Fair Work (Registered Organisations) Amendment (Ensuring Integrity) Bill 2017 (Cth)

Thursday 19 October 2017 @ 2.16 p.m. | Corporate & Regulatory | Industrial Law | Trade & Commerce

On 16 August 2017, the Federal Government introduced the Fair Work (Registered Organisations) Amendment (Ensuring Integrity) Bill 2017 (Cth) (the Bill) into the House of Representatives. The Bill was  referred to a Senate Committee inquiry on 17 August 2017 and that Committee reported on 12 October 2017. The Bill went through its second reading and passed through the House of Representatives on 16 October 2017 and was introduced into the Senate on 17 October 2017. The key purpose of the Bill is to amend the Fair Work (Registered Organisations) Act 2009 (Cth) (the Registered Organisations Act) to respond to the recommendations made by the Heydon Royal Commission into Trade Union Governance and Corruption.

Key Aspects of the Bill

The key changes the Bill would effect, are:

  • The introduction of a "public interest test" for the amalgamations of registered organisations. This would allow relevant matters to be taken into account, for example, each of the amalgamating organisation’s record of compliance with industrial laws;
  • An expansion of the categories of "prescribed offences" which lead to the automatic disqualification of a person from acting as an official of a registered organisation (that is, a union or registered employer association);
  • Allowing the Federal Court of Australia to prohibit officials from holding office in a registered organisation if:
    •   they contravene a range of industrial and other relevant laws, 
    •   are found in contempt of court, 
    •   repeatedly fail to stop their organisation from breaking the law, or 
    •   are otherwise not a fit and proper person to hold office in a registered organisation;
  • Allowing the Federal Court of Australia to cancel the registration of an organisation on a range of grounds including:
    •   corrupt conduct by officials,
    • repeated breaches of a range of industrial and other laws by the organisation or its members, and 
    • the taking of obstructive unprotected industrial action by a substantial number of members;
  • Allowing applications to be made to the Federal Court of Australia for other orders, including the suspending the rights and privileges of an organisation or an individual branch or division of an organisation where its officers or members are acting in a manner that is inconsistent with the rights and privileges of registration; and
  • Expanding the grounds on which the Federal Court of Australia may appoint an administrator to a registered organisation.

The Standing Committee's Report

On the proposed amendments to expand the grounds for disqualifying individuals from holding office in a registered organisation, the committee stated that its view was that current penalties were "insufficient" and that this was "demonstrated by the findings of the Heydon Royal Commission and by numerous court cases". Further, the committee noted that expanded grounds for disqualification were a key recommendation of the Heydon Royal Commission to address such issues.

The committee pointed out that the expanded grounds for disqualification did not create new obligations,  but instead ensured that those who engaged in unlawful conduct could be removed from leadership positions within registered organisations. The committee found that the proposed amendments were not novel but drew on ". . . established regimes including those that currently exist under the Corporations Act".

Finally, the committee found that the amendments allow for matters of disqualification to be determined in "an independent and impartial fashion" by the Federal Court of Australia which provides an ". . . appropriate check and balance on the proposed disqualification regime".

With respect to cancellation of registration of registered organisations the committee reported that it ". . . considers that there is a strong basis for expanding the grounds for the cancellation of registered organisations." The committee reported that from its submissions it was of the view that ". . . it is too difficult for the registration of a registered organisation to be cancelled". This the committee reported was demonstrated by the fact that there had not been a single use of the existing deregistration provisions for over 30 years. The proposed amendments the committee reported would address the issue and help to address the ". . . deplorable behaviour that is rampant in some industries". Again the committee considered that the independent role of the Federal Court of Australia in having the power to order the cancellation would ensure that the consequence of deregistration was ". . . applied appropriately including with due consideration to the interests of members".

On the question of placing registered organisations into administration the committee was of the view that the proposed amendments were required to the current regime for placing registered organisations into administration. The committee noted that the Bill puts beyond doubt that the Federal Court Australia can appoint an administrator and can do so where officials of registered organisations have misappropriated member funds, repeatedly breached their duties or repeatedly broken the law. This the committee considered showed the expanded grounds for placing registered organisations into administration were appropriately balanced.

On the introduction of a public interest test for the amalgamation of registered organisations the committee supported the introduction of a public interest test applying prior to the amalgamation of registered organisations. In the committee's view ,"public interest tests" are a long-standing precedent in industrial relations law and the Fair Work Commission is well practised in applying such tests. Further, the  concept is applied to corporate mergers, where they may substantially lessen competition and can only be approved by the Australian Competition Tribunal. Because the amalgamation of registered organisations may have far reaching effects the committee considered that it was appropriate that the views of all those affected be taken into account. In the committee's view it was relevant that when registered organisations seek to amalgamate, consideration must be given to ". . . whether there is a history of non-compliance with the law by the organisation - assisting in preventing the spread of non-compliance and its potential impacts on union members, employers, industry and the Australian economy.

On the matter of consultation in relation to the Bill the committee concluded that there had been adequate consultation time allowed. Further on the question of compliance with Australia's obligations in relation to the right to freedom of association the committee concluded these were not affected by the Bill.

Finally the committee recommended that the Senate pass the Bill based on the evidence received during its inquiry, which convinced the committee that the measures in the Bill were "a necessary and balanced response" to ensure the integrity of registered organisations and their officials, for the benefit of members.

The Dissenting Reports

The Labor Party presented a dissenting report saying the ". .. Bill proposed by the government is politically driven and designed to interfere with and disrupt the democratic functioning of unions".

The Labor dissenting report claimed that it is ". . . union members [who] should decide who their leaders are and what their unions looks like, not non-members and certainly not the government of the day or employers".

In the Labor dissenting report the point is made that ". . . the Bill erroneously assumes that unions are like corporations in nature, structure and purpose". The assumption is said to be far from the case and that the Bill would impose a higher and harsher standard on unions than that which exists for corporations.

The grounds and standing to bring applications for disqualification orders under schedule 1 were far too wide, according to the Labor dissenting report as were the grounds for the cancellation of registration of registered organisations and the alternative orders contained in schedule 2.

The Australian Greens Party also lodged a dissenting report, the key points of which were that the consultation time on the Bill had not been adequate, that the Bill posed a threat to general rights of assembly and to International Labour Organisation (ILO) treaties. The Australian Greens in their dissenting report indicate their support for the ACTU submission where it states that:

". . . the measures in the bill 'allow excessive political, corporate and regulatory interference in the democratic functioning and control of industrial organisations, with no true objective other than political gain.’ It is difficult to see why employers should have more of a say over which unions their employees can join or who the employees choose to run those unions, yet that seems to be the Bill’s effect."

What's Next

The Bill is legislation which can best be described as controversial and judging from the dissenting opinions the debate on the Bill in the Senate is likely to be interesting and may well take a while to complete.

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