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2019
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
FAIR WORK (REGISTERED ORGANISATIONS) AMENDMENT
(ENSURING INTEGRITY NO. 2) BILL 2019
EXPLANATORY MEMORANDUM
(Circulated by authority of the Attorney General and Minister for Industrial Relations, the
Hon Christian Porter MP)
Outline
FAIR WORK (REGISTERED ORGANISATIONS) AMENDMENT
(ENSURING INTEGRITY NO. 2) BILL 2019
OUTLINE
The Fair Work (Registered Organisations) Amendment (Ensuring Integrity No. 2) Bill 2019
(the Bill) amends the Fair Work (Registered Organisations) Act 2009 (the Act) to respond to
community concern and the recommendations of the Final Report of the Royal Commission
into Trade Union Governance and Corruption (the Royal Commission) to ensure the integrity
of registered organisations and their officers, for the benefit of members.
Registered employee and employer organisations have a privileged position in Australia's
workplace relations system and their members place a great deal of trust in them.
The Royal Commission, however, uncovered numerous examples of some organisations and
officers repeatedly flouting the law, misappropriating union funds, putting their own interests
before members, and generally failing to meet the basic standards of accountability and
governance that members, and the community more broadly, should be able to expect from
them.
In response, the Royal Commission made a number of observations and recommendations.
These included highlighting the insufficiency of the current regulatory framework in relation
to the disqualification of individuals from holding office in a registered organisations, the
regime for cancellation of registered organisations' registration, and the potential to use the
amalgamation procedure to avoid cancellation of registration.
The Bill responds to Royal Commission recommendations 36, 37 and 38, and the
Government's commitment to fairness, integrity and transparency of registered organisations
and their officers by amending the Act to:
include serious criminal offences punishable by five or more years' imprisonment as a
new category of 'prescribed offence' for the purposes of the automatic disqualification
regime which prohibits a person from acting as an officer of a registered organisation;
include a discretionary regime that allows the Federal Court, on application by the
Registered Organisations Commissioner (the Commissioner) to disqualify officers
from holding office in certain circumstances, including for committing offences
against or repeated contraventions of a range of workplace laws, repeatedly failing to
take reasonable steps to stop their organisation from breaking the law, breaching
officers duties, or where they are otherwise not a fit and proper person to hold office
in a registered organisation;
make it an offence for a person to continue to act as an officer or in a way that
influences the affairs of an organisation once they have been disqualified;
allow the Federal Court, on application by the Commissioner, to cancel the
registration of an organisation and/or make alternative orders on a range of grounds
including in relation to unlawful conduct of the affairs of the organisation, serious
criminal offences committed by the organisation, repeated breaches of a range of
workplace laws by its members, and the taking of obstructive unprotected industrial
action by a substantial number of members;
House of Representatives page i Fair Work (Registered Organisations)
Amendment (Ensuring Integrity No.2) Bill 2019
Outline
expand the grounds on which the Federal Court may order remedial action to deal with
governance issues in an organisation and expressly provide that the Federal Court may
appoint an administrator to an organisation or part of an organisation;
allow the Fair Work Commission (FWC) to decide, as a threshold matter, whether a
proposed amalgamation should be subject to a public interest test based on the
compliance history of the relevant organisations, and provide for the application of the
public interest test to a proposed amalgamation that meets the requisite compliance
history threshold;
provide that in carrying out his or her function of promoting efficient management of
organisations and high standards of accountability of organisations, the Commissioner
must prioritise matters that raise serious or systemic concerns; and
provide that the Minister must cause an independent review of the amendments made
by the Bill as soon as practicable after the end of two years after the amendments
commence.
The discretionary disqualification regime for officers of registered organisations in the Bill
will ensure more acceptable minimum standards of behaviour and accountability for officers
and promote democratic governance in the interests of members of registered organisations.
The measures in the Bill also implement the Government's commitment to effectively deal
with registered organisations that are dysfunctional or not serving the interests of their
members and to provide that registered organisations that meet the threshold of non-
compliance with workplace laws that are seeking to amalgamate are subject to a public
interest test.
In addressing these issues, the amendments will combat the culture of lawlessness of some
organisations and officers identified by the Royal Commission and therefore improve the
governance of registered organisations.
The Bill also makes a number of minor and technical amendments to the Act subsequent to
the passage of the Fair Work (Registered Organisations) Amendment Act 2016.
House of Representatives page ii Fair Work (Registered Organisations)
Amendment (Ensuring Integrity No.2) Bill 2019
Financial Impact Statement
FINANCIAL IMPACT STATEMENT
Nil
House of Representatives page iii Fair Work (Registered Organisations)
Amendment (Ensuring Integrity No.2) Bill 2019
Regulation Impact Statement
REGULATION IMPACT STATEMENT
The Interim and Final reports of the Royal Commission into Trade Union Governance and
Corruption have been certified by the then Department of Employment as being informed by
a process and analysis equivalent to a Regulation Impact Statement as set out in the
Australian Government Guide to Regulation. The Office of Best Practice Regulation ID for
this proposal is 19873. The Office of Best Practice Regulation does not assess independent
reviews.
These Royal Commission reports can be accessed at:
https://www.royalcommission.gov.au/royal-commission-trade-union-governance-and-
corruption.
House of Representatives 4 Fair Work (Registered Organisations)
Amendment (Ensuring Integrity No.2) Bill 2019
Statement of Compatibility with Human Rights
STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Fair Work (Registered Organisations) Amendment (Ensuring Integrity No. 2) Bill 2019
The Fair Work (Registered Organisations) Amendment (Ensuring Integrity No. 2) Bill 2019
(the Bill) is compatible with the human rights and freedoms recognised or declared in the
international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny)
Act 2011.
Overview of the Bill
The object of the Fair Work (Registered Organisations) Act 2009 (the Act) is to enhance
relations within workplaces and to reduce the adverse effects of industrial disputation. By
requiring registered organisations to meet the standards set out in the Act in order to obtain a
range of rights and privileges, those relations will be enhanced and the adverse effects will be
reduced.
The Bill amends the Act to respond to community concern and the recommendations of the
Final Report of the Royal Commission into Trade Union Governance and Corruption (the
Royal Commission) to ensure the integrity of registered organisations and their officers, for
the benefit of members. The Royal Commission uncovered numerous examples of some
organisations and officers repeatedly flouting workplace and other laws, putting their own
interests before members, and generally failing to meet the basic standards of accountability
and governance that members, and the community more broadly, should be able to expect
from them.
The Bill responds to Royal Commission recommendations 36, 37 and 38, and the
Government's commitment to fairness, integrity and transparency of registered organisations
and their officers by amending the Act to:
include serious criminal offences punishable by five or more years' imprisonment as a
new category of 'prescribed offence' for the purposes of the automatic disqualification
regime which prohibits a person from acting as an officer of a registered organisation;
include a discretionary regime that allows the Federal Court, on application by the
Registered Organisations Commissioner (the Commissioner) to disqualify officers
from holding office in certain circumstances, including for committing offences
against or repeated contraventions of a range of workplace laws, repeatedly failing to
take reasonable steps to stop their organisation from breaking the law, breaching
officers duties, or where they are otherwise not a fit and proper person to hold office
in a registered organisation;
make it an offence for a person to continue to act as an officer or in a way that
influences the affairs of an organisation once they have been disqualified;
allow the Federal Court, on application by the Commissioner, to cancel the
registration of an organisation and/or make alternative orders on a range of grounds
including in relation to unlawful conduct of the affairs of the organisation, serious
criminal offences committed by the organisation, repeated breaches of a range of
House of Representatives page v Fair Work (Registered Organisations)
Amendment (Ensuring Integrity No.2) Bill 2019
Statement of Compatibility with Human Rights
workplace laws by its members, and the taking of obstructive unprotected industrial
action by a substantial number of members;
expand the grounds on which the Federal Court may order remedial action to deal with
governance issues in an organisation and expressly provide that the Federal Court may
appoint an administrator to an organisation or part of an organisation;
allow the Fair Work Commission (FWC) to decide, as a threshold matter, whether a
proposed amalgamation should be subject to a public interest test based on the
compliance history of the relevant organisations, and provide for the application of the
public interest test to a proposed amalgamation that meets the requisite compliance
history threshold;
provide that in carrying out his or her function of promoting efficient management of
organisations and high standards of accountability of organisations, the Commissioner
must prioritise matters that raise serious or systemic concerns; and
provide that the Minister must cause an independent review of the amendments made
by the Bill as soon as practicable after the end of two years after the amendments
commence.
The discretionary disqualification regime for officers of registered organisations in the Bill
will ensure more acceptable minimum standards of behaviour and accountability for officers
and promote democratic governance in the interests of members of registered organisations.
The measures in the Bill also implement the Government's commitment to effectively deal
with registered organisations that are dysfunctional or not serving the interests of their
members and to provide that registered organisations that meet the threshold of non-
compliance with workplace laws that are seeking to amalgamate are subject to a public
interest test.
In addressing these issues, the amendments will address the culture of lawlessness of some
organisations and their officers identified by the Royal Commission and improve the
governance of registered organisations.
Human rights implications
The definition of 'human rights' in the Human Rights (Parliamentary Scrutiny) Act 2011
relates to the seven core United Nations human rights treaties. The Bill engages with the
following rights:
rights in work in Article 22 of the International Covenant on Civil and Political Rights
(ICCPR) and Articles 6 and 8(1)(a) of the International Covenant on Economic,
Social and Cultural Rights (ICESCR) including:
o the right to freedom of association;
o the right to form and join trade unions; and
o the right of trade unions to function freely.
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Amendment (Ensuring Integrity No.2) Bill 2019
Statement of Compatibility with Human Rights
The content of the rights to work and rights in work in the ICESCR can be informed
by treaties of the International Labour Organisation (ILO), such as the Freedom of
Association and Protection of the Right to Organise Convention 1948 (No. 87) (ILO
Convention 87), which provides employer and employee organisations with protection
for their organisational autonomy.
the right to take part in public affairs and elections in Article 25 of the ICCPR;
the right to the presumption of innocence and the minimum guarantees in Article 14 of
the ICCPR; and
the right to privacy and not to be subject to unlawful attacks on a person's reputation
in Article 17 of the ICCPR.
The Right to Freedom of Association and the Right to take part in Public Affairs and
Elections
Article 6(1) of the ICESCR provides for the right to work. The exercise of work requires the
existence of just and favourable conditions of work, including the right to form trade unions.1
Article 22(1) of the ICCPR protects the right to freedom of association, including the right to
form and join trade unions. Article 8(1)(a) of the ICESCR also provides for:
The right of everyone to form trade unions and join the trade union of his choice,
subject only to the rules of the organisation concerned, for the promotion and
protection of his economic and social interests. No restrictions may be placed on the
exercise of these rights other than those prescribed by law and which are necessary in a
democratic society in the interests of national security or public order or for the
protection of the rights and freedoms of others.
