volum
d into two pa
ndary boyco
o enterprise b
e studies con
erning the sc
g secondary b
boycott, bein
010 (Cth) res
and 45E ar
ncerning Bo
nclude Compe pose of causing commerce), 4
arisen have
industry. H
his Chapter
the Competi
employment
ver, address p
ry by referen
me.
arts. Part B d
otts. Part C
bargaining.
nsidered in th
cope and effe
boycotts and
ng ss 45D an
spectively.2
re considered
oral. Both ss
etition and Con g substantial le 45EA (giving
arisen in
However,
takes the
ition and
t matters
particular
nce to the
deals with
concerns
he Interim
ectiveness
d conduct
nd 45E of
d fully in
s 45D and
nsumer Act essening of g effect to
358
45E and their related provisions are excepted from the operation of the
exclusion in s 51(2)(a) of the Competition and Consumer Act 2010
(Cth). That paragraph excludes contracts, arrangements or
understandings relating to remuneration, conditions of employment,
hours of work or working conditions of employees from the operation
of the anti-competitive provisions of Part IV of the Competition and
Consumer Act 2010 (Cth). The scope of this exclusion is considered
further in section C below.
7. The Boral case study, in particular, demonstrated the ability of trade
unions with significant member density across a particular industry to
inflict substantial damage by disrupting the processes of distribution
and supply to the target company, in contravention of ss 45D and 45E.
It raised a number of issues,3 which were canvassed in the Discussion
Paper.4
(a) Do the existing penalties for contravention of the secondary
boycott provisions provide an effective deterrent against the
relevant conduct, particularly when compared with penalties
for other contraventions of Part IV of the Competition and
Consumer Act 2010 (Cth)?
(b) Should secondary boycotts undertaken for a market sharing
purpose be explicitly outlawed as cartels?
3 Royal Commission into Trade Union Governance and Corruption, Interim Report (2014), Vol 2, ch 8.2, pp 1106-1108. 4
Royal Commission into Trade Union Governance and Corruption, Discussion Paper - Options for Law Reform, Chapter 10.3, 19/5/15, pp 110-116.
359
(c) Should competitors of secondary boycott targets be precluded
from dealings which take advantage of the boycott?
(d) Should competitors of a secondary boycott target, or other
market participants, be required to report secondary boycott
conduct?
(e) Is the ACCC the appropriate regulator for investigation and
enforcement of secondary boycott contraventions involving
trade unions?
8. No submissions have been received from any unions in relation to
these issues. The submissions of the ACTU in relation to the Harper
Review and the Productivity Commission have been considered. In the
main, those submissions take the position that:
(a) Both ss 45D and 45E of the Competition and Consumer Act
2010 (Cth) are the products of flawed policy and should be
repealed.
(b) If not, ss 45E, 45EA and 51(2)(a) of the Competition and
Consumer Act 2010 (Cth) should be amended to exempt the
‘bargaining, making and approval of enterprise agreements or
proposed enterprise agreements’.5
5 Australian Council of Trade Unions, Competition Policy Review: ACTU Response to the Draft Report, November 2014, p 13; Australian Council of Trade Unions, Submissions to the Inquiry into the Workplace Relations Framework, March 2015, p 26.
360
Penalties
9. Both the Boral and Universal Cranes case studies suggest that the
existing penalties for contravention of ss 45D and 45E of the
Competition and Consumer Act 2010 (Cth) are ineffective to deter
conduct which has the potential to cause very substantial loss and has a
substantial anti-competitive effect.
10. The maximum penalty is $750,000 in respect of a body corporate.
Individuals are immune from pecuniary penalties in respect of
contraventions of the secondary boycott provisions.6
11. In respect of other anti-competitive contraventions by bodies corporate,
the maximum penalty is the greater of:7
(a) $10,000,000;
(b) if the Court can determine the value of the benefit that the
body corporate has obtained that is reasonably attributable to
the contravention - three times the value of that benefit; and
(c) if the Court cannot determine the value of that benefit - ten
per cent of the annual turnover of the body corporate during
6
Competition and Consumer Act 2010 (Cth), s 76(1A)(a), (2). Competition and Consumer Act 2010 (Cth), s 45DC also precludes action being taken against members or officers of organisations of employees under Competition and Consumer Act 2010 (Cth), ss 77 and 82, except in a representative capacity in respect of organisations that are not bodies corporate. 7
Competition and Consumer Act 2010 (Cth), s 76(1A)(b).
361
the period (the turnover period ) of 12 months ending at the
end of the month in which the contravention occurred.
12. The Competition Policy Review recommended that those penalties
should apply equally to breaches of ss 45D and 45E of the Competition
and Consumer Act 2010 (Cth), observing that there ‘no reason’ why
the maximum breaches should be lower than those for other breaches
of the competition law.8 Submissions to the Commission by the
Australian Competition and Consumer Commission (ACCC),
Australian Industry Group, Master Builders Australia and the
Australian Chamber of Commerce and Industry all supported this
approach.9 The ACCC observed that secondary boycott activity can
have a significant anti-competitive impact on markets in a similar
manner as contraventions of other Part IV provisions.10
13. The Australian Government supported this recommendation in its
response to the Competition Policy Review and is to draft legislation to
increase the maximum penalties for breach of the secondary boycott
provisions to the same levels as those applying to other breaches of the
competition law.11 The same recommendation in relation to ss 45E
8 Competition Policy Review, Final Report, March 2015, p 68, recommendation 36. 9 Australian Competition & Consumer Commission Law Reform Submissions, undated (received 20/8/15), p 3; Australian Industry Group Law Reform Submissions, 21/8/15, p 13-14; Master Builders Australia Law Reform Submissions, 21/8/15, p 47; Australian Chamber of Commerce and Industry Law Reform Submissions, August 2015, p 44. 10
Australian Competition & Consumer Commission Law Reform Submissions, undated (received 20/8/15), p 3. 11 Australian Government, Response to the Competition Policy Review, 24/11/15, p 29.
362
and 45EA has been noted, pending the outcome of the Productivity
Commission Review of the Workplace Relations Framework.12
14. The conduct exhibited in the case studies considered by the
Commission shows there is a real need for an effective deterrent
against secondary boycott conduct. There is no principled reason why
the penalties for contravention of the secondary boycott provisions
should be less than those that apply to the other provisions in Part IV
of the Competition and Consumer Act 2010 (Cth).
Recommendation 52
The Competition and Consumer Act 2010 (Cth) be amended so that the penalties
for breaches of ss 45D, 45DB, 45E and 45EA are the same as those that apply to
other provisions of Part IV of that Act.
Secondary boycotts engaged in for a market sharing purpose
15. The Interim Report considered the application of the cartel provisions
of the Competition and Consumer Act 2010 (Cth) in respect of the
CFMEU’s conduct concerning Boral and concluded that the CFMEU
may have contravened those provisions.
16. Boral, however, submitted that the cartel provisions of the Competition
and Consumer Act 2010 (Cth) should be clarified to remove any
existing doubt that cartel conduct includes breaches of ss 45D and 45E
of the Competition and Consumer Act 2010 (Cth) engaged in for the
12 Australian Government, Response to the Competition Policy Review, 24/11/15, p 30.
363
purpose of determining that a particular competitor or competitors will
or will not supply a particular customer or customers, ie, cartel conduct
would include secondary boycott conduct engaged in for a market
sharing purpose.13 These submissions are addressed in further detail
below.
17. The operation of the current cartel provisions of the Competition and
Consumer Act 2010 (Cth) is complex. The Competition Policy Review
recommended substantial amendments to the current provisions.
Those amendments specifically refer to market allocation conduct as
being cartel conduct, although they do not specifically address the
situation where the market allocation conduct is engaged in by a person
who is not a competitor of the market participants. The overriding
principle expressed in the Harper review, however, was that the cartel
provisions should operate in respect of conduct between competitors.14
18. The Commission received a number of submissions on this topic.
19. The Australian Chamber of Commerce and Industry supported the
inclusion of the secondary boycott prohibitions within the proscription
of cartel conduct. However, it submitted, noting the complexity of the
current provisions and the amendments recommended in the
13 That may involve engagement of other related provisions, for example Competition and Consumer Act 2010 (Cth), s 45DA. 14
Competition Policy Review, Final Report, March 2015, pp 58-59, recommendation 27; pp 363, 365.
364
Competition Policy Review, that care should be taken in drafting the
provisions to avoid the risk of unintended consequences.15
20. Master Builders Australia agreed in principle with such a proposal but
submitted that the design of the prohibition must be carefully crafted to
ensure that it does not affect those who are unknowingly involved in
secondary boycott conduct.16
21. Boral referred to evidence before the Commission to the effect that the
ban imposed by the CFMEU caused an understanding with Boral’s
customers, firstly that they would not acquire concrete from Boral, and
secondly that they would be allocated a particular class of suppliers,
being CFMEU-approved suppliers.17 Boral submitted that an
understanding of this nature is sufficient to engage the cartel provisions
in ss 44ZZRF and 44ZZRG of the Competition and Consumer Act
2010 (Cth). However, it said that to guard against uncertainties around
the competition requirement in s 44ZZRD of the Competition and
Consumer Act 2010 (Cth), the definition of cartel conduct should
expressly include conduct in contravention of ss 45D or 45E of the
Competition and Consumer Act 2010 (Cth), where that conduct can be
shown to be for a market sharing purpose.18 It argued that the relevant
purpose would involve determining that particular competitors will or
will not supply a particular customer or customers (and presumably
vice versa).
15 Australian Chamber of Commerce and Industry Law Reform Submissions, August 2015, p 44. 16
Master Builders Australia Law Reform Submissions, 21/8/15, p 47. 17 Royal Commission into Trade Union Governance and Corruption, Interim Report (2014), Vol 2, ch 8.2, p 1098. 18
Boral Law Reform Submissions, 2015, p 54.
365
22. Boral argued that the advantages of this extension are the increased
penalties available, the ability to impose penalties on individuals, the
possibility of criminal sanctions, the availability of additional
investigative powers in respect of criminal conduct and the immunities
available to parties which will encourage them to come forward.19
23. The ACCC observed that secondary boycott conduct does not
generally involve contracts, arrangements and understandings between
competitors, and hence that the conduct does not readily fit within the
concept of a cartel.20 It may be taken that the ACCC does not
recommend an extension of the cartel conduct proscriptions to embrace
secondary boycott conduct engaged in for a market purpose.
24. However, the ACCC discussed the recommendation in the Competition
Policy Review that a concerted practice prohibition be introduced to s
45 of the Competition and Consumer Act 2010 (Cth) restricting
concerted practices by persons with other persons that have the
purpose, effect or likely effect of substantially lessening competition.21
The Competition Policy Review recommended such a provision in the
context of considering the existence and scope of price signalling
prohibitions, but recommended a provision of more general application
to replace those prohibitions.22 It did not, however, recommend that
the concerted practice provision be included within the cartel
19 Boral Law Reform Submissions, 2015, p 55. 20 Australian Competition & Consumer Commission Law Reform Submissions, undated (received 20/8/15), p 4. 21
Australian Competition & Consumer Commission Law Reform Submissions, undated (received 20/8/15), p 4, citing Competition Policy Review, Final Report, March 2015, p 372, recommendation 29. 22
Competition Policy Review, Final Report, March 2015, pp 370-371, recommendation 29.
366
prohibitions, on the basis that criminal sanctions should be reserved for
contracts, arrangements and understandings between competitors.23
25. The ACCC made a further submission in relation to the scope of
ss 45D, 45DA and 45DB of the Competition and Consumer Act 2010
(Cth), all of which provide for a dual purpose and effect/likely effect
test for the conduct proscribed under those sections. An affected
person must establish that the relevant conduct was ‘engaged in for the
purpose, and would have or be likely to have the effect, of’ causing
substantial loss and damage, causing substantial lessening of
competition, or hindering trade and commerce between Australia and
overseas. The ACCC submits that these provisions create a high
threshold, whereas other provisions in Part IV of the Competition and
Consumer Act 2010 (Cth) require a purpose or effect/likely effect
test.24
26. Examining the question of whether secondary boycott conduct can be
brought within the cartel positions is complicated by the
recommendations of the Competition Policy Review. Substantial
changes to the cartel provisions were recommended to simplify their
language and also to incorporate the exclusionary provisions
legislation to the extent that that is not incorporated in the existing
cartel provisions in the Competition and Consumer Act 2010 (Cth).
23 Competition Policy Review, Final Report, March 2015, p 372, recommendation 29. 24 Australian Competition & Consumer Commission Law Reform Submissions, undated (received 20/8/15), p 7; Section 46 is, of course, one provision which requires the establishment of purpose. Section 45E is another. However, even that provision does not require the establishment of purpose and effect/likely effect.
367
27. The Australian Government, in its response to the Competition Policy
Review, has supported the recommendations in respect of the cartel
conduct provisions.25 Exposure draft legislation is to be developed for
consultation with the public and the states and territories. It is not clear
from the Government’s response whether it adopts the preference in
the Competition Policy Review that the proscriptions on cartel conduct
are to be limited to conduct involving firms who are actual or likely
competitors.
28. What is evident from the legislation proposed in the Competition
Policy Review is that there is a requirement that each of the relevant
cartel provisions in the legislation operate to affect the conduct of one
party to the contract, arrangement or understanding by reference to a
competitor, which must be a competitor of the first party.26 The
secondary boycott provisions do not fit readily into the definition of
cartel conduct, under either the existing or the proposed versions of the
legislation, if the intention is to catch only the arrangement or
understanding between the union and the market participant.
Moreover, it would appear to be contrary to the policy position reached
by the Competition Policy Review.
29. But for the reasons set out in Chapter 8.2 of the Interim Report, there is
no reason why the cartel provisions would not apply to multi-party
arrangements or understandings pursuant to which each of the
competitor parties reached a consensus on the basis of communications
25 Australian Government, Response to the Competition Policy Review, 24/11/15, pp 23-24. 26 See Competition Policy Review, Final Report, March 2015, pp 58-59, recommendation 27; Appendix A, s 45B.
368
with the instigator of the arrangement or understanding.27 In particular,
several of the proposed cartel provisions recommended by the
Competition Policy Review concern matters such as restricting the
output of supply or acquisition, or allocating supply and/or acquisition
within a market, that would catch conduct of the type engaged in by
the CFMEU in relation to the Boral dispute and in the Australian
Capital Territory building industry, affecting as they did a number of
potential customers for the supply of building materials and services.
30. For the purpose of ensuring that arrangements of that nature are caught
by the cartel provisions, it is recommended that it be made explicit in
the legislation that to prove the existence of an arrangement or
understanding, it is not necessary to establish that there be
communication between each of the parties to the arrangement or
understanding, merely that they hold the same understanding. This is
probably already the law, but an amendment would increase clarity. It
would probably be necessary to make an amendment to the same effect
in relation to s 45.
31. A provision mechanism of this kind makes it unnecessary to consider
the alternative suggested by the ACCC concerning the proposed
proscription on concerted conduct.
32. The final matter for consideration is the operation of the purpose and
effect/likely effect test in s 45D(1)(b) of the Competition and
Consumer Act 2010 (Cth). There does not appear to be any principled
27 See Royal Commission into Trade Union Governance and Corruption, Interim Report (2014), Vol 2, ch 8.2, p 1097-1098, citing Australasian Meat Industry Employees Union v Meat & Allied Trades Federation of Australia (1991) 32 FCR 318 at 330.
369
reason why the bar for contravention of that section should be higher.
That is particularly so where there may be no real difference as a
matter of practicality between whether conduct is undertaken for the
relevant purpose and whether it is likely to have such an effect, as
those questions are necessarily interrelated.28 The same reasoning
applies to ss 45DA and 45DB of the Competition and Consumer Act
2010 (Cth).
Recommendation 53
The Competition and Consumer Act 2010 (Cth) be amended to clarify that to
prove the existence of an arrangement or understanding, it is not necessary to
establish that there be communication between each of the parties to the
arrangement or understanding, merely that they hold the same understanding.
Recommendation 54
Sections 45D(1)(b), 45DA(1)(b) and 45DB(1) of the Competition and Consumer
Act 2010 (Cth) be amended to provide that those sections are contravened where
the conduct is engaged in for the purpose, or would have or be likely to have the
effect, of causing the consequence identified in those sections.
Restraint on competitors of secondary boycott target
33. In its submissions to the Commission, Boral argued that the current
secondary boycott provisions were potentially defective in that there
was no specific provision making it unlawful for the competitors of the
28
Tillmanns Butcheries Pty Ltd v Australasian Meat Industry Employees' Union (1979) 42 FLR 331 at 346 per Deane J.
370
‘target’ of a secondary boycott knowingly to supply a product or
service in substitute for a supply by the target. It supported an
amendment to the Competition and Consumer Act 2010 (Cth) so that a
competitor commits an offence if it engages in knowing supply. It says
that a specific offence directed at this conduct will act as a better
deterrent and create clarity and ease of prosecution, and ultimately
operate to destroy the effectiveness of boycott activity.29
34. On one view, there is nothing wrong with competitors of a target
taking advantage of the target’s disadvantaged position caused by the
boycott. Provided the target’s competitors do nothing to encourage or
facilitate the boycott, they should be at liberty to take advantage of
their competitor’s disadvantage. However, at least in some
circumstances a competitor’s decision to supply in substitution for the
target will facilitate the prolongation of the boycott and have an anti-competitive purpose. For example, in order to ensure the boycott
remains for as long as possible the competitor may increase production
to fill additional orders from acquirers who are ordinarily accustomed
to acquire goods from the target, or reduce its prices to secure
customers. In some circumstances such conduct could involve a
misuse of market power, but not invariably.
35. The ACCC did not support the extension of the secondary boycott
provisions to capture indirect involvement in a contravention by a
competitor of the target.30 In its view, the effect of ss 75B and 76 of
the Competition and Consumer Act 2010 (Cth) is that third parties that
29 Boral Law Reform Submissions, 2015, pp 63-64. 30 Australian Competition & Consumer Commission Law Reform Submissions, undated (received 20/8/15), p 4.
371
are knowingly concerned in or a party to anti-competitive conduct are
currently within the scope of the Part IV contraventions.31
36. The Australian Chamber of Commerce and Industry advocated the
middle ground. It makes the point that the conduct that is sought to be
addressed involves the application of considerable duress upon the
parties involved. While conduct of third parties perpetuating the
conduct of the unions in this regard is to be condemned, care should be
taken to foster behaviour that sees such conduct reported to the
regulator, and that the focus should be on encouraging competitors to
come forward with evidence of boycott conduct, rather than
discouraging them.32 The Australian Chamber of Commerce and
Industry therefore supported a recommendation that would see persons
in competition with a secondary boycott target being prevented from
knowing supply unless they have notified the ACCC of their
knowledge of the boycott.33
37. Master Builders Australia also favoured this option. It says that a
notification requirement will cause the least operational disruption but
will provide the ACCC with information on which it may take action.34
38. In considering this issue it is necessary to seek to strike a balance
between ensuring that market participants are not unduly restricted in
31 Australian Competition & Consumer Commission Law Reform Submissions, undated (received 20/8/15), p 4. 32
Australian Chamber of Commerce and Industry Law Reform Submissions, August 2015, p 46. 33 Australian Chamber of Commerce and Industry Law Reform Submissions, August 2015, p 47. 34
Master Builders Australia Law Reform Submissions, 21/8/15, p 47.
372
the market, and ensuring that union conduct that is fundamentally
destructive to competition is not allowed to proceed unhindered. The
Commission is not aware of any evidence of competitors of a boycott
target actively assisting in the perpetuation of the boycott. In the
absence of knowing involvement and assistance in boycott conduct by
a competitor within the meaning of s 75B of the Competition and
Consumer Act 2010 (Cth), there is no real warrant for introducing a
penalty on competitors for conduct that falls short of the requirements
of that section.
39. However, to require a competitor with knowledge of the existence of a
boycott to notify the relevant regulator before trading brings clear
investigative benefits. Additionally, the knowledge that the competitor
must notify before there can be any supply or acquisition offers
protection against any reprisals for reporting the conduct.
Accordingly, the second option strikes the right balance.
Contravention of such a provision should be a civil penalty provision.
In order to make out a contravention, it should be necessary to prove
that the competitor was aware of all of the elements of the primary
boycott contravention,35 and engaged in a transaction with that
knowledge and while the contravention was proceeding.
35 Yorke v Lucas (1985) 158 CLR 661.
373
Recommendation 55
The Competition and Consumer Act 2010 (Cth) be amended to provide that a
person in competition with the fourth person referred to in ss 45D or 45DA must
not knowingly engage in supply or acquisition of services to or from any third
persons referred to in those sections with knowledge of the contravention by the
first and second persons without first notifying the Australian Competition and
Consumer Commission. Contravention of the provision should be a civil
penalty provision.
General obligation to report boycott activity?
40. A number of submissions argued that there should be a broader
obligation to report secondary boycott activity.
41. The Australian Chamber of Commerce and Industry recommended
imposing a positive obligation to report secondary boycott behaviour
on persons approached to enter into an agreement arrangement or
understanding that contravenes ss 45D or 45E of the Competition and
Consumer Act 2010 (Cth).36
42. Boral made a similar submission in relation to both competitors and
suppliers/customers that are involved in secondary boycott activity.37
It submitted that, over the course of the ban on its products, Boral’s
customers likely feared repercussions if they were seen to be acting
36 Australian Chamber of Commerce and Industry Law Reform Submissions, August 2015, p 46. 37
Boral Law Reform Submissions, 2015, pp 63-64.
374
against the CFMEU.38 It argued that there should be direct obligations
and consequences for industry participants that fail to provide evidence
to the ACCC, subjecting those who fail to report secondary boycott
conduct to the same civil penalties as those that are involved in
contraventions of Part IV of the Competition and Consumer Act 2010
(Cth).
43. Boral contended that such an obligation would be consistent with the
policy approach adopted in other areas of Australian law where
conduct is difficult to detect by conventional law enforcement means,
such as the obligation on market participants to report suspected
breaches of the Australian Securities Exchange market integrity rules,39
or the obligation to report suspicious transactions to Australian
Transaction Reports and Analysis Centre under s 41 of the Anti-Money
Laundering and Counter-Terrorism Financing Act 2006 (Cth).40
44. Further, Boral submitted that encouragement could also be offered to
market participants to whom threats are made to participate in
secondary boycotts if the immunity policy presently implemented by
the ACCC for cartel conduct were extended to secondary boycotts.41
38 Boral Law Reform Submissions, 2015 (received 27/8/15), pp 56-58. 39 ASIC Market Integrity Rules (ASX Market) 2010 (Cth), rule 5.11.1, penalty for breach of which is $20,000. 40
Boral Law Reform Submissions, 2015 (received 27/8/15), pp 59-60. The maximum penalty for contravention of s 41 of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) is $100,000 for a body corporate and $20,000 for a person other than a body corporate: s 175(4) and (5). 41
Boral Law Reform Submissions, 2015 (received 27/8/15), pp 60-62.
375
45. It is not recommended that a general obligation to report secondary
boycott activity be imposed for these reasons.
(a) In relation to individuals who are suppliers/customers and are
involved in the boycott, such persons are already likely to be
liable under s 45E of the Competition and Consumer Code
Act 2010 (Cth). Imposing a reporting obligation on them is
unlikely to have much effect. However, owing to the
difficulties of investigation in relation to secondary boycott
conduct, consideration might usefully be given by the ACCC
as to whether its immunity policy should extend to secondary
boycott conduct.
(b) In relation to individuals who are suppliers/customers who are
approached but refuse to be involved in a boycott, imposing a
penalty on them unless they report the boycott is a
disproportionate and potentially unfair result.
(c) The previous recommendation deals with competitors who
have knowledge of the boycott.
376
Recommendation 56
The Australian Competition and Consumer Commission give consideration to
whether its immunity policy in respect of the cartel provisions could usefully be
extended to secondary boycott conduct and conduct indirectly leading to a
secondary boycott.
Appropriate regulator
46. A final problem with the current regulatory regime is that the ACCC’s
record of prosecuting breaches of the secondary boycott provisions is
not extensive when compared with other contraventions of Part IV of
the Competition and Consumer Act 2010 (Cth).
47. One of the recommendations of the Harper Review was that the ACCC
should pursue secondary boycott cases with increased vigour:42
Some industry organisations, especially in building, construction and mining, believe that public enforcement of the secondary boycott provisions is inadequate, a point emphasised in the Interim Report of the Royal Commission into Trade Union Governance and Corruption. Timely and effective public enforcement serves as a deterrent to boycott activity and needs to exist both in regulatory culture and capability. The Panel believes that the ACCC should pursue secondary boycott cases with increased vigour, comparable to that which it applies in pursuing other contraventions of the competition law.
48. The Australian Government, in its response to the Harper review,
supported this recommendation.43
42 Competition Policy Review, Final Report, March 2015, p 67. 43 Australian Government, Response to the Competition Policy Review, 24/11/15, p 29.
377
49. As adverted to in the Interim Report, there may be a number of root
causes for lack of enforcement.44 They might include difficulties in
obtaining documentary evidence, lack of co-operation of witnesses
who may fear repercussions from giving evidence, the potential
overlap between the roles of a number of regulators and difficulties in
ensuring compliance with court orders made in relation to secondary
boycott conduct. Whatever the causes, the fact is that many secondary
boycotts arise in the industrial relations sphere and involve trade
unions. The ACCC may not be the best placed, or best resourced,
institution to investigate such contraventions.
50. The Commission received a number of submissions in response to the
Discussion Paper advocating the view that the building and
construction industry regulator be given concurrent jurisdiction in
relation to the investigation of boycott conduct.45
51. In particular, Boral argued that enforcement of the secondary boycott
provisions requires a regulator with industrial expertise and a proactive
approach to investigation of anti-competitive union conduct within the
building and construction industry.46 Boral agreed with Master
Builders Australia that, because secondary boycott conduct is often
accompanied by other unlawful conduct such as coercion and adverse
action in breach of the FW Act, it is practical and appropriate for there
44 Royal Commission into Trade Union Governance and Corruption, Interim Report (2014), Vol 2, ch 8.2, p 1107. 45
Australian Industry Group Law Reform Submissions, 21/8/15, pp 13-14; Australian Chamber of Commerce and Industry Law Reform Submissions, August 2015, p 47; Boral Law Reform Submissions, 2015, pp 65-67; Master Builders Australia Law Reform Submissions, 21/8/15, p 48. 46
Boral Law Reform Submissions, 2015, p 65.
378
to be means of investigating and enforcing all contraventions by the
same regulator.47 Master Builders Australia submitted that the
building industry regulator should have concurrent jurisdiction with the
ACCC as this will assist with timely enforcement and enable material
gathered in the course of a building industry investigation to be used in
relation to a range of contraventions. It submitted that the jurisdiction
of the building industry regulator should be confined to secondary
boycott conduct within the definition of ‘building work’ under the
proposed Building and Construction Industry (Improving Productivity)
Bill 2013 (Cth).48
52. The ACCC did not make a submission on whether it should remain as
the role regulator charged with enforcement of the secondary boycott
provisions. However, it submitted that secondary boycott and anti-competitive conduct are ‘enforcement priorities’ for the ACCC.49 It
pointed to the impediments to gathering evidence in relation to
contraventions of the secondary boycott provisions.50 It suggested a
number of improvements to its investigative powers, which
suggestions are considered in Chapter 8 of this Volume.
53. It has not been suggested that the ACCC should share its jurisdiction in
relation to secondary boycott conduct with the Fair Work regulators in
general. Nor is there any evidence suggesting that that is necessary.
However, there is evidence that the building and construction industry
47 Boral Law Reform Submissions, 2015, p 67. 48 Master Builders Australia Law Reform Submissions, 21/8/15, p 48. 49
Australian Competition & Consumer Commission Law Reform Submissions, undated (received 20/8/15), p 5. 50 Australian Competition & Consumer Commission Law Reform Submissions, undated (received 20/8/15), p 5.
379
requires more active regulation in relation to secondary boycotts, as it
does in relation to many other instances of unlawful conduct. The need
for a separate regulator is addressed in Chapter 8 of this Volume.
54. There are two arguments supporting a grant to the ACCC and the
proposed ABCC of concurrent power over secondary boycott conduct
in relation to building and construction.
(a) First, the ACCC does not appear to be well resourced to address
secondary boycott conduct. Much of the impediment appears to
arise from there being very few reports of boycott conduct made
to the ACCC, and difficulties in investigation.
(b) Secondly, the ABCC would be well placed to deal with boycott
conduct that occurs primarily in the building and construction
industry, because of its specialist involvement in that industry,
and because boycott conduct often involves, or is accompanied
by, conduct that contravenes the FW Act and other related
legislation that is not within the jurisdiction of the ACCC.
55. The latter consideration is a powerful one. There are obvious
efficiencies in a single regulator investigating and prosecuting a
number of contraventions arising from the one course of conduct.
Moreover, it is likely that in the course of investigating other, readily
apparent conduct such as blockades or right of entry contraventions,
boycott conduct might come to light. That is an advantage that the
ACCC would not have.
56. The Productivity Commission in its draft report concerning the
Workplace Relations Framework gave preliminary support to the
380
shared regulatory approach. However, it suggested that while both the
building and construction regulator and the ACCC should have
investigatory functions, the ACCC should retain the enforcement
function.51 It reserved its position pending receipt of further
submissions. For the reasons set out above, it will often occur that
secondary boycott conduct coincides with contraventions of the
FW Act and other industrial laws. To that end, it would seem to
promote efficiency for the building industry regulator to have
responsibility for enforcement of secondary boycott contraventions
within the scope of its jurisdiction.
57. By the same token, it is necessary for the ACCC to have concurrent
power, both because of its expertise in investigating breaches of
competition laws and because of the prospect of boycott provisions
occurring outside of the building industry jurisdiction of the ABCC.
Cooperation and consultation between the two regulators would
obviously be necessary.
58. Finally, the recommendation in the Competition Policy Review that the
ACCC report on complaints, investigations and outcomes of secondary
boycott activity is sensible, particularly as it will enable continued
monitoring of what, if any, changes are necessary to the ACCC’s
investigatory powers.
51 Productivity Commission Inquiry into the Workplace Relations Framework, Draft Report, August 2015, pp 781-3.
381
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60. On its face, the exclusion is very broad. The policy rationale for
excluding conduct in the labour market from the operation of
competition laws is that the particular features of the labour market,
and in particular the traditional inequality of bargaining power as
between employers and employees, warrant permitting what is prima
facie anti-competitive conduct to avoid undesirable consequences such
as wage suppression, poor workplace health and safety and insecurity
of contract.
61. However, in light of the case studies identified above, in which
enterprise agreements included provisions that were likely to offend
ss 45E and 45EA, or s 47, or the cartel provisions in Part IV of the
Competition and Consumer Act 2010 (Cth), it is necessary to consider
whether such conduct should be exempted from the operation of that
Act. The policy justification for permitting price fixing, third line
forcing or other exclusive dealing in the context of an enterprise
agreement, particularly when there is only an indirect relationship
between that conduct and the terms and conditions of employment of
union members, is not readily apparent.
62. There are two main issues:
(a) Should s 51(2)(a) or other provisions of the Competition and
Consumer Act 2010 (Cth) be amended?
(b) Alternatively, should provision be made in the FW Act
precluding anti-competitive arrangements in the context of
enterprise agreements?
383
Discussion
63. As noted in Chapter 6.6 of Volume 3, the scope of s 51(2)(a) is
uncertain. A great deal of that uncertainty has been created by the
decision of the Full Court of the Federal Court in Australian Industry
Group v Fair Work Australia52 which held that an enterprise agreement
is not a contract, arrangement or understanding within the meaning of
the Competition and Consumer Act 2010 (Cth), and therefore is not
capable of offending s 45E of the Act.53
64. Much of that reasoning rests on the notion that as a creature of statute,
an enterprise agreement is not a consensual arrangement of the type
comprehended by the Competition and Consumer Act 2010 (Cth),54
and in any event, not one with an organisation of employees for the
purposes of s 45E. Presumably this is because, as a single or multi-enterprise agreement, the agreement applies to an organisation where
the organisation is covered by the agreement,55 but the agreement itself
is made between the employer and employees.56
65. There is an obvious superficiality to those conclusions, which were not
the product of detailed reasons (or in fact any reasons other than mere
assertion), when regard is had to the fact that an enterprise agreement
52 (2012) 205 FCR 339. 53 Australian Industry Group v Fair Work Australia (2012) 205 FCR 339 at [72]. 54
Australian Industry Group v Fair Work Australia (2012) 205 FCR 339 at [22]-[23]. 55 Fair Work Act 2009 (Cth), ss 52(1), 53(2), 201(2). 56
Fair Work Act 2009 (Cth), ss 172(2)(a), 172(3)(a). That reasoning does not apply to greenfields agreements, which must be between the employer and the union: ss 172(2)(b), (3)(b).
