Australia: Registered Organisations Bill passed – with unexpected whistleblower protections

On 22 November, the Turnbull Government finally secured passage of the Fair Work (Registered Organisations) Bill 2014 (RO Bill) by Federal Parliament.

The Bill passed with the support of all cross-bench senators (except Senator Lambie), and followed a last-minute agreement between the Government, Senator Hinch and the Nick Xenophon Team (NXT) to add some provisions increasing protections for union whistleblowers and the accountability of auditors.

In this article, we examine the key aspects of the RO Bill and explore the implications of the whistleblower changes – which are especially significant, given the Government's commitment to extend similar protections to the corporate and public sectors.

WHAT IS THE RO BILL?

The RO Bill seeks to implement the Coalition's 2013 election policy to create a specialist regulator, the Registered Organisations Commission (ROC), to oversee around 100 federally registered unions and employer associations. This proposal was subsequently endorsed by the Trade Unions Royal Commission.

The RO Bill amends the Fair Work Act 2009 (Cth) (FW Act) and Fair Work (Registered Organisations) Act 2009 (Cth) (FWRO Act) to:

  • establish the ROC and provide it with investigation and information gathering powers, enabling it to monitor and regulate registered organisations;
  • provide for the appointment, functions and powers of a ROC Commissioner who will assume the investigatory, enforcement and advisory responsibilities in relation to registered organisations currently undertaken by the General Manager of the Fair Work Commission (FWC);
  • increase the disclosure requirements relating to material personal interests for officers of registered organisations, along with financial accounting and disclosure obligations;
  • substantially increase civil penalties and introduce criminal offences for serious breaches of officers' duties, and new offences in relation to the conduct of investigations; and
  • change the grounds for disqualification and ineligibility for office of registered organisation office-holders.

While the changes effected by the RO Bill were primarily a response to corruption scandals within the Health Services Union – and other instances of union financial malfeasance identified by the Royal Commission – it is important to note that the new rules apply as much to employer organisations as trade unions.

WHAT WERE THE LAST-MINUTE CHANGES?

Auditor accountability

More proscriptive obligations have been imposed by the RO Bill upon auditors reviewing the accounts of registered organisations, including:

  • ensuring the auditors are rotated every five years or after acting as an auditor for the organisation for 5 out of 7 successive years;
  • excluding people with a close association with a registered organisation from acting as auditor;
  • outlining auditor registration requirements which enable auditors to be de-registered; and
  • increasing penalties if an auditor is found to breach their statutory obligations.

Whistleblower amendments and proposed further changes

As indicated above, the new whistleblower protections formed part of a deal between the Government, Senator Hinch and NXT senators to ensure passage of the Bill in the Senate.

A new Part 4A has been inserted in Chapter 11 of the FWRO Act, replacing previous whistleblower protection provisions which were limited in their application to allegations made by union members (about breaches of that legislation) to appropriate authorities such as the FWC.

The Heydon Royal Commission final report recommended that these protections should be strengthened to address 'the culture of intimidation and bullying' within unions, including by broadening the range of persons who could make a protected disclosure and introducing prohibitions of reprisal action against whistleblowers.1

Under the new Part 4A:

  • Protected disclosures may be made through a person's lawyer (allowing that person to remain anonymous) (FWRO Act, s 337A(2)).
  • The categories of protected whistleblower include – in addition to union members, officers or employees – former members, officers or employees and anyone who has had a contract for the supply of goods or services or other transactions with a union, or with one of its officers/employees (s 337A(a)).
  • The subjects of a protected disclosure by a whistleblower include any 'disclosable conduct', defined as an act or omission that contravenes or may contravene the FWRO Act, FW Act or the Competition and Consumer Act 2010 (Cth), or which is an offence against a law of the Commonwealth (s 6). As before, disclosures must be made to relevant authority such as the FWC or the Fair Work Ombudsman.
  • Whistleblowers are protected from any reprisal action (i.e. causing a detriment) taken in circumstances where the person acting against them believes or suspects (or should have known) that the whistleblower had made or could make a protected disclosure. 'Detriment' for these purposes includes dismissal, alteration of position, discrimination, harassment, intimidation, harm or injury (including psychological harm), or damage to property/reputation (s 337BA). Civil and criminal penalties apply to the taking of prohibited reprisal action.

Significantly, the Government has given a written commitment to NXT and Senator Hinch that it will extend this new framework of whistleblower protection to companies and public sector employers within 18 months. In the meantime, a parliamentary inquiry will examine the scope and shape of any proposed new laws, with a report due in mid-2017.

Senator Xenophon claimed that 'Australia [will] go from some of the worst whistleblower protection laws in the world to arguably the best'.2 It has also been suggested that the new laws may include US-style provisions which not only protect corporate whistleblowers, but enable them to obtain financial benefits from making disclosures of wrongdoing.3

The scope of these changes is significant and the promised extension to the public sector and corporate Australia will mean wide-ranging changes to the corporate environment, which will go well beyond issues of industrial relations. Corrs will explore the consequences of these protections and whistle-blower bounties for boards and executives, and provide monitoring of the issues raised in the parliamentary inquiry.

WHERE TO NEXT?

On the back of its success in having the RO Bill passed, the Government will now seek to persuade the Senate cross-Bench to pass the other trigger for this year's double dissolution election: the Building and Construction Industry (Improving Productivity) Bill. This would see the re-establishment of the Australian Building and Construction Commission, and a stronger approach to enforcement of laws prohibiting unlawful industrial action and coercion in the construction sector.

The fate of the ABCC bill will be known this week. We will keep you up to date on any developments.

Footnotes

1 Royal Commission on Trade Union Governance and Corruption: Final Report, December 2015, volume 5, pages 112-124.

2 Quoted in 'Minister confirms 17 FWC staff to transfer to ROC', Workplace Express, 22 November 2016.

3 See e.g. M Knott, 'Revealed: Senate deal could see whistleblowers paid a bounty for exposing wrongdoing', Sydney Morning Herald, 22 November 2016.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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