Article 8(1) of ILO Convention 87 provides that:
1. In exercising the rights provided for in this Convention workers and employers and
their respective organisations, like other persons or organised collectives, shall
respect the law of the land.
The following amendments in the Bill engage the right to freedom of association and, insofar
as they engage that right, also engage the right to take part in public affairs and elections:
amending the regime for disqualification of officers (recommendations 36-38 of the
Royal Commission);
amending the regime for cancellation of registration of organisations;
broadening the grounds for a remedial scheme to be approved by the Federal Court,
including the appointment of an administrator, when officers of an organisation or
branch are no longer serving member's interests; and
1
Committee on Economic, Social and Cultural Rights, General Comment No. 18: The Right to Work
(E/C.12/GC/18), p 5.
House of Representatives page vii Fair Work (Registered Organisations)
Amendment (Ensuring Integrity No.2) Bill 2019
Statement of Compatibility with Human Rights
allowing the Federal Court to decide whether a proposed amalgamation of registered
organisations with a threshold level of law-breaking should be subject to a public
interest test.
The right appropriately recognises that organisations and officers, like other persons or
organised collectives, shall respect the law of the land. Where the provisions of the Bill
engage the right to freedom of association, any limitations on the right are permissible as they
pursue a legitimate objective, are prescribed by law, and are reasonable, necessary and
proportionate. They have the sole objective of protecting the interests of members and
guaranteeing the democratic functioning of organisations.
1. Amendments to the regime for the disqualification of officers (recommendations
36-38 of the Royal Commission)
The Bill will:
expand the categories of offences for which a person can be automatically disqualified
from holding office to include conviction of a serious offence, being an offence
against any law in Australia carrying a penalty of five years' imprisonment or more
(recommendation 36);
provide a criminal offence of running for, holding or continuing to hold office, or
acting as a 'shadow officer' whilst disqualified from holding office in a registered
organisation (recommendation 37); and
on application by the Commissioner, give the Federal Court a discretionary power to
disqualify a person from holding office in a registered organisation for the period of
time the Court considers appropriate, in circumstances where a ground for
disqualification exists and the Court does not consider it would be unjust to disqualify
the person (recommendation 38).
The recommendations of the Royal Commission pursue the legitimate objectives of
improving the governance of registered organisations and protecting the interests of members.
The Royal Commission identified that the current disqualification scheme provides no
consequence for acting while disqualified or for committing serious criminal offences. The
Royal Commission also noted that a person against whom a civil penalty has been imposed
for a contravention of the statutory officers' duties2 cannot be disqualified from holding office
under the current disqualification provisions.3
The Bill's objective is to protect the interest of workers and ensure that they are represented
by officers who demonstrate a willingness to uphold standards reasonable expected of a
person with the responsibility of holding office in an organisation. The grounds provide a
high threshold to ensure that no officer can be disqualified for inconsequential, minor
misconduct.
For a relevant ground for disqualification to be made out in relation to designated findings,
the person must have committed an offence against a designated law or there must orders for
2
Set out in Division 2 of Part 2 of Chapter 9 of the Act.
3
Final Report of the Royal Commission into Trade Union Governance and Corruption, Volume 5, Chapter 3,
para 188.
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Amendment (Ensuring Integrity No.2) Bill 2019
Statement of Compatibility with Human Rights
the person to pay a pecuniary penalty for the contravention of one or more civil penalty
provisions with combined maximum penalties of 180 penalty units within the last 10 years.
The ground for multiple failures to prevent contraventions etc. by an organisation provides
that there must be orders for an organisation to pay a pecuniary penalty for civil contravention
breaches against at least two civil penalty provisions with a combined total of the maximum
penalties of at least 900 penalty units within the last 10 years. A ground for disqualification
also exists where a person is in breach of their general duties in relation to the financial
management of organisations. These duties are fiduciary in nature and are an essential
component to holding office in an organisation and protecting the interests of members.
These thresholds for when a ground for disqualification can apply enhance compatibility with
human rights obligations by ensuring that minor or technical contraventions cannot amount to
a ground for a disqualification application.
Providing for the possibility of disqualification from office and restricting who can be elected
to office, in circumstances where a ground for disqualification has been made out and the
Federal Court considers disqualification not to be unjust, is a rational means of ensuring
greater compliance with the standards of conduct reasonably expected of officers, and a
rational method for improving governance of organisations more generally.
The Bill will only allow the Commissioner to make an application for disqualification of an
officer from holding office. Limiting standing to the Commissioner ensures compatibility
with human rights obligations by providing that it is the independent regulator of registered
organisations alone who has standing to apply for disqualification orders.
The procedure for disqualification from office will continue to be administered and
supervised by the Federal Court, an impartial and independent judicial body from which
appeals to a Full Federal Court and to the High Court are available.
The Bill contains a number of additional safeguards further ensure compatibility with human
rights and that the provisions will only be enlivened when it comes to protecting the interest
of members of registered organisations. The provisions put the onus on the Commissioner to
satisfy the Court that disqualification would not be unjust having regard to the nature of the
matters, the circumstance and nature of the person's involvement and any other matters the
Court considers relevant. The Bill also prohibits the Federal Court from making an order
unless it is satisfied that disqualification would not be unjust, having regard to the gravity of
matters constituting the ground. Finally, the Bill includes a new Schedule 6 which provides
that in carrying out the function of promoting the efficient management of registered
organisations and high standards of accountability of registered organisations and their office
holders to their members, the Commissioner must give priority to matters that raise serious or
systemic concerns.
Any limitations on the capacity of registered organisations to regulate their affairs as they see
fit are a necessary and proportionate means of ensuring greater compliance with the standards
of conduct reasonably expected of officers and improving the governance of registered
organisations.
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Amendment (Ensuring Integrity No.2) Bill 2019
Statement of Compatibility with Human Rights
These are reasonable and proportionate methods of ensuring that officers who deliberately
disobey the law are restricted in their ability to be in charge of registered organisations. 4 It is
also necessary and proportionate that the sanction of disqualification for a substantial number
of members' failure to comply with core workplace laws is placed on officers as it is
incumbent on those in leadership positions to promote a culture of compliance. This will
serve to protect the interests of members and support public order by ensuring the leadership
of registered organisations act lawfully.
2. Amendments to the regime for cancellation of registration of organisations
The Bill limits the current standing provisions in the Act by removing the ability for an
organisation, a person interested or the Minister to apply for an order of cancellation. Only the
independent regulator of registered organisations, the Commissioner, will have standing to
apply for an order to cancel the registration of an organisation or make alternative orders.
The Bill expands the grounds for the cancellation of a registered organisation's registration by
the Federal Court. The new grounds include:
certain conduct of the affairs of the organisation, or a part of the organisation;
serious breaches of criminal laws by the organisation; and
multiple findings against a substantial number of members.
The Bill also streamlines and simplifies some of the existing grounds for cancellation,
including:
failure to comply with a court order or injunction by the organisation or a substantial
number of its members; and
the organisation or a substantial number of members taking or organising obstructive,
unprotected industrial action.
Broadly, the new grounds for cancellation are enlivened where an organisation or its officers
or members have a record of not complying with the law. The amendments do not limit the
ability of members to form and join trade unions.
The Bill contains a number of additional safeguards to ensure compatibility with human
rights. The Commissioner must satisfy the Court that deregistration or the making of
alternative orders would not be unjust having regard to the nature of the matters constituting
the ground, any action that has been taken by or against the organisation or its members or
officers in relation to these matters, the best interest of the members of the organisation as a
whole and any other matters the Court considers relevant. The Court is also prohibited from
making an order unless it is satisfied that, having regard to the gravity of the matters
constituting the ground, cancellation would not be unjust. Finally, Schedule 6 ensures that in
carrying out the function of promoting the efficient management of registered organisations
and high standards of accountability of registered organisations and their office holders to
4
Final Report of the Royal Commission into Trade Union Governance and Corruption, Volume 5, Chapter 3,
para 188.
House of Representatives 10 Fair Work (Registered Organisations)
Amendment (Ensuring Integrity No.2) Bill 2019
Statement of Compatibility with Human Rights
their members, the Commissioner must give priority to matters that raise serious or systemic
concerns.
Instead of making an order to cancel the registration of an organisation, the Court may also
make alternative orders that target a particular part of an organisation, where a ground for
cancellation is established because of the behaviour of officers or members in a particular part
of an organisation, for example, a branch or division. Applications for alternative orders may
be made to the Court directly without the need for there to be a concurrent application for the
cancellation of an organisation's registration.
The alternative orders the Court can make include:
the disqualification of certain officers from holding office for a period of time;
changes to an organisation's eligibility rules to exclude certain members from the
organisation; and
the suspension of rights, privileges or capacities of a part of the organisation, such as
rights to apply for entry permits under the FW Act or restriction on the use of funds or
property by a part of the organisation.5
The provisions of the Bill allowing for an application for cancellation of registration to be
made on the basis that an organisation, part of the organisation, or a class of members, have
engaged in obstructive industrial action effectively replicate the existing provisions of the
Act.6
Extensive evidence was presented to the Royal Commission of some organisations, branches,
or parts of organisations where a culture of little or no regard for the law regulating registered
organisations, and even criminal law, persists. The existence of such a culture demonstrates
the need for new mechanisms intended to ensure compliance with the standards reasonably
expected of organisations and their officers. It has become clear that, in addition to the
changes to industrial relations legislation recommended by the Royal Commission, there is a
pressing need to ensure greater compliance with the existing legislative regimes and relevant
criminal laws.
These measures will improve the effectiveness of the provisions in the Act concerning
cancellation of registration as they:
address the costly and lengthy process under the Act that the Royal Commission found
to be one of the impediments to deregistration;7 and
facilitate the continued existence and functioning of an organisation or some of its
component parts in circumstances in which one part of the organisation is affected by
maladministration or dysfunction associated with a culture of lawlessness.
5
Item 4, Schedule 2, new Division 5.
6
Paragraphs 28(1)(b) and (c) of the Act.
7
Final Report of the Royal Commission into Trade Union Governance and Corruption, Volume 5, Chapter 8,
para 35.
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Statement of Compatibility with Human Rights
These amendments address the legitimate objective by providing a clearer and more
streamlined scheme for the cancellation of registration of an organisation and expanding the
grounds on which an application for cancellation can be made. The new cancellation
provisions make it obvious to organisations, their officers, and their membership the types of
conduct that may form grounds for an application for cancellation of registration. The Bill
signals that misconduct and unlawful behaviour can never be considered an 'acceptable'
method of achieving a desired outcome.
Article 8(1) of ILO Convention 87 specifically provides that, in exercising the rights provided
for in the Convention, workers, employers and their respective organisations shall respect the
law of the land. Choosing to register under the Act is a privilege governed by the existing Act.
Organisations registered under the Act do not currently have freedom to conduct their affairs
in any way they see fit, but are bound by the Act. For example, the rules of every organisation
must be approved by the FWC and cannot be set by the organisation without limit.
