On 11 May 2016, the Full Bench of the Fair Work Commission (FWC) overturned the FWC General Manager's (GM) decision to authorise two FWC employees to inspect the membership records of the Construction, Forestry, Mining and Energy Union (CFMEU) for the purposes of aiding an investigation by the Office of the Fair Work Building Industry Inspectorate (FWBII). The Full Bench held that the GM’s decision was an invalid exercise of the power conferred by the Fair Work (Registered Organisations) Act 2009 (FWRO Act).
Section 348 of the FWRO Act allows the GM to issue a certificate that states whether a person is a member of a specified organisation, and sets out the legal effect of such a certificate.
In January 2016 a FWBII inspector wrote to the GM requesting, pursuant to section 348, the issue of certificates confirming that two individuals were members of the CFMEU. The certificates were sought for the purpose of:
….carrying out an investigation in relation to conduct engaged in by building industry participants that may be contrary to a designated building law.
The investigation was aimed at determining whether the individuals had breached various sections of the Fair Work Act 2009 (FWA) related to adverse action, coercion, and unlawful industrial action. The GM requested the relevant information from the CFMEU. Whilst the CFMEU objected, the GM subsequently authorised the inspection of the CFMEU’s membership records. The CFMEU appealed the authorisation to the FWC.
The CFMEU argued that:
the power of the GM to inspect and take copies of a registered organisation’s membership records could only be exercised in accordance with the legislative policy and purposes of the FWRO Act and hence exercising the power for the purpose of aiding enforcement of statutory obligations contained in the FWA was invalid
similarly, the GM could only issue a certificate under section 348 of the FWRO Act for purposes of the FWRO Act, not the FWA and
a certificate could not be validly issued under section 348 of the FWRO Act for investigatory purposes.
The first two arguments were rejected by the Full Bench of the FWC, but the third was accepted.
The power conferred by the FWRO Act extended to matters under the FWA
The FWC noted a long-standing proposition that determining if a discretionary power has been properly exercised will depend upon the ‘policy and purpose of the statute’ conferring the power as well as the duties of the officers who are to exercise it. In short, a discretionary power (such as the power to access union membership records) cannot be exercised for purposes foreign to the policy and purpose of the statute that confers it.
After considering the legislative history of the FWRO Act and FWA, the FWC concluded that because those statutes ‘may properly be characterised as component parts of a scheme of legislation concerning industrial relations’ and because they shared a ‘substantially common purpose, are inter-connected and operate together’ they should ‘be interpreted in a co-ordinated way as far as their respective texts permit’.
As a result, the FWC concluded that the power to inspect membership records and to issue certificates should be interpreted as being available not just for the purposes of the FWRO Act, but also for those of the FWA. Therefore the CFMEU’s first and second arguments were rejected.
The purpose of issuing the evidentiary certificates
The FWC therefore considered that the discretionary power to inspect membership records could be exercised to facilitate the valid issue of an evidentiary certificate under section 348 of the FWRO Act, for purposes arising under the FWA. However, it noted that the purpose of the provision is to ensure that certificates serve as evidence of membership of an organisation in ‘all courts or proceedings’. The FWC considered previous cases and concluded that an investigation by a regulatory authority is not a ‘proceeding’ as the purpose of an investigation is to ‘assess whether there is a sufficient basis to commence relevant proceedings in the first place’. Therefore issuing a certificate for an investigation was not consistent with the proper purpose of section 348: proving asserted facts in a court or proceeding.
In accepting the CFMEU’s third argument, the FWC upheld the appeal and overturned the inspection of the CFMEU’s membership records authorised by the GM.
A pyrrhic victory?
The outcome might seem to be a victory for the CFMEU and a curtailment of the ability of the GM and FWBII to investigate alleged misconduct by members of registered organisations. However, as noted by the FWC, FWBII inspectors have the power under the FWA to enter premises, and inspect and copy records. As a result alternate methods to investigate issues related to the membership of an organisation remain.
Why is the case important?
The Government proposed a number of reforms to the regulation of registered organisation and the building industry that were ultimately blocked by the Senate and served as the legal basis for the current double dissolution election. It could be argued that the case is evidence of the need to provide stronger investigatory and regulatory powers to the FWBII and GM. Alternatively however, it could be argued the case does not represent a diminution of the ability of the FWBII and GM to investigate unlawful industrial action and other breaches of the FWA, but rather clarifies the purposes for which the relevant evidentiary certificates can be issued.