384
is the product of bargaining, employee organisations are commonly
bargaining representatives in negotiating such agreements, an
enterprise agreement operates to bind employee organisations covered
by it, and an enterprise agreement can contain terms governing the
relationship between employers and employee organisations.57
66. Further, applying the reasoning of the Full Court to s 51(2)(a) would
appear to narrow significantly the scope of the provision in an
unsatisfactory manner: if enterprise agreements are not contracts,
arrangements or understandings for the purposes of the Competition
and Consumer Act 2010 (Cth), the exception would not apply to them
notwithstanding that they relate to the remuneration, conditions of
employment, hours of work or working conditions of employees.
67. An alternative reading of s 51(2)(a) is that it operates in respect of ‘any
act done in relation to … the remuneration, conditions of employment,
hours of work or working conditions of employees’ regardless of
whether those acts relate to a contract, arrangement or understanding as
defined in the Competition and Consumer Act 2010 (Cth). On that
reading, s 51(2)(a) would apply to conduct leading to the inclusion of
terms in an enterprise agreement, provided the inclusion could be said
to be in relation to remuneration etc. However, as noted in Chapter 6.6
of Volume 3, a weakness in this argument is that in relation to the prior
version of s 51(2)(a) a majority of the Full Court of the Federal Court
held that the phrase ‘act done’ had a limited meaning and did not
include an act such an entering into an agreement.58 It was as a result
57 Fair Work Act 2009 (Cth), ss 51, 52, 53, 172(1)(b). 58 Ausfield Pty Ltd v Leyland Motor Corp of Australia Ltd (1977) 30 FLR 477 at 481-482.
385
of this decision that s 51(2)(a) was amended to make specific reference
to a ‘contract, arrangement or understanding’.
68. Further, the Full Court of the Federal Court in Adamson v New South
Wales Rugby League Club Limited59 suggested that the section is
limited to contracts, arrangements or understandings pertaining to
employment conditions. At first instance, Hill J had concluded that the
provision was directed at agreements or arrangements or acts done in
relation to them, but only to the extent that those agreements or
arrangements or provisions in them relate to employee conditions.’60
69. The Competition Policy Review considered that s 51(2)(a) was
problematic insofar as it removed from the operation of Part IV
provisions in awards and enterprise agreements that place restrictions
on employers engaging contract labour or on acquiring identified
goods or non-labour services. The Competition Policy Review
recommended that ss 45E and 45EA should be amended so that they
expressly apply to awards and industrial agreements, except to the
extent they deal with the remuneration, conditions of employment,
hours of work or working conditions of employees.61 It was accepted
that the addition of the qualifier would necessitate amendment to
s 51(2)(a). The Australian Government noted this recommendation, on
the basis that it was presently being considered as part of the
59 (1991) 31 FCR 242 at 263. 60 Adamson v New South Wales Rugby League Ltd (1991) 27 FCR 535 at 551. 61
Competition Policy Review, Final Report, March 2015, p 69, recommendation 37.
386
Productivity Commission Review of the Workplace Relations
Framework.62
70. For its part, the Productivity Commission has released a draft report in
its inquiry into the Workplace Relations Framework. At a broad level,
the draft report adhered to the notion that the industrial relations
system should be separate from competition regulation, for reasons of
efficiency as well as policy: the burden of subsuming employment
agreements and arrangements within the notification and authorisation
provisions of the Competition and Consumer Act 2010 (Cth) would
create significant compliance costs.63 The Productivity Commission
observed:64
While the Productivity Commission considers that the reach of competition laws should not be further expanded into the employment space, there is a case for increasing the prominence of competition policy principles in the framework of the WR system itself. Exclusion from competition laws should not preclude WR regulation being informed by principles of competition and efficiency — especially as this would also improve the consistency of regulations across labour and product markets, while still remaining separate. … A standalone WR framework that holistically accommodates these competing goals is preferable to a chimeric approach that attempts to shoehorn provisions from the CCA into WR issues.
71. Addressing the proposal of the Competition Policy Review that the
scope of ss 45E and 45EA be extended to include awards and
enterprise agreements, the Productivity Commission expressed the
preliminary view that concerns related to competitive constraints
imposed by enterprise agreements are better addressed by the
62 Australian Government, Response to the Competition Policy Review, 24/11/15, p 30. 63 Productivity Commission Inquiry into the Workplace Relations Framework: Draft Report August 2015, pp 776-777. 64
Productivity Commission Inquiry into the Workplace Relations Framework, Draft Report August 2015, p 778.
387
mechanism of ss 186(4) and 194 of the FW Act which precludes
approval of an EBA that contains an unlawful term. It considered that
broader alterations such as amendments of the Competition and
Consumer Act 2010 (Cth) could create unintended consequences,65 and
would require the ACCC to involve itself in the workplace relations
system which could lead to unnecessary duplication.66
Conclusions
72. There is force to the views expressed by the Productivity Commission
insofar as it suggests that conduct in relation to enterprise bargaining
which has an anti-competitive effect or purpose is often more easily
dealt with in the FW Act. Ordinarily, particular anti-competitive
practices can be outlawed more easily, and with a lower risk of
unintended consequences, by amending s 194 of the FW Act to make
certain anti-competitive terms unlawful. The effect would be to
prevent such terms from being included in enterprise agreements.
73. One such example is the draft recommendation of the Productivity
Commission that terms that restrict the engagement of independent
contractors, labour hire and casual workers, or regulate the terms of
their engagement, should constitute unlawful terms under the
65 Productivity Commission Inquiry into the Workplace Relations Framework, Draft Report August 2015, p 779. 66
Productivity Commission Inquiry into the Workplace Relations Framework, Draft Report August 2015, p 780.
388
FW Act.67 The CFMEU ACT cases studies highlighted the anti-competitive nature of these clauses.
74. However, as a consequence of the decision in Australian Industry
Group v Fair Work Australia68 the interplay between competition law
and industrial relations laws is now unclear. It is necessary for
legislation to clarify that interaction.
75. It is considered that the simplest solution is simply to reverse the effect
of the decision, and to amend the Competition and Consumer Act 2010
(Cth) to make explicit that:
(a) an enterprise agreement under the FW Act is a contract,
arrangement or understanding for the purposes of the
Competition and Consumer Act 2010 (Cth); and
(b) an enterprise agreement that applies to an employer and an
employee organisation under the FW Act is a contract,
arrangement or understanding that an employer has with the
organisation of employees for the purposes of s 45E of the
Competition and Consumer Act 2010 (Cth).
76. This largely mirrors the approach suggested in the Competition Policy
Review, although it does not recommend any changes to s 51(2)(a)
itself on the ground that the legislature has already determined that
67 Productivity Commission Inquiry into the Workplace Relations Framework, Draft Report, August 2015, p 733. 68
(2012) 205 FCR 339.
389
conduct in contravention of s 45E is not subject to the exclusion in
s 51(2)(a).
Recommendation 59
The Competition and Consumer Act 2010 (Cth) be amended to make explicit that:
(a) an enterprise agreement under the Fair Work Act 2009 (Cth) is a
contract, arrangement or understanding for the purposes of the
Competition and Consumer Act 2010 (Cth); and
(b) an enterprise agreement that applies to an employer and an employee
organisation under the Fair Work Act 2009 (Cth) is a contract,
arrangement or understanding that an employer has with the
organisation of employees for the purposes of s 45E of the Competition
and Consumer Act 2010 (Cth).
390
CHAPTER 8
BUILDING AND CONSTRUCTION
Subject Paragraph
A - INTRODUCTION 1
B - THE CFMEU 5
Deregistration of the CFMEU 25
Legislative disqualification of officers 39
C - BACKGROUND TO THE AUSTRALIAN BUILDING
AND CONSTRUCTION COMMISSION
45
The Cole Royal Commission 48
The Building and Construction Industry Improvement Act 2005
(Cth)
50
Changes by the Labor Government 55
The proposed return to the ABCC 63
Office of the Fair Work Ombudsman and Fair Work Inspectors 67
391
Subject Paragraph
D - A SEPARATE, INDUSTRY SPECIFIC, REGULATOR 69
Introduction 69
Submissions opposing a separate regulator 72
Consideration 82
Conclusions 109
E - COMPULSORY INVESTIGATORY AND
INFORMATION GATHERING POWERS
113
Introduction 113
Compulsory examination powers of other regulators 117
Submissions 130
Assessment 143
F - INDUSTRY SPECIFIC INDUSTRIAL LAWS 156
Issues 156
Submissions 176
Conclusions 185
G - RICO 193
What is RICO? 194
392
Subject
Adoption
APPEND
INDUST
A - INTR
1.
2.
1 Report, V Interim Rep 2
Royal Co
n in Australia
DIX A - BUI
TRY LITIGA
RODUCTIO
A great dea
activities of
construction
Mining and
discloses sys
payments, ph
right of entr
and contemp
The issues
identified in
over the pas
Gyles Royal
2003. The
payments a
Vols 3 and 4; eport (2014), V
ommission into
a?
ILDING & C
ATION
ON
al of the evi
f unions wit
industry, a
Energy Unio
stemic corrup
hysical and v
ry permits, se
pt of court.1
identified a
n reports of t
st 40 years: t
l Commission
Winneke R
and bribes b
Royal Commi Vol 2, ch 8.
o the Building a
CONSTRUC
dence before
th coverage
and in partic
on (CFMEU
ption and un
verbal violen
econdary boy
are not new
three separat
the Winneke
n in 1992 an
Royal Comm
being taken
ission into Tra
and Constructi
CTION
e the Comm
of workers
cular the Co
U). The cond
nlawful condu
nce, threats, i
ycotts, breac
w. The sam
te Royal Com
e Royal Com
nd the Cole R
mission foun
n by memb
ade Union Gov
on Industry, F
Pa
mission conce
in the buil
onstruction,
duct that has
duct, includin
intimidation,
ches of fiduc
me issues ha
mmissions c
mmission in
Royal Comm
nd numerou
ers of the
vernance and C
Final Report (20
aragraph
201
erned the
lding and
Forestry,
s emerged
ng corrupt
, abuse of
ciary duty
ave been
conducted
1982, the
mission2 in
s corrupt
Builders
Corruption,
003).
393
3.
4.
3 Royal Co and Builde 4
Royal Co of the Hear 5
Royal C Vol 1, pp 5 6
See paras 7 See paras
Labourers F
widespread i
South Wale
improper and
similar findin
The continu
during the C
regulation of
The remaind
Par (a)
der
dea
Par (b)
hist
con
Par (c)
of
ind
ommission into ers’ Labourers’
ommission into rings Part II: I
Commission in 5-17.
s 5-44.
s 45-68.
Federation (B
illegal behav
es, including
d irregular p
ngs but not li
uing corrupti
Commission
f the building
der of the Ch
rt B deals
registered, a
aling with its
rt C provide
tory concer
nstruction ind
rt D addresse
a separate
dustry.8
o the Activities Federation, R
o Productivity Illegal Activitie
to the Buildin
BLF).3 The
viour within
g theft, ext
ayments.4 T
imited to New
ion and law
suggests a
g and constru
hapter is div
with the C
and other a
culture.6
es a brief ov
rning the r
dustry.7
es the argum
regulator fo
s of the Austra eport (1982), p
in the Building es (1992), Vol
ng and Constr
Gyles Roya
the construc
tortion, secr
The Cole Roy
w South Wal
wlessness tha
need to rev
uction industr
ided into six
CFMEU, wh
available leg
verview of t
egulation o
ments for and
or the buildi
lian Building C pp 31-36, 246-g Industry in N 4.
ruction Industr
al Commissi
ction industry
ret commiss
yal Commiss
les.5
at has been
visit, once a
ry.
x parts.
hether it sh
gislative opt
the recent l
of the build
d against the
ing and con
Construction E 251, 274-275.
New South Wa
ry, Final Repo
ion found
y in New
ions and
sion made
revealed
again, the
hould be
tions for
egislative
ding and
existence
nstruction
Employees’
ales, Report
ort (2003),
394
B - THE
5.
6.
8 See paras 9 See paras 10
See para 11 Racketee 12
See para 13 Royal C Vol 2, pt 8 14
Royal C Vol 2, ch 8
Par (d)
pow
bui
Par (e)
nec
Par (f)
sim
Org
E CFMEU
The activitie
Chapters in
Report.13 It
In the Interim
The ev number disrega
s 69-112.
s 113-155.
as 156-193.
er Influenced a
as 194-210.
Commission int .
Commission int 8.1, p 1008.
rt E considers
wers should b
lding and con
rt F addresse
cessary for th
rt G deals w
milar to the U
ganizations A
es of the CF
this Report
is appropriat
m Report the
vidence in rela r of CFMEU o ard for the rule
and Corrupt Or
to Trade Union
to Trade Union
s what inform
be available
nstruction in
s whether in
he building an
with proposal
United States R
Act,11 commo
FMEU have
(see Volum
te to make m
following co
ation to the C officials seek to of law.
rganizations A
n Governance a
n Governance a
mation gather
to the regul
ndustry.9
ndustry specif
nd constructi
ls to introdu
Racketeer Inf
only known a
been exam
mes 3 and 4
more detailed
omments wer
CFMEU case o conduct their
ct, 18 USC §§
and Corruption
and Corruption
ring and inve
lator in relati
fic industrial
ion industry.1
uce laws to
nfluenced and
as RICO.12
mined in man
4) and in the
comments he
re made:14
studies indica r affairs with a
1961-1968.
n, Interim Rep
n, Interim Rep
estigatory
ion to the
l laws are 10
Australia
d Corrupt
ny of the
e Interim
ere.
ates that a
a deliberate
port (2014),
port (2014),
395
7.
8.
L
9.
10.
That ev culture
(a)
(b)
(c)
The case s
conclusions.
The evidenc
or its offic
including th
Crimes Act
Law Consol
the Charitab
Policy Refor
The conduc
occurrence.
potential crim
officials of d
Nor is th
unrepresenta
Commission
taken agains
laws and con
vidence is sugg within the CFM
the law is t irrelevance, of particular
officials pre union;
the reputatio become the s
tudies consi
ce has reveal
ers against
e Criminal C
1958 (Vic),
idation Act
ble Fundrais
rm (Victoria)
ct identified
As the list
minal offenc
different bran
e conduct
ative. Appen
n staff provi
st building in
ntempt in the
gestive of the e MEU, under w
to be deliberat where it stands officials;
fer to lie rathe
ons of those w subjects of bas
idered in th
ed possible c
numerous p
Code (Cth),
the Crimina
1935 (SA), t
sing Act 19
Act 1995 (V
d in the C
in the previo
ces against n
nches across A
revealed
ndix A to th
iding details
ndustry parti
e period from
existence of a which:
tely evaded, o s in the way of
er than reveal
who speak out seless slurs and
his Report o
criminal offe
provisions o
the Crimes A
al Code 1899
the Corpora
991 (NSW)
Vic).
Commission
ous paragrap
numerous law
Australia.
in the Co
his Chapter i
s of 147 su
icipants for b
m 2000-2015
pervasive and
or crashed thro f achieving the
the truth and
about union w d vilification.
only reinfor
ences by the
of numerous
Act 1900 (N
9 (Qld), the
tions Act 20
and the Co
is not an
ph reveals, it
ws. It involv
ommission’s
s a table pre
uccessful pro
breaches of
5. In part, it
d unhealthy
ough as an e objectives
betray the
wrongdoing
rce those
e CFMEU
s statutes
NSW), the
Criminal
001 (Cth),
ompetition
isolated
t involves
ves senior
hearing
epared by
oceedings
industrial
t is based
396
11.
12.
13.
15 See, e.g. 75 at [76] Constructi Tracey J; D 672; Direc [20] per Fl 16
Master Officials, A
on a regular
the Fair W
provided to
appropriate p
law by build
schedule att
Master Build
In an atte
supplemente
Of course, it
relevant deci
However, it
CFMEU and
findings of b
officials. It
and construc
Numerous ju
the law by th
., Director of t ] per White J on, Forestry, Director of th ctor of the Fair
lick J.
Builders Austr Attachment A,
rly updated s
Work Buildin
the Federal
penalty to im
ding industry
tached to sub
ders Australia
empt to be
ed those sche
t is not poss
ision.
does paint
d its official
breaches of t
points to bo
ction industry
udges have c
he CFMEU a
the Fair Work J; Director of Mining and E e Fair Work B r Work Buildin
ralia, Submiss 11/7/2014.
schedule of c
ng Industry
l Court for
mpose in relat
y participant
bmissions to
a.16
e comprehen
edules with o
ible to asser
a picture o
l s. Of the 1
the law or c
oth repeated
y, and by the
commented o
and its disreg
Building Inspe f the Fair W Energy Union Building Indus
ng Inspectorate
sion in respons
cases prepare
Inspectorate
the purpose
tion to contra
s.15 It is als
o the Comm
nsive, Com
other publicly
t that Appen
f repeated c
147 cases in
ourt orders b
unlawful co
CFMEU in p
on the repea
ard for the la
ectorate v Step Work Building (No 2) [2015] stry Inspectora
e v Bragdon (N
se to Issues P
ed by the D
e that is c
s of determ
aventions of
so based on
mission receiv
mmission sta
y available d
ndix A captu
contravention
the list, 109
by the CFME
onduct in the
particular.
ated contrave
aw.
phenson (2014) Industry Insp ] FCA 407 at ate v Upton [2 No 2) [2015] F
aper 2: Duties
irector of
ommonly
mining the
industrial
a similar
ved from
aff have
decisions.
ures every
ns by the
9 involve
EU or its
e building
entions of
) 146 ALD pectorate v t [104] per 2015] FCA FCA 998 at
s of Union
397
14.
15.
16.
17 Director Energy Un 18
Director per Burnet 19 Director 75 at [76]-20
Director and Energy
The concept
the CFMEU
the union:18
There i its ideo has an The on does no activity
Another has
The Di has be legislat
Since 1 numero contrav CFMEU the exe
Yet another h
The pat been th schedul than th bespeak become
r, Fair Work B nion (No 2) [20
r, Fair Work B tt J.
r of the Fair W [77] per White
r of Fair Work y Union [2015
t of the rule
U.17 One judg
is ample evide ological fellow extensive hist ly reasonable c
ot understand o y imposed by th
observed:19
rector provide een dealt with tion. It is fair t
1999, the CFM ous occasions. ventions. … Th U to complian
rcise of rights
has stated:20
ttern of contrav he subject of co le paints, one w at. I am bound
ks an organisat e normalised.
Building Industr 015] FCA 407 a
Building Indus
Work Building e J.
k Building Ind ] FCA 1173 at
of law has b
ge has made
ence of signific w travellers. Th tory of contrav conclusion to b
or does not car he legislature a
d a schedule o h by courts
to describe the
MEU has had p . Many of th
he record indic nce with the req of entry.
vention which omment by the would have to d to say that t
tional culture i
ry Inspectorate at [103] per Tr
stry Inspectora
Industry Inspe
dustry Inspecto t [29] per Jessu
been describ
the followin
cant contraven he CFMEU, a ventions datin be drawn is th re for the legal and the courts.
of the occasion for non-contr CFMEU recor
penalties impo he court decis cates an attitud quirements of
emerges from e court on a nu say, a depressi the conduct ref
n which contra
e v Constructio racey J.
ate v Myles [20
ectorate v Step
orate v Constr up J.
ed as an ana
ng observatio
ntion by the CF as a holistic or ng back to at l hat the organisa
restrictions on
ns on which th raventions of rd as dismal.
osed on it by sions involved de of indiffere the legislation
m material such number of occa ing picture. Bu ferred to in th
aventions of th
on, Forestry, M
014] FCCA 14
phenson (2014)
ruction, Forest
athema to
ons about
FMEU and rganisation, least 1999. ation either
n industrial
he CFMEU f industrial
a court on d multiple ence by the n regarding
as this has asions. The ut it is more he schedule he law have
Mining and
429 at [45]
) 146 ALD
try, Mining
398
17.
18.
19.
21 A & L S 466 at [1
Constructi Tracey J; W (2009) 182 Energy Un JJ; Cozadin at [18] per Director, F Energy Un Inspectora per Gordon 1243 at [4 McDonald Mining an Director of Energy Un Industry In at [58]-[59 [2015] FCA 22
Product Vol 2, p 53 23
See fo
Constructi Work Build Work Bui Constructo (2014) 241 1380; Dire
There are m
dismal recor
In 2014, the
proceedings
2005, disclo
unions, and o
Apart from
numerous su
for breaches
Silvestri Pty Ltd 13]-[14] per G on, Forestry, Williams v Con
2 IR 327 (FCA nion & Ors (20 nos v Construc r Reithmuller
Fair Work Bui nion [2013] FC ate v Construct n J; Cozadinos
43] per Tracey d [2013] FCA 1 nd Energy Uni f Fair Work B
nion [2015] FC nspectorate v C 9] per Tracey A 614 at [22],
tivity Commis 30.
or example: D on, Forestry, M ding Industry I lding Industry ors (Victoria) P 1 IR 288; Broo
ector of the Fa
many other s
rd of complia
Productivity
brought by t
sing 169 pro
of those 108
non-compli
uccessful pro
of court ord
d v Constructio Gyles J and
Mining and E nstruction, For A) at [29] per Je 009) 189 IR 14
ction, Forestry, FM; Hogan v ilding Industry CA 846 at [35 tion, Forestry,
s v Constructio y J; Director 1431 at [73] pe ion & Ors (No
uilding Industr CA 353 at [96 Construction, F J; Director, F
[27] per Logan
sion Inquiry i
Director of t Mining and E Inspectorate v y Inspectorate Pty Ltd v Cons okfield Multiple
air Work Build
tatements of
ance with ind
y Commissio
the relevant
oceedings, 13
were brough
ance with i
oceedings ag
ders or conte
on, Forestry, M the cases re Energy Union restry, Mining
essup J; Draffin 45 (FCA) at [9 , Mining and E v Jarvis [2012]
y Inspectorate 5] per Collier Mining and E on, Forestry, M
of the Fair W er Barker J; G o 2) (2014) 24 ry Inspectorate
]-[97] per Tra Forestry, Minin Fair Work Buil n J.
into Public In
the Fair Wor Energy Union [ Cartledge [20 e v Cartledge
struction, Fore ex FSH Contra ding Industry
f judges reco
dustrial laws.2
n recorded a
building ind
31 of which
ht against the
industrial law
gainst the CF
empt of court
Mining and En ferred to ther (2008) 177 IR g and Energy U
n v Constructio 92] per Goldbe Energy Union & ] FMCA 189
v Constructio J; Director of Energy Union [ Mining and En
Work Building Grocon & Ors v 41 IR 288 at e v Constructio
cey J; Directo ng and Energy lding Industry
nfrastructure, I
rk Building I [2015] FCA 2 015] FCA 453 e (No 2) [20
estry, Mining a actor Pty Ltd v Inspectorate v
ording the C 21
as summary o
dustry regulat
were brough
e CFMEU.22
ws, there ha
FMEU or its
t.23 Moreov
nergy Union [2 rein; Stuart-M R 61 (FCA) a Union and Mat
on, Forestry, M erg, Jacobson a & Ors [2011] F at [20] per Bu on, Forestry, M
f the Fair Wor [2013] FCA 10 nergy Union [2 Industry Insp
v Construction [201] per Cav on, Forestry, M or of Fair Wor
y Union [2015 Inspectorate
Inquiry Repor
Industry Inspe 226; Director o and Director 015] FCA 85
and Energy Un v McDonald [2 v Construction
CFMEU’s
of penalty
tors since
ht against
ave been
s officials
ver, some
2008] FCA Mahoney v at [44] per ters (No 2)
Mining and and Tracey FMCA 284 urnett FM; Mining and
rk Building 014 at [46] 2013] FCA pectorate v n, Forestry,
vanough J; Mining and rk Building ] FCA 226
v Cradden
rt, 27/5/14,
ectorate v of the Fair of the Fair 1; Grocon nion (No 2)
2013] FCA n, Forestry,
399
20.
Mining an Energy Un Mining an Constructi 24
Matt Joh 25/5/13, operation/s 25
Michael untrue.
senior officia
court orders
Setka, the S
General Divi
In public he
Queensland
General Div
industrial di
Brisbane. H
Q.
A.
d Energy Unio nion (No 2) [20 nd Energy Un on, Forestry, M
hnston, CFME http://w story-e6frg6n6
Ravbar, 6/8/1
als of the uni
. According
State Secretar
ision of the C
earings in 20
and Norther
vision of th
sruptions inv
He gave the fo
You have no with official which I saw injuncting th
At the end o decision had they wanted back to the c think that p workers that These dispu there is alwa got to look was certainly
on [2012] FCA 011] FCA 557 nion (No 2) [ Mining and En
EU pledges to www.theaustrali -12266505171
14, T: 347.25-3
ion apparentl
g to press re
ry Victorian
CFMEU.24
014, Michae
rn Territory
he CFMEU,
volving the
ollowing evid
o issue, do yo ls of the CFM w on that foota hat sort of activ
of the day, I do d been made of d to send a pro company that t people have a
t he is with, to utes are very r ays a little bit o at the circums
y set up by the
A 966; Alfred ; Bovis Lend L 2009] FCA 6 ergy Union [20
continue milita ian.com.au/new 166, accessed 4
39. Incidental
ly see no diff
eports, this i
n Branch of
el Ravbar, S
Branch of
, was show
CFMEU on
dence:25
ou, as the Divi MEU engaging age, despite o vity?
on’t have a prob f the workforce otest, if they w they’re not hap
right, whethe o send a messa obust in the c of emotion and
stances of how company.
v Constructio Lease Pty Ltd v 650; and BHP 001] FCA 336.
ant operation, ws/cfmeu-pled 4/12/15.
ly, the last sen
fficulty with b
is the case w
the Construc
State Secretar
the Construc
wn video fo
a Hindmars
isional Branch in activities i orders having b
blem with that e not to return wanted to send ppy, I don’t thi
er it’s the offi age back to the construction in d passion in it,
w this all cam
on, Forestry, M v Construction P Steel (AIS) .
The Australia dges-to-continu
ntence of the a
breaching
with John
ction and
ary of the
ction and
ootage of
sh site in
h Secretary, in the kind been made
t, no. If the to work, if a message ink that - I
cial or the e company. ndustry and but you’ve me about. It
Mining and n, Forestry, Pty Ltd v
an (online), ue-militant-
answer was
400
21.
22.
23.
24.
26 Australia Industries 27
Royal C Vol 1, p 11
These comm
Merkel J onc
The rul that soc orders t rule of resort t comply
The conduct
echoes the
findings in t
following:27
Underly is a di
where t genuine pursued the law
There is a l
One sympto
officials. A
habitually lie
the disease i
rule of law.
What can be
an Industry Gr Union [2000] F
Commission in 1, para 22.
ments are en
ce observed:2
le of law in a
ciety, no matte that are to be f law in our so to courts to de y with the order
t of the CFM
findings of
the Final Re
ying much of t sregard or con the policy of th e enterprise ba d through indu w and legal insti
longstanding
om is regula
Another symp
e rather than
is that CFME
e done to cut
roup v Automo FCA 629 at [7
nto the Buildin
ntirely antith 26
democratic so er how powerfu observed and t ociety does no
termine their d rs made by the
MEU official
previous Ro
eport of the
the conduct of ntempt for the he law is to fos argaining. Ove ustrial conduct,
itutions.
g malignancy
ar disregard
ptom of the
n ‘betraying’
EU officials
out the malig
otive, Food, Me 9].
ng and Constr
hetical to th
ociety does no ul, to pick and those that are ot only require
disputes … it e courts in deter
ls considered
oyal Commi
Cole Royal
f unions, and in e law and its
ster individuali erwhelmingly, , rather than re
y or disease
for industri
disease is th
the union.
habitually sh
gnancy and c
etals, Engineer
ruction Industr
he rule of l
ot permit any m choose the law not. Maintena e that parties a
also requires t rmining those
d by the Com
issions. Am
Commission
n particular the institutions, p ism, freedom o industrial obj
eliance on neg
within the
ial laws by
hat CFMEU
Another sym
how contemp
cure the disea
ring, Printing
ry, Final Repo
law. As
member of ws or court ance of the are able to
that parties disputes.
mmission
mong the
n was the
e CFMEU, particularly of choice or ectives are
gotiation or
CFMEU.
CFMEU
U officials
mptom of
pt for the
ase?
& Kindred
ort (2003),
401
Deregistr
25.
26.
27.
28 Fair Wo 29 Fair Wo
ration of the
One way of c
There are tw
using the pr
legislation.
In relation t
person inter
Federal Cour
number of g
include the f
the (a)
ach
FW
Wo
the (b)
the
org
pro
inte
or
rk (Registered
rk (Registered
e CFMEU
combatting t
wo ways in wh
rocedure in
to the first
rested, or the
rt to cancel t
grounds upo
following:
organisatio
hievement o
W(RO) Act or
ork Act 2009
organisation
organisation
ganisation, h
otected indus
erfered with t
d Organisations
d Organisations
he disease w
hich the CFM
s 28 of the
possibility,
e Minister f
the registratio
n which an
n’s conduct
of Parliamen
r of an objec
(Cth) (FW A
n, or a subst
n or of a sec
has engaged
strial action)
the activities
s) Act 2009 (Ct
s) Act 2009 (Ct
would be to de
MEU could b
e FW(RO) A
s 28 permit
for Employm
on of an orga
application
has preven
nt's intentio
ct of the FW
Act);28
tantial numbe
ction or clas
in industria
that has pr
s of a ‘federa
th), s 28(1)(a).
th), s 28(1)(b).
eregister the
be deregistere
Act or (2) b
ts an organi
ment, to app
anisation. Th
can be mad
nted or hind
on in enac
W(RO) Act or
er of the me
ss of membe
al action (ot
revented, hin
al system emp
.
CFMEU.
ed: (1) by
by special
isation or
ply to the
here are a
de. They
dered the
cting the
r the Fair
embers of
ers of the
ther than
ndered or
mployer’;29
402
28.
29.
30 Fair Wo 31 See Fair 32
Fair Wo 33 Fair Wo
the (c)
the
org
mad
Cancellation
The Federal
an organisat
do so having
the action w
those matter
Deregistratio
consequence
the (a)
wou
the (b)
ben
Com
or i
rk (Registered
r Work (Registe
rk (Registered
rk (Registered
organisation
organisation
ganisation, ha
de under the
n of registrati
Court has a
ion’s registra
g regard to th
which has bee
s.
on under th
es, including
CFMEU wo
uld not cease
CFMEU an
nefit of any
mmission or
its members;
d Organisations
ered Organisa
d Organisations
d Organisations
n or a substa
n or of a sec
as or have fa
FW Act.30
on is not auto
fairly wide
ation if it co
he degree of
en taken agai
he FW(RO)
the followin
ould cease to
e to be an uni
nd its memb
y modern a
enterprise a 33
s) Act 2009 (Ct
tions) Act 2009
s) Act 2009 (Ct
s) Act 2009 (Ct
antial numbe
ction or clas
ailed to com
omatic once
discretion.31
onsiders that
f gravity of t
inst the orga
Act would
g:
o be a body
incorporated
bers would n
award, order
agreement tha
th), s 28(1)(d).
9 (Cth), ss 28(3
th), s 32(a).
th), s 32(c).
er of the me
ss of membe
mply with cou
a ground is m
But it cann
it would be
the matters r
anisation in r
d have a nu
corporate, al
association;
not be entitl
r of the Fa
at bound the
.