When organisations or their officers deliberately breach relevant laws then there must be an
effective sanction if the system of registration is to remain meaningful. In the case of a
registered organisation, the sanction could include losing the right to act as an officer, losing
the right to expand through amalgamation, being placed into administration, or losing
registration.
The measures maintain a meaningful system of registration and protect the rights of members
in that the amendments have the sole objective of protecting the interests of members and
promoting public order by ensuring an organisation is administered lawfully. The sanction of
cancelling registration is reasonable and proportionate when an organisation or a part thereof
operates without regard to the law, officers do not act in their members' interests, or a
substantial number of members fail to comply with core workplace laws.
The measures do not impact on the rights of workers to continue to be represented by a
registered organisation. An organisation that obeys the law and complies with its rules is not
at risk of having its registration cancelled.
Where a ground for cancellation exists, the Court still has a discretion not to cancel the
registration of an organisation in circumstances where that cancellation would be unjust. This
ensures that cancellation remains a measure of last resort. The Court is required to take into
account the best interests of the members of the organisation as a whole in determining
whether the cancellation of registration would be unjust.
In addition, the availability of alternative orders provides the Court with appropriate means of
limiting the effect on members who have not been involved in activity that would otherwise
be grounds for an order for cancellation.
3. Amendments to the regime for the remediation of dysfunction and lawlessness
The Bill expands the categories of declaration for a remedial scheme in relation to an
organisation to be approved by the Federal Court to include:
that one or more officers of an organisation or part of an organisation have engaged in
financial misconduct in relation to the carrying out of their functions or in relation to
the organisation or part. An inclusive definition of financial misconduct is included in
the Bill;
House of Representatives 12 Fair Work (Registered Organisations)
Amendment (Ensuring Integrity No.2) Bill 2019
Statement of Compatibility with Human Rights
that a substantial number of the officers of the organisation or part of an organisation
have, in the affairs of the organisation or part, acted in their own interests rather than
in the interests of members of the organisation or part as a whole; and
that affairs of an organisation or part of an organisation are being conducted in a
manner that is oppressive or unfairly prejudicial to, or unfair discriminatory against, a
member or members in a manner that is contrary to the interests of the members of the
organisation or part as a whole.
The Bill also amends the Court's power to approve a scheme consequent to the making of a
declaration to expressly permit the appointment of an administrator, and clearly sets out the
functions of the administrator. The administrator will control, and may manage, the property
and affairs of the organisation, and may perform any functions or powers that the organisation
or its officers would typically perform. Officers and employees must assist administrators and
there are criminal penalties for failing to do so.
These measures have the sole objective of protecting the interests of members and
guaranteeing the democratic functioning of organisations under the stewardship of officers
who respect the law and thus maintain public order.
The Royal Commission identified numerous examples of organisations no longer serving the
interests of their members because of the pervasive breaches of duties by officers and
widespread and repeated law-breaking by union officers. The measures will improve the
effectiveness of the administration provisions by allowing the Court to take appropriate
remedial and facilitative action to secure the future effective functioning of an organisation or
its component parts.
The proposed changes pursue the legitimate objective of ensuring that organisations are
functioning effectively to be able to serve the interests of their members. Consistent with
current administration provisions, the Court must be satisfied that an order would not do
substantial injustice to the organisation or any member of the organisation. The amendments
are rationally connected to this objective because the new grounds for a declaration are all
instances of an organisation not acting in the interests of their members and therefore not
functioning effectively.
These measures are proportionate as they are made with the sole objective of benefiting
members. The measures are reasonable and proportionate for the following reasons:
the measures protect the interests of members and promote public order by ensuring
an organisation is administered lawfully;
the new grounds under which the Court may make a declaration are clearly set out
and, if present, indicate that an organisation is not serving the interests of its members
and is not functioning effectively;
the measures protect union members who have not been involved in maladministration
or unlawful activity by providing for orders to be limited to the part of the
organisation that has conducted these activities;
House of Representatives page xiii Fair Work (Registered Organisations)
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Statement of Compatibility with Human Rights
the measures provide only for the appointment of an administrator or interim
administrator under a scheme in new Part 2A of Chapter 11 if the Court is satisfied
that it is in the best interests of members of the organisation;
relief is discretionary8 and the Court may find that no action is necessary or justified;
consistent with the current administration provisions in the Act, the Court must be
satisfied that an order (should it choose to make one) would not do substantial
injustice to the organisation or any member of the organisation;9 and
the measures do not impact on the rights of workers to continue to be represented by a
registered organisation.
4. Introduction of a public interest test for certain amalgamations of registered
organisations
The Bill will require a Full Bench of the FWC to consider as a preliminary matter, whether a
proposed amalgamation should be subject to the public interest test in the Bill. The Bill
ensures compatibility with human rights freedom of association by explicitly providing that
the FWC may only decide that the public interest test in the Bill is to apply to a proposed
amalgamation if there is information before the FWC that there are at least 20 compliance
records events for an organisation within the 10 year period prior to an application for
approval for submission of an amalgamation ballot under section 44 of the Act.
This threshold determination as to the application of the public interest test is intended to
ensure that organisations that abide by workplace laws and therefore do not have a history of
non-compliance with the law, will not be subject to a public interest test should they wish to
amalgamate.
When the public interest test is to apply to a proposed amalgamation, the FWC will take into
account any history the organisations may have in breaking the law, with reference to the
incidence, age and gravity of such contraventions. If the public interest test is not concluded
after having regard to the record of compliance with the law, the FWC must have regard to
the impact on employees and employers in the industries concerned and other relevant
matters.
The existing organisations concerned will be able to make submissions about the public
interest, as will organisations and bodies that represent industries potentially affected by the
merger, and those who represent employees and employers in those industries.
The Commissioner, the Minister, and a Minister who has responsibility for workplace
relations in a referring state will also be able to make submissions. Submissions can also be
made by any person with sufficient interest in the proposed amalgamation, that is, those
whose rights, interests, or legitimate expectations would be affected.
8
Proposed subsection 323A(1) in the Bill.
9
Proposed subsection 323A(3) in the Bill.
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Amendment (Ensuring Integrity No.2) Bill 2019
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If the FWC considers that an amalgamation is not in the public interest, the only effect of this
decision is that the amalgamation will not take effect. There are no further consequences for
the organisation, its officers or members.
Where applied, the public interest test for amalgamations will improve organisational
governance, protect the interests of members, ensure that organisations meet the minimum
standards set out in the Act, and address community concerns by creating a disincentive for a
culture of 'contempt for the rule of law' that has been identified in some registered
organisations.10 It is a pressing and substantial concern, such as is required to constitute a
legitimate objective for the purposes of international human rights law, that this culture may
present in some registered organisations seeking to amalgamate.
The introduction of a public interest test will be effective in meeting this objective as it will
reduce the risk of an adverse effect of an amalgamation of existing organisations. The
measures in the Bill are solely in place to ensure that members and their interests are
protected. The application of a public interest test to mergers of organisations with a
substantial history of breaking workplace laws will curtail the potential spread of lawbreaking
culture from one organisation to another.
When organisations or their officers deliberately breach relevant laws then there must be an
effective sanction if the system of registration is to remain meaningful. In the case of a
registered organisation, the sanction could include losing the right to act as an officer, losing
the right to expand through amalgamation, being placed into administration, or losing
registration.
Applying a public interest test to the mergers of registered organisations is not a new concept.
Under predecessor legislation, the Australian Industrial Relations Commission was required
to have regard to the public interest in performing its functions under the registered
organisations provisions.11 The public interest test in this Bill is more limited and will only
apply when the FWC determines that at least one of the organsiations involved in the
proposed amalgamation meets the requiresite threshold for non-compliance with the law.
This measure is reasonable and proportionate. It is sufficiently circumscribed in that it will
not apply to amalgamations of law abiding organisations nor does it impact on the rights of
workers to continue to be represented by a registered organisation.
These amendments further protect the interests of members by helping to ensure the
democratic functioning of organisations under the stewardship of officers who respect the law
and thus maintain public order.
The measures in the Bill are also a reasonable and proportionate means to limit the spread of a
culture of lawlessness in some organisations. The measure is properly supervised by a Full
Bench of the FWC.
10
Final Report of the Royal Commission into Trade Union Governance and Corruption, Volume 5, Chapter 8,
para 23.
11
The latest iteration of this provision was contained in subsection 103(2) of the Workplace Relations Act 1996
and prior to 2005 it was contained in section 90 of that Act.
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Statement of Compatibility with Human Rights
Right to the presumption of innocence and other guarantees
The right to the presumption of innocence and the minimum guarantees contained in Article
14 of the ICCPR is relevant to some of the new criminal offences in the Bill.
New sections 222, 28J and 28L of the Bill require the Commissioner to satisfy the Court that
the making of a disqualification order, cancellation order or alternative order would not be
unjust. This amendment enhances compatibility with the right to presumption of innocence,
by making it clear that it is the Commissioner at all times who bears the legal onus of proof in
the Bill.
The provisions are not inconsistent with the right to the presumption of innocence as they are
reasonable, necessary and proportionate in pursuit of a legitimate objective.
1. The offences in relation to a person who is disqualified from holding office by the
Court, standing for office or continuing to hold office (in section 226)
The Royal Commission recommended that the offence of continuing in office while
disqualified should be an offence to address the gap in the Act that currently provides no
consequences for a person who stands for or continues to hold either an actual or a de facto
office whilst disqualified.12 This limitation is reasonable, necessary and proportionate in cases
where a person has been disqualified from holding office by the Court because:
the lack of a strong sanction in these circumstances may encourage further non-
compliance with the Act, the FW Act and other relevant laws; and
the Corporations Act provides that it is an offence for a person disqualified from
managing a corporation to do so. Under section 206A of the Corporations Act, strict
liability applies to the element of the offence concerning whether or not the relevant
person is disqualified from managing a corporation under the Corporations Act. Strict
liability does not apply to these new offences.
2. The offence in relation to assisting administrators (section 323G) and the offence
in relation to administrators' access to an organisation's books (section 323H)
The amendments requiring officers and employees of registered organisations to assist
administrators and entitling an administrator to access an organisation's books are intended to
assist an administrator appointed by the Court under new Part 2 of Chapter 11 to effectively
carry out their functions. These are important provisions that ensure an administrator can
carry out their role in remediating an organisation that has become dysfunctional or is no
longer serving its members' interests. Unlike the comparable offences in the Corporations
Act, these are not offences of strict liability.
Conclusion
The Bill is compatible with human rights because any restriction is for a purpose that falls
within one of the permitted grounds for restriction under the relevant article, and because the
measures will be effective in achieving better governance of registered organisations. To the
12
Final Report of the Royal Commission into Trade Union Governance and Corruption, Volume 5, Chapter 3,
para 171 and recommendation 37.
