Australia: Coming changes to Fair Work (Registered Organisations) Act – Update on 21 December 2016 Bulletin

In our bulletin of 21 December 2016 we alerted clients to significant changes to the Fair Work (Registered Organisations) Act 2009 (Cth) ("the RO Act") that became law in late November 2016, and which were expected to commence operation by the end of March 2017.

This bulletin provides an update on the current situation with these changes, and with additional proposed changes to the RO Act that the Federal Government has recently presented to the Parliament

Amending legislation still not proclaimed to commence

While it was previously anticipated that last year's Act amending the RO Act ("the Amending Act") would commence by the end of March 2017, that has not happened, and a precise date for commencement of the Amending Act is not yet known.

The appointment of the Registered Organisations Commissioner has not yet been announced and there have been no transitional regulations published yet. It is understood that these regulations are still a "work in progress".

On the information available to us, it is unlikely that the Amending Act will commence for at least another month.

We will advise clients as soon as we know the actual commencement date.

Organisations and branches will have to alter their Rules

The delay in commencement of the Amending Act is actually of some benefit to organisations and their branches because it is now clear that they all will have to move to amend their Rules as soon as they can after the Amending Act starts – there is unlikely to be any 12 month "grace period" for getting the changes done, as there was with the amending legislation in 2012 that required organisations and branches to amend their Rules in relation to, inter alia, financial transparency.

The alterations to their Rules that organisations and branches will have to make fall into two categories.

Rule as to keeping minute books

First, they all have to insert into their Rule Books a rule that requires the keeping of minute books for all committee of management meetings, recording proceedings and resolutions. This requirement is tied to the new statutory disclosure regime in the Amending Act wherein all disclosures required to be made by officers as to external board remuneration, related party payments and material personal interests must be reported to and recorded in the minutes of committee of management meetings. While probably all organisations and branches already keep such minute books, as a matter of normal practice, the Amending Act prescribes that their Rules must specifically provide for this matter. In our experience, most organisations/branches do not currently have a "Keeping Minute books" rule in their Rule books.

Removal of current "financial transparency" rules

Secondly, all those Rules that were inserted into organisation and branch Rules relating to financial transparency, following the amendments in 2012, have to be removed. This is because the subjects they cover (except financial management training) are now the subject of specific statutory obligations on officers and organisations/branches in the Amending Act (with specific penalties for breach). In conjunction with those new statutory prescriptions, the provisions in the 2012 legislation mandating the necessary rule changes in this are repealed.

Failure to remove these Rules will result in two sets of obligations, some slightly different, in relation to the same subjects – a completely inappropriate state of affairs going forward.

Rule alteration process

For some clients, attending to the necessary rule changes will be simple; but for others, more difficult for a variety of reasons. But all organisations and branches should start thinking about this now. We can assist if required.

Outlawing "corrupting payments" by employers to unions/union officials

Finally, most organisations and branches are probably aware that the Federal Government has recently introduced a Bill to implement Recommendations of the Trade Union Royal Commission prohibiting, and heavily punishing "corrupting payments" by employers to unions or their officials.

The Bill is the "Fair Work Amendment (Corrupting Benefits) Bill 2017", and it follows quite closely Recommendations 40, 41 and 48 in the Commission's Report on this subject. In general summary, the Bill has two purposes:

  1. Prohibiting "corrupting payments" by employers to unions or union officials, including offering soliciting or receiving such benefits, being payments that are in exchange for a union or an official behaving improperly (e.g. not performing an official's duties properly in the interests of the union's members);
  2. Requiring disclosure to employees intended to be covered by anenterprise agreement of benefits to a union proposed to be included in the subject agreement.

Penalties for breach of the "corrupting payments" prohibitions are potentially very severe – for an individual, imprisonment for up to 10 years and a penalty up to $900,000 or both, and in the case of a body corporate, up to $4,500,000.

While the Government does not have a majority in the Senate, it is suspected that the Bill will have reasonable prospects of being passed in that Chamber, and thus coming into law later this year (perhaps in the coming Budget session).

Further information to follow

As can be seen, we are monitoring developments in this area of the law quite closely.

When further information is available we shall be in touch with clients again.

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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