3), 28(4), 29.
embers of
ers of the
urt orders
made out.
not cancel
unjust to
raised and
relation to
umber of
lthough it 32
ed to the
air Work
e CFMEU
403
30.
31.
32.
34 Fair Wo 35 Fair Wo 36
Fair Wo 75. 37 Austral Commonw
the (c)
rep
agr
righ (d)
auto
Deregistratio
that the Com
The second
specific legis
precedent fo
enacted the
Registration)
(Cancellatio
(Cth). Those
the Austral
Labourers’
cancellation.
by the High
Both the Gy
addressed th
rk Act 2009 (C
rk Act 2009 (C
rk (Registered
ian Building wealth (1986) 1
CFMEU w
resentative
reements;34 an
ht of entry
omatically ex
on under the
mmonwealth w
possibility i
slation cance
or such actio
e Builders
) Act 1986 (
n of Registr
e enactments
lian Buildin
Federation,
. The consti
Court.37
yles Royal C
he question w
Cth), s 176.
Cth), s 516.
d Organisations
Construction 61 CLR 88.
would no l
in relation
nd
permits he
xpire.35
FW(RO) Ac
would acquir
s for the Co
elling the reg
on. In 1986
Labourers’
(Cth) and the
ration - Con
s had the effe
ng Construc
and provi
itutional vali
Commission
whether the C
s) Act 2009 (Ct
Employees’ &
longer be a
to the nego
eld by CFM
ct would not
re the CFME
ommonwealth
gistration of t
6, the Comm
’ Federatio
e Builders L
nsequential P
ect of cancell
ction Emplo
ding for th
dity of the le
and the Col
CFMEU or it
th), s 32(g). C
& Builders L
a default b
otiation of e
MEU officer
have the con
EU’s property
h Parliament
the CFMEU.
monwealth P
on (Cancell
abourers’ F
Provisions ) A
ling the regis
oyees’ and
he conseque
egislation wa
le Royal Com
ts predecesso
Cf Vol 3, ch 7.5
Labourers’ Fed
bargaining
enterprise
rs would
nsequence
y.36
t to enact
There is
Parliament
lation of
Federation
Act 1986
stration of
Builders
ences of
as upheld
mmission
ors should
5, paras 73-
deration v
404
33.
34.
35.
36.
38 Royal C Final Repo 39
Royal C Vol 11, pp
be deregister
Workers In
deregistered,
Commission
registration.3
For the reaso
registration o
First, in the
its members
organisation
act by its hum
may have a
been involve
Secondly, de
process.
Further, ther
of Australia
Amalgamati
FW(RO) Ac
would cease
likely that th
prove ineffec
ommission int ort, Vol 7, p xii
Commission in 95-96.
red. Commi
ndustrial U
,38 but th
ner Cole did 39
ons that follo
of the CFME
main, it is th
, that is unla
, just like a c
man agents.
disproportio
ed in illegal a
eregistration u
re is a real po
a ( MUA) w
on would fo
ct because th
e to exist as
he deregistrat
ctive.
o Productivity i.
nto the Buildin
issioner Gyle
Union (New
hat recomm
not recomme
ow, no recom
EU.
he conduct o
awful. It mu
company or a
Cancelling t
onate effect o
activity.
under the FW
ossibility that
will seek to
orestall canc
he effect of a
a registered
tion mechani
in the Buildin
ng and Constr
es recommen
w South W
mendation
end cancella
mmendation
of the officer
st be emphas
any other cor
the registratio
on union me
W(RO) Act is
t the CFMEU
amalgamate
ellation of r
amalgamation
d organisatio
ism under the
g Industry in N
ruction Industr
nded that the
Wales Bra
was not
ation of the C
is made to c
rs of the CFM
sised that a r
rporate body,
on of the wh
embers who
s a costly an
U and Maritim
e in the nea
registration u
n is that the
on. As a re
e FW(RO) A
New South Wa
ry, Final Repo
Building
anch) be
adopted.
CFMEU’s
cancel the
MEU, not
registered
, can only
hole union
have not
nd lengthy
me Union
ar future.
under the
CFMEU
esult, it is
Act would
ales (1992),
ort (2003),
405
37.
38.
Legislati
39.
40.
Of course,
enacted to d
some way, t
the new orga
involve the
already note
inevitably ne
had transferr
not amalgam
current offic
the CFMEU
All of these
combat the c
union.
ve disqualifi
Chapter 3
reforms to p
Federal Cour
a registered o
would apply
branches.
However, to
CFMEU, Co
prohibiting a
if amalgama
deal with the
to prevent the
anisation. H
cancellation
ed, it would
eed to deal w
red to the ne
mate with th
cials organisin
rose up out o
matters poin
culture of the
ication of of
of this Vol
ermit the reg
rt for an orde
organisation
y generally t
o deal with
ommonwealth
a class of CF
ation did oc
e transfer of
e existing CF
However, suc
n of the CF
d have ceas
with the form
ew organisati
e MUA, der
ng a new and
of the ashes o
nt to the conc
e CFMEU sh
fficers
lume examin
gistered orga
er disqualifyi
or branch. T
to all officer
the particul
h and State P
FMEU offici
ccur, special
members an
FMEU cultu
ch legislation
FMEU’s reg
sed to exist
mer officers
ion. And ev
registration w
d equally dan
of the BLF.
clusion that a
hould focus o
nes and rec
anisations reg
ing persons f
That recomm
rs of register
lar cultural
Parliaments c
ials determin
legislation
nd assets and
ure being rep
n would not,
gistration bec
t. Rather,
of the CFM
en if the CF
would not pr
ngerous unio
any targeted
on the offici
commends l
gulator to app
from holding
mendation, if
red organisa
problems w
could enact le
ned by the P
could be
d seek, in
plicated in
in terms,
cause, as
it would
MEU who
MEU did
revent its
on, just as
action to
ials of the
egislative
ply to the
g office in
accepted,
ations and
within the
egislation
Parliament
406
41.
42.
43.
40 Kariapp
from holding
specified per
Such a law
officers and
part by its of
pro (a)
gen
det
org
con
in p (b)
the
for
con
uni
An argumen
an exercise
As the law p
in relation
Parliament.
However, th
considering
was enacted
er v Wijesinha
g any office
riod of time.
would recog
that the cult
fficers. It wo
otect the me
nerally by d
ermined wer
ganisations t
nferred upon
particular, se
public from
the law w
ntrol of the C
on.
nt might be m
of judicial p
presently stan
to such l
he Privy Cou
similar legis
disqualifyin
a [1968] AC 71
in any regist
gnise that an
ture within a
ould:
mbers of th
disqualifying
re not fit an
that have th
registered or
eek to protect
m the consequ
ithin the CF
CFMEU rath
made that the
power, and t
nds, such an
egislation e
uncil rejected
lation from C
ng persons fo
7.
tered organis
n organisation
an organisati
he CFMEU
g persons w
nd proper pe
he range of
rganisations;
t the member
uences of the
FMEU by f
er than on th
e legislation
therefore co
argument co
enacted by
d an argume
Ceylon.40 In
ound by a Co
sation or bra
n can only a
ion is created
and the pub
whom the P
ersons to be
f statutory p
and
rs of the CFM
e culture of
focusing on
he membersh
would, if en
onstitutionally
ould only be
the Comm
ent of that ki
n that case, le
ommission o
anch for a
act by its
d in large
blic more
Parliament
e running
privileges
MEU and
disregard
those in
hip of the
nacted, be
y invalid.
available
monwealth
ind when
egislation
of Inquiry
407
44.
Recomm
For the p
the CFM
disqualify
and prope
for a spec
41
Kariapp Board). 42 Polyukh Fardon v A agreeing); CLR 350 Duncan v N 43
See, eg, curiam.
to have enga
argued that t
imposition o
Council reje
punishment
protection.41
The Privy Co
a number o
punishment
recognised in
mendation 60
urpose of see
MEU, conside
ying those of
er persons fr
cified period.
per v Wijesinh
hovich v The C Attorney-Gene Albarran v Co at [17] per G New South Wa
Clyne v New
aged in bribe
the legislatio
of punishmen
cted those ar
for crimina
ouncil’s reas
of occasions.
and disqualif
n other areas
0
eking to com
eration be g
fficers of the
om holding o
.
ha [1968] AC
Commonwealth eral (Qld) (200 ompanies Audi Gleeson CJ, Gu
ales (2015) 89 A
South Wales B
ery from hol
on was an exe
nt or a bill o
rguments, em
al guilt and
soning has be 42 More ge
fication for th
of the law.43
mbat the cultu
given to the
e CFMEU tha
office in any
717 at 732-7
h (1991) 172 04) 223 CLR 5 itors and Liqu ummow, Hayn
ALJR 462 at [4
Bar Associatio
ding parliam
ercise of judi
of pains and
mphasising th
d discipline
een approved
enerally, the
he protection 3
ure of disrega
enactment
at Parliamen
y registered o
738 per Sir Do
CLR 501 at 575 at [118] p idators Discip ne, Callinan, H
49]-[51] per cu
on (1960) 104
mentary office
icial power,
penalties. T
he difference
for the pu
d in the High
e distinction
n of the publi
ard for the la
of special le
nt considers a
organisation o
ouglas Menzie
537-538 per M per Gummow plinary Board ( Heydon and C
uriam.
CLR 186 at 20
e. It was
being the
The Privy
e between
urpose of
h Court on
between
ic is well-
aw within
egislation
are not fit
or branch
es (for the
Mason CJ; J (Hayne J (2007) 231 Crennan JJ;
01-202 per
408
C - BAC
CONSTR
45.
46.
47.
The Cole
48.
CKGROUND
RUCTION C
Parts D and
Construction
‘restoration’
The two mai
Is t (a)
the
Par
Wh (b)
the
ind
the
Par
In order to u
brief backgro
e Royal Com
The Cole Ro
2002. That
to ‘monitor
proceedings
industry] to
D TO TH
COMMISSI
d E of this C
n Commissio
.
in issues for c
there a need
building and
rt D.
hat informati
industrial
dustry have?
answer to t
rt E.
understand th
ound.
mmission
oyal Commis
report recom
conduct, t
to ensure a
industrial, cr
HE AUST
ION
Chapter conc
on and consid
consideration
for a separa
d constructio
on gathering
regulator of
This is an
the previous
hese key issu
sion handed
mmended the
o investigat
adherence [i
riminal and c
TRALIAN
cern the Au
der the merit
n are as follo
ate industrial
on industry?
g and investig
f the buildi
issue which
question. T
ues, it is nece
down its Fir
establishme
te and, if a
in the build
civil laws’ pe
BUILDING
stralian Buil
ts and deme
ows:
l regulator sp
This is cons
gatory powe
ing and con
arises irresp
This is cons
essary to set
rst Report on
ent of an inte
appropriate,
ding and con
ending the de
G AND
lding and
erits of its
pecific to
sidered in
ers should
nstruction
pective of
sidered in
out some
5 August
erim body
facilitate
nstruction
elivery of
409
49.
The Buil
50.
44 Royal C para 12. 45
Royal C Vol 1, pp 5 46
Royal C Vol 1, pp 1
the Commis
Taskforce
recommenda
Employment
Taskforce be
The Final R
widespread b
orders, inap
lawlessness
construction
Building and
monitor, inv
building and
lding and Co
To impleme
introduced t
2005 (Cth).
Australian B
Commission in
Commission in 5-13.
Commission in 156-157, recom
ssioner’s Fin
was establ
ation. It wa
t and Workp
ecame a perm
Report of the
breaches of
ppropriate us
and a cult
industry.45
d Constructio
vestigate and
d construction
onstruction In
ent those re
the Building
It establish
Building and
nto the Buildin
nto the Buildin
nto the Buildin mmendations 1
nal Report.44
lished in
as a separate
lace Relation
manent taskfo
e Cole Roya
industrial law
se of indus
ture of disr
It was re
on Commissi
enforce indu
n industry.46
Industry Imp
ecommendati
and Constr
hed a separat
d Constructi
ng and Constr
ng and Constr
ng and Constr 77-180.
The Interi
2002 on
e unit withi
ns. The Inter
orce in March
al Commissi
w, disregard
trial power,
regard for
ecommended
ion be establ
ustrial law in
provement Ac
ions, the C
uction Indus
te, industry s
ion Commis
ruction Industr
ruction Industr
ruction Industr
im Building
the basis
in the Depar
rim Building
h 2004.
ion made fin
of court and
, many exam
the law w
d that an A
lished with p
n connection
ct 2005 (Cth
Coalition Go
stry Improve
specific regu
ssion (ABCC
ry, First Repo
ry, Final Repo
ry, Final Repo
Industry
of this
rtment of
g Industry
ndings of
d tribunal
mples of
within the
Australian
powers to
n with the
h)
overnment
ement Act
ulator, the
C). The
ort, (2002),
ort (2003),
ort (2003),
410
51.
52.
47 Building 48 Building 49
Building 50 Building 51
Building
regulator w
industrial law
In addition,
2005 (Cth) im
unl (a)
rest
or r
coe (b)
con
are
agr
sup
disc (c)
Some found
compulsory
belief on re
document re
evidence or
g and Construc
g and Construc
g and Construc
g and Construc
g and Construc
was given p
w in connecti
the Building
mposed subs
awful indus
trictions on t
refusals to att
ercion in re
ntractors and
to perform;
reement; or
perannuation
crimination i
d it contro
examination
easonable gr
elevant to an
provide doc
ction Industry I
ction Industry I
ction Industry I
ction Industry I
ction Industry I
owers to m
ion with buil
g and Constr
stantial civil p
strial action,
the performa
tend for or pe
lation to th
d/or the dutie
; or to make
r to nomin
fund;49 and
in connection
versial that
n powers ena
rounds that
n investigati
cuments.51 F
Improvement A
Improvement A
Improvement A
Improvement A
Improvement A
monitor, inve
lding and con
ruction Indus
penalties for:
, including
ance of build
erform build
he engageme
es those emp
e, vary or ter
nate or pa
n with the bu
the Comm
abling him or
a person h
ion, to comp
Failure to co
Act 2005 (Cth),
Act 2005 (Cth),
Act 2005 (Cth),
Act 2005 (Cth),
Act 2005 (Cth),
estigate and
nstruction.47
stry Improve
:
bans, limita
ding work, o
ding work;48
ent of empl
ployees or co
rminate an e
ay to a
uilding indust
missioner w
r her, upon f
had informat
pel witnesse
omply was a
, s 10.
ss 36-38.
ss 43-44, 46.
s 45.
s 52(1).
d enforce
ement Act
ations or
or failures
loyees or
ontractors
enterprise
specified
try.50
was given
forming a
tion or a
s to give
a criminal
411
53.
54.
52 Building 53 Crimes A 54
Building 55 Building 56
Building 57 Building 58
Building
offence with
although a c
in respect of
corporate.53
the ground t
to a penalty
produced w
comply with
an investigat
The Comm
Building and
Commission
breaches of b
In addition,
2005 (Cth) e
Relations to
that were to
building con
a Commonw
g and Construc
Act 1914 (Cth)
g and Construc
g and Construc
g and Construc
g and Construc
g and Construc
h a maximu
court could im
f an individu
It was not a
that it might
y.54 Howe v
was not adm
h the require
ting officer.55
missioner wa
d Constructi
ner, empower
building laws
the Building
empowered
issue a ‘buil
o be observed
ntractors that
wealth or Terr
ction Industry I
, s 4B.
ction Industry I
ction Industry I
ction Industry I
ction Industry I
ction Industry I
um penalty
mpose a fine
ual and 150 p
an excuse fo
incriminate
ver the info
missible excep
ement, giving 5
as also emp
on Inspector
red to enter p
s.57
g and Constr
the Minister
lding code’ s
d in relation
were consti
ritory project
Improvement A
Improvement A
Improvement A
Improvement A
Improvement A
Improvement A
of six mo
e instead of u
penalty units
r a person to
that person
ormation, ev
pt in procee
g false inform
powered to
rs,56 who we
premises to i
ruction Indus
r for Employ
setting out st
n to building
tutional corp
t.58
Act 2005 (Cth),
Act 2005 (Cth),
Act 2005 (Cth),
Act 2005 (Cth),
Act 2005 (Cth),
Act 2005 (Cth),
nths impriso
up to 30 pen
s in respect o
o refuse to co
or expose th
vidence or d
edings for f
mation or ob
o appoint A
ere, together
investigate, i
stry Improve
yment and W
tandards of b
g work carrie
porations or
s 52(6).
s 53(1).
s 53(2).
s 57.
s 59.
s 27.
onment,52
nalty units
of a body
omply on
hat person
document
failure to
bstructing
Australian
r with the
inter alia,
ement Act
Workplace
behaviour
ed out by
involving
412
Changes
55.
56.
57.
59
M Wilc Industry, M 60 M Wilc Industry, M 61
M Wilc Industry, M 62
M Wilc Industry, M
by the Labo
In 2008 th
Wilcox QC t
Specialist D
Inspectorate
policy positi
abolish the A
Work Austra
The Wilcox
autonomous
Work Ombu
require wit
substantially
addition, the
specific pro
discriminatio
would apply
On 1 July 20
Relations Ac
cox QC, Tran March 2009.
cox QC, Tran March 2009, p
cox QC, Tran March 2009, pp
cox QC, Tran March 2009, p
or Governm
he Labor G
to prepare a
Division for
of Fair Wor
ion of the Au
ABCC and
alia’.
Report reco
Building an
udsman.60 I
tnesses to
y curtailed an
e report reco
ohibitions on
on on the bas
.62
009 the FW A
ct 1996 (Cth
nsition to the
nsition to the 6, recommend
nsition to the p 6-7, recomme
nsition to the 6, recommend
ment
overnment c
report on m
building an
rk Australia.5
ustralian Lab
replace it w
ommended th
nd Constructi
It was also
give eviden
nd subject to
ommended th
n unlawful
sis that the g
Act came int
h). The FW
Fair Work Ac
Fair Work A ation 1.
Fair Work A endations 3-4.
Fair Work A ation 2.
commissione
matters related
nd constructi 59 The report
bor Party at t
with a ‘Specia
hat ABCC be
ion Division
recommende
nce be ret
o a five year
he repeal of
industrial a
general prohib
to effect, rep
W Act amal
ct for the Bu
ct for the Bu
ct for the Bu
ct for the Bu
ed the Hon
d to the crea
ion work w
t was premis
the time whic
alist Divisio
e replaced by
of the Offic
ed that the
tained, thou
ar sunset per
the building
action, coerc
bitions in the
placing the W
lgamated go
ilding and Co
uilding and Co
uilding and Co
uilding and Co
n Murray
ation of a
within the
sed on the
ch was to
on of Fair
y a semi-ce of Fair
power to
ugh very
riod.61 In
g industry
cion and
e FW Act
Workplace
overnment
onstruction
onstruction
onstruction
onstruction
413
58.
59.
60.
63
Building Act 2012 (C 64 Fair Wo
agencies tha
new regulato
Ombudsman
In 2012, the
name of the
(Cth) to the
Act) and ma
The amendm
the Fair Wor
Director of
referred to a
recommenda
autonomous
However, ot
The industr
coercion and
effect was to
industrial ac
industry. Pr
the Building
for these co
were 1,000 p
penalty units
g and Construc Cth).
rk (Building In
at administer
ory bodies: th
n.
e Labor Gov
Building and
Fair Work
aking signific
ments include
rk Building I
the FWBII.
as Fair Wor
ation in the
part of the F
ther recomme
ry specific
d discriminat
o reduce dra
ction, coerci
rior to the ch
g and Constr
ontraventions
penalty units
s (then $22,0
ction Industry
ndustry) Act 20
red the work
he Fair Work
ernment intr
d Constructio
(Building In
cant amendm
ed abolishing
Industry Insp
The FWB
rk Building
Wilcox Rep
Fair Work Om
endations in
prohibitions
tion were rem
amatically the
ion and dis
anges, the m
ruction Indus
s in relation
(then $110,0
000) for indi
Improvement
012 (Cth), s 9.
kplace relati
k Commissio
roduced legis
on Industr y Im
ndustry) Act
ments.
g the ABCC
pectorate (FW
BII is commo
& Construct
port that the
mbudsman w
the Wilcox R
on unlawf
moved from t
e penalties a
scrimination
maximum pen
stry Improve
to building
000) for bod
ividuals. Un
Amendment (T
ions system
on and the F
slation63 chan
Improvement
2012 (Cth)
and replacin
WBII)64 head
only, but in
tion or FWB
e FWBII be
was rejected.
Report were
ful industria
the FW(BI) A
available for
within the
nalties availa
ement Act 20
industry pa
dies corporate
nder the FW
Transition to F
into two
Fair Work
nging the
t Act 2005
(FW(BI)
ng it with
ded by the
ncorrectly,
BC. The
e a semi-
accepted.
al action,
Act. The
unlawful
building
able under
005 (Cth)
articipants
e and 200
W Act, the
Fair Work)
414
61.
62.
65 Fair Wo 66 Fair Wo 67
Fair Wo 68 Fair Wo
maximum p
bodies corpo
Further, the
examination
abrogation
However, un
issued by th
designated
Tribunal, on
out in some
notice must
presidential
obtaining the
and are unsu
Further, ther
operation o
projects.67 F
will cease to
rk (Building In
rk (Building In
rk (Building In
rk (Building In
penalties wer
orate and 60 p
ere was a
powers.
of the priv
nder the FW
he Director o
presidential
n application
detail the gr
not be issue
member is
e information
uccessful, or a
re is an ‘In
of the comp
Finally, ther
exist from 1
ndustry) Act 20
ndustry) Act 20
ndustry) Act 20
ndustry) Act 20
re only 300
penalty units
significant
The penalti
vilege again
W(BI) Act, a
f the FWBII
member o
by the FWB
rounds of th
ed unless the
satisfied, in
n, documents
are inappropr
dependent A
pulsory exa
re is a sunse
1 June 2017 o
012 (Cth), s 45
012 (Cth), s 47
012 (Cth), ss 36
012 (Cth), s 46
penalty unit
s (then $6,600
curtailing
es for non-nst self-incr
an examinati
I. Instead, it
of the Adm
BII supporte
he application
Administrat
nter alia, th
s or evidence
riate.66
Assessor’ wh
amination po
et provision b
onwards.68
.
(1).
6B, 39.
.
ts (then $33
0) for individ
of the co
-compliance
rimination r
ion notice c
t must be iss
ministrative
ed by affidav
n.65 The exa
tive Appeals
hat other me
e have been a
ho can ‘turn
owers for p
by which th
3,000) for
duals.
ompulsory
and the
remained.
cannot be
sued by a
Appeals
vit setting
amination
s Tribunal
ethods of
attempted
n off’ the
particular
he powers
415
The prop
63.
64.
65.
69 Explanat Bill 2013 ( 70
Building 71 Commo November 72
Explana Bill 2013 (
posed return
The presen
Construction
Parliament
Representati
The Building
2013 (Cth) w
Construction
ABCC with
The Building
2013 (Cth)
Construction
definition of
goods to be u
sites (includ
may be perfo
indirect disru
supply of m
pick up the m
tory Memoran (Cth), p 50.
g and Construc
onwealth, Par 2013, p 265 (H
tory Memoran (Cth), p 6, para
n to the ABC
nt Federal
n Industr y (
in Novemb
ives but was r
g and Constr
was intended
n Industry Im
its earlier po
g and Constr
tried to e
n Industry Im
f ‘building w
used in work
ding any reso
ormed.70 Th
uption of ons
materials.71 T
manufacture
ndum, Building
ction Industry (
rliamentary D Hon Christoph
ndum, Building a 12.
CC
Government
(Improvin g P
er 2013.
rejected by th
ruction Indus
d ‘substantial
mprovement A
owers.69
ruction Indus
expand the
mprovement A
work’ to inc
k covered by
ources platfo
he expanded d
shore and off
That expande
of materials.
g and Construc
(Improving Pro
Debates (Hans her Pyne).
g and Construc
introduced
Productivity)
The Bill pa
he Senate on
str y ( Improv
lly [to] replic
Act 2005 (Cth
str y ( Improv
coverage o
Act 2005 (C
clude the tra
the definitio
orm) where
definition wa
ffshore projec
ed definition 72
ction Industry
oductivity) Bill
sard), House
ction Industry
d the Build
) Bill 2013
assed the H
n 17 August 2
ving Product
cate’ the Buil
h) and re-esta
ving Product
of the Build
Cth) by expan
ransport or s
on, directly to
the work is
as designed t
cts by interfe
n was not int
(Improving Pr
l 2013 (Cth), cl
of Represent
(Improving Pr
ding and
(Cth) to
House of
2015.
tivity) Bill
lding and
ablish the
tivity) Bill
ding and
nding the
supply of
o building
being or
to prevent
ering with
tended to
roductivity)
l 6(e).
tatives, 14
roductivity)
416
66.
Office of
67.
68.
73 Building 74 Fair Wo 75
Fair Wo 76 Fair Wo
The Bill als
picketing73
applied in re
participants.
(Improving
below.
f the Fair Wo
Finally, by w
the powers e
Work Buildi
FWBII, have
to ‘building
participants’
Fair Work In
form part of
Fair Work In
of the FW
awards and
Inspectors h
documents.76
comply is s
g and Construc
rk (Building In
rk Act 2009 (C
rk Act 2009 (C
so contained
and restorin
elation to un
Other aspe
Productivity)
ork Ombud
way of backg
exercised by
ing Inspecto
e the same p
matters’, wh
.74
nspectors are
f the Office o
nspectors are
Act and ‘fa
enterprise a
have the pow 6 An indivi
subject to a
ction Industry (
ndustry) Act 20
Cth), s 700.
Cth), s 712; see
d provisions
ng the highe
lawful indus
ects of the Bu
y) Bill 2013
sman and F
ground, it is
Fair Work In
rs, who are
powers as Fa
hich are mat
e appointed b
f the Fair W
e charged wi
air work ins
agreements).
wer to requir
dual who fai
maximum c
(Improving Pro
012 (Cth), s 59
e also s 709(d).
creating an
er penalties
strial activity
uilding and C
(Cth) will
air Work In
useful to bri
nspectors. T
appointed b
air Work Insp
tters involvin
by the Fair W
ork Ombuds
ith investigat
struments’ (f
Among thei
e a person t
ils, without r
civil penalty
oductivity) Bill
C.
offence of
that had p
y by building
Construction
be addresse
nspectors
riefly refer to
The reason is
by the Direct
pectors, albe
ng ‘building
Work Ombud
man.75 Very
ting possible
for example
ir powers, F
to produce r
reasonable e
y of 60 pena
l 2013 (Cth), cl
unlawful
previously
g industry
n Industry
ed further
o some of
s that Fair
tor of the
eit limited
g industry
sman and
y broadly,
breaches
, modern
Fair Work
ecords or
excuse, to
alty units
l 47(2).
417
D - A SE
Introduc
69.
70.
77 Fair Wo 78 Fair Wo 79
Submiss 80 New Sou 81
Boral La 82 Australia
(currently $
civil penalty
excuse that
person or exp
EPARATE,
ction
All federal g
supported th
investigating
participants
section C a
about (a) w
constituted,
significantly
Given that l
somewhat ac
separate, ind
State of Ne
Australian I
rk Act 2009 (C
rk Act 2009 (C
sions of the Go
uth Wales Gov
aw Reform Sub
an Industry Gr
10,800), and
y of 300 pen
production o
pose the pers
INDUSTRY
governments
he existence
g and enfo
in the buildi
above, there
what that bo
(c) what the
y, (d) what its
limited degre
cademic to c
dustry specif
ew South W
ndustry Gro
Cth), ss 539, 54
Cth), s 713(1).
vernment of V
vernment, Polic
bmissions, 201
oup Law Refor
d a body cor
nalty units (c
of the docum
son to penalty
Y SPECIFIC
since 2005, o
of a separa
orcing indus
ing and cons
have been
dy should b
scope of its
s powers shou
ee of politica
onsider the i
fic regulator.
Wales,79 the
oup,82 the Au
46.
Victoria, 28/10/
cy Submission,
5, p 50.
rm Submission
rporate is su
currently $54
ment may ten
y.78
C, REGULA
of both politi
ate body cha
strial laws
struction indu
significant p
be called, (b
s jurisdiction
uld be.
al consensus
issue of whet
. Submissio
State of Vi
ustralian Ch
/14, pp 70-71.
, August 2014,
ns, 21/8/15, pp
ubject to a m
4,000).77 It
nd to incrim
ATOR
ical persuasi
arged with
in connecti
ustries. As s
policy disag
b) how it s
n should be a
s, it might be
ther there sh
ons received
ictoria,80 B o
hamber of C
, pp 6-8.
p 12-13.
maximum
is not an
minate the
ions, have
a role of
ion with
set out in
greements
should be
and, most
e thought
hould be a
from the
oral,81 the
Commerce
418
71.
Submissi
72.
I
83 Australia pp 31-40. 84
Housing 85 Master B 86
Australia Legislation Productivi
and Industry
Australia85 w
specific regu
The ACTU,
issue to the C
to various
Construction
vigorously a
Those submi
ions opposin
The argume
ACTU in
Committee
position that
construction
ACTU made
Industr y ( Im
an Chamber o
g Industry Asso
Builders Austra
an Council of n Committee ty) Bill 2013 (C
y,83 the Housi
were all stron
ulator and the
CFMEU an
Commission
inquiries, pa
n Industry
advocating th
issions are co
ng a separate
ent against a
its submiss
on Educatio
t the imposit
industry is
e the point
mproving Pro
f Commerce a
ociation Pty Ltd
alia Law Refor
Trade Unions, into the B
Cth), 22/11/13
ing Industry A
ngly in favo
e restoration
nd AMWU d
. However,
articularly i
(Improving
he abolition
onsidered bel
e regulator
an industry s
sions to th
on and Emp
tion of spec
both unnece
that, becaus
oductivity) B
and Industry La
d Law Reform
rm Submission
, Submission to Building and , p 4, para 8.
Association8
ur of the ret
of the ABCC
did not make
each has put
n relation t
Productivity
of an indust
low.
specific regu
he Senate S
loyment. T
ial laws affe
essary and d
e the Buildi
Bill 2013 (Ct
aw Reform Su
Submissions,
ns, 21/8/15, p 4
o the Senate E Construction
84 and Master
tention of an
C.
e submission
t forward sub
to the Build
y) Bill 201
try specific r
ulator was pu
Standing Le
The ACTU
ecting worke
discriminator
ing and Con
th) does not
ubmissions, Au
21/8/15, pp 8-45.
Education and E n Industry (
r Builders
n industry
ns on this
bmissions
ding and
13 (Cth),
regulator.
ut by the
egislation
takes the
ers in the
ry.86 The
nstruction
in terms
ugust 2015,
-10.
Economics (Improving
419
j
73.
74.
75.
87 Australia Legislation Productivi 88
Australi Legislation Productivi 89
Australia Legislation Productivi 90
Australi Legislation Productivi
address crim
justified by c
The ACTU’s
There i constru time in had be existen Work A the regu promot
It contended
Act has broa
well-resourc
and impartia
The ACTU f
The A Constru by the activitie of work
an Council of n Committee ty) Bill 2013 (C
ian Council of n Committee ty) Bill 2013 (C
an Council of n Committee ty) Bill 2013 (C
ian Council of n Committee ty) Bill 2013 (C
minal conduc
criminal cond
s submission
is no need for uction industry n Australian hi een legislated
ce of such an i Act 2009 … co ulation of indu ting and securin
d that the Fair
ad investigati
ced agency th
al manner’.89
further subm
BCC, as it e uction Industry aggressive, co es. It focused o
kers and trade
Trade Unions, into the B
Cth), 22/11/13
Trade Unions, into the B
Cth), 22/11/13
Trade Unions, into the B
Cth), 22/11/13
Trade Unions, into the B
Cth), 22/11/13
ct, but rather
duct occurrin
n goes on to s
r a specialist st y. The creatio story that an i into existenc
nspectorate is onstitutes an ad ustrial relations ng compliance
r Work Omb
ive powers an
hat has carrie
itted:90
existed under y Improvemen oercive and bia overwhelmingl
e unions, thus
, Submission to Building and , p 4, para 10.
, Submission t Building and , p 5, para 11.
, Submission to Building and , p 5, para 11.