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Statement of Compatibility with Human Rights
extent that the Bill may limit human rights, those limitations are reasonable, necessary and
proportionate.
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Amendment (Ensuring Integrity No.2) Bill 2019
Notes on Clauses
NOTES ON CLAUSES
In these notes on clauses, the following abbreviations are used:
Act Fair Work (Registered Organisations) Act 2009
Amendment Act Fair Work (Registered Organisations) Amendment Act 2016
Bill Fair Work (Registered Organisations) Amendment (Ensuring Integrity
No. 2) Bill 2019
Corporations Act Corporations Act 2001
Criminal Code Criminal Code Act 1995
Final Report Hon John Dyson Heydon AC QC's Final Report of the Royal
Commission into Trade Union Governance and Corruption
FW Act Fair Work Act 2009
FWC Fair Work Commission
Regulations Fair Work Regulations 2009
Commissioner Registered Organisations Commissioner
Royal Commission Royal Commission into Trade Union Governance and Corruption
Clause 1 - Short title
1. This is a formal provision specifying the short title.
Clause 2 - Commencement
2. The table in this clause sets out when the provisions of the Bill commence.
Clause 3 - Schedules
3. Clause 3 of the Bill provides that legislation that is specified in a Schedule is amended
or repealed as set out in that Schedule, and any other item in a Schedule operates according to
its terms.
Clause 4 - Review of this Act
4. Clause 4 of the Bill provides that the Minister must cause an independent review of
the operation of the amendments made by the Bill to the Act. The review must be commenced
as soon as practicable after the end of the two years from the commencement of the Act. The
review must examine the following:
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Notes on clauses
the effectiveness of the amendments to the Act made by the Bill;
whether there is a need for further amendments to the Act relating to the
administration of dysfunctional organisations and a public interest test for
amalgamations of organisations;
whether the Commissioner has acted as a model litigant in proceedings involving
the Commissioner; and
whether the Commissioner has, in carrying out the Commissioner's functions,
focused on matters that related to systematic patterns of conduct engaged in by an
organisation or officers of an organisation.
5. The person conducting the review must give the Minister a written report of the review. A
copy of the report must be tabled in each House of Parliament within 15 sitting days after
the report is given to the Minister.
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Schedule 1 - Amendments relating to disqualification from office
SCHEDULE 1 - AMENDMENTS RELATING TO
DISQUALIFICATION FROM OFFICE
6. Schedule 1 will amend the Act in relation to disqualification from office. The
amendments will expand the circumstances in which a person may be automatically
disqualified from office and make it a criminal offence for a person who is disqualified from
holding office in a registered organisation to continue to hold office or act in a manner that
would significantly influence the organisation. The schedule also provides a discretionary
disqualification regime that allows the Federal Court to disqualify an officer from holding
office in certain circumstances.
Fair Work (Registered Organisations) Act 2009
Item 1 - Section 6
7. This item amends section 6 of the Act by inserting two new definitions related to the
new provisions contained in the Bill. Key concepts that underpin the various schedules in Bill
are:
designated finding (new subsection 9C(1)); and
designated law (new subsection 9C(2)).
8. These new definitions are relevant for the purposes of disqualification, cancellation of
registration, and amalgamation of organisations regimes in the Bill.
9. Finally, this item also inserts a new definition of 'disqualified from holding office in
an organisation' and provides that the term has the meaning given by new section 225. New
section 225 defines a person disqualified from holding office in an organisation or branch as:
a person not eligible to be a candidate for election to, or to hold, an office in an
organisation or branch of an organisation under subsection 215(1); or
a person disqualified from holding office in an organisation or branch of an
organisation under sections 28M or 222.
Item 2 - After Section 9B
10. This item inserts new sections 9C and 9D providing the definitions of 'designated
finding' and 'designated laws' and when findings will apply to an organisation.
Section 9C - Designated findings and designated laws
11. New subsection 9C(1) provides that a 'designated finding' is:
any conviction against the person for an offence against a 'designated law'; or
any order for the person to pay a pecuniary penalty for the contravention of:
o a civil penalty provision of the Act; or
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Schedule 1 - Amendments relating to disqualification from office
o a civil remedy provision of the FW Act; or
o a civil remedy provision of the Building and Construction Industry (Improving
Productivity) Act 2016; or
o a WHS civil penalty provision of the Work Health and Safety Act 2011; or
o a provision of a State or Territory OHS law within the meaning of the FW Act
(other than an offence).
12. New subsection 9C(2) provides that 'designated laws' are:
the Act;
the FW Act;
the Building and Construction Industry (Improving Productivity) Act 2016;
the Work Health and Safety Act 2011; or
each State or Territory OHS law within the meaning of the FW Act.
13. Compliance with the legislation listed in the new definitions of 'designated finding'
and 'designated law' goes to the heart of the effective operation of the workplace relations
system and by extension, the effective and lawful management of registered organisations by
their officers. The legislation listed in each definition has been adapted from the list of
circumstances in which Commissioner Heydon recommended that the Federal Court be given
capacity to disqualify a person from holding office in an organisation.13 Organisations and
officers that do not comply with these core workplace laws cannot be considered to be
lawfully and effectively representing the interests of members as a whole.
Section 9D - Findings against part of an organisation
14. New section 9D provides that a finding made against a part of an organisation will,
for the purposes of the Act, be taken to have been made against the organisation.
Items 3 and 4 - Section 181
These items amend the simplified outline of Part 1 of Chapter 7 in section 181 to account for
the amendments made to Chapter 7 regarding orders disqualifying a person from holding
office in organisations.
Item 5 - Division 1 of Part 4 of Chapter 7 (heading)
15. This item repeals and replaces the current heading of Division 1. The new heading for
Division 1 is 'Preliminary'.
13
Final Report of the Royal Commission into Trade Union Governance and Corruption, Volume 5, Chapter 3,
para 190.
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Schedule 1 - Amendments relating to disqualification from office
Item 6 - At the end of section 210
16. This item amends the simplified outline of Part 4 of Chapter 7 set out in section 210 to
cover new Divisions 3 and 4.
Item 7 - At the end of Division 1 of Part 4 of Chapter 7
Section 210A - Application of this Part to branches
17. New section 210A provides that a reference in Part 4 of Chapter 7 to 'an office in, or
holding office in an organisation' includes a reference to an office in a branch of an
organisation or holding office in a branch of an organisation. The new section also provides
that a reference to 'an officer in an organisation' in Part 4 of Chapter 7 will include a
reference to an officer in a branch of an organisation.
18. This new section aligns the existing disqualification provisions in Division 2, Part 4 of
Chapter 7 with the new disqualification provisions that will be inserted in new Division 3,
Part 4 of Chapter 7. The new disqualification provisions apply to holding office in a branch of
an organisation and not just an organisation.
19. New subsection 210A(2) specifically notes that this section does not limit the
operation of subsection 9(2) of the Act which provides that a reference to an office in an
association or organisation includes a reference to an office in a branch of the association or
organisation.
Item 8 - After paragraph 212(a)
20. This item inserts new paragraph 212(aa) into existing section 212 to expand the
definition of 'prescribed offence'. Section 212 defines prescribed offence for the purposes of
Division 2, Part 4 of Chapter 7, which provides when a person will be automatically
disqualified from holding office because they have been convicted of a prescribed offence.
21. Recommendation 36 of the Final Report was that the definition of prescribed offence
in section 212 be expanded to include a category of 'serious offences', being one punishable
on conviction by a maximum penalty of imprisonment for life or a period of five years or
more.
22. The insertion of the new paragraph 212(aa) expands the definition of prescribed
offence to include an offence under a law of the Commonwealth, a State or Territory,
punishable upon conviction by imprisonment for life or a period of five years or more.
Section 215 provides that a person convicted, per section 213, of one of the prescribed
offences set out in section 212 is disqualified from holding office (subject to the person
making an application for leave to hold office or a reduced period of exclusion under sections
216 or 217).
23. The effect of item 17(1) is that automatic disqualification will not apply to a
conviction for an offence of the type listed in new paragraph 212(aa) if the conviction is in
relation to conduct engaged in before commencement of this Schedule.
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Item 9 - Subsection 215(1)
24. This item amends subsection 215(1) to streamline the terms used in the section to take
into account the offences created in new section 226 and align the terms used in section 215
with those used in the disqualification provisions in new Division 3, Part 4 of Chapter 7 and
offence provisions in new Division 4, Part 4 of Chapter 7.
25. Subsection 215(1) currently provides that a person convicted of one of the prescribed
offences set out in section 212 is disqualified from being a candidate in an election for office
and from being elected or appointed to office. This amendment to subsection 215(1) is
consequential to the new offences to provide that a person convicted of a prescribed offence is
disqualified from being elected to, or holding, office.
Item 10 - At the end of subsection 215(1)
26. This item adds a new note to amended subsection 215(1) to explain that the effect of
new section 226 will be that a person who is disqualified from holding office is also not
eligible to be a candidate for election to, or to hold, office in a branch of an organisation.
Item 11 - At the end of Part 4 of Chapter 7
27. This item inserts new Divisions 3 and 4 of Part 4, Chapter 7.
28. New Division 3 includes new sections 221-223 which respond to recommendation 38
of the Royal Commission. Recommendation 38 was that the Federal Court be provided with
the jurisdiction to disqualify a person from holding office in a registered organisation for a
period of time the Court considers appropriate.
Section 221 - Simplified outline of this Division
29. New section 221 provides a simplified outline of Division 3 of Part 4 of Chapter 7.
Section 222 - Disqualification orders
30. New subsection 222(1) provides that the Commissioner can apply to the Federal Court
for an order disqualifying a person from holding office in an organisation or a branch of an
organisation if the Commissioner considers one or more of the grounds set out in section 223
applies.
31. The note directs the reader to new section 223A which provides that a person who
reasonably believes that a ground set out in section 223 applies, may refer the matter to the
Commissioner. The note also makes it clear that the Commissioner does not need a referral to
make an application to the Federal Court for a disqualification order under section 222.
32. New subsection 222(2) provides that the Federal Court can make an order
disqualifying the person from holding office for any period the Court considers appropriate if
the Court is satisfied that a ground for disqualification set out in the application applies to the
person and the Commissioner satisfies the Court that it would not be unjust to disqualify the
person. In determining whether disqualifying a person from office would be unjust, the Court
is to have regard to:
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the nature of the matters that constituted the ground for disqualification (new
subparagraph 222(2)(b)(i));
the circumstances and nature of the person's involvement in the matters constituting
the ground for disqualification (new subparagraph 222(2)(b)(ii)); and
any other matter the Court considers relevant (new subparagraph 222(2)(b)(iii)).
Other matters may include consideration of the best interests of the organisation's members
and whether other action has been taken to address the conduct.
33. New subsection 222(2A) provides that the Federal Court must not make a
disqualification order unless it is satisfied, having regard to the gravity of the matters
constituting the ground, that disqualification would not be unjust.
