22 Nov 2016

Government's union regulation legislation passes Senate

A key plank of the Government's industrial relations reform agenda that triggered the double dissolution election has passed the Senate in the early hours of this morning.  

The Fair Work (Registered Organisations) Amendment Bill received the support of nearly all cross-bench senators with amendments to provide stronger protections for whistle-blowers.

The passage of this Bill is the most significant industrial relations legislative development since the creation of the Fair Work Act in 2009.

What are the key features of the new legislation?

The key focus of the Bill is to amend the Fair Work Act and the Fair Work (Registered Organisations) Act to ensure better governance of organisations by strengthening existing financial accounting and disclosure requirements, increasing penalties for breaches of the legislation and importantly, to establish a new independent regulator – the Registered Organisations Commission. 

A Registered Organisations Commissioner will be appointed to oversee the new agency and will have wide powers to do all things necessary for the purposes of performing his or her functions. The Commissioner's powers have been modelled on those in the Australian Securities and Investments Commission Act.  

The Bill makes it an offence for an employee of an organisation to use his or her position, or information obtained because of his or her position, dishonestly, with the intention of gaining an advantage for himself or herself, or someone else, or causing detriment to the organisation.  The Bill imposes substantial penalties of up to $360,000 or 5 years' imprisonment, or both, for such offences.

Other key components of the legislation, which attract maximum penalties of up to $216,000 include:

  • greater disclosure obligations for each officer of an organisation of any material personal interest that an officer has or acquires relating to the affairs of the organisation;  and
  • a prohibition on an officer of an organisation who has a material personal interest in a matter that relates to the affairs of the organisation being present during deliberations on the matter, and taking part in any decision with respect to the matter.

Higher penalties have also been imposed for existing contraventions, including those requiring an officer of an organisation to exercise his or her powers and discharge his or her duties with the degree of care and diligence that a reasonable person would.

The Bill also imposes a higher maximum penalty for a "serious contravention" which is one that materially prejudices the interests of the organisation or its members, materially prejudices the organisation's ability to pay its creditors, or is otherwise "serious."

Whistle-blower protections

Another key aspect of the final version of the Bill is to include stronger protections for whistle-blowers in organisations to ensure that they have access to remedies where a person takes, or threatens to take, a reprisal against them out of a belief or suspicion that they have made, may have made, or proposes to make or could make, a disclosure of information.  

The "reprisals" contemplated by the whistle-blower protections in the Bill include the dismissal of an employee, injuring the employee in his or her employment, altering the employee's position to his or her detriment, discriminating between an employee and other employees, harassment or intimidation of a person, harm or injury to a person (including psychological harm), and damaging a person's property or reputation.

A person who takes a reprisal against a whistle-blower can be pursued for civil or criminal remedies.  On an application for civil remedies, a court can make any order it thinks appropriate if satisfied that a reprisal was taken or threatened (including compensation, reinstatement and ordering an apology).  An applicant for such civil remedies is not limited to the Registered Organisations Commissioner and also includes the target, the General Manager of the Fair Work Commission, the Director of the Fair Work Building Industry Inspectorate or the Fair Work Ombudsman.  

The Bill also increases the criminal sanctions for taking or threatening to take a reprisal to imprisonment for two years or the imposition of a penalty of up to $21,600, or both.

What is the importance of the Registered Organisations Commission?

The Commission will create a separate independent body, akin to ASIC, for organisations, which will ensure more efficient management of organisations by promoting compliance with financial reporting and accountability for the benefit of their office-holders and most importantly, the members of organisations.

What next

The Bill will now complete its final stages to achieve Royal Assent and become operational, which we anticipate to be in the very near future.  

The Parliament will now move to consider the second of the Government's key industrial relations reforms – the reintroduction of the Australian Building and Construction Commission.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.