, Submission t Building and , p 5, para 12.
r industrial a
ng within the
state:88
tatutory regula on of the ABC industry-specif ce by the Fe
undesirable an dequate and ap s in Australia, e with industria
budsman esta
nd ‘has prov
ed out its fun
the former B t Act 2005 (C ased manner in ly on the inves
failing in its
o the Senate E Construction
o the Senate E Construction
o the Senate E Construction
o the Senate E Construction
activity, it c
industry.87
ator for the bu CC in 2005 wa fic industrial in ederal Parliam
nd unnecessary ppropriate fram including with al laws.
ablished unde
ven to be an a
nctions in an
BCII Act [Bu Cth)], distingui n which it carr stigation and p
primary oblig
Education and E n Industry (
Education and E n Industry (
Education and E n Industry (
Education and E n Industry (
cannot be
uilding and as the first nspectorate ment. The
y. The Fair mework for h respect to
er the FW
active and
n effective
ilding and ished itself ried out its prosecution gation as a
Economics (Improving
Economics (Improving
Economics (Improving
Economics (Improving
420
76.
77.
91 Australia Legislation Productivi 92
Austraila Infrastructu 93 Australia into the W
regulato signific underpa health a
The ACTU
existence o
construction
would impro
the Productiv
submitted th
increased sin
may be mor
ABCC’s coe
proposition t
A further lim
of maintainin
same legisla
into the Wor
Anothe fact tha enforcin the FW defined FWO.
an Council of n Committee ty) Bill 2013 (C
an Council of ure Inquiry, p 2
an Council of orkplace Relat
or to enforce cant and wide ayment or non and safety issu
also argued
of the ABC
industry nor
ove productiv
vity Commis
hat the rate of
nce the abolit
re directed t
ercive power
that a dedicat
mb of the AC
ng two separ
tion. It subm
rkplace Relat
er and perhaps at there are tw ng one set of i WBC is confine
d, its statutory
Trade Unions, into the B
Cth), 22/11/13
Trade Unions 22.
Trade Unions, tions Framewo
the law impar spread issues n-payment of es or sham con
that there w
CC led to
r was there an
vity.91 Relat
ssion Public
f industrial d
tion of the A
towards the
rs, they also
ted regulator
CTU’s oppo
rate regulator
mitted to the
tions Framew
more glaring wo separate and industrial laws ed in its role t
mandate is in
, Submission to Building and , p 5, para 13.
, Submission t
, Submission to rk, p 348.
rtially. It did v in the buildin wages and en ntracting.
was no credi
improved
ny evidence
ted to this po
Infrastructur
isputation do
BCC. 92 Wh
argument ag
appear to be
r has not achi
sition related
rs administer
Productivity
work that:93
issue of ineff d separately fu - the FWO an to laws applyin
virtually iden
o the Senate E Construction
to the Producti
o the Productiv
very little to a ng industry su ntitlements, oc
ible evidence
productivity
that its reintr
oint, in subm
re Inquiry, th
oes not appea
hilst these sub
gainst ‘resto
e directed tow
ieved results.
d to the inef
ring and enfo
y Commissio
ficiency and w unded, statutor nd the FWBC. ng to ‘building ntical terms to
Education and E n Industry (
ivity Commiss
vity Commissi
address the uch as the ccupational
e that the
y in the
roduction
missions to
he ACTU
ar to have
bmissions
oring’ the
wards the
.
fficiencies
orcing the
on Inquiry
waste is the ry agencies Although g work’ as
that of the
Economics (Improving
sion Public
ion Inquiry
421
78.
79.
94 Australia into the W 95
CFMEU the Buildin pp 1-2, par
The ACTU a
the FW ‘the enf the pro relation instrum perform carry ou to secu respons allowin more co
…
The con and ine constru capacity constru be disb
The CFMEU
on Educatio
before the l
building in
participants
statistical an
an Council of orkplace Relat
U, Submission t ng and Constru ras 1.6-1.7.
also contende
WBC has made forcement of th otection of wo n to the enfor ments, the FWB
m and has done ut this work... ure and enfo sibility to the F ng the FWO to
ompelling.
ntinued existen efficiency. Th uction industry y, powers and uction industry
anded and its o
U submitted t
on and Emp
law demand
dustry and
of that indu
nalysis of th
Trade Unions, tions Framewo
to the Senate E uction Industry
ed that:94
a policy deci he legal provis orkers while e rcement of em
BC has outsou e that on the ba The effect of t orce employee
FWO makes th o function as th
nce of the FWB ere is no reaso y. Nor is the
d resources to along with ev operation absor
to the Senate
ployment tha
that there b
no accom
ustry.95 The
he ABCC’s
, Submission to rk, pp 348-350
Education and y (Improving P
sion not to per sions relating to engaged in the mployee entitl urced this respo
asis that the FW this ‘policy’ de e entitlements he case for dis he sole federal
BC amounts to on for a secon ere any doubt o carry out al very other indu
rbed into the F
e Standing L
at principles
be no separ
mpanying law
e CFMEU a
investigatio
o the Productiv 0.
Economics Le Productivity) B
rform that role o conditions o eir work’]...
lements under onsibility to th WO is better e ecision by the s but to abd
sbanding the F labour inspect
o unnecessary d nd agency to ex t that the FW ll of its funct
ustry. The FW FWO.
Legislation C
s of equal
rate regulato
ws directed
also submitte
ons and pro
vity Commissi
egislation Com Bill 2013 (Cth)
e [securing f work and Instead, in r industrial he FWO to equipped to
FWBC not dicate that FWBC and torate even
duplication xist for the WO has the tion in the
WBC should
Committee
treatment
or for the
d at the
ed that a
osecutions
ion Inquiry
mmittee into ), 22/11/13,
422
80.
96 CFMEU the Buildin pp 7-8, par 97
CFMEU the Buildin p 7, para 4 98
CFMEU the Buildin p 7, paras 4 99
CFMEU the Buildin p 8, paras 4 100
CFMEU the Buildin p 19, para
revealed it to
stated:97
The fac concern was no direct th
The CFMEU
CFMEU refe
Court appare
its investigat
specific insp
‘abandoned
are establish
the workplac
U, Submission t ng and Constru ras 4.1-4.2, 4.7
U, Submission t ng and Constru .3.
U, Submission t ng and Constru 4.8-4.9 and p 1
U, Submission t ng and Constru 4.10-4.11.
U, Submission ng and Constru 9.2.
o be biased a
ct that the ov ned the alleged t accidental. I heir resources
U also asser
ferred to one
ently critical
tions.99 It ch
pectorate as
the fundame
hed - the pro
ce.’100
to the Senate E uction Industry 7-4.8.
to the Senate E uction Industry
to the Senate E uction Industry 10, para 4.17.
to the Senate E uction Industry
to the Senate E uction Industry
against the co
erwhelming m d conduct of tr It was the resu toward union-r
rted bias on
decision of
of the mann
haracterised
s ‘the conti
ental purpos
otection and e
Education and y (Improving P
Education and y (Improving P
Education and y (Improving P
Education and y (Improving P
Education and y (Improving P
onduct of uni
majority of the rade unions or ult of a policy d related matters
n the part of
the AIRC an
ner in which
the reintrodu
inuation of
se for which
enforcement
Economics Le Productivity) B
Economics Le Productivity) B
Economics Le Productivity) B
Economics Le Productivity) B
Economics Le Productivity) B
ions and wor
e ABCC’s inv r union membe decision of the s.
f the FWBI
nd one of th
the ABCC u
uction of an
flawed pol
h labour insp
t of workers’
egislation Com Bill 2013 (Cth)
egislation Com Bill 2013 (Cth)
egislation Com Bill 2013 (Cth)
egislation Com Bill 2013 (Cth)
egislation Com Bill 2013 (Cth)
rkers.96 It
vestigations ers/workers e ABCC to
II.98 The
he Federal
undertook
industry-licy’ that
pectorates
’ rights in
mmittee into ), 22/11/13,
mmittee into ), 22/11/13,
mmittee into ), 22/11/13,
mmittee into ), 22/11/13,
mmittee into ), 22/11/13,
423
81.
Consider
82.
Need
83.
84.
101 AMWU the Buildin 2013, p 7,
The AMWU
ration
The main ar
these. Firs
Secondly, th
regulator. T
unions and u
industry spe
below.
One conside
regulator is t
demonstrated
entrenched d
the country’
Given the h
construction
enforcing the
The suggest
be justified
misplaced in
U, Submission ng and Constru paras 29-35.
U made subm
rguments aga
st, there is
here are ine
Thirdly , theA
union officia
ecific regula
eration which
the high leve
d by Appen
disregard for
’s largest co
high level o
sector, it is d
e law within
ion that the
by crimina
n a number o
to the Senate E uction Industry
issions simil
ainst an indu
no need for
efficiencies
ABCC was,
als. Fourthly
ator. Each o
h supports t
el of unlawfu
ndix A to th
r both indust
onstruction u
of unlawful
desirable to h
that sector.
need for spe
al conduct o
of respects. I
Education and y (Improving P
ar to those of
ustry specific
r an industr
in having
and the FW
ly, it is discr
of these arg
the need for
ul conduct in
his Chapter.
trial and crim
union furthe
activity with
have a regula
ecific industr
occurring wi
It ignores the
Economics Le Productivity) Bi
f the CFMEU
c regulator se
ry specific r
an industry
WBII is, biase
riminatory to
guments is a
r an industry
n the industry
The susta
minal laws s
er supports t
hin the buil
ator tasked so
rial regulatio
ithin the in
e fact that a
egislation Com ill 2013 (Cth),
U.101
eem to be
regulator.
y specific
ed against
o have an
addressed
y specific
y. This is
ained and
shown by
the need.
lding and
olely with
on cannot
ndustry is
lot of the
mmittee into November
424
85.
86.
87.
102 M Wil Industry, M 103
Australi Legislation Productivi
criminal con
arises in the
occurs in th
constitutes
contraventio
laws. It also
assist police
criminal acti
Another mat
is that it led
that would
industry spec
Various eco
Econtech, ha
introduction
increased a
However, a
Wilcox Rep
including the
The various
Productivity
lcox QC, Tran March 2009, p
ian Council of n Committee ty) Bill 2013 (C
nduct for wh
e context of
he course of
a criminal
ns of industr
o ignores the
, through ref
ivity within th
tter that is of
to productivi
be a signifi
cific regulato
onomic repo
ave been adv
of the Build
aggregate p
2007 version
port102 and l
e ACTU.103
s claims an
Commission
nsition to the 46.
f Trade Unions into the B
Cth), 22/11/13
ich unions a
breaches of
f contravenin
contempt o
rial laws) and
e ability of a
ferrals and in
he industry.
ften advanced
ity improvem
ficant matter
or.
orts by Inde
vanced in su
ding Industry
productivity
n of those rep
later reports
nd counter c
n Public Infr
Fair Work A
s, Submission t Building and , pp 5-14.
and union off
industrial la
ng industrial
f orders of
d out of a cul
a dedicated i
nformation sh
d for the rest
ments. If that
supporting
ependent Ec
upport of the
y Taskforce
in the co
ports was he
have been
claims were
rastructure in
Act for the Bu
to the Senate E Construction
ficials are re
aws (either b
l laws, or b
f a court re
lture of defia
industrial reg
haring, in co
toration of th
t could be est
the existen
conomics, p
e proposition
and the ABC
onstruction
eavily criticis
criticised b
e considered
nquiry report
uilding and Co
Education and E n Industry (
esponsible
because it
because it
estraining
ance of all
gulator to
ombatting
he ABCC
tablished,
nce of an
previously
n that the
CC led to
industry.
sed in the
by others,
d by the
t which is
onstruction
Economics (Improving
425
88.
89.
90.
104 Produc Vol 2, pp 4 105
Produc Vol 2, pp 5 106
Produc Vol 2, p 53 107
Produc Vol 2, p 53 108
Produc Vol 2, p 53 109
Produc Vol 2, pp 5
the most com
topic at the t
One measu
Commission
working day
Relevantly
concluded, h
industry ove
to the opera
balance, it is
report also n
of [FWBII],
this’.108
The report a
was a cons
disputation w
confirmed by
ctivity Commis 498-551 and ap
ctivity Commis 535-541.
ctivity Commis 37.
ctivity Commis 38.
ctivity Commis 38.
ctivity Commis 536-537.
mprehensive
time of writin
ure of pro
n was Austral
ys lost due to
for present
having regard
er time that ‘a
ations of the
s likely that t
noted that day
, although ag
lso noted tha
iderably hig
within the co
y the Austra
ssion Inquiry ppendix 1.
ssion Inquiry
ssion Inquiry
ssion Inquiry
ssion Inquiry
ssion Inquiry
analysis ava
ng.104
ductivity co
lian Bureau o
industrial ac
t purposes,
d to the days
a direct conn
e ABCC app
the ABCC re
ys lost ‘nearl
gain one-off
at compared w
gher number
onstruction in
alian Bureau
into Public In
into Public In
into Public In
into Public In
into Public In
into Public In
ailable to the
onsidered b
of Statistics d
ction per 1,00
the Produ
s lost measur
nection of low
pears highly
educed indust
ly doubled a
f events may
with all indu
r of days lo
ndustry.109 T
of Statistics
nfrastructure, I
nfrastructure, I
nfrastructure, I
nfrastructure, I
nfrastructure, I
nfrastructure, I
e Commissio
by the Pro
data on the n
00 workers.10
uctivity Com
re for the con
wer industria
plausible’106
trial disputes
after the estab
y have contr
ustries genera
ost due to
Those figures
data present
Inquiry Repor
Inquiry Repor
Inquiry Repor
Inquiry Repor
Inquiry Repor
Inquiry Repor
on on this
oductivity
number of 05
mmission
nstruction
al disputes 6 and ‘on
s’.107 The
blishment
ributed to
ally, there
industrial
s are also
ted in the
rt, 27/5/14,
rt, 27/5/14,
rt, 27/5/14,
rt, 27/5/14,
rt, 27/5/14,
rt, 27/5/14,
426
91.
110 Produc Report, Au 111
Produc Vol 2, p 53 112
Produc Vol 2, p 53 113
See Pro Vol 2, pp Framework
Productivity
Relations F
construction
industrial ac
highest num
Productivity
that the num
substantially
1990s,111 and
Bureau of S
the apparent
However, th
capture the f
of reasons in
the (a)
incl
par
dist
acti
ctivity Commi ugust 2015, pp
ctivity Commis 35.
ctivity Commis 36.
oductivity Com 538-544; Pr k, Draft Repor
Commissio
Framework,
industry ha
tion of any i
mber, being
Commissio
mber of indus
y declined s
d further tha
tatistics, ‘set
economic im
e report also
full costs to b
ncluding:113
data from
lude industr
rtial work b
tinguish bet
ion);
ission Inquiry 661 and 665.
ssion Inquiry
ssion Inquiry
mmission Inquir roductivity Co rt, August 2015
on’s draft re
which show
d the highes
industry, and
second to
n did note i
strial dispute
ince the ver
at on the basi
t against the
mpacts of ind
noted that th
businesses fro
the Australia
rial actions
bans or se
tween prote
y into the Wo
into Public In
into Public In
ry into Public ommission In 5, pp 666-670.
eport concer
ws that fro
st average nu
d from 2010-
coal mining
in its Public
es in the con
ry high rate
is of the data
size of the c
dustrial dispu
he days lost m
om industria
an Bureau o
such as wo
condary bo
cted and u
orkplace Relat
nfrastructure, I
nfrastructure, I
Infrastructure, quiry into th
rning the W
om 2001-2
umber of day
-2014 had th
g.110 How
c Infrastructu
struction ind
es of the 19
a from the A
construction
utes are very l
measure is un
al activity for
of Statistics
ork-to-rule, g
ycotts (nor
unprotected
tions Framew
Inquiry Repor
Inquiry Repor
Inquiry Repor he Workplace
Workplace
2013, the
ys lost to
he second
ever, the
ure report
dustry has
970s and
Australian
industry,
low’.112
unlikely to
r a variety
does not
go-slows,
does it
industrial
work, Draft
rt, 27/5/14,
rt, 27/5/14,
rt, 27/5/14, Relations
427
92.
114 Produc Vol 2, p 54
the (b)
wor
stop
sma
wor
the (c)
the
wh
a su
thre (d)
stat
and
mu (e)
con
In terms o
productivity
follows:114
[N]otw and the to whic improv matter.
The Co and oth
ctivity Commis 43.
data only in
rking days
ppages amon
all number o
rk on a proje
cost of indu
working da
ere a short de
ubstantial pro
eats of actio
tistics yet th
d
uch of the
nstruction, is
f the claim
gains, the Pr
withstanding th e ABCC had n ch their impac vements in agg
…
ommission’s v her micro evid
ssion Inquiry
ncludes a dis
lost, the res
ng large wor
of employee
ect) might not
ustrial action
ays lost, pa
elay in relati
oductivity eff
n and aborte
hey may hav
construction
not affected
ms concernin
roductivity C
e likelihood th net positive pro cts did, or eve gregate constru
view is that giv dence, there is
into Public In
spute if it am
sult being th
rkforces, or l
es (not causi
t be counted
is not necess
articularly on
on to a time
ffect on the w
ed action are
ve a substant
n industry, p
by industrial
ng economi
Commission’
hat the [Build oductivity and en reasonably uction industry
ven the case s s no doubt tha
nfrastructure, I
mounts to 10
hat some br
longer stoppa
ing a stoppa
in the data;
sarily propor
n a construc
critical step
whole site;
e not reflect
tial productiv
particularly
l action.
ic modelling
s conclusion
ding Industry cost impacts, could, show u y productivity
studies, indust at local produ
Inquiry Repor
0 or more
rief work
ages by a
age of all
rtionate to
ction site
will have
ted in the
vity cost;
dwelling
g of the
ns were as
Taskforce] the degree up as large is another
try surveys uctivity has
rt, 27/5/14,
428
93.
94.
95.
115 Produc Vol 2, p 54 116
Produc Vol 2, p 49
been ad some b likely meticul Econom Industry constru materia regime
This is its natu arrange shaping datasets
The report w
the non-dw
extremely p
aggregate pr
The overall
summarised
[T]he m Buildin parts of entire in
These findin
on industria
industry regu
and survey r
ctivity Commis 44.
ctivity Commis 95.
dversely affect building sites, to have imp lously, the
mics] and other y Taskforce]/A uction product al aggregate ef
did not have a
neither surpris ure, it is hard ements, includ g workplace p
s and statistica
went on to ex
welling build
ositive outco
roductivity n
findings of
in this way:1
more stringent ng Industry Tas f the industry, ndustry.
ngs, particula
l disputes, s
ulator on pro
esults consid
ssion Inquiry
ssion Inquiry
ted by union and that the [B proved outco quantitative rs do not provi
ABCC regime ivity or that ffects. Indeed a large aggrega
sing, nor inimi d to isolate n ding industrial productivity, e al noise.
xplain how a
ding sector
ome’ - wou
umbers.115
f the report 116
IR regime com skforce … is li but these effec
arly those in r
support the c
oductivity gro
dered in the W
into Public In
into Public In
(and associate Building Indus omes. Howe results prov
ide credible ev e created a r
the removal d, the availabl ate impact.
ical to the need numerically th relations, fro especially give
a 5% product
- what wa
uld be nearly
in relation
mmencing with ikely to have in cts cannot be r
relation to th
continued ex
ounds. So, to
Wilcox Repor
nfrastructure, I
nfrastructure, I
ed employer) c stry Taskforce ever, when ided by [In
vidence that the resurgence in of the ABCC le date sugges
d for further re he effects of om all the oth en small and
tivity improv
as described
y indiscernib
to productiv
h the establishm ncreased produ robustly identif
he effect of th
xistence of a
oo, do the cas
rt:
Inquiry Repor
Inquiry Repor
conduct on e]/ABCC is scrutinised ndependent
e [Building aggregate C has had
sts that the
eform. By workplace her factors inadequate
vement in
d as ‘an
ble in the
vity were
ment of the uctivity for fied for the
he ABCC
a separate
se studies
rt, 27/5/14,
rt, 27/5/14,
429
96.
117 Grocon working d working d Project ove days or mo man hours M Wilcox March 200 118
M Wil Industry, M 119
M Wil Industry, M
Com (a)
Ene
und
Con
sho
disp
Sur (b)
the
par
ind
of t
200
an
an
beh
by
Moreover, th
imposing blo
n compared th days lost to ind days lost to in er 2001-2004 (
ore, 10 AIRC a lost due to ind QC, Transitio 09, pp 48-49, p
lcox QC, Tran March 2009, pp
lcox QC, Tran March 2009, p
mparisons pu
ergy Limited
dertaken bef
nstruction In
owed a mark
putation.117
rvey results
perception
rticipants we
dustrial harmo
the Building
05 (Cth), that
industry wat
industry mo
have suitably
those with w
he logic of e
ockades and
he QV Projec dustrial disput ndustrial dispu (254,460 man
applications) a dustrial action, on to the Fair W ara 5.62.
nsition to the p 49-54.
nsition to the 54.
ut forward b
d, both of
fore the com
ndustry Impro
ked reductio
obtained by
ns of a s
ere that the
ony and prod
g and Constr
t this was in p
tchdog, and t
onitor to ens
y,118 which ac
whom Mr Wil
events indica
d work stopp
ct in central ation) and the tation), and W hours lost due and the LNG T
3 stoppages of Work Act for th
Fair Work A
Fair Work A
by Grocon Pt
which comp
mmencement
ovement Act
on in lost tim
an employe
ignificant n
ere had bee
ductivity sinc
ruction Indus
part attributa
that it was im
sure that wo
ccorded with
lcox had con
ates that the
pages has a n
Melbourne ov e AXA project Woodside com e to industrial a
Train 5 project f 2 days or mor he Building an
Act for the Bu
Act for the Bu
ty Ltd and W
pared major
of the Buil
2005 (Cth)
me due to
er body indic
number of
en improvem
ce the comm
stry Improve
able to the pr
mportant that
orkers and e
h the views e
nsulted anecd
conduct of u
negative infl
ver 1999-2002 t over 2005-20 mpared the LN action, 17 stop
over 2005-20 re, 4 AIRC app nd Constructio
uilding and Co
uilding and Co
Woodside
r projects
lding and
and after,
industrial
cated that
industry
ments in
encement
ement Act
resence of
t there be
employers
expressed
dotally.119
unions in
luence on
2 (86/1156 007 (1/556 NG Train 4 ppages of 2
08 (27,424 plications): n Industry,
onstruction
onstruction
430
97.
120 See Vol 121 Produc Vol 2, p 53 122
Produc Vol 2, p 53
productivity
blocks suppl
work on the
schedule. T
delay and d
money, for
relatively sm
The costs as
may also be
period of a
with the cou
productivity
industry, is o
the commerc
work opport
agree to term
economically
no effect on
bottom line,
Having regar
no need for a
l 3, ch 6.3, para
ctivity Commis 39.
ctivity Commis 38.
. When a un
ly of goods
e site is not
The Commis
disruption on
example, d
mall project c
ssociated wi
e high.121 On
single day o
urse of condu
for individu
obvious. Mo
cial reputatio
tunities. In t
ms and condi
y efficient is
n the produc
there would
rd to all of th
an industry sp
a 152.
ssion Inquiry
ssion Inquiry
nion official c
or delivery
done in ac
ssion heard e
n building si
disruption of
can cost in th
th accelerati
nce such occ
or several da
uct that the un
ual projects,
oreover, delay
on of the con
that context,
itions in ente
s high.122 In
ctivity of a b
be little poin
he available m
pecific regul
into Public In
into Public In
causes emplo
of services t
cordance wi
evidence of
ites can cost
f a simple
he vicinity o
ion of works
casions (shou
ays) are mul
nions have a
and the build
ys are likely
ntractor, with
the pressure
rprise agreem
ndeed, if ind
building proj
nt in the unio
material, the
ator cannot b
nfrastructure, I
nfrastructure, I
oyees to stop
to a construc
ith the proje
the means b
t the project
concrete po
of $10,000-$1
s to overcom
uld they occ
ltiplied in ac
adopted, the i
ding and con
to result in d
h an impact
e on the con
ments that m
dustrial disrup
ject and the
ons engaging
argument tha
be sustained.
Inquiry Repor
Inquiry Repor
p work, or
ction site,
ect works
by which
t a lot of
our on a
15,000.120
me delays
cur over a
ccordance
impact on
nstruction
damage to
on future
ntractor to
may not be
ption had
erefore its
in it.
at there is
rt, 27/5/14,
rt, 27/5/14,
431
Efficiency
98.
99.
100.
101.
102.
y
The ACTU’
regulator lea
There is no
functions con
Further, a s
substantial e
though not p
squads addr
expertise is l
Moreover, h
separate fro
financial and
construction
objectives.
funds if there
Finally, a w
dispute resol
Wilcox inqu
’s contention
ads to ineffici
suggestion t
ncurrently w
separate ind
expertise and
perfect, analo
ressing diffe
likely to enco
having a build
om the Offi
d operational
industry
It also promo
e is a separat
well-resource
lution and en
uiry was to t
n that the e
iencies is also
that the Fair
with the FWB
dustry specif
familiarity w
ogue is the s
erent areas o
ourage efficie
ding and con
ice of the F
l independen
regulator’s
otes transpar
te body devo
ed separate
nforcement ou
the effect tha
existence of
o unsustainab
r Work Omb
II.
fic regulator
with the indu
separation of
of criminal
ency.
nstruction ind
Fair Work
nce in relatio
investigatio
rency and ac
ted to a parti
regulator ca
utcomes. Th
at during the
an industry
ble.
budsman exe
r is likely t
ustry. An app
f the police f
conduct. S
dustry regulat
Ombudsman
on to the buil
on and enf
ccountability
icular sector.
an assist in
he evidence b
e time of th
y specific
ercises its
to obtain
propriate,
force into
Specialist
tor that is
n ensures
lding and
forcement
of public
efficient
before the
e ABCC,
432
Bias
103.
104.
105.
123 Product Vol 2, p
Constructi 124 CFMEU the Buildin pp 7-8; AM into the B November 125
Lovewe
inspectors co
and the dispu
The third is
FWBII is, bi
The material
stat (a)
Com
of t
stat (b)
the
The first cat
upon was m
two other c
tivity Commis 550; M Wilc on Industry, M
U, Submission ng and Constru MWU, Submis Building and C
2013, paras 29
ell v O’Carroll
ould attend s
ute would be
sue that has
iased in its en
l said to supp
tements by m
mmission an
the way the A
tistics showin
ABCC again
tegory of ma
ade in an ex
ases relied u
ssion Inquiry R ox QC, Trans March 2009, p 1
to the Senate E uction Industry sion to the Sen Construction I 9-35.
(Spender ACJ
ites within an
e resolved soo
been raised
nforcement o
port this cont
members of t
nd judges wh
ABCC condu
ng that more
nst unions th
aterial is ver
tempore, an
upon, the A
Report: Public sition to the F 14, para 3.24.
Education and y (Improving P nate Education Industry (Impr
J, QUD 427/20
n hour of not
on thereafter
d is that the
of industrial l
ention consis
the Australia
hich are said
ucted proceed
proceedings
an against em
ry slight. O
d unpublishe
ABCC was su
c Infrastructure Fair Work Ac
Economics Le Productivity) B and Economic roving Produc
07, transcript,
tification of a
.123
ABCC was
laws against u
sts of:124
an Industrial
to be heavil
dings; and
s were comm
mployers.
One observati
ed, decision.1
uccessful or
e, No 71, 27 M ct for the Bu
egislation Com Bill 2013 (Cth) cs Legislation C ctivity) Bill 2
8 October 200
a dispute,
s, and the
unions.
Relations
ly critical
menced by
ion relied 125 In the
r partially
May 2014, uilding and
mmittee into ), 22/11/13, Committee 013 (Cth),
08).
433
106.
107.
Discrimin
108.
126 Re Mar [2008] FCA
successful.12
the existence
The second c
ABCC comm
does not esta
of the publis
a high level o
is suggestive
In any even
building indu
The Commo
relation to th
the Common
of the ABC
(Improvin g P
the independ
of the Ombu
available tha
nation
The final iss
building and
to this argum
‘the unequal
rtino [2007] AI A 1804.
26
None of th
e of an anti-u
category of m
menced mor
ablish that th
shed annual r
of success of
e of proceedin
nt, concerns
ustry regulat
onwealth Om
he investigati
nwealth Omb
CC’s powers
Productivity)
dence of the
udsman could
at would sugg
sue is an argu
d construction
ment is that
l treatment o
IRC 717; Duffy
he statement
union bias on
material is al
re proceeding
he ABCC wa
reports of the
f proceedings
ngs being bro
about the c
tor can be ad
mbudsman h
ive powers of
budsman hav
in the Bui
) Bill 2013 (
regulator in
d be expande
gest that this
ument that h
n industry is
the essence
of equals’, bu
fy v Constructio
ts comes even
n the part of th
so unpersuas
gs against un
as in fact bia
e ABCC and
s brought by
ought with a
conduct and
ddressed by in
has an expre
f the FWBII.
ve a role in ov
ilding and C
(Cth). If the
other respec
ed. There is
is necessary
having a sepa
discriminato
of discrimin
ut also ‘in th
on, Forestry, M
n close to est
he ABCC.
sive. The fac
nions than e
ased. A cons
d the FWBII
both regulat
proper basis
independenc
ndependent o
ess oversigh
. It was prop
verseeing the
Construction
ere is a conce
cts, the over
no material
.
arate regulato
ory. The sho
nation lies no
he equal trea
Mining and Ene
tablishing
ct that the
employers
sideration
discloses
tors. That
s.
ce of the
oversight.
ht role in
posed that
e exercise
Industry
ern about
sight role
presently
or for the
ort answer
ot only in
atment of
ergy Union
434
Conclusi
109.
110.
111.
127 See, eg,
those who a
outcome is
treatment of
of the fina
specialised l
professions
manner in w
demonstrate
case of the
special treatm
ions
For the reas
separate ind
industry. T
independent
Work Ombu
Apart from
discussed in
briefly be tou
The first issu
issue. The
incorrectly
somewhat c
, Austin v Com
are not equa
not the prod
f a particular
ancial servic
laws and the
are, likewise
which their
in detail the
building and
ment have alr
ons above, i
dustry-specifi
The reasons
regulator, an
udsman.
the large qu
n the followi
uched upon.
ue is the nam
current situ
referred to
confusing, an
monwealth (20
als’ where th
duct of a rel
industry is n
ces industry
supervision
e, subject to
work is und
e public inter
d constructio
ready been a
it is recomm
ic regulator f
advanced a
nd not simpl
uestion about
ing section,
me of the reg
uation wher
as Fair Wo
nd wrongly
003) 215 CLR
he different
levant distin
not a novel co
y, for exam
of a speciali
specialised
dertaken. It
rest in that st
on industry,
advanced.
mended that th
for the build
also support
ly as part of
t the regulat
there are tw
ulator. This
re the FWB
ork Building
suggests to
185 at [118].
treatment or
nction.127 Sp
oncept: differ
mple, are su
ised regulato
laws that go
t is not nec
tate of affair
the justifica
here continu
ding and con
t its retentio
the Office o
tor’s powers
wo issues tha
is largely a
BII is comm
g & Constr
o the public
r unequal
pecialised
rent areas
ubject to
or. Many
overn the
cessary to
rs. In the
ations for
ue to be a
nstruction
on as an
of the Fair
which is
at should
symbolic
monly but
ruction is
and the
435
112.
