1. The Fair Work Act 2009 (the Act) now makes it a criminal offence to make illegitimate payments to registered organisations. Strict disclosure obligations also apply.
2. Registered organisations are both unions and employer associations.
3. The intent of the provisions is to promote better governance by registered organisations.
4. It is now a criminal offence for a person to dishonestly give, receive or solicit benefits that are intended to influence officers or employees of registered organisations in the performance of their duties, or the exercise of their powers.
5. It will also be a criminal offence in certain circumstances for a national system employer to give, receive or solicit any cash or in kind payment to a union or its prohibited beneficiaries. Substantial penalties may be imposed on any person or body corporate contravening the new requirements.
6. A number of payments are exempted from the provisions – see paragraph 12.
7. New enterprise bargaining obligations require employers and registered organisations to disclose financial benefits associated with a proposed enterprise agreement.
Summary of the new requirements
8. The December 2015 Final Report of the Royal Commission into Trade Union Governance and Corruption highlighted numerous examples of payments being made by employers to influence registered organisations and their officers. In many cases, the final report found a lack of transparency regarding financial benefits instigated by bargaining representatives.
9. The Fair Work Amendment (Corrupting Benefits) Act 2017 addressed these concerns through new criminal offences and disclosure obligations designed to combat corruption and promote better governance of registered organisations.
10. The new obligations took effect on 11 September 2017.
11. The key changes are:
- persons are prohibited from dishonestly requesting, receiving or obtaining, or agreeing to receive or obtain, a corrupting benefit that is intended to influence an officer or employee of a registered organisation in performing their duties.
- A person may be subject to criminal proceedings where these requirements are contravened. Maximum penalties of up to $5.25 million for a body corporate and up to 10 years imprisonment and/or a maximum financial penalty of $1.05 million for an individual apply.
- employers are prohibited from providing cash or in-kind payments to unions and certain related parties, except for payments that are exempted. The maximum penalty for an individual making an unlawful payment is 2 years imprisonment and/or a maximum financial penalty of $105 000. A body corporate may be subject to a financial penalty up to $525 000.
- employers and registered organisations that are bargaining for an enterprise agreement must disclose certain direct or indirect financial benefits that they, or parties closely connected to them, may derive under the terms of that agreement. The disclosure document must be given to employees before they commence voting on the agreement.
Payments that are exempted from these provisions
12. The following categories of payments are exempt from the new offence relating to cash or in-kind payments provided they are not also corrupting benefits:
- genuine membership fees of a registered organisation deducted from the wages of employees,
- benefits provided and used for the sole or dominant purpose of benefitting an employer’s employees, or former employees in relation to their former employment,
- gifts or contributions to a deductible gift recipient,
- benefits of nominal value (meaning 2 penalty units which is currently $420) for travel or hospitality during consultation, negotiation or bargaining,
- token gifts of nominal value given in accordance with common courteous practice among employers and organisations,
- payments made at market value for goods and services supplied to an employer in the ordinary course of an organisation’s business,
- payments made under or in accordance with a law of the Commonwealth, State or a Territory,
- benefits provided in settlement of a genuine legal dispute or in accordance with an order, judgement or award of a court of the Fair Work Commission.
13. The Australian Public Service Code of Conduct and the Public Governance, Performance and Accountability Act 2013 place significant obligations on APS employees and their agencies about using Commonwealth resources in a proper manner and for a proper purpose. Non-APS agencies also need to be careful about how and why they spend public money.
14. All Commonwealth agencies are encouraged to err on the side of caution by not entering into any arrangements that provide unions with benefits or cash or in-kind payments, if such transactions are not required by law.
Implications for Agencies and Commonwealth entities
15. All Commonwealth entities should review their current arrangements with registered organisations to ensure they do not contravene the new legislation. This includes arrangements in enterprise agreements, determinations, or common law agreements, as well as agency policies, guidelines and practices.
16. Attention should be directed to any formal or informal arrangements with unions.
- The scrutiny should include any financial commitments that Commonwealth entities may have made with a union(s) to facilitate the activities of union officials or union employees. Examples include paying for transport and accommodation costs for a union official to attend consultation meetings or bargaining meetings.
- Should any such arrangements exist, the entity may wish to seek legal advice to confirm whether these comply with obligations under the Act.
17. Agencies must also ensure that they do not, either knowingly or inadvertently, endorse or promote products or services provided by or through a union. For example this could include, but is not limited to: financial advice, banking and insurance products, legal services and training courses.
18. All Commonwealth entities should review commitments made to unions during enterprise bargaining. The purpose is to ensure both the employer and union identify those commitments that are disclosable by unions to employees during the access period for a proposed enterprise agreement.
19. Where a union gives a Commonwealth entity a disclosure document in accordance with section 179 of the Act, the employer must take all reasonable steps to give relevant employees a copy of the document or access to a copy as soon as practicable.
20. Employers must disclose certain financial benefits that can reasonably be expected to be received by the employer (or an associated entity), as a result of the operation of the agreement. For example, any savings the employer may gain as a result of nominating a default superannuation fund that also provides a financial benefit to a union.
21. Commonwealth entities should not entertain any discussions with unions that may contravene the new obligations. Employers and registered organisations have an obligation to identify any disclosable benefits and take steps to ensure compliance with the Act.
Further information and advice
22. A copy of the Explanatory Memorandum for this legislative change can be found here.
23. For further information or advice, agencies can contact their APSC Relationship Manager, or email emailworkplacerelations [at] apsc.gov.au.