34. New subsection 222(3) clarifies that if the Federal Court makes an order under new
subsection 222(2), the person is also disqualified from holding office in a branch of an
organisation for the period.
Section 223 - Grounds for disqualification
35. New section 223 sets out the prima facie grounds that enliven the power of the Federal
Court to consider making an order under new section 222.
36. The effect of item 17(2) is that a ground for disqualification can only be established by
conduct that occurs after commencement of this Schedule.
Designated finding or contempt in relation to designated law
37. New subsection 223(1) provides that a ground for disqualification exists if:
a criminal designated finding is made against the person within the meaning of new
section 9C(1)(a) (criminal), (other than offence covered by subsection 223(4) which
relates to breaches of officers' and directors' duties) - paragraph 223(1)(a); or
one or more designated findings are made against the person under new section
9C(1)(b) (civil) within the last 10 years (other than a contravention covered by
subsection 223(4) which relates to breaches of officers' and directors' duties) and the
maximum penalty or the combined total of the maximum penalties for the
contravention or contraventions amount to at least 180 penalty units, or the equivalent
of 180 penalty units (see section 4AA of the Crimes Act for the value of a penalty
unit) - paragraph 223(1)(b); or
the person is found to be in contempt of court in relation to an order or injunction
made under a designated law - paragraph 223(1)(c).
38. For the ground to apply, the person must have, in the past 10 years, been ordered to
pay a pecuniary penalty for the relevant contraventions of civil penalty provisions that amount
to at least 180 penalty units for individuals. This can include one contravention of a civil
penalty provision that has a maximum penalty set at 180 penalty units or more, or a number of
civil penalty provision contraventions where the maximum penalties attached to those
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contraventions add up to 180 penalty units (for example, three contraventions where each of
the maximum penalty amounts is 60 penalty units). The timeframe and penalty unit threshold
included in this ground is intended to ensure that only those officers with an ongoing pattern
of non-compliance with the law can establish this ground for disqualification. Even if the
ground is enlivened, the Federal Court must still be satisfied that making the order would not
be unjust, including having regard to the gravity of the matters constituting the ground.
Contempt in relation to law other than designated law
39. New subsection 223(2) provides that a ground for disqualification exists if the person
has been found to be in contempt of court in relation to an order or injunction made under any
law of the Commonwealth, a State or Territory (other than a designated law).
40. Significantly, this ground will only be established if the person engaged in the conduct
to which the finding relates in the course of, or purportedly in the course of, performing
functions in relation to an organisation. In this way, findings which are committed in a private
capacity will not be relevant.
41. Ensuring absence of contempt by officers is important for ensuring the effective and
lawful management of registered organisations by law-abiding officers.
Multiple failures to prevent contraventions etc. by organisations
42. New subsection 223(3) provides that a ground for disqualification applies in relation
to a person if:
more than one of the following is made against an organisation whilst that person
was an officer of that organisation:
o a designated finding within the meaning of paragraph 9C(1)(a) (criminal)
(subparagraph (a)(i));
o a designated finding within the meaning of paragraph 9C(1)(b) (civil)
(subparagraph (a)(ii));
o a finding that the organisation is in contempt of court in relation to an order
or injunction made under a designated law (subparagraph (a)(iii)); and
at least one of them is covered by subparagraph (a)(i) or (iii); and
the person failed to take reasonable steps to prevent that conduct.
43. The requisite threshold of more than one finding can be made up of any combination
of findings in paragraph 223(3)(a). For example, the ground could be established by a
designated finding within the meaning of paragraph 9C(1)(b) (civil) (subparagraph (a)(ii) and
a finding that the organisation is in contempt of a court order or injunction as described in
233(3)(a)(ii)).
44. The ground will not apply if there are only two (civil) designated findings as defined
by subsection 9C(1)(b). This circumstance is covered by new subsection 223(3A).
45. New subsection 223(3A) includes a new ground for disqualification that applies if:
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two or more (civil) designated findings within the meaning of paragraph 9C(1)(b)
have been made against any organisation within the past 10 years in relation to
conduct engaged in while the person is an officer of the organisation; and
the combined total of the maximum penalties for contraventions to which the
designated findings relate is at least 900 penalty units; and
the person failed to take reasonable steps to prevent the conduct.
46. New subsection 223(3A) provides that where designated findings solely relate to civil
contraventions against an organisation, there must be a contravention of two or more civil
penalty provisions and the maximum collective penalties must amount to at least 900 penalty
units (see section 4AA of the Crimes Act for the value of a penalty unit) for the ground to
exist. This can include two contraventions of civil penalty provisions where maximum
penalties add up to at least 900 penalty units (for example, one contravention where the
maximum penalty is 1,000 penalty units and a second contravention where the maximum
penalty is 300 penalty units), or a greater number of civil penalty provision contraventions
where the maximum penalties of those provisions add up to at least 900 penalty units (for
example, three contraventions where each of the maximum penalties is 300 penalty units).
47. This ground for disqualification can only apply to findings made in relation to conduct
that occurs after commencement, whilst the person was an officer of the relevant organisation,
and the officer was in a position to take reasonable steps to prevent that conduct and the
officer failed to take such steps.
48. The higher penalty unit value as compared to that provided for by new subsection
223(1) reflects that the civil penalties that can be imposed upon a body corporate are five
times those that can be imposed upon an individual (see section 306 of the Act).
49. It is not desirable to be prescriptive about the actions expected from an individual
officer in taking reasonable steps. The reasonable steps assessment entails an objective test
that will be informed by the particular circumstances of the case and the person's position and
responsibilities within the organisation. The test involves considering if the steps taken would
be in accordance with those of a 'prudent and reasonable' person and would have regard to an
individual's sphere of knowledge, influence and accountability within the organisation.
Breach of directors' and officers' duties
50. New subsection 223(4) provides that a ground for disqualification applies to a person
if:
a designated finding is made against a person and it relates to an offence against, or a
contravention of, a provision of Division 2 of Part 2 of Chapter 9 (general duties in
relation to the financial management of organisations); or
the person is found to have committed an offence under, or contravened a provision
of, Division 1 of Part 2D.1 of the Corporations Act (this Division concerns the
general duties of officers of corporations); or
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the person becomes disqualified from managing corporations under Part 2D.6 of the
Corporations Act.
51. The general duties of officers in a corporation, set out in Division 1, Part 2D.1 of the
Corporations Act, mirror those in Division 2, Part 2 of Chapter 9 of the Act. Each of these
Acts imposes duties on officers relating to an appropriate level of care and diligence, acting in
good faith and not misusing their position of officer or information gained as a result of
holding office. A finding that a person has previously contravened their duties as an officer in
relation to a corporation may be indicative that the person is not a suitable person to hold
office in an organisation or branch of an organisation.
52. If a person has been disqualified from managing a corporation under Part 2D.6 of the
Corporations Act, such disqualification should properly be a ground for disqualification of an
officer under this Part. This is because if a person has engaged in the types of conduct that
form the grounds for disqualification under Part 2D.6 of the Corporations Act, suitability of
the person to hold office in an organisation is also relevant.
Not fit and proper
53. New subsection 223(5) provides that a ground for disqualification applies to a person
if having regard to the events set out under subsection 223(6) a person is not a fit and proper
person to hold office in an organisation.
54. New subsection 223(6) sets out the events relevant for the ground in new subsection
223(5). These are:
the person was refused an entry permit, or had an entry permit revoked or suspended,
under Part 3-4 of the FW Act (new paragraph 223(6)(a));
the person was refused a WHS entry permit, or had a WHS entry permit revoked or
suspended, under Part 7 of the Work Health and Safety Act 2011 (new paragraph
223(6)(b));
the person was refused an entry permit (however described), or had such a permit
revoked or suspended, under a State or Territory OHS law within the meaning of the
FW Act (new paragraph 223(6)(c));
any conviction against the person for an offence against a Commonwealth or State or
Territory law:
o involving the intentional use of violence towards another person, the
intentional causing of death or injury to another person, or the intentional
damaging of or destruction of property (new paragraph 223(6)(d)(i)); or
o involving fraud, dishonesty, misrepresentation, concealment of material
facts or a breach of duty (new paragraph 223(6)(d)(ii)); or
o that is punishable by imprisonment for two years or more (new paragraph
223(6)(d)(iii));
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in any civil proceeding against the person, an order is made that relates to conduct by
the person that involved fraud, dishonesty, misrepresentation, concealment of
material facts or a breach of duty (new paragraph 223(6)(e)).
55. Currently, there is no capacity in the Act for a person to be disqualified from holding
office in an organisation on the basis that they are not a fit and proper person to hold such a
position. The Final Report specifically recommended that a person's fitness and propriety be
included as a ground for disqualification from office in light of the various case studies
provided throughout the Final Report of continuing and unabated mismanagement by officers.
The events set out in new subsection 223(6) give content to the term 'fit and proper' by
highlighting the types of conduct and behaviour that may indicate that a person is not fit or
proper to hold office in an organisation.
56. The Final Report questioned whether a person who has been a denied an entry permit,
or had such a permit suspended or revoked under the FW Act, the Work Health and Safety Act
2011 or a State or Territory occupational health and safety law, is an appropriate person to
hold office in an organisation or branch of an organisation. The issuing of an entry permit
under section 512 the FW Act is conditional upon a person being a fit and proper person and a
person cannot hold an entry permit under the Work Health and Safety Act 2011 unless they
have a permit issued under the FW Act. The denial, suspension or revocation of an entry
permit, as described in new subsections 223(6)(a), (b) and (c), may be indicative that the
person is not a suitable person to hold office in an organisation or branch of an organisation.
This is because the right of entry provisions in the FW Act grant significant rights and
privileges to permit holders to access premises, including in the absence of consent, and
should only be exercisable by those who demonstrate appropriate regard for the law.
57. New paragraph 223(6)(d) will require the Federal Court to consider whether a person
who has been convicted of an offence involving the intentional use of violence toward another
person, the intentional causing of death or injury to another person or the intentional
damaging or destruction of property, involving fraud, dishonesty, misrepresentation,
concealment of material facts or breach of duty, or a serious criminal offence punishable by
two years' imprisonment or more, is a fit and proper person to hold office in an organisation.
A conviction of a criminal offence relating to such behaviour may be indicative that the
person is not a suitable person to hold office in an organisation due to the significant and
important functions, privileges and powers that are exercisable by officers.
58. Division 2, Part 2 of Chapter 9 of the Act places duties on officers, including a duty to
act with an appropriate level care and diligence, a duty to act in good faith and duties to not
misuse the position of officer or misuse information gained as a result of holding office. A
person who has had an order imposed in any relevant proceedings relating to conduct by the
person involving fraud, dishonesty, misrepresentation, concealment of material facts or a
breach of duty in the circumstances described in paragraph 223(6)(e) may be a person who
cannot uphold the duties of an officer and is thus not suitable to hold office in an organisation.