Recomm
There sh
separate
investigat
industrial
128 See Fai
industry tha
Commission
be referred to
The second
largely on t
Currently, th
otherwise co
including th
Building and
(Cth) propos
supplying of
circumstance
would ensur
supply of m
of disrupting
that ‘buildin
materials, oth
mendation 61
hould continu
from the O
ting and enf
l laws in conn
ir Work (Buildi
at the regu
n. For the pu
o as the ‘buil
issue is the
the definition
hat definitio
overs the w
he constructi
d Constructio
sed to expand
f goods dire
es that affect
re that the re
materials to a
g work on th
ng work’ doe
her than on-s
1
ue to be a b
Office of the
forcing the F
nection with
ing Industry) A
ulator is co
rposes of thi
lding and con
e regulator’s
n of ‘buildin
on excludes
whole of civ
ion of infra
on Industr y (I
d that definit
ectly to build
ted Boral, th
egulator can
building pro
he site. The
es not includ
site.
building and
e Fair Work
Fair Work A
building ind
Act 2012 (Cth),
onnected w
s Report, the
nstruction ind
jurisdictiona
ng work’ in
domestic or
vil and comm
structure. A
(Improvin g P
tion to includ
ding sites. H
his seems a s
deal with at
oject which w
legislation s
de the manu
d constructio
k Ombudsma
Act 2009 (Cth
dustry particip
, s 5.
with the Fa
e regulator w
dustry regula
al scope. T
the FW (B
r home buil
mmercial con
As noted ab
Productivity)
de the transp
Having rega
sensible exte
ttempts to di
would have t
should explic
ufacturing of
on industry r
an, with the
h) and other
pants.
air Work
will simply
ator’.
That turns
I) Act.128
ding, but
nstruction,
bove, the
Bill 2013
porting or
ard to the
ension. It
isrupt the
the effect
citly state
f building
regulator,
e role of
r relevant
436
E - COM
GATHER
Introduc
113.
114.
115.
116.
MPULSORY
RING POW
ction
The second
gathering po
and construc
The powers
Construction
amounted to
to require a
between the
powers prop
(Improvin g P
56 above.
The questio
necessary, w
safeguards a
Concerns ex
incrimination
under the Ad
the decision
coercive po
contraventio
Y INVES
WERS
of the key
owers should
ction industry
s proposed
n Industry
o an entitlem
a person to
e existing po
posed unde
Productivity)
ons that ari
whether they
against misus
pressed inclu
n in respect o
dministrative
n to issue an
owers in re
ns.
STIGATORY
issues is wh
be capable o
y regulator.
for the A
(Improving
ent to requir
answer ques
owers of the
r the Build
) Bill 2013 a
ise are whe
are excessiv
e.
ude the abrog
of examinatio
Decisions (J
n examinatio
espect of w
Y AND
hat investiga
of being exer
ABCC under
Productivity
re the produc
stions on oa
e Director of
ding and C
are summaris
ether the p
ve, and wheth
gation of the
ons, the abse
Judicial Revi
on notice, an
what are a
INFORM
atory and inf
rcised by the
r the Build
ty) Bill 20
ction of docu
ath. The di
f the FWBII
Construction
sed in paragr
proposed pow
her there are
privilege aga
ence of judici
iew) Act 1977
nd the appli
almost entir
MATION
formation
e building
ding and
13 (Cth)
uments or
ifferences
I and the
Industry
raphs 55-
wers are
adequate
ainst self-ial review
7 (Cth) of
ication of
rely civil
437
Compuls
117.
Australia
118.
sory examin
In order to
context, it
empowering
gathering po
an Securities
Sections 19
2001 (Cth) p
19
(1)
(2)
30
(1)
ation power
place the va
is convenie
g other regu
owers.
and Investme
and 30 of t
provide as fol
Notice requ
This section suspects or b a matter th Division 1.
ASIC may, person, requ
(a) to g
wit
(b) to a
exa
Notice to p registered s
ASIC may g
(a) a b
or
(b) an e
rs of other re
arious subm
ent to set
ulators to ex
ents Commis
the Australia
llows:
uiring appeara
n applies wh believes that a hat it is inves
by written not uire the person:
give to ASIC th the investiga
appear before a amination on o
roduce books cheme
give to:
ody corporate
eligible person
egulators
issions ident
out some a
xercise com
ssion
an Securities
ance for exami
here ASIC, o person can giv stigating, or i
tice in the pres
all reasonable ation; and
a specified mem oath and to answ
s about affair
that is not an
n in relation to
tified below
analogous p
mpulsory info
and Investm
ination
on reasonable ve information is to investig
scribed form g
assistance in
mber or staff m wer questions.
rs of body cor
exempt public
such a body co
w in some
provisions
ormation-
ments Act
e grounds, relevant to gate, under
given to the
connection
member for
rporate or
c authority;
orporate;
438
119.
120.
I
129 Australi 130 Australi 131
Australi 132 Austra Securities a 133
Australi
Failure to co
offence car
imprisonmen
The power to
Investments
documents, m
Investments
have been a
information
contraventio
examination
representativ
privilege ag
requirement
may before
with the con
against the
penalty, othe
record.133
ian Securities a
ian Securities a
ian Securities a
lian Securities and Investmen
ian Securities a
a written noti staff member relating to aff
omply with r
rrying pena
nt for two ye
o issue a not
Act 2001 (
may only be
Commission
a contraventio
relevant
n.130 There
,131 but an A
ves from the
ainst self-inc
to produce a
giving an an
nsequence th
person in
er than a proc
and Investmen
and Investmen
and Investmen
s and Investm ts Commission
and Investmen
ice requiring th r, at a specifie ffairs of the bod
requirements
lties of 10
ars, or both.1
ice under s 1
(Cth), which
exercised w
ns (ASIC) ha
on, and that
to the inv
is an entitlem
ASIC examin
examination
crimination i
a record or g
nswer or sign
hat the answ
criminal pro
ceeding in re
ts Act 2001 (C
ts Act 2001 (C
ts Act 2001 (C
ments Act 200 n (No 3) (2008)
ts Act 2001 (C
he production ed place and t dy.
under the a
00 penalty
129
19 of the Aus
h may requir
where the Aus
as reason to s
the target o
vestigation
ment to lega
ner is empow
n in some ci
is abrogated
give evidence
ning a record
wer is not ad
oceedings, o
espect of falsi
th), s 63.
th), s 13.
th), s 23.
01 (Cth), s 22 ) 252 ALR 353
th), s 68.
to a specified time, of speci
above provisi
units ($18
stralian Secu
re the produ
stralian Secu
suspect that t
of the notice
of that s
al representat
wered to excl
ircumstances
d to the exte
e, save that th
d claim the p
dmissible in
or proceedin
ity of the sta
2; Collard v 3 at [39].
member or ified books
ions is an
8,000) or
rities and
uction of
urities and
there may
can give
suspected
tion at an
lude legal
s.132 The
ent of the
he person
privilege,
evidence
ngs for a
atement or
Australian
439
121.
Australia
122.
134 Australi 135 AWB Lt
There is no e
to refuse to
privilege, bu
been held th
legal profess
the recipient
an Competitio
Section 155
relevantly pr
Power
(1)
ian Securities a
td v Australian
express prov
o answer qu
ut consistentl
at a person m
sional privile
t of a notice t
on and Consu
5 of the C
rovides:
to obtain info
Subject to s or a Deputy capable of giving evide constitute, a Commission require that p
(a) to f
per com and info
(b) to p
in t not
(c) to a
spe ora
and Investmen
n Securities and
ision entitlin
uestions on
ly with well-may refuse to
ege.135 There
to have it set
umer Commi
Competition a
ormation, docu
subsection (2A y Chairperson furnishing in ence relating
a contraventio n may, by not person:
furnish to the C rson or, in th
mpetent officer d in the mann formation;
produce to the the notice actin tice, any such d
appear before t ecified in the n ally or in writin
ts Act 2001 (C
d Investments C
ng a person, o
the basis o
-established l
o answer a qu
e is no expre
aside.
ission
and Consum
uments and ev
A), if the Comm has reason to nformation, pr to a matter t on of this Ac
tice in writing
Commission, b he case of a
r of the body c ner specified
e Commission, ng on its behal documents; or
the Commissio notice to give a ng, and produce
th), s 69.
Commission (2
other than a l
of legal pro
legal princip
uestion on th
ess provision
mer Act 20
vidence
mission, the C believe that a roducing docu that constitute ct … a memb g served on th
by writing sign a body corpor corporate, with in the notice,
, or to a person lf, in accordanc
on, … at a time any such evide e any such doc
2008) 216 FCR
lawyer,134
ofessional
ples it has
he basis of
n entitling
010 (Cth)
Chairperson a person is uments or es, or may
ber of the
hat person,
ned by that rate, by a
hin the time , any such
n specified ce with the
e and place ence, either cuments.
R 577.
440
123.
124.
Commiss
125.
136 Compet 137 Compet 138
Compet 139 Compet 140
Taxatio 141 Taxatio
The evidenc
comply with
units or 2 ye
incrimination
record or gi
answer or si
that the ans
criminal pro
proceeding i
It is an excu
professional
provision all
as a matter
Australian C
ioner of Taxa
The Commis
information,
in the pers
administratio
with the re
tition and Cons
tition and Cons
tition and Cons
tition and Cons
on Administrati
on Administrati
ce may be r
h a notice is
ears imprison
n is abrogate
ive evidence
igning a reco
wer is not a
oceedings, o
n respect of f
use to refuse
privilege o
lowing legal
of practice r
Competition a
ation
ssioner of Ta
to attend an
son’s custod
on or operat
quirement is
sumer Act 2010
sumer Act 2010
sumer Act 2010
sumer Act 2010
ion Act 1953 (C
ion Act 1953 (C
required to b
an offence p
nment, or bo
ed to the exte
, save that t
ord claim the
admissible in
or proceedin
falsity of the
compliance w
or Cabinet s
representativ
representatio
and Consume
axation has p
nd give evide
dy and con
tion of a tax
s a crimina
0 (Cth), ss 155
0 (Cth), s 155(
0 (Cth), s 155(
0 (Cth), ss 155
Cth), Schedule
Cth), ss 8C, 8D
be given on
punishable by
oth.137 The p
ent of the requ
the person m
e privilege, w
n evidence a
ngs for a p
statement or
with a notice
secrecy.139
ves to appear
on is permitt
er Commissio
power to req
ence or to pr
ntrol for th
xation law.14
l offence.141
5(3), (3A).
(5), (6A).
(7).
5(7A), (7B).
1, Division 35
D.
oath.136 F
y a fine of 2
privilege aga
quirement to p
may before g
with the con
against the p
enalty, othe
r record.138
e on the basi
There is no
r at examina
ted by office
on (ACCC).
quire a perso
roduce any d
he purposes 40 Failure to 1
Penalties
53-10.
Failure to
20 penalty
ainst self-produce a
giving an
nsequence
person in
er than a
is of legal
o express
ations, but
ers of the
on to give
documents
s of the
o comply
increase
441
Australia
126.
Superann
127.
General M
128.
142 Taxatio 143 See Insu 144
Superan
depending o
penalty units
imprisonmen
an Prudential
The Australi
powers unde
Failure to c
maximum
imprisonmen
nuation
Similarly, a
powers und
(Supervision)
with a maxim
Manager o f t
Finally, as a
Manager has
of the FW(R
requirement
on Administrati
urance Act 197
nnuation Indus
on the numbe
s for a first o
nt, where mo
l Regulation A
ian Prudenti
er ss 55, 62C
comply with
penalties r
nt.143
range of re
der ss 269
n) Act 1993 (
mum penalty
the Fair Wor
already note
s compulsory
RO) Act. It
under s 335
ion Act 1953 (C
73 (Cth), ss 56
stry (Supervisio
er of previou
offence and 5
ore than 2 off
Authority
al Regulatio
C, 81 and 115
these provi
ranging fro
egulators ha
and 270 o
(Cth). Failur
y of 30 penalt
rk Commissio
d in Chapte
y information
is a criminal
5(2), with a
Cth), s 8E.
, 62D, 82 and
on) Act 1993 (C
us offences a
50 penalty un
fences have b
on Authority
5 of the Insur
isions is a c
om 3 mon
ave similar i
of the Supe
re to comply
ty units.144
on
er 2 of this V
n gathering p
l offence to
maximum p
115.
Cth), s 285.
and range be
nits and/or 12
been committ
(APRA) ha
rance Act 19
criminal offe
nths to 6
information
erannuation
y is a crimina
Volume, the
powers under
fail to comp
penalty of 30
etween 20
2 months’
ted.142
as similar
973 (Cth).
ence with
months
gathering
Industry
al offence
e General
r s 335(2)
ply with a
0 penalty
442
129.
Submissi
Submissio
130.
I
145 Althou example C 146
Austral p 36.
units in resp
body corpora
Some of the
regulator in
Most are ex
legislation th
than the car
Part IV of th
civil consequ
ions
ons in suppor
The Austra
examination
of those ex
Improvemen
powers to is
noting comp
agencies, su
ugh many con Corporations Ac
lian Chamber o
pect of an ind
ate.
e powers ide
the ordinar
xercisable in
hat attract on
rtel provision
he Competit
uences.
rt of compuls
alian Chamb
powers bein
xercised und
t Act 2005 (
ssue notices
pulsory pow
ch as the AC
ntraventions of ct 2001 (Cth),
of Commerce a
dividual, and
entified abov
ry administra
n relation to
nly civil con
ns, all of the
tion and Con
sory investiga
ber of Com
ng vested in t
der the Buil
(Cth).146 It s
and enforce
wers are wid
CCC, APRA
f the corporat ss 184, 1308-1
and Industry L
d 150 penalty
ve are exerci
ation of the
suspected c
sequences.145
e anti-compe
nsumer Act 2
ation powers
mmerce and
the ABCC th
lding and C
supported th
e failures to
dely used by
A, ASIC and
ions legislatio 1311, 1021A-P
Law Reform Su
y units in res
isable by the
e relevant le
contravention 5 For examp
etitive prohib
2010 (Cth) h
s
Industry s
hat reflect the
Construction
he use of exa
comply with
y many Go
the Commis
on are offence P.
ubmissions, Au
spect of a
e relevant
egislation.
ns of the
ple, other
bitions in
have only
supported
e strength
Industry
amination
h notices,
overnment
ssioner of
es: see for
ugust 2015,
443
131.
147 Austral p 38. 148
Housin para 5.20. 149
Master Legislation Productivi 150
Austral p 39. 151
Austra Complianc 2005 to 30 152
Uphold 25/3/2004,
Taxation.147
Builders Aus
The Australi
‘continuation
than was th
Report’.150
Commission
of the Interim
to the effect
The (a)
unw
ope
blac
the
lian Chamber o
ng Industry A
r Builders Au n Committee ty) Bill 2013 (C
lian Chamber o
alian Building ce Powers by t 0 September 20
ding the law - , p 13.
The HIA
stralia.149
ian Chamber
n of informa
he case at t
It referred
n Report on th
m Building I
that:
ere is a n
willingness o
erate with the
ck banning o
ABCC).
of Commerce a
Association Pt
ustralia, Subm into the B
Cth), 22/11/13
of Commerce a
g and Constr the Australian 008), p 6.
One Year On:
made a sim
of Commerc
ation gatherin
the time of
to the Austr
he Exercise o
Industry Tas
need for co
of many indu
e regulator fo
of contractors
and Industry L
ty Ltd Law R
mission to th Building and , p 30, paras 18
and Industry L
ruction Comm Building and
Findings of th
ilar submiss
ce and Indus
ng powers is
f the finalis
ralian Buildi
of Complianc
kforce,152 an
ompulsory p
ustry particip
or fear of retr
s that were kn
Law Reform Su
Reform Subm
e Senate Edu Construction 8.2-18.3.
Law Reform Su
mission, ‘Repo Construction C
he Interim Buil
sion,148 as di
try contende
even more i
ation of the
ing and Con
ce Powers,15
nd the Wilco
powers due
pants to be se
ribution (for
known to hav
ubmissions, Au
missions, 21/8/
ucation and E n Industry (
ubmissions, Au
ort on the E
Commission’
lding Industry
id Master
ed that the
important
e Wilcox
nstruction 1 findings
x Report,
e to the
een to co-example,
ve assisted
ugust 2015,
/15, p 10,
Economics (Improving
ugust 2015,
Exercise of (1 October
Taskforce,
444
132.
153 Royal C Vol 2, ch 8 154
Austral (received 2 155
Austral (received 2
The (b)
AB
Rec (c)
tow
CFM
inv
The ACCC
regulator, cit
in respect of
of a numbe
information
the Competit
It also refer
compliance
conceal evid
much highe
establish. Th
The dif fines, p may ha anti-com [sic] tha will out
Commission in 8.9.
lian Competiti 20/8/15), p 5.
lian Competiti 20/8/15), pp 6-
e exercise o
BCC led to a n
cent instance
wards Fair W
MEU demo
vestigative po
provided su
ting substant
f secondary b
r of witness
to the ACCC
tion and Con
rred to the
with the no
dence sought
er penalties
he submissio
fficultly [sic] i particularly for ave significant mpetitive cond
at may be done tweigh the low
nto Trade Union
on & Consum
on & Consum 7.
of compulso
number of su
es of threate
Work Buildin
onstrates the
owers.153
ubmissions in
tial barriers
boycott condu
ses to secon
C, even in re
nsumer Act 2
fact that the
tice creates
under s 155
for the con
on noted:155
n establishing r a corporation t incentives to duct. In some
e to a business w fines that mig
n Governance
mer Commissio
mer Commissio
ory examina
uccessful pen
ening and in
ng Inspector
e need for
n relation to
to assemblin
uct.154 It refe
ndary boycot
esponse to a
2010 (Cth), d
e low level
an incentive
5 rather than
ntraventions
a contraventio n, creates a sit o impede an in e situations, th
that complies ght be imposed
and Corruption
on Law Reform
on Law Reform
ation powers
nalty proceed
ntimidatory b
rs by officia
strong co
o its experien
ng probative
erred to the r
tt activity to
notice under
due to fear of
of penalty
e for some b
expose them
that eviden
on, coupled wi tuation where nvestigation in he commercia
with a section d for non-comp
n, Interim Rep
rm Submission
rm Submission
s by the
dings.
behaviour
als of the
ompulsory
nces as a
evidence
reluctance
o provide
r s 155 of
f reprisal.
for non-bodies to
mselves to
nce might
ith the low a business nto alleged al damages
155 notice pliance.
port (2014),
ns, undated
ns, undated
445
133.
134.
135.
156 Austral (received 2 157
Boral L 158 Citing t - Findings Australia, the Buildin pp 30-31, p
The ACCC a
to secondary
compliance
sanctions for
Boral submit
existing law
misuse of u
secondary b
evidence and
the ACCC.
the conseque
to be coope
customers ul
ACCC and
submitted t
compulsory
Master Buil
place there
withdrawn d
complaint w
powers inten
lian Competiti 20/8/15), p 5.
Law Reform Su
the Commonw s of the Build Submission to ng and Constru
para 18.3.
advocated gr
y boycott co
with informa
r non-compli
tted that its e
and enforce
union power.
oycott was t
d supporting
Boral indica
ences for the
erating volun
ltimately did
this Comm
that the sp
powers.
lders Austral
were a num
due to fear
was pursued.
nded to be
on & Consum
ubmissions, 20
wealth of Austra ding Industry T o the Senate Ed uction Industry
reater protect
onduct and
ation gatheri
iance.156
experience w
ment proced
. A key is
the willingne
g documents
ated that its
ir businesses
ntarily in B
d give eviden
mission.157 B
pecialist reg
lia submitted
mber of insta
of the ramif 158 Master
conferred o
mer Commissio
015, p 51.
alia Building I Taskforce’, Se ducation and E y (Improving P
tion for whis
the improve
ing powers,
with the CFM
dures are inad
sue it faced
ess of Boral
in relation to
customers v
s if they were
Boral’s proce
nce under co
Based on th
gulator shou
d that befor
ances in wh
fications tha
Builders Au
n the restor
on Law Reform
Industry Taskfo eptember 2005 Economics Leg Productivity) B
stleblowers in
ed ability to
including ap
MEU illustrate
dequate to co
d during the
witnesses to
o the ban to
voiced conce
e seen by the
eedings, but
ompulsion to
his experienc
uld have e
re the ABCC
hich complai
at might occ
ustralia supp
red ABCC u
rm Submission
force ‘Upholdin 5, p 11, Maste gislation Comm Bill 2013 (Cth)
n relation
o compel
ppropriate
es that the
ombat the
CFMEU
o provide
o Boral or
rns about
e CFMEU
t that the
o both the
ce, Boral
equivalent
C was in
ints were
cur if the
ported the
under the
ns, undated
ng the Law er Builders mittee into ), 22/11/13,
446
A
Submissio
136.
159 Austral Australia, the Buildin p 31, para 160
Master Legislation Productivi 161
Australi Legislation Productivi 162
Australi Legislation Productivi 163
Australi Legislation Productivi
Building and
(Cth), obser
compliance
Australian S
and that the
powers to
safeguard.160
ons against c
The ACTU
enhanced co
to the Sena
Employment
enforcement
property; an
protection of
ian Securities Submission to ng and Constru 18.6.
r Builders Au n Committee ty) Bill 2013 (C
ian Council of n Committee ty) Bill 2013 (C
ian Council of n Committee ty) Bill 2013 (C
ian Council of n Committee ty) Bill 2013 (C
d Constructio
rving in par
are less tha
Securities an
e procedure
the Commo 0
compulsory in
put forward
ompulsory in
ate Standing
t.161 It cont
t of industria
nd the right
f personal inf
and Investmen o the Senate Ed uction Industry
ustralia, Subm into the B
Cth), 22/11/13
f Trade Unions into the B
Cth), 22/11/13
f Trade Unions into the B
Cth), 22/11/13
f Trade Unions into the B
Cth), 22/11/13
on Industr y (I
rticular that
an those for
nd Investmen
for referral
onwealth O
nvestigation p
d strong opp
nformation ga
g Legislation
ended that s
l laws; that t
t to silence,
formation.162
nts Commission ducation and E y (Improving P
mission to th Building and , p 31, para 18
s, Submission t Building and , p 23, para 76
s, Submission t Building and , p 23, para 77
s, Submission t Building and , p 24, para 78
(Improvin g P
the penaltie
equivalent
nts Commissi
of the exe
Ombudsman
powers
position to t
athering pow
n Committee
such powers
they infringe
, as well a
2 The ACTU
n Act 2001 (Ct Economics Leg Productivity) B
e Senate Edu Construction .8.
to the Senate E Construction .
to the Senate E Construction .
to the Senate E Construction .
Productivity)
es proposed
provisions u
ion Act 2001
ercise of exa
was an ap
the reintrodu
wers in its su
e on Educa
have no pla
e rights of pri
as statutory
U asserts that:
th), s 63; Maste gislation Comm Bill 2013 (Cth)
ucation and E n Industry (
Education and E n Industry (
Education and E n Industry (
Education and E n Industry (
Bill 2013
for non-under the
1 (Cth)159
amination
ppropriate
uction of
ubmission
ation and
ace in the
ivacy and
rights to
:163
er Builders mittee into ), 22/11/13,
Economics (Improving
Economics (Improving
Economics (Improving
Economics (Improving
447
137.
138.
139.
164 Australi Legislation Productivi 165
Australi Legislation Productivi
The pu industri worker imping organis
The ACTU c
connection w
will be exam
Finally, the A
exercise of t
requirement
Tribunal for
‘switching o
The CFMEU
the introduct
the law, in th
the public re
Rather, the C
the powers
prejudice to
ian Council of n Committee ty) Bill 2013 (C
ian Council of n Committee ty) Bill 2013 (C
ublic interest ial arena to en s (as they hav e upon the exe se and take coll
contended th
with investig
mined further
ACTU objec
the powers c
to make an
r issue of a
ff’ the exami
U contends th
tion of coerc
hat they do n
evenue, serio
CFMEU con
out of the
the exercise
f Trade Unions into the B
Cth), 22/11/13
f Trade Unions into the B
Cth), 22/11/13
favours keepin nsure that, inso ve been overw ercise of indus
lective action.
hat the power
gation of terr
below.
cted to the re
currently rep
n application
an examinati
ination powe
hat the indus
cive powers i
not raise mat
ous corruptio
ntends that th
industrial a
of industrial
s, Submission t Building and , p 23, para 77
s, Submission t Building and , p 24, para 80
ng these type ofar as the pow whelmingly in strial rights, lik
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rorist activity
emoval of ‘sa
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to the Senate E Construction .
to the Senate E Construction .
es of powers wers are directe Australia), th ke the right to
r to those av
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afeguards’ ag
FWBII, inclu
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and the prov
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ction does no
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onal security,
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so asserts
Economics (Improving
Economics (Improving
448
140.
141.
142.
166 CFMEU the Buildin p 15, para 167
CFMEU the Buildin p 9, paras 4 168
AMWU the Buildin 2013, p 10
that the Fair
coercive pow
The CFMEU
number of c
the period fr
issued, of wh
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do not sugge
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confer judici
George Will
of Public La
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U, Submission ng and Constru 7.2-7.4.
U, Submission ng and Constru 4.12-4.13.
U, Submission ng and Constru , para 40-42.
r Work Ombu
wers as are pr
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compulsory e
from 1 Octob
hich 138 wer
officials.167
est that the A
powers. M
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eserved to s
a warrant wo
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n Industr y (I
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liams and Ni
aw, also put
Committee o
to the Senate E uction Industry
to the Senate E uction Industry
to the Senate E uction Industry
udsman has
roposed and
ion also refe
examination
ber 2005 to
re issued to e
It may be n
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Moreover, on
mployers.
rts that coer
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operated eff
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30 April 20
employees, 5
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inal and terr
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suggested in
Productivity)
ative body.16
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ubmission to
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fectively with
unnecessary
tistics conce
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rorist activity
MWU assert
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Gilbert + Tob
o the Senate
oyment in re
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egislation Com Bill 2013 (Cth)
egislation Com ill 2013 (Cth),
hout such
y.166
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ices were
ement and
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y, and in
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ding and
Cth) is to
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Standing
elation to
mmittee into ), 22/11/13,
mmittee into ), 22/11/13,
mmittee into November
449
169 William Constructio 170
William Constructio 171 Lovewe ACJ, cited Building an 257-258.
the Building
2013 (Cth).
concerning t
submissions
scope of the
were, in sum
The (a)
and
too
wh
pow
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The (b)
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ell v O’Carrol d in Williams, nd Constructio
g and Constr
The submi
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e power to ob
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broad, limit
at may be re
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quiry.170
e other limit
s the proper
discretion o
ABCC’s de
ir officials ra
ctions 52(7)
dustry Improv
ainst self-inc
Garrity N, ‘The n’ (2008) 21 A
Garrity N, ‘The n’ (2008) 21 A
l, (unreported, G and McGar on Commission
ruction Indus
ission attach
ation powers
a ‘range of
posed in the
btain evidenc
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ted only by
elevant to an
used in aid o
to the powe
subject of an
f the ABCC.
cision to inv
ather than the
and 53 of
vement Act 2
rimination a
e Investigatory Australian Jour
e Investigatory Australian Jour
, QUD 427/20 rrity N, ‘The I n’ (2008) 21 Au
str y ( Improv
hed a previou
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f concerns’ a
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Improvemen
the discretio
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of a fishing
er to require p
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. A case wa
vestigate and
e employer w
f the Buildin
2005 (Cth) o
and the opera
Powers of the rnal of Labour
Powers of the rnal of Labour
007, transcript, Investigatory P ustralian Journ
ving Producti
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about the na
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to s 52 of the
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on of the AB
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ng and Con
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ation of secr
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e Australian Bu Law 244 at 25
8/10/2008) pe Powers of the nal of Labour L
ivity) Bill
ed article
C.169 The
ature and
expressed
e Building
(Cth) was
BCC as to
lowed the
or roving
f evidence
was also at
in which
nions and
d.171
nstruction
privilege
recy laws
uilding and
uilding and 56.
er Spender Australian Law 244 at
450
172 William Constructio 173
William Constructio 174
William Constructio 175
William Constructio
and
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ms, G and McG on Commissio
d the public i
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amination m
ntravention o
en adequate
demnities pro
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th).173
e penalties fo
Buildin g a
05 (Cth) wer
on official
dence agains
ere were insu
cretion to is
nstruction In
hors contend
exercise of
Garrity N, ‘The n’ (2008) 21 A
Garrity N, ‘The n’ (2008) 21 A
Garrity N, ‘The n’ (2008) 21 A
Garrity N, ‘The n’ (2008) 21 A
interest, with
ange of po
may have e
of laws and
ely safeguar
ovided for
Construction
or non-comp
and Constru
re unjustifiab
who object
st his colleagu
ufficient chec
ssue a s 52
ndustry Imp
d that ASIO
its investigat
e Investigatory Australian Jour
e Investigatory Australian Jour
e Investigatory Australian Jour
e Investigatory Australian Jour
hout any iden
otential targ
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rded by th
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Industry Im
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ction Indust
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rovement Ac
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tory powers,
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Powers of the rnal of Labour
Powers of the rnal of Labour
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ntified justifi
gets for co
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3(2) and 54
mprovement A
a notice unde
try Improvem
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g compelled
iple).174
xercise of the
der the Build
ct 2005 (Ct
o greater ove 175 and said
e Australian Bu Law 244 at 25
e Australian Bu Law 244 at 26
e Australian Bu Law 244 at 26
e Australian Bu Law 244 at 26
ication.172
ompulsory
nesses to
not have
ities and
4 of the
Act 2005
er s 52 of
ment Act
sed was a
d to give
e ABCC’s
lding and
th). The
ersight in
that there
uilding and 58-259.
uilding and 61-262.
uilding and 63-264.
uilding and 65.
451
Assessme
143.
144.
176 William Constructio 177
William Constructio
is n
oth
The (f)
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pow
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The materia
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major statuto
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participants
Having regar
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ms, G and McG on Commissio
no prospect f
her than under
e powers of
ailable to the
cuses for pro
binet docum
ministrative D
ailable in res
CCC. Moreo
wers reposed
the ACCC.177
l available in
d construction
provide a str
mation gather
ory regulator
of submiss
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they disagre
Garrity N, ‘The n’ (2008) 21 A
Garrity N, ‘The n’ (2008) 21 A
for review of
r s 75(v) of t
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spect of the
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f a decision
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that are equ
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Powers of the rnal of Labour
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to issue a s
ion.176
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essional privi
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ew) Act 1977
s 155 notic
ion of the co
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lt to conside
e Australian Bu Law 244 at 26
e Australian Bu Law 244 at 27
52 notice
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provides
ilege and
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ompulsory
e reposed
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ard in the
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ing them.
relation to
er such a
uilding and 66.
uilding and 70-272.
452
145.
146.
147.
148.
reluctance to
has already b
The submis
regard. It i
investigation
that it, or ot
Its account o
to a penalty
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penalties for
A number o
compulsory
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First, it has
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Secondly , t h
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necessarily i
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gerated or
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surers, or
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pe of an
regard of
wers that
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453
149.
150.
178 See Bu 102(2), (3) 179
See par 180 R v As Internation 543 at 553 181
See, e
Consumer Investment
incrimination
documents a
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proposed leg
comply with
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undermined.
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legislation.18
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Productivity)
privileges.181
expressly sta
Fourthly, co
issue notices
the powers
Commission
addressed b
uilding and Co ), 103, 104.
as 154-155.
ssociated North nal Pty Ltd v A , 560 per Glees
eg, Daniels C Commission ts Commission
n. Valuabl
and answers i
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trary to a num
eges such as
unless expre 80 Consisten
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ated.
oncerns abou
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ner of Taxati
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onstruction In
hern Collierie Australian Com son CJ, Gaudro
Corporation In (2002) 213 (2008) 216 FC
le evidence
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ry notices.
o much pro
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ut the breadt
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ion. In add
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nternational P CLR 543; AW CR 577
may be ac
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Indeed, fo
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missions, the
sional privil
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dition, any c
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CLR 738 at 74 onsumer Comm and Hayne JJ.
Pty Ltd v Aus WB Ltd v Au
cquired by
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process of
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ed this be
cretion to
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3 (Cth) cll
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petition & urities and
454
151.
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182 See Kir 183 Adminis 184
Adminis
gathering.
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regulators.
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fascination w
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Judiciar y A
administrativ
It is very di
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s 39B and u
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was issued w
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strative Decisio
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455
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153.
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roceedings.
powers exe
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Act 1979 (Cth
n Act 1979 (Cth
ifficult to
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PRA, the
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h), Part III
h), ss 34D-
456
154.
155.
