Alana Matheson | Senate Education and Employment Legislation Committee Inquiry Fair Work (Registered Organisations) Amendment (Ensuring Integrity) Bill 2017

29 Sep 2017 |

Opening statement
Senate Education and Employment Legislation Committee Inquiry into the 
Fair Work (Registered Organisations) Amendment (Ensuring Integrity) Bill 2017
Alana Matheson, Deputy Director | Workplace Relations
Melbourne | 28 September 2017

We thank the committee for this opportunity to appear today and we do so in support of the passage of the Fair Work (Registered Organisations) Amendment (Ensuring Integrity) Bill 2017.

Being a registered organisation confers significant rights and privileges, including a central role in negotiating enterprise agreements, rights to commence proceedings seeking civil remedy, rights to appear before the Fair Work Commission and extremely broad rights the into businesses’ premises. Given the breadth and gravity of these rights, it is appropriate that there be rules around who should hold and exercise them.

It’s also important that these rights be revocable when conduct falls short of what members of the broader community have a right to expect.

Serious criminal offences, punishable by five or more years, as grounds for automatic disqualification, is appropriate in this regard. The ability to apply for disqualification from office in a registered organisation for multiple findings of other breaches of the law also responds to the royal commission’s recommendations regarding officers of organisations who repeatedly contravene the law.

While disqualification grounds will be broadened in this way, these applications will be considered by the Federal Court, which would be required to be satisfied that disqualification would not be unjust. The role of the Federal Court is an important check and balance in the proposed scheme to better ensure integrity in the operation of registered organisations. The court acts on evidence according to the law and protects all those who come before it—applicants and respondents. The ILO recognises the unique protection judicial processes provide above administrative ones in exercising powers such as disqualification.

The bill also addresses an anomaly in the Fair Work (Registered Organisations) Act by making it a criminal offence for a person who is disqualified from office from continuing to hold office. We anticipate that some will attempt to characterise these changes as unfairly singling out union officials for special treatment and will claim that directors of corporations are not held to the same standards.

We say this bill will apply known and widely applied legal standards to large organisations exercising substantial legal powers. It is entirely legitimate and appropriate for the community to set and enforce expectations on conduct and character in such situations. The proposed rules are also in many areas consistent with those already imposed on corporations and directors. The laws will apply equally to both employer organisations and trade unions.

We also note part 2D.6 of the Corporations Act provides for the directors’ disqualification for breaches of the law, including indictable offences, dishonesty offences and offences under the Corporations Act punishable by at least 12 months imprisonment. Part 2D.1 also provides for grounds of disqualification for breaches of officers’ duties. Court ordered disqualification can also occur where a civil penalty provision has been contravened or if, within seven years, the person has been an officer of two or more corporations that have failed.

There was a broad congruence between the proposed obligations for union officials and those running corporations. It is not accurate to claim unions are being held to radically different expectations from those applicable to corporations and directors.

Furthermore, it is not unusual to regulate who can provide certain services or hold certain occupations. Occupational licensing regimes regulate who can provide various services on consumer protection grounds. For example, in New South Wales a person carrying out residential building work worth over $5,000 needs to have a licence. The licence may not be granted or may be suspended if the applicant is subject to an unsatisfied tribunal order; has had an unreasonable number of complaints, penalty notices, formal cautions or paid insurance claims against them; a close associate who is not a fit and proper person, exercises significant influence over the applicant and the operation of the business; or the applicant is deemed to be an unfit or improper person.

If consumers are protected in this way, it is reasonable that employees and employers can expect comparable standards for those running their organisations, particularly as evidence of serious and repeated misconduct on the part of some unions has made the case for legislation to ensure the risk arising from unlawful and unscrupulous activity is minimised. We stress this point: the proposed regulation acts on real concerns that came through in evidence from a royal commission, the highest form of inquiry under our legal system.

I will move on to cancellation. Cancellation of registration is a matter that should not be approached lightly and will never be approached lightly. However, the culture of industrial lawlessness that has been reported in multiple royal commissions, and that is enduring in the building and construction industry in particular, suggests that existing deterrents to wrongdoing have not proven effective.

Where a union operates a business model in which it pays fines but continues to knowingly and deliberately breach the law, the threat of cancellation becomes the only effective mechanism of disruption. Again, we urge the Senate to consider the checks and balances in the proposal, particularly the role of the court. Applications for cancellation will be determined by the Federal Court, from which appeals are available. This avoids the risk of excessive or arbitrary interference in the free functioning of organisations.

As mentioned, once registered, unions have considerable rights, including standing as organisations to bring applications for orders to the court for penalties in a large range of civil remedy matters, and this includes civil remedy provisions identified as attracting serious contravention penalties pursuant to the Fair Work Amendment (Protecting Vulnerable Workers) Act, which came into effect earlier this month. Penalties can now be as high as $630,000. It is appropriate that the exercise of substantial rights of this nature be accompanied by responsibilities, accountabilities and oversight.

The Australian chamber recognises not all the unions do the wrong thing. We seek to work constructively with unions in identifying solutions to meet the challenges faced by business and the people that work in those businesses now and into the future. Unions and employer organisations acting in the best interests of their members in complying with the law have nothing to fear from this bill. It will likely strengthen the deterrents to wrongdoing and prevent conduct of a nature that brings the entire movement into disrepute.

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