59. In 'having regard to' the events set out in new subsection 223(6), in appropriate cases,
the Court would need to form its own view about the conduct that gave rise to the actions or
findings taken against the individual. For example, the Federal Court would not take an entry
permit refusal as set out in new paragraph 223(6)(a) and disqualify a person from office
without looking behind the refusal to assess for itself the gravity and relevance of the
underlying conduct. The language of 'having regard to' demonstrates that the Federal Court
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would need to form its own view about the conduct that gave rise to the refusal and determine
for itself whether that conduct, and the refusal that followed, made the person unfit to hold
office in a registered organisation.
Section 223A - Referral to Commissioner
60. New section 223A provides for a person (the referrer) who reasonably believes that a
ground for disqualification set out in section 223 exists in relation to another person, to refer
the matter to the Commissioner.
61. The referral must be in writing, identify and provide contact details for the referrer,
and set out the basis for the reasonable belief that a ground exists.
62. The new section provides that the Commissioner may, but is not required to, take
action in relation to the referral.
63. The note highlights that the Commissioner may apply for a disqualification order
under section 222 in relation to referrals made under section 223A if he or she considers a
ground set out in section 223 applies in relation to a person.
64. The referral mechanism provided for in this provision does not limit the ability of a
person to raise with the Commissioner any matter of concern for the Commissioner's
consideration.
Division 4 - Offences in relation to standing for or holding office etc. while disqualified
65. Item 11 also inserts new Division 4, Part 4 of Chapter 7 responding to
recommendation 37 of the Final Report. Recommendation 37 was that the Act be amended to
make it a criminal offence for a person disqualified from holding office to continue to hold
office.
Section 224 - Simplified outline of this Division
66. New section 224 provides a simplified outline of Division 4, Part 4 of Chapter 7.
Section 225 - Definition of 'disqualified from holding office in an organisation'
67. New section 225 provides that a person is 'disqualified from holding office in an
organisation' if a person is:
not eligible to be a candidate for election to, or to hold, an office in an organisation
or a branch of an organisation under subsection 215(1) (new paragraph 225(a)); or
disqualified from holding office in an organisation or branch of an organisation
under section 28M or section 222 (new paragraph 225(b)).
68. A person is not eligible to be a candidate for election to, or to hold, an office in an
organisation or a branch of an organisation under subsection 215(1) if the person has been
convicted, within the meaning of section 213, of one of the prescribed offences listed in
section 212.
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69. New section 28M provides the Federal Court with the power to disqualify a person
from holding office in an organisation where an application has been made to the Federal
Court under new sections 28 or 28A seeking the cancellation of an organisation's registration
or alternative orders. The Federal Court can make an order under new section 28M where the
Court determines that one of the grounds set out in the application is established, subject to
the conditions set out in new section 28L, and the Court is satisfied that the ground was
established wholly or mainly because of the conduct of officers.
70. The Federal Court can disqualify a person from holding office in an organisation or
branch of an organisation under new section 222 where the Court is satisfied that one of the
grounds for disqualification set out in new section 223 exists and the Court does not consider
it would be unjust to disqualify the person.
Section 226 - Offences
71. New section 226 provides that a person commits an offence if the person is
disqualified from holding office in an organisation or branch and the person:
is a candidate for office in an organisation or branch of an organisation (new
subsection 226(1));
continues to hold a position as an officer in an organisation or branch of an
organisation (new subsection 226(2));
exercises the capacity to significantly affect the financial standing or other affairs of
an organisation or branch (subparagraph 226(3)(b)(i)); or
gives directions to the committee of management of an organisation or branch,
excluding advice given in a professional capacity, knowing the committee of
management is accustomed to acting in accordance with the person's wishes or
intends that the committee of management will do so (subparagraph 226(3)(b)(ii)).
72. The maximum penalty for each of these offences is 100 penalty units ($21,000), two
years imprisonment, or both. This ratio represents a departure from that set out in subsection
4B(2) of the Crimes Act 1914 (Cth) but reflects the Final Report recommendation as to the
appropriate penalty.
73. New section 226 mirrors comparable offences in section 206A of the Corporations
Act, except that that the offences will not be offences of strict liability.
74. Subsection 226(5) provides that new section 226 does not limit the Federal Court's
power to punish a person for contempt of Court.
Item 12 - Subsection 255E(2)
75. Existing section 255E provides when the Commissioner can refuse to grant an
application for registration as an auditor under section 255A of the Act. This item repeals and
replaces existing subsection 255E(2) with a new subsection that reflects the amendment made
to subsection 215(1) and the creation of a new power of disqualification by the Federal Court
in new section 222.
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Schedule 1 - Amendments relating to disqualification from office
76. Existing subsection 255E(2) provides that the Commissioner must refuse a person's
application for registration as an auditor if the person:
is not eligible to be a candidate for election, or to be elected or appointed, to an office
in an organisation under existing subsection 215(1); or
is disqualified from holding office under existing section 307A.
77. Item 12 replaces subsection 255E(2) with a new subsection that simply provides that
the Commissioner must refuse to register a person as an auditor under the Act if the person is
disqualified from holding office in an organisation. This replacement subsection relies on the
definition of 'disqualified from holding office in an organisation or branch' provided in new
section 225.
Item 13 - Section 307A
78. This item repeals existing section 307A which is no longer needed due to the new
discretionary disqualification regime in section 222. The grounds for disqualifying a person
from holding office under new section 222 provided in new subsection 223(3) include the
ground in existing 307A of contravening a civil penalty provision of the Act.
Item 14 - At the end of subsection 308(1)
79. Existing section 308 provides that the Federal Court may make such orders as the
Court considers appropriate in all the circumstances of the case where a person has
contravened a civil penalty provision of the Act.
80. This item inserts a new note to subsection 308(1) providing that the Commissioner
may apply under new section 222 for an order disqualifying a person from holding office in
an organisation. New subsection 223(3) provides a ground for disqualification under new
section 222 where a person has contravened a civil penalty provision of the Act.
Item 15 - Paragraph 324(2)(g)
81. Existing section 324 provides when the Minister may authorise financial assistance to
certain persons under the Act. Paragraph 324(2)(g) allows a person who has made an
application for a declaration under subsection 215(5) to apply to the Minister for financial
assistance relating to that application.
82. This item is consequential to the changes the Bill makes to section 215.
Item 16 - Subsection 325(2)
83. Subsection 325(2) provides for when the Federal Court may certify that an application
made under subsection 215(5), for a declaration that a person was not eligible to be a
candidate for office, not eligible to be elected or appointed to office or had ceased to hold
office, was made reasonably.
84. This item is consequential to the changes the Bill makes to section 215.
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Schedule 1 - Amendments relating to disqualification from office
Item 17 - Application of amendments
Definition of prescribed offence
85. This item explains how the amendments to the disqualification regimes made by the
Bill will apply upon commencement of the provisions of this Schedule.
86. Subitem 17(1) provides that despite existing paragraph 213(a), Part 4 of Chapter 7
dealing with automatic disqualification will not apply to a conviction for an offence of the
type listed in new paragraph 212(aa) if:
the offence is not a prescribed offence within the meaning of another paragraph of
section 212); and
the conviction is in relation to conduct engaged in before commencement of this
Schedule.
Section 222 disqualification
87. Subitem 17(2) provides for which conduct or events the Federal Court may consider
when determining whether any of the grounds for disqualification under new section 223 are
applicable to a person. The general effect of this subitem is that a ground for disqualification
can only be established by conduct or events that occur after commencement of this Schedule.
For the purposes of the grounds set out in new subsections 223(1) and 223(2),
concerning a conviction, order or finding, the Federal Court may only consider
conduct the person engaged in after the commencement of this Schedule and
contempt relating to an order or injunction made after the commencement of this
Schedule.
For the purposes of the ground set out in new subsection 223(3), concerning multiple
findings made against an organisation, the Federal Court may only consider a
conviction, order or finding made in relation to conduct engaged in after the
commencement of this Schedule. Further, when considering whether the person
failed to take steps to prevent the organisation's conduct, the Court may only have
regard to a failure to take reasonable steps after the commencement of this Schedule.
For the purposes of the ground set out in mew subsection 223(3A) concerning
multiple designated findings (civil) against an organisation, the Federal Court may
only have regard to conduct after commencement of this Schedule that resulted in a
designated finding. Further, when considering whether the person failed to take steps
to prevent the organisation's conduct, the Court may only have regard to a failure to
take reasonable steps after the commencement of this Schedule.
For the purposes of the ground set out in new subsection 223(4), concerning
corporate and officer impropriety, the Federal Court may only consider findings, or a
disqualification, made in relation to conduct or an event occurring after the
commencement of this Schedule.
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For the purposes of the ground set out in new subsections 223(5), concerning
whether the person is a fit and proper person to hold office, the Federal Court may
only consider events that occurred after the commencement of this Schedule or for a
conviction of an offence mentioned in paragraph 223(6)(d) or an order mentioned in
paragraph 223(6)(e)--a conviction or order made in relation to conduct engaged in
after commencement.
88. The effect of subitem 17(3) is that once a ground for disqualification is established by
reference to conduct or events that occurred after commencement of this Schedule, the
Federal Court may have regard to matters that occurred prior to the commencement of this
Schedule for the purposes of determining whether it would be unjust to disqualify the person
from holding office (per new section 222(2)).
Section 307A disqualification
89. Subitem 17(4) provides that current section 307A will continue to have effect,
allowing the Federal Court to disqualify a person from office in certain circumstances, after
the commencement of this Schedule and in spite of the section's repeal, in relation to relevant
conduct that was engaged in prior to the commencement of this Schedule.
90. Subitem 17(5) is a consequential amendment to subitem 17(4).
Commencement
91. Subitem 17(6) clarifies that references to 'commencement' within item 17 are
references to the day on which this Schedule commences.
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Schedule 2 - Amendments relating to cancellation of registration and alternative orders
SCHEDULE 2 - AMENDMENTS RELATING TO
CANCELLATION OF REGISTRATION AND ALTERNATIVE
ORDERS
92. Schedule 2 amends the Act to expand the grounds for, and streamline the regime in
relation to, the cancellation of registration of organisations by the Federal Court. Provision is
also made for the availability of alternative orders where a ground for cancellation has been
made out because of the conduct of the officers or members of a particular part of an
organisation.
Fair Work (Registered Organisations) Act 2009
Item 1- At the end of section 17
93. This item amends the simplified outline of Chapter 2 of the Act in existing section 17
to provide that, under new Division 5, the Federal Court can make certain orders instead of
cancelling the registration of an organisation. Alternative orders that can be made under new
Division 5 include orders disqualifying certain officers from holding office, orders altering
eligibility rules to exclude certain members from organisations, and orders suspending the
rights and privileges of the organisation and members.
Item 2 - Subsections 19(4) and 20(2)
94. This item is a consequential amendment to include references to 'officers' of an
organisation. This amendment takes into account the provisions of the Bill that repeal and
replace section 28 to provide that the actions of officers may provide a ground for an
application to have an organisation's registration cancelled.