189
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approve the
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provisions ex
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stry (Improvin
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giving of inf
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ct 2001 (Cth) s provides that th of the Compe ormation or an Neither provisi
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Cth). As
formation
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oducing a
he person
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s.190 The
ments and
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s 68, which he privilege etition and nswering a
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457
191 See Join in the Cor Sofronoff (1994) 10 Rights and 3/8/15), [1 192
Re an a Crim R 30
in scope bec
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the general
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There is no
possession o
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powers of th
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nt Statutory Co rporations Law P, ‘Derivative QUTLJ 122 a d Freedoms—E
2.96]-[12.97].
application un 5, [155]-[156]
cause immun
actical effect
compulsory p
n is a concer
ged to form
powers is re
l law prot
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industry reg
ty limited to
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warrant for
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the notice w
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nder the Major ] per Warren C
ities expresse
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orporations an stralian Securit ty and the inv 34, Australian
by Commonw
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ed in broade
aterial obtain
useless.191 B
re is no imm
nt as to whe
cessary, and
inst self-inc
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were obtained
o compulsion
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ion industry
rights of the
nd Securities, ‘U ties Commissi vestigation of Law Reform
ealth Laws (AL
stigative Powe
r terms were
ned as a resu
Balanced ag
munity, the re
ether the ex
an attendant
crimination
hich the buil
ropriate that t
nt of the no
en under com
d to documen
d or created
n. Extendin
urtail the inv
regulator in
individual co
Use Immunity ion Law’ (199 f Corporate wr Commission T
LRC Interim R
ers) Act 2004 (
e found to
ult of the
gainst that
egulator is
xercise of
t risk that
will be
lding and
there be a
otice, and
mpulsion.
nts in the
when the
g the use
estigative
a manner
oncerned.
Provisions 91) [3.1.5]; rongdoing’ Traditional Report 127,
(2009) 198
458
Recommendation 62
Legislation be enacted conferring the building and construction industry
regulator with compulsory investigatory and information gathering powers
equivalent to those possessed by other civil regulators. The powers set out in
the Building and Construction Industry (Improving Productivity) Bill 2013 (Cth)
appear appropriate in this regard.
Recommendation 63
There should be oversight by the Commonwealth Ombudsman of the powers
exercised by the building and construction regulator in the manner provided for
in the Building and Construction Industry (Improving Productivity) Bill 2013
(Cth).
Recommendation 64
Consideration be given to redrafting the use/derivative use immunity provisions
in clauses 102 and 104 of the Building and Construction Industry (Improving
Productivity) Bill 2013 (Cth) to provide protections equivalent to those available
in relation to the powers exercised by the Australian Securities and Investments
Commission.
459
F - IND
Issues
156.
157.
USTRY SPE
Determining
regulator lea
enforce. It
lawlessness
introduction
occurs on
industrial ac
unlawful ind
applicable un
The argumen
building and
them is that
construction
employment
treatment, e
action or hav
be an action
prevalent in
be argued th
Building and
(Cth) endeav
differences b
ECIFIC IND
g that there s
aves for con
has been su
in the bu
of specific p
building sit
ction) and g
dustrial activ
nder the FW
nt against th
d constructio
the culture
industry
t areas. The
either by int
ving higher p
nable nuisan
the construc
at to prohibit
d Constructio
voured to do
between the b
DUSTRIAL
hould be a b
nsideration w
uggested that
uilding and
provisions d
es (such as
greater pena
vities (such
Act.
hese measure
on industry
of lawlessne
differentiate
existence o
troducing sp
penalties. Fo
nce at comm
ction industry
t certain pick
on Industr y (I
o, simply re
building and
LAWS
building and
what laws t
t a further o
d constructio
directed at co
s picketing
alties for co
as coercion
s is that they
participants.
ess that exist
es that in
f that culture
pecific laws
or example, p
mon law - i
y than in oth
kets in the bu
(Improvin g P
flects the fa
construction
construction
that regulato
option for co
on industry
onduct that f
and other
ontravention
n) than are
y discriminat
. The argu
ts in the buil
ndustry from
e justifies di
concerning
picketing - w
is considerab
her industries
uilding indust
Productivity)
act that there
n industry and
n industry
or should
ombatting
y is the
frequently
unlawful
of other
presently
te against
ument for
lding and
m other
ifferential
building
which may
bly more
s. It may
try, as the
Bill 2013
e are real
d others.
460
158.
Current p
159.
160.
161.
193 Fair Wo 194 Fair Wo 195
Fair Wo
It is conveni
provisions u
industrial ac
Building and
(Cth).
position
Under the FW
commencing
safety net c
participants.
the Independ
The Directo
commenced
commencing
proceedings
have settled
The FW Act
coercion. M
threaten to ta
the other per
ork (Building I
ork (Building I
ork (Building I
ient, for the p
under the F
ction, as wel
d Constructio
W(BI) Act, t
g proceeding
contractual e 193 The desi
dent Contrac
or is also em
by others.19
g or continu
(ordinarily,
their claims
t contains a n
More specific
ake, any actio
rson, or a thir
Industry) Act 2
Industry) Act 2
Industry) Act 2
purposes of d
FW Act pro
l as the prov
on Industr y (I
the Director
gs to enforc
entitlements’
ignated build
tors Act 2006
mpowered to 94 However
uing procee
employees
in the procee
number of ci
cally, a pers
on against an
rd person:
012 (Cth), s 10
012 (Cth), ss 7
012 (Cth), ss 7
discussion, to
ohibiting co
visions that w
(Improvin g P
of the FWB
e ‘designate
in relation
ding laws inc
6 (Cth).
o intervene
r, the Direct
dings where
and employ
edings.195
ivil remedy p
on must not
nother person
0(d).
71-72.
73-73A.
o refer to the
ercion and
were propos
Productivity)
BII has the fu
ed building
to building
clude the FW
in such pro
tor is preclu
e the partie
yers or organ
provisions pr
t organise or
n with intent
e existing
unlawful
sed in the
Bill 2013
unction of
laws and
g industry
W Act and
oceedings
ded from
es to the
nisations)
rohibiting
r take, or
to coerce
461
162.
163.
164.
196 Fair W This prohib 197
Fair Wo 198 Fair Wo 199
Fair W industrial a 200 Fair Wo
to (a)
exe
exe
to ‘ (b)
to e (c)
not
In addition,
basis of cove
The maximu
penalty units
and 300 pen
body corpora
The FW Act
the FW Act
industrial ac
complied w
employees o
claims in re
Work Act 2009 ( bition does not
ork Act 2009 (C
ork Act 2009 (C
Work Act 2009 action: s 354(2
ork Act 2009 (C
exercise or
ercise, a ‘wo
ercise a ‘work
engage in in
employ or no
t engage a pa
a person mu
erage of emp
um penalty f
s (currently $
nalty units (c
ate.200
t also deals w
(ss 408-416A
ction to be p
with. In pa
organised or
elation to a
(Cth), s 343(1) t apply to ‘prot
Cth), s 348. En
Cth), s 355.
9 (Cth), s 354 ).
Cth), ss 539, 54
not exercise
orkplace righ
kplace right’
dustrial activ
ot employ a
rticular indep
st not discrim
ployees by pa
for contrave
$10,800) for
currently $54
with industria
A) deals with
protected, a
articular, in
r engaged in
proposed en
). Workplace tected industria
ngage in indus
4(1). This pro
46(2).
e, or propos
ht’ or to ex
in a particul
vity’;197 or
particular pe
pendent cont
minate again
articular indu
ention of the
r a contraven
4,0000) for
al action. Div
h ‘protected i
number of f
relation to
n for the pu
nterprise agre
right is define al action’: s 34
trial activity is
ohibition does
se to exercis
xercise or pr
lar way;196
erson, or to e
tractor.198
st an employ
ustrial instrum
ese prohibitio
ntion by an i
a contravent
vision 2 of P
industrial act
formal steps
industrial a
urpose of su
eement, ther
ed very broadly 3(2).
s defined in s 3
s not apply to
se or not
ropose to
engage or
yer on the
ments.199
ons is 60
individual
tion by a
Part 3-3 of
tion’. For
s must be
action by
upporting
re must a
y in s 341.
347.
o protected
462
165.
201 Fair Wo 202 Fair Wo 203
Fair Wo 204 Fair Wo
ballot of em
under any la
action unles
injury, wilfu
property.202
Industrial ac
The (a)
or e
or
pen
con
(cu
cor
Cou
con
or a
Wh (b)
acti
stop
ind
plac
ork Act 2009 (C
ork Act 2009 (C
ork Act 2009 (C
ork Act 2009 (C
mployees appr
aw in relation
s the action
ful or dange
tion that is n
e effect of s 4
engaged in d
workplace
nalty is 60
ntravention
urrently $54
rporate.203 In
urt is empow
nduct on the
a person affe
here industria
ion, the Fair
p orders in r
dustrial action
ce on the app
Cth), s 409(2).
Cth), s 415.
Cth), ss 539, 54
Cth), ss 417(3)
roving the in
n to industria
has involved
erous destru
ot protected
417(1) is that
during the pen
determinatio
penalty un
by an indi
4,000) for
n addition, th
wered to gr
application
cted by the in
al action is o
r Work Com
respect of th
n or industri
plication of a
46(2).
), s 539, item 1
ndustrial acti
l action that
d or is likely
uction of pr
is dealt with
t industrial ac
ndency of an
on is unlawf
nits (curren
ividual and
a contrave
he Federal Co
rant an injun
of persons in
ndustrial acti
otherwise no
mmission is
hreatened, im
al action wh
a person affe
4, column 2.
ion.201 No a
is protected
y to involve
roperty or t
as follows:
ction that is o
n enterprise a
ful. The m
ntly $10,800
300 pena
ention by
ourt or Feder
nction to res
ncluding an
ion.204
ot protected
empowered
mpending or
hich is actual
ected by the
action lies
industrial
e personal
taking of
organised
agreement
maximum
0) for a
alty units
a body
ral Circuit
strain the
employer
industrial
to make
probable
lly taking
industrial
463
Proposed
166.
205 Fair Wo 206 Fair Wo 207
Fair Wo 208 Fair Wo
acti
pra
day
so,
Con (c)
unl
(cu
300
a bo
If t (d)
the
gra
the
com
for
d industry-spe
In summary
the Building
2013 (Cth) a
ork Act 2009 (C
ork Act 2009 (C
ork Act 2009 (C
ork Act 2009 (C
ion.205 Th e
acticable, dete
ys after the a
must make a
ntravention
awful. Th
urrently $10,8
0 penalty uni
ody corporat
the persons s
stop order, t
ant an injunct
contraven
mpensation o
a contravent
ecific provisi
, the industr
g and Constr
are as follows
Cth) ss 418-41
Cth), ss 539, 54
Cth), s 421(1).
Cth), s 421(4).
e Fair Work
ermine an ap
application is
an interim sto
of a stop or
he maximum
800) for a co
its (currently
te.206
subject to the
the Federal C
tion on the a
ntion.207
order may be
tion of a stop
ions
ry-specific pr
ruction Indus
s.
9.
46(2).
k Commissio
pplication for
s made, and
op order.
rder or an i
m penalty i
ontravention
y $54,0000) f
e stop orders
Court or Fede
application of
However,
made under
p order.208
rohibitions th
str y ( Improv
on must, as
r a stop order
if it is not a
interim stop
is 60 pena
by an indiv
for a contrav
s do not com
eral Circuit C
f a person af
exceptiona
r s 545 of the
hat were pro
ving Producti
soon as
r with two
able to do
p order is
alty units
vidual and
vention by
mply with
Court may
ffected by
ally, no
e FW Act
oposed in
ivity) Bill
464
167.
168.
169.
209 Building 210 Defined 211
One dif employee f 212 Building 213
Building
First, a civi
engaging un
action that i
defined in a
of the FW A
way as in th
enterprise ag
engaged in c
not ‘protecte
including a
with an inter
The propose
1,000 penalt
and 200 pen
court would
by the contra
Secondly, t
Productivity)
unlawful pic
this provisio
g and Construc
d in cll 7 and 8
fference was th for safety reaso
g and Construc
g and Construc
il penalty pr
nlawful indu
s not protect
similar way,
Act.211 Prote
he FW Act,
greement is n
concert with,
ed persons’.
union that is
rest in the par
ed maximum
ty units ($18
nalty units ($3
also be able
avention.212
the Building
) Bill 2013 (C
cketing.213 T
n as in relatio
ction Industry
respectively.
hat under the B ons was on the
ction Industry
ction Industry
rovision was
ustrial action
ted industria
and with sim
cted industri
except that
not protected
, or if the org
In substanc
s a bargainin
rticular enter
m penalty fo
0,000) for co
36,000) for c
e to award c
g and Co
Cth) propose
The same rem
on to unlawf
(Improving Pr
Bill the onus o e employee.
(Improving Pr
(Improving Pr
s proposed a
n,209 defined
al action.210
milar exclusio
ial action wa
action in re
d industrial a
ganisers incl
ce, protected
ng representa
rprise agreem
or unlawful
ontravention
contravention
compensation
nstruction I
ed a civil pen
medies were p
ful industrial
roductivity) Bil
of proving that
roductivity) Bil
roductivity) Bil
against orga
d to mean
Industrial ac
ons, as in ss
as defined in
elation to a
action if the
lude, persons
d persons are
ative and its
ment.
industrial ac
by a body c
n by an indiv
n to a person
Industr y (Im
nalty provisio
proposed in r
action.
ll 2013 (Cth), c
at action was ta
ll 2013 (Cth), c
ll 2013 (Cth), c
anising or
industrial
ction was
19(1), (2)
the same
proposed
action is
s who are
e persons,
s officers,
ction was
corporate,
vidual. A
n affected
Improving
on against
respect of
cl 46.
aken by an
cl 81.
cl 47.
465
170.
171.
172.
214 Building 215 Defined Territory b 216
Building
The Building
2013 (Cth)
injunction
picketing.214
The principa
restrictions
fourfold. Fi
a ‘stop orde
industrial ac
restrain unla
‘stop order’.
much higher
prohibition a
Thirdly, th
Productivity)
provisions
provisions e
covered enti
intent to affe
constitutiona
or inciting, o
g and Construc
d in clause 5 t body, or an org
g and Construc
g and Constr
also conta
restraining
al practical d
on unlawfu
irst, the ‘two
er’ is replac
ction. Secon
awful indust
. Thirdly, th
r than those u
against unlaw
he Building
) Bill 2013
against coe
each cover
ity215 that aff
fect the activ
ally covered
or action take
ction Industry
to mean a corp anisation for th
ction Industry
ruction Indus
ained provis
unlawful i
differences b
ul industrial
step’ proces
ed with an
ndly, in all c
trial action c
he penalties
under the FW
wful picketing
g and Con
(Cth) prop
ercion and
conduct un
ffects, is capa
ities, functio
entity, that
en with intent
(Improving Pr
poration, the C he purposes of
(Improving Pr
str y ( Improv
ions enablin
ndustrial ac
between thes
action und
ss in the FW
outright pro
ases an inju
conduct with
for unlawful
W Act. Fourt
g.
nstruction I
posed a ser
discriminati
ndertaken by
able of affec
ons, relations
consists of a
t to coerce:21
roductivity) Bil
Commonwealth f the FW(RO) A
roductivity) Bil
ving Product
ng the gran
ction and
se provisions
der the FW
Act of first
ohibition on
unction is ava
hout first ob
l industrial a
thly, there is
Industr y (Im
ries of civil
ion. The
y a constitu
cting or is ta
ships or busi
advising, enc 16
ll 2013 (Cth), c
h or a Commo Act.
ll 2013 (Cth), c
tivity) Bill
nt of an
unlawful
s and the
Act are
obtaining
unlawful
ailable to
btaining a
action are
a specific
Improving
l penalty
coercion
utionally-aken with
iness of a
couraging
cl 48.
onwealth or
cl 51.
466
173.
174.
175.
217 Building 218 Building 219
Building 220 Building
A p (a)
per
dut
A b (b)
par
A p (c)
bui
Clause 55
Productivity)
against a bu
proposed to b
Each of the
pecuniary pe
and 200 pena
Fourthly, t
Productivity)
cl 34(1) as a
be complied
work in a Te
respect of bu
g and Construc
g and Construc
g and Construc
g and Construc
person to em
rsons as buil
ties and respo
building emp
rticular super
person to ag
lding enterpr
of the Build
) Bill 2013 (
uilding empl
be covered b
above provis
enalties of up
alties units fo
the Building
) Bill 2013 (
a code of prac
d with by per
erritory or Co
uilding work
ction Industry
ction Industry
ction Industry
ction Industry
mploy or en
lding employ
onsibilities to
ployee or em
rannuation fu
gree or refu
rise agreemen
ding and C
(Cth) propos
loyer becaus
by a particula
sions were su
p to 1,000 p
or an individu
g and Con
Cth) provide
ctice, issued
rsons (being
ommonwealt
. The intenti
(Improving Pr
(Improving Pr
(Improving Pr
(Improving Pr
ngage or no
yees or cont
o those perso
mployer to n
und;218
se to make,
nt.219
Construction
ed to preven
se building e
ar industrial in
ubject to com
penalty units
ual.220
nstruction I
ed for a Build
by the releva
corporations
h place, or th
ion of the pr
roductivity) Bil
roductivity) Bil
roductivity) Bil
roductivity) Bil
ot employ o
tractors or to
ns;217
nominate or
vary or ter
Industr y (Im
nt the taking
employees a
nstrument.
mpensation o
for a body
Industr y (Im
ding Code, d
ant Minister,
s, persons un
he Commonw
rovision is to
ll 2013 (Cth), c
ll 2013 (Cth), c
ll 2013 (Cth), c
ll 2013 (Cth), c
or engage
o allocate
pay to a
rminate a
Improving
of action
are or are
orders and
corporate
Improving
defined in
, that is to
ndertaking
wealth) in
o continue
cl 52.
cl 53.
cl 54.
cl 81.
467
Submissi
Submissio
176.
177.
221 Explana Bill 2013 Industry) A history of t Territories Constructio 222
Australi 223 Boral L 224
Master 225 Austral p 40.
the present r
building ind
building wor
ions
ons supportin
In submissio
Boral223 and
Building and
(Cth). They
preventing c
industrial arr
on union a
conduct are m
The Austra
proposed inc
for building
atory Memoran (Cth), p 3. T Act 2012 (Cth) the Building C
is set out i
on Industry, Fi
ian Industry G
Law Reform Su
Builders Austr
ian Chamber o
regime pursu
dustry partici
rk.221
ng introducti
ons to the C
d Master B
d Constructio
y asserted th
coercion of c
rangements o
agreements,
manifestly in
alian Chamb
creases in the
industry pa
ndum, Building The present Bu , s 27(1) and c Codes implemen
n the Cole R inal Report (20
roup Law Refo
ubmissions, 20
ralia Law Refo
of Commerce a
uant to whic
ipants who u
ion of industr
ommission,
Builders Aus
on Industr y (I
hat (a) the c
contractors to
or to contract
and (b) the
nadequate.
ber of Com
e penalties fo
articipants.225
g and Construc uilding Code w ommenced ope nted by the Co Report: Royal
003), Vol 7, ch
orm Submissio
015, p 51.
orm Submission
and Industry L
ch standards
undertake Co
ry-specific la
the Australia
stralia224 stro
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current laws
o sign up to
t only with s
e current pe
mmerce and
or contravent 5 It submitt
ction Industry was made und eration on 1/2/ ommonwealth
Commission h 3, pp 51-54, 5
ons, 21/8/15, p
ns, 21/8/15, p 4
aw Reform Su
are set in re
ommonwealt
aws
an Industry
ongly suppo
Productivity)
s are not eff
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enalties for
Industry s
tion of indus
ted that the
(Improving Pr der Fair Work /2013. An acc and in various
into the Bu 57-58.
12.
46.
ubmissions, Au
elation to
th funded
Group,222
orted the
Bill 2013
fective in
inflexible
rs that are
unlawful
supported
strial laws
penalties
roductivity) k (Building count of the States and uilding and
ugust 2015,
468
178.
179.
226 Austral p 41-42. 227
Housin 5.22. 228
Housin 5.23-5.25. 229 Master Legislation Productivi
must be set
‘taking into
organisation
cost’.226
The Housin
laws.227 It
Commission
Commission
laws are nec
targeted pic
community.
happening in
Master Build
on Educatio
necessary to
and the MU
unassociated
will not aff
provisions i
lian Chamber o
ng Industry As
ng Industry Ass
r Builders Au n Committee ty) Bill 2013 (C
at an appro
o considerat
s to incur a
ng Industry A
referred to
n and the F
n, as demonst
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ckets on th
It contende
n the building
ders Australi
on and Emp
o combat wha
UA, in particu
d with a parti
ffect the pic
in s 57 of
of Commerce a
ssociation Pty
sociation Pty L
ustralia, Subm into the B
Cth), 22/11/13
opriate level
ion the vas
monetary p
Association
the number
Federal Cour
trating the ne
ddress the ec
he building
ed that these
g and constru
a submitted t
ployment tha
at has becom
ular, commu
icular union,
cketers.229
f the Build
and Industry L
Ltd Law Ref
Ltd Law Reform
mission to th Building and , p 23-28, para
to act as a
st capacity
penalty at litt
also suppor
r of cases b
rt, and the
eed for such
onomic impa
industry an
laws send a
uction industr
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at a prohibi
me a regular
unity pickets
so that orde
It added th
ding and C
Law Reform Su
form Submissi
m Submissions
e Senate Edu Construction as 16.5, 16.8-16
an effective
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tle overall o
rted industry
before the F
evidence be
laws. It arg
act of large
nd also the
message tha
ry is unaccep
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ition on pic
tactic of the
which are n
ers binding th
hat the reve
Construction
ubmissions, Au
ions, 21/8/15,
s, 21/8/15, p 10
ucation and E n Industry (
6.23.
deterrent,
employee
or relative
y specific
air Work
efore the
gued these
scale and
e general
at what is
ptable.228
Committee
cketing is
e CFMEU
nominally
he unions
erse onus
Industry
ugust 2015,
p 10, para
0-11, paras
Economics (Improving
469
180.
230 Master Legislation Productivi 231
Indepe Productivit to the Sen Constructi 232
Law Co building http://www
(Improvin g P
unlawful pic
Master Buil
Economics
Committee
Independent
contractors w
for reasons o
FWBII is pr
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r Builders Au n Committee ty) Bill 2013 (C
ndent Econom ty: 2013 Upda nate Education on Industry (Im
ouncil of Austr and const
w.lawcouncil.as
Productivity)
ckets.230
ders Austral
in support
on Educat
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will often acc
of commercia
evented from
er elects to
xpressed con
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ase that the p
ants over th
ignificantly
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ustralia, Subm into the B
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lia also relie
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industry.232
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elease: ‘Law C dustry regula cil/images/LCA
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ss 73 and 73
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were likely
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The Australi
ns.233
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ouncil raises c ator’s role’
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ontrolling
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ignificant
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181.
I
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Committee Industry (I This possi Infrastructu 234
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See par 237 CFMEU Employme Bill 2013 (
ons opposing
The ACTU s
and Employ
stringent law
and constru
comprehensi
unions to tak
means to res
argued that
Industr y (Imp
unjustifiable
disputation i
ABCC was
made a simil
Council%20rais ruction%20indu
ian Mines and e on Education Improving Pro ibility was als
ure, Inquiry Re
ian Council of n Committee ty) Bill 2013 (C
lian Council of n Committee ty) Bill 2013 (C
agraph 76 abov
U, Submission ent’s inquiry in (Cth), 22/11/13
g industry-sp
submitted to
yment that i
ws in relation
uction indus
ively regulat
ke industrial
strain industr
the propose
proving Prod
e’, because th
in the buildin
abolished.236
lar submissio
ses%20concern ustry%20regul
Metals Associ n and Employ oductivity) Bill o averted to i
eport, 27/5/14,
f Trade Unions into the B
Cth), 22/11/13
f Trade Unions into the B
Cth), 22/11/13
ve.
n to the Senate nto the Building 3, p 13.
ecific laws
the Senate S
t opposes th
n to industrial
stry.234 It
tes and rest
action, and p
rial action ou
ed changes i
ductivity) Bil
here is no ev
ng industry h 6 The CFME
on.237
ns%20about%2 lators%20role.p
iation, Submis yment’s inquir l 2013 (Cth), N in the Product
Vol 2, p 503.
s, Submission t Building and , p 19.
s, Submission t Building and , p 20.
e Standing Leg g and Construc
Standing Com
he creation
l action by w
contended
tricts the ab
provides emp
utside the pro
n the Buildi
ll 2013 (Cth)
vidence to s
has materiall
EU, relying o
20dilution%20 pdf, accessed 1
sion to the Sen ry into the Bu November 201 tivity Commis
to the Senate E Construction
to the Senate E Construction
gislation Comm ction Industry
mmittee on E
of special a
workers in the
that the
bility of wor
ployers with
otections regi
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nate Standing L uilding and Co 13, p 33, para ssion Inquiry i
Education and E n Industry (
Education and E n Industry (
mittee on Edu (Improving Pr
Education
and more
e building
FW Act
rkers and
adequate
ime.235 It
nstruction
essary and
industrial
since the
ox report,
g%20and
Legislation onstruction as 176-177. into Public
Economics (Improving
Economics (Improving
ucation and roductivity)
471
182.
j
I
183.
238 Australi Legislation Productivi 239
CFMEU Employme Bill 2013 ( 240
Australi Legislation Productivi
The ACTU2
justification
the industry
economic im
construction
permitting te
risk of econo
that the max
Industr y ( Im
disproportion
industrial act
The ACTU
removal of
proceedings
suggests tha
proceedings
parties to th
desirable.
ian Council of n Committee ty) Bill 2013 (C
U, Submission ent’s inquiry in (Cth), 22/11/13
ian Council of n Committee ty) Bill 2013 (C
238 and the
for imposing
in which th
mportance tha
industry,
ermination o
omic harm ar
ximum penalt
mprovin g P
nate to the
tion.240
(supported
f laws prev
that have b
at there is n
or in permi
he conduct do
It character
f Trade Unions into the B
Cth), 22/11/13
n to the Senate nto the Building 3, p 14.
f Trade Unions into the B
Cth), 22/11/13
CFMEU239
g higher pen
hey are empl
at warrants s
and said th
of protected
re adequate p
ties proposed
Productivity)
e public ha
by the CFM
venting com
been settled
no benefit i
itting a regu
o not consid
rises the abi
s, Submission t Building and , p 22.
e Standing Leg g and Construc
s, Submission t Building and , p 23.
both conten
nalties on wo
oyed. They
such treatmen
hat provisio
industrial ac
protections. T
d in the Build
Bill 2013
arm occasio
MEU in this
mmencement
as between
in subjecting
ulator to seek
der that cours
ility of the
to the Senate E Construction
gislation Comm ction Industry
to the Senate E Construction
nded that the
orkers by ref
y disputed an
nt of the bui
ons in the
ction where t
The ACTU c
ding and Con
(Cth) are
oned by un
regard) opp
or continu
n private pa
g parties to
k penalties w
se to be nec
regulator t
Education and E n Industry (
mittee on Edu (Improving Pr
Education and E n Industry (
ere is no
ference to
ny special
lding and
FW Act
there is a
contended
nstruction
e grossly
nprotected
poses the
uation of
arties. It
multiple
where the
cessary or
to pursue
Economics (Improving
ucation and roductivity)
Economics (Improving
472
184.
Conclusi
185.
241 Australi Legislation Productivi 242
CFMEU Employme Bill 2013 Committee Industry (I 243
CFMEU Employme Bill 2013 (
proceedings
of disputes o
The CFMEU
on unlawful
taken in rela
is contrary to
submitted th
catch condu
motivated by
of assembly
ions
There is an
against unla
openly ackno
union object
laws govern
ian Council of n Committee ty) Bill 2013 (C
U, Submission ent’s inquiry in (Cth), 22/11/1 e on Education Improving Prod
U, Submission ent’s inquiry in (Cth), 22/11/13
independent
or fostering in
U and AMWU
industrial ac
ation to legiti
o the policy
hat the prohib
ct that is no
y a lawful pu
and of speec
obvious nee
awful conduc
owledge that
tives without
ning protected
f Trade Unions into the B
Cth), 22/11/13
n to the Senate nto the Building 3, p 11; AMW n and Employ
ductivity) Bill 2
n to the Senate nto the Building 3, p 17.
tly of settlem
ndustry relati
U both subm
ction has the
imate occupa
of ensuring
bition of unl
ot unlawful a
urpose, thus i
ch.243
ed for laws t
ct. In an en
t they will ta
t regard to w
d and unprot
s, Submission t Building and , p 25.
e Standing Leg g and Construc WU, Submissi yment’s inquir
2013, Novemb
e Standing Leg g and Construc
ment as cont
ionships.241
mitted that the
e potential to
ational health
safe workpla
lawful picket
at common l
imposing on
that ensure a
nvironment w
ake industrial
hether that a
tected indust
to the Senate E Construction
gislation Comm ction Industry on to the Sen ry into the Bu ber 2013, p 6, p
gislation Comm ction Industry
trary to the r
e proposed pr
catch condu
h and safety r
aces.242 The
ts has the po
aw and actio
the rights of
an effective
where union
l action to ac
action might
trial action, t
Education and E n Industry (
mittee on Edu (Improving Pr nate Standing L uilding and Co
paras 20-21.
mittee on Edu (Improving Pr
resolution
rohibition
uct that is
risks, and
e CFMEU
otential to
on that is
f freedom
deterrent
n officials
chieve the
break the
there is a
Economics (Improving
ucation and roductivity) Legislation onstruction
ucation and roductivity)
473
186.
187.
188.
need for law
provide stron
There is, ho
even where t
Subject to
proposed in
Productivity)
the FW Act.
governing bu
should apply
the FW Act a
and construc
relation to c
entitlement f
One matter
from the ma
penalties are
the construc
CFMEU app
like any othe
be consider
industrial ac
particular pe
discretion.
coercion an
increased. I
ws that expre
ng penalties f
wever, merit
there is a nee
certain mat
n the Build
) Bill 2013 (
This sugge
uilding indus
y to building
are necessary
ction industr
oercion to co
funds are dea
is the subst
atters canvass
e an ineffectiv
ction unions
pear to regard
er. That sugg
red dispropo
ction and c
enalties from
Rather, it su
d breaches
It is recomm
essly address
for contraven
t in uniform
ed for specifi
tters, the b
ding and Co
(Cth) are ver
ests that rathe
stry participa
industry par
y to deter unl
ry. General
ontribute to
alt with in Ch
tantial differe
sed in sectio
ve deterrent t
s, and judici
d financial p
gests that hig
ortionate to
oercion, par
m case to cas
uggests that
of ss 417 a
mended that th
s what is pr
ntion of them
ity of substa
c regulatory
building spec
onstruction
ry similar to
er than havin
ants, the prov
rticipants, bu
lawful condu
l amendment
superannuati
hapter 6 of th
ence in pena
on B and D a
to unlawful c
ial officers
penalties as s
gher maximu
the harm
rticularly wh
e are subject
the penaltie
and 421 sho
hey be incre
rohibited con
m.
antive indust
enforcement
cific industr
Industr y (Im
o those estab
ng separate le
visions of the
ut that amend
uct within the
ts to the FW
ion funds an
his Volume.
alties. It is
above that th
conduct on th
have noted
simply a busi
um penalties
caused by
hen the sele
t to the usua
es in the FW
ould be sub
ased to 1,00
nduct and
trial laws,
t.
rial laws
Improving
blished by
egislation
e FW Act
dments to
e building
W Act in
nd worker
apparent
he present
he part of
that the
iness cost
could not
unlawful
ection of
al judicial
W Act for
bstantially
00 penalty
474
189.
D
244 (1999) 9 245 Transfi Pty Ltd v N Energy Un Industry In 170 at [57 Postal, Plu
units for bod
strong argum
increase sho
effect the rec
them.
