2.1
The Australian government has committed to implementing recommendations of the Royal Commission into Trade Union Governance and Corruption (the royal commission). The Fair Work Laws Amendment (Proper Use of Worker Benefits) Bill 2017 (the bill) delivers on this promise by seeking to implement 10 of those recommendations in full or in part.
2.2
To achieve this, the bill would amend the Fair Work (Registered Organisations) Act 2009 (the RO Act) and the Fair Work Act 2009 (the FW Act) to:
(a)
require worker entitlement funds to be registered, and have proper governance arrangements such as providing annual reports on their operation, updating members on their entitlements and having at least one independent director on their boards;
(b)
ensure that payments under awards, enterprise agreements and contracts of employment can only be made to registered worker entitlement funds, charities and superannuation funds;
(c)
help ensure that payments by employees to election funds within their organisation cannot be compelled by making certain terms of an enterprise agreement or contract employment unlawful;
(d)
prohibit anyone coercing payments into a particular fund;
(e)
require employers and registered organisations to disclose any financial benefits they receive through payments into funds or particular insurance arrangements that organisations arrange or promote; and
(f)
strengthen financial management, disclosure and record-keeping requirements for registered organisations.
2.3
This chapter outlines the key measures in the bill.
Schedule 1—Financial management and accountability
2.4
This schedule would amend and expand requirements for financial disclosure and record keeping for registered organisations.
2.5
While certain financial management provisions exist in the RO Act, there are currently no consequences for organisations which fail to keep proper financial records. The bill seeks to address this by introducing a civil penalty provision.
2.6
The bill would also require registered organisations to implement written, binding policies on:
financial decision-making;
levels of authorisation of expenditure;
the establishment, operation and governance of related parties; and
other prescribed matters.
2.7
Organisations would be required to lodge their policies with the Registered Organisations Commissioner and also make them available to members. Failure to implement the required policies would attract a maximum civil penalty of 100 penalty units (currently equivalent to $21 000).
2.8
Schedule 1 would also impose a requirement for registered organisations to keep credit and charge card statements and records of the use of other cards which have charges reimbursed by the organisations.
2.9
Schedule 1 seeks to implement recommendations 9, 10, 17 and 39 of the royal commission in full or in part.
Schedule 2—Regulation of worker entitlement funds
2.10
Schedule 2 contains provisions dealing with governance, financial reporting and financial disclosures of worker entitlement funds. Although worker entitlement funds are in some ways similar to managed investment schemes, they are currently exempt from the regulatory requirements which apply to the latter under the Corporations Act 2001.
2.11
The bill would require worker entitlement funds to be registered and meet certain conditions relating to financial management, board composition, disclosure and how money is spent. For example, funds would be required to:
have an independent voting director on their boards;
publish and provide the Registered Organisations Commissioner with annual reports; and
provide worker and employer members with information about any entitlements held by the fund.
2.12
The bill would impose additional requirements on how worker entitlement funds can spend income, and would clarify that contributions are to be treated as contributions, and income as income. The latter would ensure that funds are not able to avoid statutory restrictions on how contributions and income may be spent.
2.13
Schedule 2 seeks to implement recommendations 45, 46 and 49 of the royal commission.
Schedule 3—Election funds
2.14
This schedule seeks to ensure that election fund contributions are voluntary, not a condition of working for a union or for an employer group. This would be achieved by amending the FW Act to prohibit enterprise agreement or contract of employment agreements which either permit or require employee contributions to an election fund. Genuine donations outside of employment agreements would not be affected.
2.15
This schedule would give effect to recommendation 43 of the royal commission.
Schedule 4—Prohibiting coerced payments
2.16
Schedule 4 addresses evidence of coercive behaviour uncovered by the royal commission—behaviour aimed at securing employer benefits to funds which give financial benefits back to a particular registered organisation. The bill would prohibit any action taken with the intent to coerce a person to make payments to any particular entitlement, superannuation, training or welfare fund, any particular employee insurance scheme or certain managed investment schemes. Protected industrial action would not be included in this prohibition.
2.17
This schedule would give effect to recommendation 50 of the royal commission.
Schedule 5—Disclosable arrangements
2.18
Schedule 5 would increase transparency around benefits which flow to organisations and employers as a result of certain arrangements between the two. This would be achieved by requiring registered organisations and employers to disclose any financial benefits they receive from such arrangements.
2.19
The schedule would give effect to recommendation 47 of the royal commission.