Item 3 - Part 3 of Chapter 2 (heading)
95. This item repeals and replaces the heading to Part 3 of Chapter 2. The heading will
now read 'Part 3 - Cancellation of registration and alternative orders' to reflect the fact that
the Part allows the Commissioner to seek orders other than the cancellation of an
organisation's registration.
Item 4 - Sections 28 and 29
96. This item repeals current sections 28 and 29 and inserts new Divisions 1-7 of Part 3 of
Chapter 2.
Division 1- Simplified Outline of this Part
Section 27A - Simplified outline of this Part
97. New section 27A provides a simplified outline of Part 3 of Chapter 2.
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Schedule 2 - Amendments relating to cancellation of registration and alternative orders
Division 2 - Applications to the Federal Court for orders under this Part
Section 28 - Application for cancellation of registration
98. New section 28 provides that the Commissioner may apply to the Federal Court for an
order cancelling the registration of an organisation on any of the grounds set out in new
Division 3. The current standing of the Minister is removed.
99. A legislative note to new section 28 direct the reader to new section 28HA which
provides that a person who reasonably believes that a ground for cancellation of registration
or an alternative order exists, may refer the matter to the Commissioner. However, the note
also makes it clear that the Commissioner does not need a referral to make an application for
cancellation of registration of an organisation.
Section 28A - Application for alternative orders
100. New section 28A provides that the Commissioner may also apply to the Federal Court
for one or more of the alternative orders set out in new Division 5 on any of the grounds
contained in new Division 3.
101. An application under new section 28A provides an alternative avenue for redress
where a ground for cancellation in Division 3 is established because of the behaviour of
officers or members in a particular part of an organisation, for example, a branch or division.
102. A legislative notes to new section 28A direct the reader to new section 28HA which
provides that a person who reasonably believes that a ground for cancellation of registration
or an alternative order exists, may refer the matter to the Commissioner. However, the note
also makes it clear that the Commissioner does not need a referral to make an application for
an alternative order.
Section 28B - Multiple applications
103. New section 28B makes it clear that the Commissioner can make an application for
the cancellation of an organisation's registration under new section 28 and an application for
alternative orders under new section 28A at the same time. The Federal Court will be required
to deal with those applications together.
Division 3 - Grounds for Federal Court orders
104. The Division sets out the grounds for cancellation of an organisation's registration.
When a ground or grounds applies, it is still necessary for the Federal Court to determine
whether cancellation of registration and/or or the imposition of alternative orders is just in the
circumstances.
105. Attention of the reader is drawn to item 11 (Application of amendments). The effect of
item 11 is that a ground for deregistration can only be established by conduct that occurs after
commencement of this Schedule.
Section 28C - Ground--conduct of affairs of organisations or part of organisation
106. New section 28C provides a ground for cancelling an organisation's registration under
new section 28, or making an alternative order under new section 28A where:
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officers of the organisation or part of the organisation have acted in affairs of the
organisation or part in their own interests rather than in the interests of the members
of the organisation or part as a whole (new paragraph 28C(1)(a));
affairs of the organisation or part of the organisation have been or are being
conducted in a manner that is contrary to the interests of the members of the
organisation or part as a whole (new paragraph 28C(1)(b)); or
affairs of the organisation or part of the organisation have been or are being
conducted in a manner resulting in the organisation or part, or officers or members of
the organisation or part, having a record of not complying with designated laws (new
paragraph 28C(1)(c).
107. The new paragraphs are adapted from the formulation of paragraphs 461(1)(e) and
461(1)(f) of the Corporations Act which provide grounds on which a company may be wound
up by the Court that relate to the affairs of the company.
108. 'Affairs' of the organisation' is non-exhaustively defined to include:
the internal management, governance, and proceedings of the organisation or part;
and
its business model, including the way it is structured and how it operates to achieve
its aims; and
its transactions and dealings with other persons.
109. It is intended that a consideration of an organisation's transactions and dealings with
other persons would include (but not be limited to) its interactions with employers and
employers' employees, other organisations or parts of organisations, regulators (whether
industry-specific or otherwise), worker entitlement funds, training and welfare funds,
superannuation funds, and other funds established for an industrial purpose.
110. Subsection 28C(3) makes it clear that the Court may have regard to both acts and
omissions in considering the manner in which the affairs of the organisation are being
conducted.
111. The ground in paragraph 28C(1)(c) is intended to address instances of systemic
organisational culture, administration or governance that result in the organisation (or part) or
officers or members of the organisation (or part) having a record of not complying with
designated laws.
112. Subsection 28C(2) provides that the Court must only have regard to any designated
findings made against the organisation or its officers or members, or any findings that the
organisation or its officers or member are in contempt of court in relation to an order or
injunction made under a designated law, to assess whether there is a record of not complying
with designated laws. Subitem 11(1)(a) makes it clear that regard to such instances of non-
compliance are limited to those that relate to conduct that occurs after commencement of the
Schedule. However, subitem 11(2) makes it clear that once a ground has been established, the
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Schedule 2 - Amendments relating to cancellation of registration and alternative orders
Court may have regard to matters occurring before or after commencement in determining
whether it is unjust to make a cancellation and/or alternative order.
113. Subsection 28C(4) provides that a finding of fact in proceedings before any court,
relating to the grounds for cancelling registration or alternative orders set out in new section
28C, is admissible as prima facie evidence of that fact. This new subsection is an evidentiary
provision to allow an applicant to use a finding of fact in another proceeding as evidence of
that fact, unless the contrary is established. It is intended to expedite the application under
new sections 28 or 28A where relevant factual findings have been made in other proceedings.
Section 28D - Ground--serious offence committed by organisation
114. New section 28D provides a ground for cancelling an organisation's registration under
new section 28, or making an alternative order under new section 28A, where the organisation
is found, in criminal proceedings against it, to have committed an offence against a law of the
Commonwealth or a State or Territory and the offence is punishable upon conviction by a
penalty for a body corporate of (or equivalent to) at least 1,500 penalty units (see section 4AA
of the Crimes Act for the value of a penalty unit). The threshold quantum of penalty units
required establishes the gravity of the offence for a body corporate, which is equivalent to 5
years imprisonment for a natural person.
115. The words 'or equivalent to' are necessary as not all States and Territories utilise the
concept of penalty units and some instead express penalties as fixed amounts. In such a case
where the fixed amount is equivalent to the monetary value of at least 1,500 penalty units, it
will be sufficient to provide a ground for cancellation.
Section 28E - Ground--multiple findings against members
116. New section 28E is adapted from current paragraph 28(1)(a)(ii) of the Act.
117. New section 28E provides a ground for cancelling an organisation's registration under
new section 28, or making an alternative order under new section 28A, where designated
findings have been made against a substantial number of the members of the organisation or
the members of a part or class of the organisation. The term 'designated finding' is defined
under amended section 6 and new section 9C (items 1 and 2 of Schedule 1).
Section 28F - Ground--non-compliance with orders or injunctions
118. New section 28F is adapted from current paragraph 28(1)(d) of the Act.
119. New section 28F provides a ground for cancelling an organisation's registration under
new section 28, or making an alternative order under new section 28A, where the organisation
has failed to comply with an order or injunction made under a designated law (paragraph
28F(1)(a)).
120. New section 28F also provides a ground for cancelling an organisation's registration
under new section 28, or making an alternative order under new section 28A, where a
substantial number of the members of the organisation, or a part or class of the organisation
have failed to comply with an order or injunction made under a designated law. The term
'designated law' is defined under amended section 6 and new section 9C (items 1 and 2 of
Schedule 1).
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121. New subsection 28F(2) provides that where an application under new sections 28 or
28A is made on the ground in new section 28F, a finding in proceedings before any court that
there has been a relevant failure to comply with court orders or injunctions is admissible as
prima facie evidence. This new subsection is an evidentiary provision to allow an applicant to
use a finding of fact in another proceeding as evidence of that fact, unless the contrary is
established. It is intended to expedite the application under new sections 28 or 28A where
relevant factual findings have been made in other proceedings.
Section 28G - Ground--obstructive industrial action
122. New section 28G substantively replicates current paragraphs 28(1)(b) and (c) of the
Act.
123. New subsections 28G(1) and (2) provide a ground for cancelling an organisation's
registration under new section 28, or making an alternative order under new section 28A,
where the organisation, or a substantial number of the members of the organisation or of a
part or class of the organisation, have organised or engaged in industrial action (other than
protected industrial action) that:
prevented, hindered or interfered with the activities of a federal system employer or
the provision of any public service by the Commonwealth, a State or Territory, or an
authority of the Commonwealth, a State or Territory (new subparagraphs
28G(2)(a)(i) and (ii)); or
has had, is having, or is likely to have, a substantial adverse effect on the safety,
health or welfare of the community or a part of the community (new paragraph
28G(2)(b)).
124. The definition of 'protected industrial action' is set out in section 408 of the FW Act.
125. New subsection 28G(3) provides that where an application under new sections 28 or
28A is made on the ground in new section 28G, a finding of fact in any court is admissible as
prima facie evidence in the application under new sections 28 or 28A. This new subsection is
an evidentiary provision to allow an applicant to use a finding of fact in another proceeding as
evidence of that fact, unless the contrary is established. It is intended to expedite the
application under new sections 28 or 28A where relevant factual findings have been made in
other proceedings.
Section 28H - Application of grounds in relation to amalgamated organisations
126. New subsection 28H(1) provides that when considering whether a ground in new
Division 3 exists in relation to an amalgamated organisation:
a reference to an 'organisation' includes any deregistered organisation in relation to
the amalgamation (new paragraph 28H(1)(a));
a reference to an 'officer' of the organisation includes a person who was an officer of
any such deregistered organisation (new paragraph 28H(1)(b)); and
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a reference to the conduct of an officer in relation to an organisation includes any
conduct of the officer as an officer in relation to any such de-registered organisation
(new paragraph 28H(1)(c)).
127. In relation to an amalgamated organisation, this provision ensures that where relevant
conduct occurs after commencement of this Schedule so that a ground for cancellation is
established, the Federal Court can consider the prior conduct of any deregistered organisation
or its officers, for the purposes of determining whether it is unjust to make an order under
Division 4 or Division 5 of Part 3 of Chapter 2 of the Act.
128. New subsection 28H(2) explains that the definitions created for the purposes of Part 2
of Chapter 3, which deal with amalgamations, apply to any such terms used in new section
28H.
Section 28HA - Referral to Commissioner
129. New section 28HA provides that a person (the referrer) who reasonably believes that
a ground for cancellation of registration set out in Division 3 exists in relation to an
organisation, to refer the matter to the Commissioner.
130. The referral must be in writing, identify and provide contact details for the referrer,
and set out the basis for the reasonable belief that a ground exists.
131. Subsection 28HA(3) makes clear that the Commissioner may, but is not required to,
take action in relation to the referral.
