Employers will have to adopt strict safeguards and auditing measures to ensure compliance with the new corrupting benefits legislation passed by both Houses of Parliament late last week.

The Fair Work Amendment (Corrupting Benefits) Bill 2017 (Cth) – currently awaiting royal assent – enacts recommendations arising out of the Heydon Royal Commission in relation to corrupting benefits made between employers and employee organisations.

How is this relevant to employers?

The legislation provides that an employer will commit a criminal offence where the employer or its employees:

  • give corrupting benefits to Union Officials dishonestly to influence them;
  • receive or solicit corrupting benefits from Union Officials dishonestly with the intention that the receipt of the benefit will influence the Union Official; and
  • make prohibited “cash or in kind payments” to Unions and Union Officials (except for prescribed categories of permissible payments).

Some important amendments to the legislation were made last week. These include the following:

  • the first two offences are now limited by the requirement that the corrupting benefit must be provided, offered or promised “dishonestly” (which is assessed according to “the standards of ordinary people”). The requirement that the intent be to influence the Union Official in the performance of their duties “improperly” has been removed;
  • the offences are no longer strict liability offences; and
  • in relation to the last offence, there are new categories of permissible payments, which now include certain types of gifts, or travel or hospitality benefits, provided that the amount is no more than $420. There were also minor amendments to the categories of permissible payments. For example, the permissible payment relating to benefits to employees has been extended to former employees in relation to their former employment.

The legislation also includes new disclosure requirements for Union bargaining representatives and employers to follow. These disclosure requirements mandate that a disclosure document be given to the employer and employees where the Union bargaining representative or the employer is receiving certain financial benefits as a result of the terms of the non-greenfields enterprise agreement.

What are the consequences for breaching the provisions?

Offence Maximum penalty for Individuals Maximum penalty for Body Corporates
Giving and receiving corrupting benefits to Union Officials
  • Imprisonment of not more than 10 years
  • A 5,000 penalty unit fine (currently $1.05 million)
  • Both
  • 25,000 penalty units (currently $5.25 million)
Making prohibited payments to unions and Union Officials
  • Imprisonment of not more than 2 years
  • A 500 penalty unit fine (currently $105,000)
  • Both
  • 25,000 penalty units (currently $5.25 million)

If employers do not comply with their disclosure requirements in relation to financial benefits for non-greenfields agreements, a civil penalty can be imposed of up to 300 penalty units (currently $63,000).

When will the legislation commence?

The legislation has not yet received royal assent. However, once it does, the legislation will either commence on a day fixed by proclamation, or after 6 months of receiving royal assent.

Employers should start considering the appropriate safeguards and auditing measures that can be put in place now to ensure compliance with the legislation once it commences.