On 10 August 2017, the Fair Work Amendment (Corrupting Benefits) Bill was finally passed by both Houses of Federal Parliament and is expected to take effect soon. The bill was introduced by the Coalition Government in response to key recommendations from the Royal Commission into Trade Union Governance and Corruption and is designed to avoid deals between employers and unions that were contrary to the interests of union members. However, it has broader implications for all employers.
In addition to criminalising the receipt or solicitation of “corrupting benefits” by unions and their associates, the new amendments to the Fair Work Act contained in the bill will:
- make it a criminal offence for an employer to dishonestly provide, offer to provide or promise to provide a “corrupting benefit” to unions and their associates
- make it a criminal offence for an employer to provide, offer to provide or promise to provide “cash or in kind payments” to a union (or other prohibited beneficiaries) where the employer (or its associates) employ potential members of that union (subject to legitimate exceptions)
- require the disclosure by employers of any benefits that may reasonably be expected to be derived by unions and their associates or the employer and its associates through enterprise bargaining.
A benefit is a “corrupting benefit” if it is intended to influence a union officer or employee:
- in the performance of their duties
- in the exercise of their legal powers or functions, or
- to give an advantage of any kind in connection with the affairs of the employer which is not legitimately due.
“Benefit” is defined broadly, and includes but is not limited to, property. Relevantly, the person to whom the benefit is provided does not need to be an officer or employee of a union, provided that the benefit is given or offered with the intention of influencing the officer or employee.
There is no requirement that the employer actually obtain a benefit from the corrupting benefit.
Offences in relation to corrupting benefits carry significant penalties of a maximum of 10 years imprisonment and/or fines of $1,050,000 for an individual or fines of $5,250,000 for a body corporate.
Provision of cash or in kind payments by employer of potential union members
Unlawful “cash or in kind payments” are defined broadly to include the provision of goods or services.
Exceptions include union membership fees, tax deductible gifts and market value payments for supply of goods or services, as well as certain commonly provided token benefits that do not exceed the current limit of $420.
Offences in relation to providing benefits in this way carry lesser penalties of a maximum of two years imprisonment and/or fines of $105,000 for an individual or fines of $525,000 for a body corporate.
Disclosure of benefits derived through enterprise bargaining
Where the terms of a proposed enterprise agreement can reasonably be expected to operate to provide a prescribed financial benefit to a union, the union must disclose in writing details of that benefit to the employer. The disclosure must occur by no later than the fourth day of the period in which employees who are voting on a proposed enterprise agreement are granted access to that agreement (EA Access Period). Employers will be exposed to civil penalties if they fail to disclose this document to employees as soon as practicable after it is disclosed to them and do not allow the employees to access it for the remainder of the EA Access Period after the disclosure to employees is made.
Employers also have a separate obligation to make a similar written disclosure to employees by the fourth day of the EA Access Period of any prescribed financial benefits the employer or its associates can reasonably be expected to receive from the operation of the terms of the proposed agreement. This disclosure does not extend to financial benefits received in the ordinary course of the employer’s business.
The failure to make a required disclosure, or the making of a false or misleading representation in the employer’s disclosure document, exposes the employer to civil penalties of up to $12,600 for an individual and $63,000 for a body corporate. However, any failures do not prevent the agreement from being approved or suggest it was not genuinely agreed.
Key considerations for employers
All employers involved in enterprise bargaining (whether with a union or not) must now turn their minds to the requirement to disclose prescribed financial benefits to employees who are voting on a proposed enterprise agreement. Required disclosures will need to be built into their agreement approval process. Advice should be sought about the terms of the agreement before it is circulated to employees to confirm that any disclosable financial benefits have been identified.
Employers in unionised industries should consider whether their existing arrangements with unions and their associates will breach the new laws, and seek advice if necessary. These employers will need to exercise extra caution in their dealings with unions and their associates to avoid any suggestion that they are involved in the provision or promise of any unlawful benefits.
The full scope of these laws remains to be tested in the courts.