A second m
definition of
is arguably
worksite inc
or restriction
acceptance o
authorities o
Court in Da
held that pic
was directed
picket. The
picketing co
industrial ac
community
than one o
different for
the provisio
Davids Distr
91 FCR 463 at
eld Constructi NUW (2006) 1 nion (No 2) (20 nspectorate v C 7]-[59]. See a
umbing and All
dies corporat
ments that ev
ould be much
commended p
matter is whet
f ‘industrial a
sufficient to
luding by m
n on the per
of or offerin
on this point
avids Distribu
keting by a u
d by and to
reasoning s
ould be ‘indu
ction’ which
at large. Th
ccasion (per
rms that pick
n under con
ribution Pty
t [52].
ion Pty Ltd v A 58 IR 80 at [1 008) 170 FCR Construction, F also Communic
lied Services U
te and 200 p
ven these pe
h greater. P
penalties hav
ther picketin
action’ in s 1
o include, in
means of a pic
rformance of
ng for work
are uncertai
ution Pty Ltd
union did not
the work o
eemed to be
ustrial action
h would ha
hat decision
rhaps unsur
keting may ta
nsideration in
Ltd v Natio
AMWU [2002] 0]-[13]; Cahil 357 at [51]-[5 Forestry, Min cations, Electr Union of Austra
enalty units
enalties are t
Perhaps it is
ve, assuming
ng is caught b
19(1) of the F
n s 19(1)(b)
cket: it invol
f work by an
by an emplo
n. The Full
d v National
t fall within t
of the emplo
focused on
n’, it could
ave a preju
has been d
rprisingly, w
ake are cons
n some auth
onal Union o
FCA 171; Sa ll v Constructio 52]; Director of ing and Energ
rical, Electron alia v Laing (19
for others. T
too low, and
best to obse
g the legislatu
by the FW A
FW Act is b
), action to
lves ‘a ban, l
n employee
oyee.’ How
l Court of th
l Union o f W
the provision
oyees engage
the possibili
in turn be ‘
udicial effect
distinguished
when the nu
sidered).245 H
horities distin
of Workers c
aint-Gobain Wa on, Forestry, M f the Fair Wor gy Union [201 nic, Energy, In
998) 89 FCR 1
There are
d that the
erve what
ure adopts
Act. The
broad, and
disrupt a
limitation
or on the
wever, the
he Federal
Workers244
n unless it
ed in the
ity that if
‘protected
t on the
on more
umber of
However,
nguishing
concerned
Warehousing Mining and rk Building 5] FCAFC nformation, 17 at 32.
475
190.
191.
I
192.
246 Building 247 See Da [68]-[72].
contraventio
and Constr
contained an
action under
Picketing in
law.247 It is
that kind of
under s 418
than having
deal specific
The third ma
Improvemen
need first to
matter of c
industrial ac
more effect
significant e
cases where
time to prev
and submiss
reached abou
One final m
building and
g and Construc
avids Distribut
ns of the pro
ruction Indu
n express pro
rtaken by an o
nvolving obst
s highly anom
tortious indu
in relation to
special buil
cally with ind
atter is that u
t Act 2005 (C
obtain a stop
ommon sen
ction in the b
t. Short w
conomic effe
employers a
vent damagin
ions before t
ut that matter
matter that d
d constructio
ction Industry
tion Pty Ltd v
ohibition on u
ustry Improv
ovision defin
organisation.
truction and
malous if Fa
ustrial condu
o other types
ding industr
dustrially mot
under the Bu
Cth) industri
p order from
se, it is lik
building and
work stoppag
ect on constr
are unable to
ng industrial
the Commiss
r.
deserves con
on industry r
Improvement A
National Uni
unlawful acti
vement Act
ning unlawfu
.246
besetting is
air Work Com
uct when it c
of industrial
ry legislation
tivated picke
uilding and C
ial action is p
the Fair Wor
kely that a d
construction
ges and blo
ruction proje
o obtain a st
l action. Ho
sion do not e
nsideration i
egulator to m
Act 2005 (Cth)
ion of Workers
ion under the
2005 (Cth
ul industrial
s tortious at
mmission ca
can make sto
l action. Aga
n, the FW A
eting.
Construction
prohibited wi
rk Commissi
direct prohib
n industry wo
ockades can
ects, and ther
top order in
owever, the
enable any v
is the power
maintain enf
), ss 36-37.
s (1999) 91 F
e Building
h), which
action as
common
annot stop
op orders
ain, rather
Act should
n Industry
ithout the
ion. As a
bition on
ould have
n have a
re may be
sufficient
materials
view to be
rs of the
forcement
FCR 463 at
476
248 Under s 249 Under s 250
Under Act 2001 (C 251 Under s
proceedings.
whether sepa
raises two is
second is th
conduct. In
able indepen
unlawful con
affected by
including Fa
Work Comm
seek pecunia
compensatio
regulators ar
penalties fol
persons.
s 539 of the FW
s 310 of the FW
ss 12GBC and Cth), ss 1315,
ss 77 and 82 of
. Whether th
arate proceed
ssues. The f
e need for an
the present
ndently to ma
nduct withou
the conduct
air Work Ins
mission,249 A
ary penalties
on in respect
re prevented
llowing settle
W Act.
W(RO) Act.
d 12 GF of the 1317J of the C
f the Competiti
hat power sh
dings concern
first is the ne
n appropriate
context, it is
aintain enfor
ut being subje
t. It can be
spectors,248 t
ASIC,250 and
s while affec
t of the sam
d from maint
ement of pro
e Australian S Corporations A
on and Consum
hould be con
ning private i
eed for final
e regulatory
s important f
rcement proc
ect to the priv
e observed t
the General
the ACCC2
cted persons
e contravent
taining proce
oceedings co
Securities and I ct 2001 (Cth),
mer Act 2010 (
nstrained acc
individuals a
lity in litigat
response to
for the regula
ceedings in r
vate concern
that other re
Manager of 251 are empo
s are entitled
tions. None
eedings for p
oncerning the
Investments C
(Cth).
cording to
are settled
tion. The
unlawful
ator to be
relation to
s of those
egulators,
f the Fair
owered to
d to seek
e of those
pecuniary
e affected
Commission
477
Recomm
The build
enforce t
laws. T
commenc
according
been settl
Act 2012
Recomm
The Fair
(a) to
an
ac
an
(b) to
‘i
in
G - RIC
193.
mendation 65
ding and co
the Fair Wor
The power o
ce and main
g to whether
led. Accordi
(Cth) should
mendation 66
Work Act 20
o increase the
nd 355 (coe
ction) to 1,0
nd 200 penal
o provide th
industrial act
ndustrially m
O
Submissions
various med
unlawful a
consideration
5
nstruction in
rk Act 2009
of the build
ntain enforce
any other pr
ingly, ss 73 a
d be repealed
6
009 (Cth) be
e maximum
ercion) and
00 penalty u
lty units othe
hat picketing
tion’, and to
motivated pick
s to the Com
dia commen
activity in
n ought to b
ndustry regu
(Cth) and o
ding and co
ement procee
roceedings in
and 73A of t
d.
amended:
penalties for
ss 417(1) a
units for a co
erwise; and
g by employ
o deal specif
kets.
mmission by
ntators sugg
the buildin
be given to th
ulator continu
other existing
onstruction i
edings shoul
n respect of th
the Fair Wor
r contraventi
and 421(1)
ontravention
yees or emp
fically with
Boral in 20
ested that,
ng and co
he introducti
ue to investi
g designated
industry reg
ld not be co
he same cond
rk (Building
ions of ss 34
(prohibited
n by a body
ployee associ
the consequ
14 and state
in order to
onstruction
ion of laws s
igate and
d building
gulator to
onstrained
duct have
Industry)
43(1), 348
industrial
corporate
iations is
uences of
ements by
o combat
industry,
similar to
478
A
What is R
194.
195.
196.
252 Rackete 253 Rackete
the United
Act,252 comm
further subm
RICO?
Enacted by C
Organized C
crime by pr
lawful enterp
In very broad
It is unlawfu
wh (a)
rack
deb
ope
affe
thro (b)
coll
inte
acti
eer Influenced
eer Influenced
States Racke
monly know
missions on th
Congress in
Crime Contr
reventing the
prises.
d terms, the s
ul for any per
o has rece
keteering act
bt to use or
erate any ‘en
ect, interstate
ough ‘a pa
lection of an
erest or con
ivities of whi
and Corrupt O
and Corrupt O
eteer Influen
wn as RICO
he topic.
1970, RICO
rol Act of 19
e investment
scheme of RI
rson:253
eived any
tivity’ or thro
r invest that
terprise’ eng
e or foreign c
attern of ra
n unlawful
ntrol in any
ich affect, int
Organizations A
Organizations A
nced and Co
O. The Disc
was introdu
970 to seek
of unlawful
ICO is as fol
income thro
ough the coll
t money to
gaged in, or t
commerce;
acketeering
debt to acqu
y enterprise
terstate or fo
Act, 18 USC §§
Act, 18 USC §
Corrupt Orga
cussion Pape
uced as Title
to combat o
lly derived m
llows.
ough a ‘pa
lection of an
acquire, est
the activities
activity’ or
uire or main
engaged in
oreign comme
§ 1961-1968.
1962.
anizations
er sought
IX of the
organised
money in
attern of
unlawful
tablish or
of which
through
ntain any
n, or the
erce;
479
197.
198.
254 Rackete 255 Rackete 256
Rackete 257 Rackete
emp (c)
the
to c
affa
coll
to c (d)
(a)-
A ‘pattern o
activity’ the
definition o
numerous of
bribery, exto
An ‘enterpri
or ‘group o
entity’.256
A person wh
civil penalti
maximum pe
also have br
ordering div
eer Influenced
eer Influenced
eer Influenced
eer Influenced
ployed by or
activities of
conduct or p
airs through
lection of an
conspire to d
-(c).
of racketeerin
last of which
of ‘racketee
ffences includ
ortion, fraud,
ise’ includes
of individua
ho violates th
ies. Crimin
enalty of 20
road power t
vestment of a
and Corrupt O
and Corrupt O
and Corrupt O
and Corrupt O
r associated w
f which affec
participate in
h a ‘pattern
unlawful deb
do any of th
ng’ requires
h is within te
ering activit
ding, among
illegal gamb
a partnershi
als associate
he RICO pro
nal convictio
years’ impri
to restrain fu
assets, prohib
Organizations A
Organizations A
Organizations A
Organizations A
with any ente
ct, interstate
n the conduc
n of racke
bt; or
e things men
at least two
en years of a
ty’ is expa
other things
bling and ob
ip, corporatio
d in fact a
ohibitions is
on under RI
isonment.257
urther RICO
bition of enga
Act, 18 USC §
Act, 18 USC §
Act, 18 USC §
Act, 18 USC §
erprise engag
or foreign c
ct of that en
eteering act
ntioned in pa
acts of ‘rac
a previous ac
ansive and
s, murder, kid
struction of j
on, associatio
although not
liable to crim
ICO gives r
United Stat
violations,
aging in the
1961(5).
1961(1).
1961(4).
1963(a).
ged in, or
commerce
nterprise’s
tivity’ or
aragraphs
cketeering
ct.254 The
includes
dnapping,
justice.255
on, union
t a legal
minal and
rise to a
tes courts
including
activities
480
199.
j
200.
Adoption
201.
258 18 USC preventing influencing union mem 259
Rackete 260 Sedima the effect caused by racketeerin the racket Organisatio 261
Rackete 262 Boral L
of an enterpr
making due p
In addition,
RICO violat
jurisdiction t
on an anteri
plaintiff mu
contrary to
business or p
In addition,
one of ‘gen
expedited.261
n in Australi
Boral subm
Australia.262
C § 1964(a). Fo g defendant uni g union affairs mbers: United S
eer Influenced
SPRL v Imrex that recovery the establishm ng activity, rec
teering activi ons’ (2015) 52
eer Influenced
Law Reform Su
rise and the d
provision for
the legislati
tion to sue to
to hear a civ
ior convictio
st show that
RICO and
property.260
the Attorney
neral public 1
ia?
mitted that
The reasoni
or example, civ ion officials fro s and prohibit States v Local 5
and Corrupt O
x Co Inc 473 U on the basis o ment, operation covery on the b
ity: see E T
2 Am Crim L Re
and Corrupt O
ubmissions, 20
dissolution an
r the rights o
ion permits
o recover treb
vil RICO clai
on for violat
t there was
that the act
y-General ma
c importance
like legisla
ing put forw
vil preventativ om holding uni ting association 560 (IBT) 974
Organizations A
US 479 at 488-of § 1962(a) or n or investmen basis of § 196 T Phillips et
ev 1507 at 155
Organizations A
15, p 70.
nd reorganisa
f innocent pe
a person inj
ble the dama
im is broad,
ion of the c
a pattern of
tivity injured
ay designate
e’ following
ation should
ard was that
ve orders have b ion office, part n between cor F 2d 315 at 34
Act, 18 USC §
-95, 479 (1985 r (b) requires nt in the enter 62(c) requires p
al, ‘Rackete 3-1554.
Act, 18 USC §
ation of an e
ersons.258
jured by rea
ages sustained
and is not d
criminal statu
f racketeering
d the plaint
a civil RICO
g which the
d be introd
legislation li
been made in R ticipating in un rrupt union of 42, 344 (3d Cir
1964(c).
5). The author proof that the rprise as oppo proof of harm eer Influence
1966.
enterprise,
ason of a
d.259 The
dependant
ute. The
g activity
tiff in its
O case as
e case is
duced in
ike RICO
RICO suits nion rallies, fficials and r 1992).
rities are to e harm was osed to the caused by
d Corrupt
481
202.
203.
204.
205.
263 Master 264 Pub L N (3rd Cir 20 265
Though Finance Tr [29] and St
would provid
engage in ra
severe penal
Further, the
legislation s
maximum pe
In contrast, M
that such le
undertaken o
The RICO l
perceived in
organised cr
numerous a
umbrella.264
and lawlessn
various piec
Crime Comm
task of comb
The genesis
number of
Builders Austr
No 91-452, 84 003); Atlas Pile
h the differenc Trust Co Ltd v N tate of South A
de a substant
cketeering ac
ties and expe
e submission
such as prev
enalty of 20 y
Master Build
gislation be
on the broade
legislation w
adequacy in
rime. In part
cts of crimi
Australia’s
ness has pr
es of Comm
mission (AC
batting seriou
of the ACC
Royal Com
ralia Law Refo
4 Stat 922 (197 e Driving Co v
ces are primar New South Wa Australia v Tota
tial deterrent
ctivity by, am
edited hearin
n outlined
ventative ord
years’ impris
ders Australi
implemente
er effect it wo
was introduce
their crimina
ticular, the l
inal organisa
journey to a
roceeded dow
monwealth an
CC) is a natio
us and organi
lies in the in
mmissions, in
orm Submission
70); United Sta v Dicon Fin Co
rily of degree ales Crime Com ani (2010) 242
t to participan
mong other th
ng dates.
the procedu
ders, divestit
sonment.
a urged caut
ed without p
ould have on
ed in the Un
al and civil la
egislation w
ations under
address system
wn a differe
nd State legis
onal statutor
ised crime.
nquiries and r
n particular
ns, 21/8/15, pp
ates v Irizarry 886 F 2d 986
e: see the disc mmission (200 CLR 1 at [37]
nts in enterpr
hings, provid
ural benefits
ture of asse
tion in recom
proper resear
n the country.
nited States
aws to addres
was intended
r a single l
mic crime, c
ent path.265
slation, the A
ry authority
recommenda
the Costiga
p 48-49, para 8
341 F 3d 273 at 990 (8th Cir
cussions in Int 09) 240 CLR 3 ].
rises who
ding more
s of the
ets and a
mmending
rch being
.263
due to a
ss serious
to collect
egislative
corruption
Among
Australian
given the
ations of a
an Royal
4.
at 292 n 7 r 1989).
ternational 19 at [25]-
482
206.
207.
266 Royal C Final Repo 267
See Na Crime Auth 268
Explana Those pow Divisions 1 269
Austral the membe the Chief E Security un each State
Commission
final report
appropriately
The consequ
establishmen
The Nationa
established o
functions of
investigatory
intelligence
functions of
Criminal Inte
The ACC o
between the
crime.269 O
evidence co
Commission on ort (1984), Vol
ational Crime hority Bill 198
atory Memoran wers are conta 1A and 2.
ian Crime and ers of the ACC Executive Offi nder the Austra
and Territory P
n into the Fed
of the Cost
y adapted, th
uence was n
nt of the Nati
al Crime Auth
on 1 January
f the two bod
y powers in
and its inve
f the Nationa
elligence and
operates to
e relevant G
Once an in
ollated is the
n the Activitie l 3, pp 166, 174
Authority Ac 3 (Cth).
ndum, Australi ained in Austr
d Commission A C Board include icer of Custom alian Security I
Police Force an
derated Ship
tigan Royal
he RICO Ac
ot the introd
ional Crime A
hority was su
2003. One o
dies was tha
order for i
estigatory ro
al Crime Au
d the Office o
provide a
Government
nvestigation
en provided
s of the Feder 4, 229.
ct 1984 (Cth);
ian Crime Com ralian Crime
Act 2002 (Cth) es the Commis ms, the Chairpe Intelligence Or
nd the Commis
Painters and
Commission
ct be implem
duction of th
Authority.267
uperseded by
of the key di
at the ACC w
it to carry o
oles.268 The
uthority, the
of Strategic C
channel of
agencies t
is undertak
to the app
ated Ship Pain
Explanatory
mmission Estab Commission A
, ss 7-7C. Sec ssioner of the A erson of ASIC, rganisation Ac
ssioner for Tax
d Dockers Un
n recommen
mented in Au
he RICO Act
y the ACC w
ifferences bet
would have
out both its
e ACC comb
Australian B
Crime Assess
information
to combat o
ken, the mat
propriate Go
nters and Dock
Memorandum
blishment Bill 2 Act 2002 (Cth
ction 7B(2) stip Australian Fede , the Director-ct 1979 (Cth), t
xation.
nion. The
nded that,
ustralia.266
t, but the
which was
tween the
access to
criminal
bined the
Bureau of
sments.
n sharing
organised
atters and
overnment
kers Union,
m, National
2002 (Cth). h), Part 2,
pulates that eral Police, -General of the head of
483
208.
209.
270 Australi 271 The po offences fr contravent various oth years’ imp persons or (Cth), ss 15 272
See Cri Criminal P (SA); Ser (Confiscati Confiscatio 273
Boral L
agency.270 T
particular leg
In addition, t
made for the
proceeds of
orders in re
offence.271
Territories.27
Having rega
recommende
already exist
intelligence
existing crim
officials and
parts of this
damages un
private parti
ian Crime and
ower to make s rom which a b ions of the ca her specified prisonment inv
a loss to the C 5B, 17-19, 47-iminal Assets R Proceeds Conf rious and Org
ion of Profits) on Act 2000 (W
Law Reform Su
The offences
gislation und
the Proceeds
e freezing an
criminal con
espect of be
Cognate le 72
ard to the e
ed that RICO
ts to seek to
gathering a
minal laws an
d employers d
Volume. Bo
nder the RIC
ies to bring
d Commission A
such orders is benefit is deriv artel provisions offences, and volving unlawf
Commonwealth 49.
Recovery Act 1 fiscation Act 2 rganised Crim Act 1993 (Ta WA).
ubmission 2015
and the resul
der which the
s of Crime A
nd forfeiture
nduct, and for
enefits deriv
egislation is
existing fram
O-style laws b
o combat seri
and investiga
nd penalties t
dealing with
oral submitte
CO legislatio
actions aga
Act 2002 (Cth),
engaged, in t ved, or serious s of the Comp indictable off ful conduct cau
h of at least $1
1990 (NSW); C 2002 (Qld); C me (Unexplain ax); Confiscati
5, p 70.
lting penaltie
offence aris
ct 2002 (Cth
of property
r the making
ved from th
s in place i
mework of
be adopted in
ious and org
ation. Furth
to deter crimi
them has bee
ed that the ab
on was a po
ainst unions.
, s 12(1).
the main, by c s offences, def etition and Co fences punisha
using or intend 0,000: see Pro
Criminal Prope Criminal Assets ned Wealth) A ion Act 1997 (
es are govern
es.
h) enables ord
that forms p
g of pecuniar
e commissio
in many St
legislation,
n Australia. T
ganised crime
her, the ade
minal conduct
en considered
bility to sue
owerful ince
.273 Howev
commission of fined in s 338 onsumer Act 2 able by more
ded to cause a oceeds of Crim
erty Forfeiture s Confiscation Act 2009 (SA (Vic); Crimina
ned by the
ders to be
part of the
ry penalty
on of an
tates and
it is not
The ACC
e through
equacy of
by union
d in other
for treble
entive for
ver, treble
f indictable to include 2010 (Cth), than three
a benefit to me Act 2002
e Act (NT); n Act 2005 A); Crime al Property
484
274 Objects tobacco ma Influenced
damages stat
least since th
scope of app
would have e
s of civil RICO anufacturers, h d Corrupt Organ
tutes have no
he early days
plication of a
effects well b
O applications h health funds, an nisations’ (201
ot found favo
after Federa
RICO-type
beyond the b
have included e nd police serv 15) 52 Am Crim
our with Aus
ation. Finally
statute274 me
uilding and c
environmental ices: see E T P m L Rev 1507 a
stralian legisl
y, the extrem
eans that its e
construction
and other prot Phillips, et al, at 1559-1566.
latures, at
mely broad
enactment
industry.
test groups, ‘Racketeer
485
486
APPENDIX A
BUILDING & CONSTRUCTION INDUSTRY LITIGATION 2000-2015
1
*
CASE NAME & CITATION
PROJECT & VALUE
UNION/ EMPLOYER
NATURE OF CONDUCT
LIABILITY
PENALTY
1.
Director, Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2015] FCA 1173 (penalty)
Mitcham train station, VIC
Union (CFMEU)
Action taken or threatened w
ith intent
to coerce another person to engage in industrial activity.
Liability uncontested.
Pecuniary penalties amounting to $55,125: x
$22,500 and $26,250 against the CFMEU (for 2 contraventions of s 348 FW Act);
x
$3,000 and $3,375 against Myles (for 2 contraventions of s 348 FW Act).
************************************************************ 1 Legislation Key: x
BCII Act -
Building and Construction In
dustry Improvement Act
2005 (Cth) (replaced by
Fair Work (Building Industry) Act
2012 (Cth))
x FW Act -
Fair Work Act
2009 (Cth)
x TPA -
Trade Practices Act
1974 (Cth) (repealed and replaced by the
Competition and Consumer Act
2010 (Cth))
x WR Act -
Workplace Relations Act
1996 (Cth) (repealed and replaced by
Fair Work Act
2009 (Cth))
*
487
*
CASE NAME & CITATION
PROJECT & VALUE
UNION/ EMPLOYER
NATURE OF CONDUCT
LIABILITY
PENALTY
2.
Director of Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2015] FCA 1125 (liability)
La Scala, North Melbourne, VIC Yarra Street, North Melbourne, VIC
Union (CFMEU)
Adverse action (freedom of association) Coercion to employ or engage a particular person or independent contractor, or to allocate/designate particular duties or responsibilities.
Liability uncontested.
CFMEU and Edwards found to have contravened ss 346 and 355 of the FW Act - penalties to be determined. Respondents also to pay compensation to the employer in the amount of $18,084.
3.
Director, Fair Work Building Industry Inspectorate v Bragdon (No 2) [2015] FCA 668; 147 ALD 373 (liability) [2015] FCA 998 (penalty)
Seventh Street, Mascot, NSW
Union (CFMEU)
Contravention of right of entry provisions: Failure to produce entry permit for inspection when requested. Permit holder(s) intentionally hindered or obstructed another person, or otherwise acted in an improper manner, when exercising right of entry.
Liability contested.
Declarations and pecuniary penalties amounting to $272,500: x
$20,000 against Bragdon (for 1 contravention of s 497 FW Act, 2 contraventions of s 500 FW Act, and 2 contraventions of s 503(1) FW Act);
x
$27,500 against Kong (for 1 contravention of s 497 FW Act, 3 contraventions of s 500 FW Act, and 2 contraventions of s 503(1) FW Act);
x
$225,000 against the
488
*
CASE NAME & CITATION
PROJECT & VALUE
UNION/ EMPLOYER
NATURE OF CONDUCT
LIABILITY
PENALTY
Misrepresentation(s) concerning rights of entry.
CFMEU (for contravention of ss 497, 500 and 503 FW Act by reason of s 793 FW Act).
4.
Director, Fair Work Building Industry Inspectorate v Upton [2015] FCA 672 (penalty)
Wheatstone Liquefied Natural Gas, Onslow, WA
Union (CFMEU)
Permit holder(s) intentionally hindered or obstructed another person, or otherwise acted in an improper manner, when exercising right of entry.
Liability uncontested.
Pecuniary penalties amounting to $24,000: x
$4,000 against Upton (for contraventions of s 500 of the FW Act on 2 occasions);
x
$20,000 against the CFMEU (for contraventions of s 500 of the FW Act on two occasions).
5.
Director, Fair Work Building Industry Inspectorate v Construction, Forestry Mining and Energy Union (No 2) [2015] FCA 199 (liability) (No 3) [2015]
Central Apartments, Darwin, Northern Territory
Union (CFMEU)
Permit holder(s) intentionally hindered or obstructed another person, or otherwise acted in an improper manner, when exercising right of entry.Action taken or threatened w
ith intent
to coerce another person to engage in industrial activity.
Liability contested.
Pecuniary penalties amounting to $45,600: x
$6,000 against Pearson (for contravening s 500 FW Act);
x
$4,600 against Olsen (for contravening s 500 FW Act);
x
$35,000 against CFMEU (for contravening s 348 FW Act).
489
*
CASE NAME & CITATION
PROJECT & VALUE
UNION/ EMPLOYER
NATURE OF CONDUCT
LIABILITY
PENALTY
FCA 845 (penalty)
6.
Director, Fair Work Building Industry Inspectorate v Cradden [2015] FCA 614 (penalty)
Common Ground Project Site, QLD
Union (CFMEU)
Coercion in relation to enterprise agreements.
Liability partially contested.
Declarations and pecuniary penalties amounting to $555,000: x
$30,000 against Cradden (for 6 contraventions of s 44 BCII Act);
x
$40,000 against Myles (for 4 contraventions of s 44 BCII Act);
x
$30,000 against O’Brien (for 6 contraventions of s 44 BCII Act);
x
$20,000 against Davis (for 4 contraventions of s 44 BCII Act);
x
$25,000 against Cummins (for 5 contraventions of s 44 BCII Act);
x
$400,000 against the CFMEU (for contraventions of s 44 BCII Act).
490
*
CASE NAME & CITATION
PROJECT & VALUE
UNION/ EMPLOYER
NATURE OF CONDUCT
LIABILITY
PENALTY
7.
Director, Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union (No 2) [2015] FCA 407 (penalty)
Bald Hills Wind Farm Project, VIC $400 million
Union (CFMEU)
Adverse action (workplace right). Coercion to employ or engage a particular person or independent contractor, or to allocate/designate particular duties or responsibilities. Attempting to exercise OHS law right of entry without a permit.
Liability uncontested as per earlier determination in related case ( Director, Fair Work Building Industry Inspectorate v CFMEU [2015] FCA 226)
Pecuniary penalties amounting to $109,500: x
$102,500 against the CFMEU (for 3 contraventions of s 340(1)(a) FW Act and 4 contraventions of s 355(a) FW Act);
x
$7,000 against Stephenson (for 1 contravention of s 494 FW Act and 1 contravention of s 355(a) Act).
8.
Director, Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2015] FCA 353
Work site in Hawthorn, VIC
Union (CFMEU)
Coercion (freedom of association). Adverse action (workplace right). Action taken or threatened w
ith intent
to coerce another person to engage in industrial activity.
Liability contested for second respondent.
Pecuniary penalties amounting to $43,000: x
$28,500 against the CFMEU (for contraventions of s 343 FW Act);
x
$8,250 against Berardi (for contraventions of ss 340, 343 and 348 FW Act);
x
$6,000 against Reardon (for 1 contravention of s 343 FW Act).
491
*
CASE NAME & CITATION
PROJECT & VALUE
UNION/ EMPLOYER
NATURE OF CONDUCT
LIABILITY
PENALTY
9.
Director, Fair Work Building Industry Inspectorate v Merkx[2015] FCA 316
Royal Adelaide Hospital, SA
Employees Industrial action prior
to nominal expiry date of enterprise agreement.
Liability uncontested.
Pecuniary penalties amounting to $22,000 (22 employee respondents ordered to pay $1,000 each for contravening s 417 of the FW Act)
10.
Director of Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2015] FCA 225 (liability) [2015] FCA 1213 (penalty)
Myer Emporium Site, Lonsdale Street, VIC McNab Site, McNab Avenue, Footscray, VIC
Union (CFMEU)
Coercion to employ or engage a particular person or independent contractor, or to allocate/designate particular duties or responsibilities. Action taken or threatened w
ith intent
to coerce another person to engage in industrial activity.
Liability contested.
Pecuniary penalties amounting to $147,500: x
$95,000 against CFMEU (for multiple contraventions of ss 348 and 355 of the FW Act on);
x
$19,750 against Setka (for multiple contraventions of ss 348 and 355 of the FW Act and 1 contravention of s 346);
x
$14,500 against Reardon (for multiple contraventions of ss 348 and 355 of the FW Act);
x
$3,000 against Christopher (for multiple contraventions of ss 348 and 355 of the FW Act);
x
$7,000 against Spernovasilis
492
*
CASE NAME & CITATION
PROJECT & VALUE
UNION/ EMPLOYER
NATURE OF CONDUCT
LIABILITY
PENALTY
(for multiple contraventions of ss 348 and 355);
x
$3,500 against Oliver (for multiple contraventions of ss 348 and 355 of the FW Act);
x
$5,250 against Edwards (for multiple contraventions of ss 348 and 355 of the FW Act);
x
$1,000 against Stephenson (for multiple contraventions of ss 348 and 355 of the FW Act);
x
$2,000 against Johnson (for multiple contraventions of ss 348 and 355 of the FW Act).
11.
Director, Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2015] FCA 226 (contempt) (penalty)
Bald Hills Wind Farm Project, VIC $400 million
Union (CFMEU)
Contempt of court: Breach of court order Breach of undertaking.
Liability uncontested.
Pecuniary penalties amounting to $125,000: x
$100,000 against the CFMEU (for two charges of contempt for not complying with an undertaking);
x
$25,000 against the CFMEU (for not complying with court order to file affidavit material).
x
493
*
CASE NAME & CITATION
PROJECT & VALUE
UNION/ EMPLOYER
NATURE OF CONDUCT
LIABILITY
PENALTY
12.
Director, Fair Work Building Industry Inspectorate v Stephenson (2014) 146 ALD 75; [2014] FCA 1432 (penalty)
Construction projects in Adelaide, SA
Union (CFMEU)
Permit holder(s) intentionally hindered or obstructed another person, or otherwise acted in an improper manner, when exercising right of entry.
Liability uncontested.
Pecuniary penalties amounting to $205,100: x
$4,000 against Stephenson (for 2 contraventions of s 500 FW Act);
x
$1,000 against Smart (for 1 contravention of s 500 FW Act);
x
$3,800 against Bolton (for 2 contraventions of s 500 FW Act);
x
$1,100 against Vitler (for 1 contravention of s 500 FW Act);
x
$800 against Huddy (for 1 contravention of s 500 FW Act);
x
$4,000 against McDermott (for 1 contravention of s 500 FW Act);
x
$800 against Jarrett (for 1 contravention of s 500 FW Act);
x
$1,100 against Sloan (for 1 contravention of s 500 FW Act);
x
$3,500 against Pitt (for 1
494
*
CASE NAME & CITATION
PROJECT & VALUE
UNION/ EMPLOYER
NATURE OF CONDUCT
LIABILITY
PENALTY
contravention of s 500 FW Act);
x
$5,000 against Perkovic (for 1 contravention of s 500 FW Act);
x
$180,000 against the CFMEU (for all the officials’ contraventions of s 500 FW Act).
13.
Director, Fair Work Building Industry Inspectorate v Robko Construction Pty Ltd [2014] FCCA 2257 (liability) (No 2) [2015] FCCA 177 (penalty)
Employer Contravention of a
provision of the National Employment Standards. Employer dismissed (threatened to dismiss) an employee in order to engage the individual as an independent contractor.
Liability contested.
Pecuniary penalties amounting to $39,600: x
$33,000 against Robko Constructions Pty Ltd (for contraventions of ss 44 and 358 FW Act)
x
$6,600 against Robbins (for contraventions of ss 44 and 358 FW Act).
Robko Constructions Pty Ltd ordered to pay $1,164.14 to employee affected.
14.
Director, Fair Work Building Industry
Building construction site at
Union (CFMEU)
Permit holder(s) intentionally hindered or obstructed another
Liability uncontested.
Pecuniary penalties amounting to $152,600:
495
*
CASE NAME & CITATION
PROJECT & VALUE
UNION/ EMPLOYER
NATURE OF CONDUCT
LIABILITY
PENALTY
Inspectorate v Cartledge [2014] FCA 311 (interim injunction) [2014] FCA 1047 (penalty) [2015] FCA 453 (contempt of court)(No 2) [2015] FCA 851 (penalty for contempt of court)
50 Flinders Street, Adelaide, SA
person, or otherwise acted in an improper manner, when exercising right of entry.Contempt of court.
x
$6,000 against O’Connor (for 2 contraventions of s 500 FW Act);
x
$9,000 against Pitt (for 2 contraventions of s 500 FW Act);
x
$3,000 against Cartledge (for 1 contravention of s 500 FW Act);
x
$4,000 against Bolton (for 1 contravention of s 500 FW Act);
x
$600 against Stephenson (for 1 contravention of s 500 FW Act);
x
$130,000 against the CFMEU (for officials’ contraventions of s 500 FW Act).
$12,000 against O’Conner for acting in contempt of a court order.
15.
Director of Fair Work Building Industry Inspectorate v Luka Tippers &
Essence Apartments, Park Street, Melbourne, VIC
Employer Contravention of a
term(s) of an enterprise agreement. Contravention of a
Liability uncontested.
Pecuniary penalties amounting to $10,000: x
$8,000 against Luka Tippers & Excavation Pty Ltd (for
496
*
CASE NAME & CITATION
PROJECT & VALUE
UNION/ EMPLOYER
NATURE OF CONDUCT
LIABILITY
PENALTY
Excavation Pty Ltd [2014] FCCA 1459 (penalty)
provision of the National Employment Standards. Adverse action (workplace right). Adverse action (freedom of association).
contraventions of ss 50, 44, 340(1)(a) and 346 FW Act);
x
$2,000 against Maric (for contraventions of ss 50, 44, 340(1)(a) and 346 FW Act).
16.
Director, Fair Work Building Industry Inspectorate v Robko Construction Pty Ltd [2014] FCCA 1017 (liability) (No.2)
[2014]
FCCA 1328 (penalty)
Employer Contravention of term
of modern award. Failure to comply with compliance notice.
Liability contested.
Pecuniary penalties amounting to $21,420: x
$17,850 against Robko Construction Pty Ltd (for contravention of ss 45 and 716 of the FW Act);
x
$3,570 against Robbins (for contravention of ss 45 and 716 of the FW Act).
497
*
CASE NAME & CITATION
PROJECT & VALUE
UNION/ EMPLOYER
NATURE OF CONDUCT
LIABILITY
PENALTY
17.
Director, Fair Work Building Industry Inspectorate v Baulderstone Pty Ltd [2014] FCCA 721 (liability) (No 2) [2015] FCCA 2129 (penalty)
Edmund Barton Building Project, Canberra, ACT
Employer Adverse action
(freedom of association).
Liability contested.
Pecuniary penalties amounting to $32,000: x
$25,000 against Baulderstone Pty Ltd (for contravention of s 346 FW Act);
x
$3,500 against Razlog respondent (for contravention of s 346 FW Act);
x
$3,500 against Kidman respondent (for contravention of s 346 FW Act).
18.
Grocon Constructors (Victoria) Pty Ltd v Construction, Forestry, Mining and Energy Union (No 2)
(2014) 241
IR 288; [2014] VSC 134 (liability and penalty) Construction, Forestry, Mining and Energy Union
Emporium and McNab Construction sites, VIC
Union (CFMEU)
Criminal contempt of court
Liability contested.
$1.15 million against CFMEU for being in criminal
contempt
of a
court order.
498
*
CASE NAME & CITATION
PROJECT & VALUE
UNION/ EMPLOYER
NATURE OF CONDUCT
LIABILITY
PENALTY
v Grocon Constructors (Victoria) Pty Ltd; Construction, Forestry, Mining and Energy Union v Boral Resources (Vic) Pty Ltd [2014] VSCA 261 (appeal)
19.
Brookfield Multiplex Engineering and Infrastructure Pty Ltd v McDonald [2014] FCA 389 (penalty)
Mundaring Water Treatment Plant, WA
Union (CFMEU)
Adverse action (freedom of association). Action taken or threatened w
ith intent
to coerce another person to engage in industrial activity. Industrial action prior to nominal expiry date of enterprise agreement.
Liability uncontested.
Pecuniary penalties amounting to $123,000: x
$21,000 against McDonald (for contraventions of s 346 FW Act, s 348 FW Act and contraventions of s 417 FW Act);
x
$7,000 against Molina (for contraventions of s 346 FW Act, s 348 FW Act and s 417 FW Act);
x
$95,000 against the CFMEU (for contraventions of s 346 FW Act, s 348 FW Act and s 417 FW Act).
499
*
CASE NAME & CITATION
PROJECT & VALUE
UNION/ EMPLOYER
NATURE OF CONDUCT
LIABILITY
PENALTY
20.
Brookfield Multiplex FSH Contractor Pty Ltd v McDonald [2014] FCA 359 (penalty)
Fiona Stanley Hospital Project, WA
Union (CFMEU)
Action taken or threatened w
ith intent
to coerce another person to engage in industrial activity. Industrial action prior to nominal expiry date of enterprise agreement.
Liability uncontested.
Pecuniary penalties amounting to $61,000: x
$9,500 against McDonald (for 1 contravention of s 348 FW Act and 1 contravention of s 417 FW Act);
x
$3,500 against Pallott (for 1 contravention of s 348 FW Act and 1 contravention of s 417 FW Act);
x
$48,000 against the CFMEU (for a contravention of s 348 FW Act and 1 contravention of s 417 FW Act).
CFMEU agreed to pay $250,000 in compensation for losses arising from statutory breaches.
21.
Director, Fair Work Building Industry Inspectorate v McDermott (2014) 140 ALD 337; [2014] FCA 160
Harris Scarfe construction project, SA
Union (CFMEU)
Coercion to employ or engage a particular person or independent contractor, or to allocate/designate particular duties or responsibilities.
Liability uncontested.
Pecuniary penalties amounting to $17,820: x
$1,320 against McDermott (for 1 contravention of s 355 FW Act);
x
$16,500 against the CFMEU (for 1 contravention of s 355 FW Act).
500
*
CASE NAME & CITATION
PROJECT & VALUE
UNION/ EMPLOYER
NATURE OF CONDUCT
LIABILITY
PENALTY
(penalty)
22.
Director, Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2014] FCA 126
Construction site at 901 William Street, Northbridge, WA
Union (CFMEU)
Action taken or threatened w
ith intent
to coerce another person to engage in industrial activity.
Liability uncontested.
Pecuniary penalties amounting to $35,640: x
$5,940 against McDonald (for 3 contraventions of s 348 FW Act);
x
$29,700 against the CFMEU (for 3 contraventions of s 348 FW Act).
23.
Director, Fair Work Building Industry Inspectorate v Linkhill Pty Ltd (No 7) [2013] FCCA 1097 (liability) (No 8) [2014] FCCA 225 (appeal) (No 9) [2014] FCCA 1124 (penalty)
384-386 Flinders Lane, Melbourne, VIC
Employer Misrepresented
employment as an independent contracting arrangement (a contract for services).
Liability contested.
Pecuniary penalties amounting to $313,500: x
18 contraventions of s 900 of the WR Act;
x
77 contraventions of s 357 of the FW Act;
x
Contravening an enterprise agreement.
501
*
CASE NAME & CITATION
PROJECT & VALUE
UNION/ EMPLOYER
NATURE OF CONDUCT
LIABILITY
PENALTY
[2015] FCAFC 99 (penalty appeal)
24.
Director, Fair Work Building Industry Inspectorate v Myles [2013] FCCA 2229 (liability) [2014] FCCA 1429 (penalty)
Work site at 123 Albert Street, Brisbane, QLD
Union (CFMEU and BLF)
Permit holder(s) intentionally hindered or obstructed another person, or otherwise acted in an improper manner, when exercising right of entry.
Liability contested.
Pecuniary penalties amounting to $38,500: x
$4,950 and declaration against Myles (for 1 contravention of s 500 FW Act);
x
$4,950 and declaration against Pearson (for 1 contravention of s 500 FW Act);
x
$2,200 and declaration against Treadaway (for 1 contravention of s 500 FW Act);
x
$26,400 against the CFMEU (for 1 contravention of s 500 FW Act).
25.
Director, Fair Work Building Industry Inspectorate v McDonald
Citic Pacific Sino Iron Ore Mine, Karratha, WA
Union (CFMEU and CFMEUW)
Unlawful industrial action.
Liability uncontested.
Pecuniary penalties amounting to $193,600: x
$17,600 against McDonald (for 2 contraventions of s 38 BCII Act);
502
*
CASE NAME & CITATION
PROJECT & VALUE
UNION/ EMPLOYER
NATURE OF CONDUCT
LIABILITY
PENALTY
[2013] FCA 1431 (penalty)
x
$88,000 against the CFMEU (for 2 contraventions of s 38 BCII Act);
x
$88,000 against the CFMEUW (for 2 contraventions of s 38 BCII Act).
26.
Brookfield Multiplex FSH Contractor Pty Ltd v McDonald [2013] FCA 1380 ( contempt
)
(penalty)
Fiona Stanley Hospital Project, WA
Union (CFMEU)
Contempt of court order.
Liability uncontested.
$40,000 against McDonald for contempt of a court order.
27.
Director, Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2013] FCCA 2130 (penalty)
Brisbane Convention and Exhibition Centre, QLD Construction site at 123 Albert Street, Brisbane, QLD Multi-level car park at
Union (CFMEU and BLF)
Unlawful industrial action.
Liability uncontested.
$55,500 pecuniary penalty against the CFMEU and BLF (jointly and severally) (for 1 contravention of s38 BCII Act).
503
*
CASE NAME & CITATION
PROJECT & VALUE
UNION/ EMPLOYER
NATURE OF CONDUCT
LIABILITY
PENALTY
Brisbane Airport, QLD $140 million
28.
Director, Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2013] FCA 1014 (penalty)
Peninsula Link Project, VIC Southern Link Upgrade, VIC Alliance Project, VIC $759 million
Union (CFMEU)
Unlawful industrial action. Coercion in relation to engagement of building employees and building contractors.
Liability uncontested.
Pecuniary penalties amounting to $230,000: x
$155,000 against the CFMEU (for 3 contraventions of s 43 BCII Act);
x
$11,000 on Doyle (for 1 contravention of s 43 and 1 contravention of s 38 BCII Act);
x
$29,000 on Stephenson (for 3 contraventions of s 43);
x
$24,500 on Powell (for 2 contraventions of s 43);
x
$5,000 on MacDonald (for 1 contravention of s 43 and 1 contravention of s 38);
x
$3,000 on Benstead (for 1 contravention of s 38);
x
$2,500 on John Parker (for 1 contravention of s 38).
504
*
CASE NAME & CITATION
PROJECT & VALUE
UNION/ EMPLOYER
NATURE OF CONDUCT
LIABILITY
PENALTY
29.
Director, Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2013] FCA 981 (penalty)
Florey Neuroscience Institute at the Austin Hospital, Heidelberg, VIC $119 million
Union (CFMEU)
Industrial action prior to nominal expiry date of enterprise agreement.
Liability uncontested.
Pecuniary penalties amounting to $15,000: x
$12,500 against the CFMEU (for 1 contravention of s 417 FW Act);
x
$2,500 against Beattie (for 1 contravention of s 417 FW Act).
30.
Director, Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2013] FCA 846 (penalty)
Translation Research Institute Project, QLD Queensland Institute of Medical Research Centre Project, QLD Carrara Stadium Project, QLD $150 million
Union (CFMEU and CEPU)
Coercion in relation to enterprise agreements. Coercion in relation to engagement of building employees and building contractors.
Liability uncontested.
Pecuniary penalties amounting to $119,000: x
$99,000 against the CFMEU (for contravening ss 43(1)(b) and 44 BCII Act);
x
$20,000 against the CEPU (for 1 contraventions of s 43(1)(b) BCII Act).
505
*
CASE NAME & CITATION
PROJECT & VALUE
UNION/ EMPLOYER
NATURE OF CONDUCT
LIABILITY
PENALTY
31.
Director, Fair Work Building Industry Inspectorate v Buildpower Pty Ltd [2013] FCCA 1037 (liability) (No 2) [2013] FCCA 2236 (penalty)
Building sites in VIC
Employer Contravention of the
Australian Fair Pay and Conditions Standard.
Liability contested.
Pecuniary penalties amounting to $39,660: x
Buildpower Pty Ltd ordered to pay $33,000 in compensation to Mr Alcantara (for contraventions of ss 182 and 226 WR Act, and s 546 FW Act);
x
$6,600 against Slabbert (for contraventions of ss 182 and 226 WR Act, and s 546 FW Act).
32.
Director, Fair Work Building Industry Inspectorate v Zion Tiling Pty Ltd [2013] FCCA 769 (liability) [2013] FCCA 1288 (penalty)
WA Employer Contravention of a
provision of the National Employment Standards. Contravention of term of modern award. Breach of obligation to maintain employee records. Failure to comply with compliance notice.
Liability contested.
Pecuniary penalties amounting to $23,740: x
$19,800 against Zion Tiling Pty Ltd (for 1 contraventions of ss 44, 45, 535 and 716 FW Act)
x
$3,960 against Tae Young Yoon (for contraventions of ss 44, 45, 535 and 716 FW Act).
x
Zion and Yoon ordered to pay $6,000 compensation to Mr Choi
506
*
CASE NAME & CITATION
PROJECT & VALUE
UNION/ EMPLOYER
NATURE OF CONDUCT
LIABILITY
PENALTY
33.
Director of Fair Work Building Industry Inspectorate v Giovanni Italiano [2013] FCCA 530 (penalty)
VIC Employer Contravention of a
provision of the National Employment Standards.
Liability uncontested.
Pecuniary penalties amounting to $9,300: x
$1,800 against Italiano (for contravention of s 44 FW Act)
x
Italiano ordered to pay Mr Gerges $7,500 in compensation fo
r losses
34.
Director, Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2013] FCA 515 (penalty)
Ashwood Chadstone Gateway Project, VIC Other St Hilliers construction sites in VIC: Ararat prison; Watsonia Military Camp; Carlton apartment and social housing project; Canterbury housing
Union (CFMEU)
Coercion in relation to engagement of building employees and building contractors.
Liability uncontested.
Pecuniary penalties amounting to $115,000: x
$84,000 against the CFMEU(for 8 contraventions of s 43 BCII Act);
x
$10,500 against Beattie (for 2 contraventions of s 43 BCII Act);
x
$9,500 against Berardi (for 2 contraventions of s 43 BCII Act);
x
$4500 against Theodorou (for 1 contravention of s 43 BCII Act);
x
$3500 against Bell (for 1 contravention of s 43 BCII Act);
x
$3000 against Pitt (for 1
507
*
CASE NAME & CITATION
PROJECT & VALUE
UNION/ EMPLOYER
NATURE OF CONDUCT
LIABILITY
PENALTY
complex $365.8 million
contravention of s 43 BCII Act).
35.
Director, Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2013] FMCA 160 (penalty)
Royal Melbourne Institute of Technology site, VIC $25 million
Union (CFMEU)
Action taken or threatened w
ith intent
to coerce another person to engage in industrial activity.
Liability uncontested.
CFMEU ordered to pay a pecuniary penalty of $10,000 for contravening s 348 of the FW Act.
36.
Director, Fair Work Building Industry Inspectorate Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union [2013] FCA 82
West Werribee Dual Water Supply Project, VIC $40 million
Union (AMWU)
Coercion to employ or engage a particular person or independent contractor, or to allocate/designate particular duties or responsibilities.
Liability contested.
Concerns that s 355 had been breached resulted in an injunction against AMWU from: x
Preventing or hindering access to and egress from the site;
x
Counselling, procuring, encouraging or persuading any person not to enter the site;
x
Counselling, procuring, encouraging or persuading any person not to work at the
508
*
CASE NAME & CITATION
PROJECT & VALUE
UNION/ EMPLOYER
NATURE OF CONDUCT
LIABILITY
PENALTY
site.
37.
Director of Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union (2012) 271 FLR 7; [2012] FMCA 946 (first instance) [2013] FCAFC 53 (appeal) (No 2)
[2013]
FCCA 1255 (penalty)
Peninsula Project, Burswood, WA $700 million
Union (CFMEU and CFMEUW)
Industrial action prior to nominal expiry date of collective agreement/ workplace determination.
Liability contested.
Pecuniary penalties amounting to $7,260: x
$3,300 against the CFMEU (for 1 contravention of s 494(1) WR Act);
x
$3,300 against the CFMEUW (for 1 contravention of s 494(1) WR Act);
x
$660 against McDonald (for 1 contravention of s 494(1) WR Act).
38.
Director, Fair Work Building Industry Inspectorate v Sutherland (Unreported, FCCA,
Gold Coast Hilton Hotel, QLD Wintergarden shopping precinct, Brisbane,
Union (CFMEU and CEPU)
Unlawful industrial action.
Liability uncontested.
Pecuniary penalties amounting to $65,000: x
$50,000 against the CFMEU (for 2 contraventions of s 38 BCII Act);
x
$15,000 against the CEPU (for 1 contravention of s 38
509
*
CASE NAME & CITATION
PROJECT & VALUE
UNION/ EMPLOYER
NATURE OF CONDUCT
LIABILITY
PENALTY
BRG1008/2011, Burnett J, 19 July 2013)(penalty)
QLD $700 million
BCII Act).
39.
Lend Lease Project Management Construction (Australia) Pty Ltd v Construction, Forestry, Mining and Energy Union (No 5)
[2012]
FCA 1144 (injunction application) (No 6 )
[2012]
FCA 1273
Gold Coast University Hospital, QLD $1.76 billion Supreme and District Courts, Brisbane, QLD $570 million
Union (CFMEU and CEPU)
Unlawful industrial action.
Liability uncontested.
Pecuniary penalties amounting to $590,000: x
$550,000 against the CFMEU and CEPU (jointly and severally liable) payable to Lend Lease (for 1 CEPU contravention of s 38 BCII Act and 12 CFMEU contraventions of s 38 BCII Act);
x
$6,450 against Pearson (for 4 contraventions of s 38 BCII Act);
x
$6,450 against Vink (for 2 contraventions of s 38 BCII Act);
x
$4,300 against O’Doherty (for 2 contraventions of s 38 BCII Act);
x
$7,750 against Hanna (for 6 contraventions of s 38 BCII Act);
510
*
CASE NAME & CITATION
PROJECT & VALUE
UNION/ EMPLOYER
NATURE OF CONDUCT
LIABILITY
PENALTY x
$6,450 against Jarvis (for 4 contraventions of s 38 BCII Act);
x
$6,450 against Olsen (for 2 contraventions of s 38 BCII Act);
x
$2,150 against Malone (for 1 contravention of s 38 BCII Act).
40.
Director of Fair Work Building Industry Inspectorate v Supernova Contractors Pty Ltd [2012] FMCA 935 (penalty)
QLD Employer Misrepresented
employment as an independent contracting arrangement (a contract for services).
Liability uncontested.
Pecuniary penalties amounting to $11,880: x
Supernova Contractors Pty Ltd ordered to pay $9,900 for contravening s 357 FW Act;
x
Long ordered to pay $1,980 for contravening s 357 of FW Act.
511
*
CASE NAME & CITATION
PROJECT & VALUE
UNION/ EMPLOYER
NATURE OF CONDUCT
LIABILITY
PENALTY
41.
Director, Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2012] FMCA 916 (penalty)
Rosso Apartments, Carlton, VIC
Union (CFMEU)
Unlawful industrial action.
Liability uncontested.
Pecuniary penalties amounting to $25,000: x
$7,500 against Hudson (for one contravention of s 38 BCII Act);
x
$17,500 against the CFMEU (for one contravention of s 38 BCII Act by reason of vicarious liability for the conduct of Hudson).
42.
Radisich v McDonald [2012] FMCA 919 (penalty)
Herdsman Business Park Project, WA
Union (CFMEU)
Unlawful industrial action. False or misleading statement about the obligation/need to be (or not to be) a member of an industrial association or about the requirement to disclose membership status.
Liability uncontested.
Pecuniary penalties amounting to $34,980: x
$6,380 against McDonald (for 1 contravention of s 790(1) WR Act and 1 contravention of s 38 BCII Act);
x
$28,600 against the CFMEU (for 1 contravention of s 790(1) WR Act and 1 contravention of s 38 BCII Act).
512
*
CASE NAME & CITATION
PROJECT & VALUE
UNION/ EMPLOYER
NATURE OF CONDUCT
LIABILITY
PENALTY
43.
Helal v Brookfield Multiplex Ltd [2012] FCA 653 (penalty)
Southbank One project, VIC $100 million
Union (CFMEU)
Coercion in relation to engagement of building employees and building contractors.
Liability uncontested.
CFMEU ordered to pay a pecuniary penalty of $30,000 for contravening s 43(1) BCII Act.
44.
Director, Fair Work Building Industry Inspectorate v Mates[2012] FMCA 475 (penalty)
81 Lorimer Street, Docklands, VIC $5 million
Union (CFMEU)
Adverse action (freedom of association).
Liability uncontested.
$3,500 pecuniary penalty against Mates (for 2 contraventions of s 346 FW Act).
45.
Australian Building and Construction Commissioner v Christopher [2012] FMCA 589 (penalty)
RMIT Building Re- development, 379-405 Russell Street, Melbourne, VIC $25 million
Union (CFMEU)
Unlawful industrial action.
Liability uncontested.
$20,000 pecuniary penalty against the CFMEU (for 1 contravention of s 38 of BCII Act.
513
*
CASE NAME & CITATION
PROJECT & VALUE
UNION/ EMPLOYER
NATURE OF CONDUCT
LIABILITY
PENALTY
46.
Australian Building and Construction Commissioner v Bollas [2012] FCA 484
Penders Grove Primary School, VIC
Union (CFMEU)
Misrepresentation about another person’s obligation to engage in industrial activity.
Liability uncontested.
$2,000 pecuniary penalty against Bollas (for 1 contravention of s 349(1)(a) FW Act).
47.
Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2012] FCA 189 (penalty)
Caroline Springs Square Shopping Complex, VIC $30 million
Union (CFMEU)
Unlawful industrial action.
Liability uncontested.
$50,000 pecuniary penalty against the CFMEU (for contravening s 38 of the BCII Act).
48.
Hogan v Jarvis [2012] FMCA 189 (penalty)
Gold Coast University Project, QLD $1.76 billion
Union (CFMEU)
Unlawful industrial action.
Liability uncontested.
Pecuniary penalties amounting to $46,860: x
$36,300 and declarations against the CFMEU (for 1 contravention of s 38 BCII Act);
x
$7,260 and declarations against Jarvis (for 1 contravention of s 38 BCII Act);
514
*
CASE NAME & CITATION
PROJECT & VALUE
UNION/ EMPLOYER
NATURE OF CONDUCT
LIABILITY
PENALTY x
$3,300 and declarations against Temoho (for 1 contravention of s 38 BCII Act).
49.
Cozadinos v Construction, Forestry, Mining and Energy Union [2012] FCA 46 (liability) (2013) 231 IR 278; [2013] FCAFC 8 (appeal) [2013] FCA 1243 (penalty)
Epsom Shopping Centre, Bendigo, VIC $10 million
Union (CFMEU)
Coercion in relation to enterprise agreements.
Liability contested.
$20,000 pecuniary penalty against the CFMEU (for contravening s 44 of the BCII Act).
50.
Australian Building & Construction Commissioner v Doyle(Unreported, FMCA, Turner FM,
Safeway Beaconsfield, VIC $7 million
Union (CFMEU)
Failure to comply with right of entry provisions: Failure to produce entry permit for inspection when requested.
Liability uncontested.
Pecuniary penalties amounting to $26,000: x
$6,500 against the CFMEU (referable to 1 contravention of s 497 FW Act);
x
$6,500 against the CFMEU (referable to 1 contravention
515
*
CASE NAME & CITATION
PROJECT & VALUE
UNION/ EMPLOYER
NATURE OF CONDUCT
LIABILITY
PENALTY
MLG859/2010, 5 October 2011) Lukies v Doyle (Unreported, FMCA, Burchardt FM, MLG1502/2010, 14 December 2011)
Permit holder(s) intentionally hindered or obstructed another person, or otherwise acted in an improper manner. Attempting to exercise OHS law right of entry without a permit. Misrepresentation(s) concerning right of entry.
of s 500 FW Act);
x
$13,000 against the CFMEU (referable to 1 contravention of each of ss 756 and 768 of the WR Act.
51.
Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union (No 2) [2011] FCA 1518 (penalty)
140 William Street, Perth, WA $40 million
Union (CFMEU)
Unlawful industrial action. Coercion in relation to enterprise agreements.
Liability partially contested.
Pecuniary penalties amounting to $231,000: x
$154,000 and declarations against the CFMEU (for 4 contraventions of s 38 BCII Act);
x
$38,500 and declarations against the CFMEU (for 1 contravention of s 44 BCII Act);
x
$30,800 and declarations
516
*
CASE NAME & CITATION
PROJECT & VALUE
UNION/ EMPLOYER
NATURE OF CONDUCT
LIABILITY
PENALTY
against McDonald (for 4 contraventions of s 38 BCII Act)
x
$7,700 and declarations against McDonald (for 1 contravention of s 44 BCII Act).
52.
United Group Resources Pty Ltd v Calabro (No 5)
(2011) 198
FCR 514; [2011] FCA 1408 (liability) (No 6)
[2012]
FCA 431 (application to amend orders) (No 7)
(2012) 203
FCR 247; [2012] FCA 432 (penalty)
Pluto LNG Project, WA $15 billion
Employees Unlawful industrial
action. Industrial action prior to nominal expiry date of enterprise agreement. Contravention of an order.
Liability contested.
Pecuniary penalties ordered against respondents: x
$1,300 (wholly suspended) for each day the respondents breached s 38 of BCII Act and ss 417 and 421 FW Act;
x
$1,200 (wholly suspended) for each day the respondents breached s 38 of BCII Act and s 421 of FW Act;
x
$1,100 (wholly suspended) for each day the respondents breached s 38 of BCII Act and s 417 of FW Act;
x
$1,000 (wholly suspended) for each day the respondents breached s 38 of BC II Act;
x
$300 for two respondents who breached s 417 and 421 FW Act (but not s 38 of the
517
*
CASE NAME & CITATION
PROJECT & VALUE
UNION/ EMPLOYER
NATURE OF CONDUCT
LIABILITY
PENALTY
BCII Act).
53.
Australian Building and Construction Commissioner v Gray [2011] FMCA 919 (penalty)
ANZ Docklands Project, VIC $600 million
Union (CEPU) Action taken or
threatened w
ith intent
to coerce another person to engage in industrial activity.
Liability uncontested.
$10,000 pecuniary penalty against the CEPU (for 1 contravention of s 348 of the FW Act).
54.
Director, Fair Work Building Industry Inspectorate v Abbott ( No 5)
(2011) 211
IR 267; [2011] FCA 950 (liability) (2012) 209 FCR 448; [2012] FCAFC 178 (successful appeal in relation to Upton and CFMEU)
North West Shelf LNG Plant, WA $27 billion
Employees Union (CFMEU) - successfully appealed
Unlawful industrial action. Industrial action prior to nominal expiry date of collective agreement/workplace determination. Failure to comply with an order of an Australian Industrial Relations Commissioner. Failure to comply with the terms of a Union Collective Agreement.
Liability contested by the majority of respondents
Pecuniary penalties ordered against 117 employee respondents for contravening s 38 BCII Act, s 496(1) WR Act and two union collective agreements (some respondents ½ suspended).
518
*
CASE NAME & CITATION
PROJECT & VALUE
UNION/ EMPLOYER
NATURE OF CONDUCT
LIABILITY
PENALTY
( No 6)
[2013]
FCA 942 (penalty)
55.
Woodside Burrup Pty Ltd v Construction, Forestry, Mining and Energy Union [2011] FCA 949 (penalty)
Pluto LNG Project, WA $15 billion
Union (CFMEU)
Unlawful industrial action.
Liability uncontested.
Pecuniary penalties amounting to $85,800: x
$71,500 against the CFMEU (for 2 contraventions of s 38 BCII Act);
x
$14,300 against McDonald (for 2 contraventions of s 38 BCII Act).
56.
White v Benstead [2011] FMCA 920 (penalty)
Preston Pump Station, VIC $17 million
Union (CFMEU)
Permit holder(s) intentionally hindered or obstructed another person, or otherwise acted in an improper manner, when exercising right of entry.Misrepresentation(s) concerning right of entry.
Liability uncontested.
Pecuniary penalties amounting to $13,000: x
$10,000 against the CFMEU (for 1 contravention of each of ss 500 and 503 FW Act);
x
$2,000 against Benstead (for 1 contravention of s 500 FW Act);
x
$1,000 against Beattie (for 1 contravention of s 503 FW Act).
57.
Australian Building and Construction
The Crescent Dee Why, NSW
Union (CFMEU)
Permit holder(s) intentionally hindered or obstructed another
Liability uncontested.
Pecuniary penalties amounting to $12,500:
519
*
CASE NAME & CITATION
PROJECT & VALUE
UNION/ EMPLOYER
NATURE OF CONDUCT
LIABILITY
PENALTY
Commissioner v Mitchell [2011] FMCA 622 (penalty)
person, or otherwise acted in an improper manner, when exercising right of entry.
x
$2,500 against Mitchell (for 1 contravention of s 500 FW Act);
x
$5,000 against the CFMEU (for 1 contravention of s 500 FW Act);
x
$5,000 against the CFMEU (NSW) (for 1 contravention of s 500 FW Act).
58.
Gregor v Construction, Forestry, Mining and Energy Union [2011] FMCA 562 (penalty)
Tullamarine Construction Project, VIC $65 million
Union (CFMEU)
Permit holder(s) intentionally hindered or obstructed another person, or otherwise acted in an improper manner, when exercising right of entry.
Liability uncontested.
Pecuniary penalties amounting to $6,000: x
$5,000 against the CFMEU (for 1 contravention of s 767(1) WR Act);
x
$1,000 against Travers (for 1 contravention of s 767(1) WR Act).
520
*
CASE NAME & CITATION
PROJECT & VALUE
UNION/ EMPLOYER
NATURE OF CONDUCT
LIABILITY
PENALTY
59.
Director, Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2011] FCA 810 (penalty) [2012] FCAFC 44 (appeal) [2012] FCA 966 ( contempt
)
Commercial Office Tower, 915 Hay Street, Perth, WA Queens Riverside Project, Perth, WA
Union (CFMEU)
Unlawful industrial action.
Liability contested.
Pecuniary penalties amounting to $150,000: x
$120,000 against the CFMEU (for 3 contraventions of s 38 BCII Act);
x
$17,000 against McDonald (for 2 contraventions of s 38 BCII Act);
x
$13,000 against Buchan (for 3 contraventions of s 38 BCII Act).
$150,000 against the CFMEU and McDonald for contempt: x
$100,000 against the CFMEU (for contempt of court on two occasions);
x
$50,000 against McDonald (for contempt of court on two occasions).
Pecuniary penalties amounting to $50,000: x
$40,000 against the CFMEU (for 2 contraventions
521
*
CASE NAME & CITATION
PROJECT & VALUE
UNION/ EMPLOYER
NATURE OF CONDUCT
LIABILITY
PENALTY
contravention of s 44 BCII Act);
x
$10,000 against McDonald (for 2 contraventions of s 44 BCII Act).
60.
Australian Building and Construction Commissioner v Graauwmans (Unreported, FMCA, Riley FM, MLG912/2011, 16 April 2012) (penalty)
Barwon Heads Bridge Project, VIC $23 million
Union (CFMEU)
Unlawful industrial action.
Liabi