132. The note highlights that the Commissioner may apply for cancellation of registration
or alternative orders in relation to referrals made under section 28HA if he or she considers a
ground applies in relation to an organisation.
133. The referral mechanism provided for in this amendment does not limit the ability of a
person to contact or otherwise raise with the Commissioner any matter of concern for the
Commissioner's consideration.
Division 4 - Cancellation of registration of an organisation by the Federal Court
Section 28J - Order cancelling registration of an organisation
134. New section 28J provides that, if an application is made for the cancellation of an
organisation's registration under new section 28, the Federal Court may cancel the registration
of the organisation if:
the Court finds that one of the grounds set out in the application is established; and
the Commissioner satisfies the Court that it would not be unjust to cancel the
organisation's registration having regard to:
o the nature of the matters constituting the ground (new subparagraph
28J(1)(b)(i));
o any action taken by or against the organisation, members or officers in relation
to those matters (new subparagraph 28J(1)(b)(ii));
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o the best interests of the members of the organisation as a whole (new
subparagraph 28J(1)(b)(iii)); and
o any other matters the Court considers relevant (new subparagraph
28J(1)(b)(iv)).
135. Note 1 to new subsection 28J(1) draws the reader's attention to the alternative orders
the Court may make under new Division 5 in circumstances where a ground for cancellation
is established but the Commissioner fails to satisfy the Court that it would not be unjust to
cancel the organisation's registration.
136. Note 2 to new subsection 28J(1) draws the reader's attention to the effect of
cancellation of registration as provided for under new Division 7.
137. New subsection 28J(1A) explicitly provides that the Court must not cancel an
organisation's registration unless it is satisfied, having regard to the gravity of the matters
constituting the ground, that cancellation would not be unjust.
138. The matters in paragraph 28J(1)(b) and new subsection 28J(1A) mean that for
example, if the Court considered that the conduct giving rise to the ground related (wholly or
partly) to pursuing a public health issue such as safety concerns in relation to asbestos
exposure or patient care, the Court could decide not to cancel the organisation's registration if
it determined it would be unjust to do so.
139. New subsection 28J(2) clarifies that the relevant organisation must be given the
opportunity to be heard by the Federal Court when the Court is determining whether or not to
cancel the organisation's registration.
Section 28K - Orders additional to cancelling registration under section 28J
140. New section 28K is adapted from existing subsection 28(5) and provides that, where
an order cancelling the registration of an organisation has been made under new section 28J,
the Court may also direct, by order, either or both of the following:
that any future application for registration under the Act by the former organisation
not be dealt with before the end of a specified period (new paragraph 28K(a));
that any future application for the registration of an organisation with the same, or
substantially the same, officers as those in the organisation that has had its
registration cancelled, not be dealt with before the end of a specified period (new
paragraph 28K(b)).
141. Each of the grounds for cancelling an organisation's registration set out in new
Division 3 relates to an organisation that has ceased to function in the best interests of
members as a whole. New section 28K is intended to ensure that the cancellation of an
organisation's registration is effective and is not undermined by the re-registration of the
organisation or the registration of an organisation that has the same, or substantially the same,
officers as those in the organisation that had its registration cancelled.
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Schedule 2 - Amendments relating to cancellation of registration and alternative orders
Division 5 - Alternative Federal Court orders
Section 28L - When the Federal Court may make alternative orders
142. New section 28L provides that the Federal Court may make alternative orders (other
than the cancellation of the registration of the organisation) under Division 5 if:
the Court finds that one of the grounds set out in Division 3 has been established in
an application made under new sections 28 or 28A (new paragraph 28L(1)(a)); and
if the Court is considering an application made under new section 28, or an
application made under new section 28A in conjunction with an order made under
section 28, the Commissioner fails to satisfy the Court that it would not be unjust to
cancel the organisation's registration (new paragraph 28L(1)(b)).
143. The alternative orders that the Federal Court can make are:
disqualification of certain officers (new section 28M);
exclusion of certain members (new section 28N); and
suspension of rights, privilege and capacity (new section 28P).
144. New subsection 28L(1A) explicitly provides that the Court must not make an
alternative order unless it is satisfied that, having regard to the gravity of the matters
constituting the ground, the order would not be unjust.
145. New subsection 28L(2) provides that, before making an order under new sections 28M
(disqualification of officers) or 28N (exclusion of certain members), or exercising power
under new paragraph 28P(1)(a) (suspension of rights, privileges or capacity) in relation to
only part of an organisation or only some of its members, the Federal Court must be satisfied
that the relevant ground was established wholly or mainly because of the conduct of:
officers of a particular part of the organisation (new subparagraph 28L(2)(a)(i)); or
members or class of members of a particular part of the organisation (new
subparagraph 28L(2)(a)(ii).
146. In addition, the Court must be satisfied that it would not be unjust to make the order or
exercise the power, having regard to the circumstances and nature of the officers' or
members' involvement in the matters constituting the ground and any other matters the Court
considers relevant (new paragraph 28L(2)(b)).
147. Subsection 28L(3) provides that, before exercising the power provided to the Federal
Court under new paragraph 28P(1)(a) (suspension of rights, privileges or capacity) in relation
to the whole of an organisation or all of its members, the Court must be satisfied that
exercising that power in that way would not be unjust having regard to the nature of the
matters constituting the ground and any other matters the Court considers relevant.
148. New subsection 28L(4) provides that the relevant organisation must be given the
opportunity to be heard by the Federal Court when it is determining whether or not to make
alternative orders.
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Amendment (Ensuring Integrity) Bill 2019
Schedule 2 - Amendments relating to cancellation of registration and alternative orders
Section 28M - Order--disqualification of certain officers
149. New section 28M provides that the Federal Court may make an order disqualifying the
officers mentioned in new subparagraph 28L(2)(a)(i) from holding office in an organisation
for a period the Court considers appropriate. An order under new section 28M is only
available to the Court if it is satisfied of the relevant matters in new section 28L.
150. New subsection 28M(2) provides that if the Court does so, the officer is also
disqualified from holding office in a branch of an organisation.
Section 28N - Order--exclusion of certain members
151. New section 28N is adapted from existing subsection 28(4) of the Act.
152. If the Federal Court is satisfied of the relevant matters in new section 28L, under new
subsections 28N(1) and (2) it may make an order altering the eligibility rules of an
organisation so as to exclude from eligibility for membership of the organisation persons
belonging to the part of the organisation, or the class of members, mentioned in new
subparagraph 28L(2)(a)(ii). The Federal Court can make an order excluding people belonging
to such part of class of the membership despite any membership agreement made under
existing section 151 of the Act.
153. New subsection 28N(2) provides that if an order is made under new section 28N, the
alteration of the rules of eligibility takes place on the date of the order or a date specified in
the order.
154. New subsection 28N(3) provides that where the Court makes an order under new
section 28 it may make an additional order prohibiting an organisation, for a specified period
of time, from seeking consent under section 158 of the Act to alter the organisation's
eligibility rules in such a manner as to have the effect of restoring eligibility to the persons
who were the subject of the order under section 28N.
Section 28P - Order--suspension of rights and privileges etc. and later reconsideration of
question of cancellation or alternative orders
155. New section 28P is adapted from existing subsection 29(2) of the Act.
156. If the Federal Court is satisfied of the relevant matters in new section 28L, it may
under new section 28P do any of the following:
make an order suspending the rights, privileges or capacities of the organisation or a
part of the organisation, or of all or any of its members, as such members, under the
Act, the FW Act or any other Act, under modern awards or orders made under this
Act, the FW Act or any other Act, or under enterprise agreements (new paragraph
28P(1)(a)); or
make orders providing directions as to the exercise of any rights, privileges or
capacities that have been suspended (new paragraph 28P(1)(b));
House of Representatives 25 Fair Work (Registered Organisations)
Amendment (Ensuring Integrity No. 2) Bill
2019
Schedule 2 - Amendments relating to cancellation of registration and alternative orders
make orders that restrict the use of the funds or property of the organisation or a part
of the organisation, and orders for the control of the funds or property for the purpose
of ensuring observance of the restrictions (new paragraph 28P(1)(c)).
157. New subsection 28P(2) provides that an order made under new section 28P relating to
the exercise of power will have effect despite anything in the rules of the organisation, or part
of the organisation, concerned.
158. Under new subsection 28P(3), any orders made under new section 28P relating to the
exercise of power may either be:
revoked by an order from the Court upon the application of a party to the
proceedings (new paragraph 28P(3)(a)); or
will expire on the date specified in the order (new paragraph 28P(3)(b)).
159. New subsection 28P(4) provides that the Federal Court must reconsider an application
made under either or both of sections 28 (cancellation of registration) or 28A (alternative
orders) once either:
any orders made under new section 28P cease to be in force (new paragraph
28P(4)(a)); or
one of the existing parties makes an application requesting that the Court consider
whether it is just to determine the substantive issues in the application having regard
to the evidence given in relation to compliance with any orders made under new
section 28P or any other relevant circumstances (new paragraph 28P(4)(b)).
Division 6 - Cancellation of registration of an organisation by the FWC
160. This item inserts a new heading to Division 6 and is consequential to the other
amendments being made by this Schedule. The cancellation of registration of an organisation
by the FWC is not affected by the amendments in this Schedule and continues unamended.
Item 5 - At the end of section 30
161. This item adds a note to section 30 to draw the reader's attention to the fact that new
Division 7 provides for the effect of cancelling the registration of an organisation.
Item 6 - Before section 31
Division 7 - Effect of cancellation of registration
162. This item inserts new Division 7. The creation of this new Division is consequential to
the other amendments being made by this Schedule and separates the effects of cancelling the
registration of an organisation in new Divisions 1-5 concerning cancellation of registration by
the Federal Court from Division 6 concerning cancellation by the FWC.
House of Representatives 26 Fair Work (Registered Organisations)
Amendment (Ensuring Integrity) Bill 2019
Schedule 2 - Amendments relating to cancellation of registration and alternative orders
Item 7 - Before paragraph 158(10)(a)
163. This item amends section 158, concerning changing the name or eligibility rules of an
organisation, to ensure that it does not apply to an order made under new section 28N
determining an alteration to the name or eligibility rules of an organisation.
Item 8 - Section 343
Item 9 - At the end of section 343
164. Section 343 of the Act provides for when the Minister may delegate his or her powers
under the Act.
165. These items renumber existing section 343 as subsection 343(1), and insert a new
subsection 343(2) that provides that despite subsection 343(1), the Minister's functions or
powers under subsection 323(1) cannot be delegated.
Item 10 - Paragraph 343B(2)(a)
166. This item repeals paragraph 343B(2)(a) and substitutes new paragraph 343(2)(a) to
reflect the fact that existing section 28 has been repealed and replaced by new sections 28 and
28A. Paragraph 343B(2)(a) provides that the Commissioner cannot delegate his or her power
to make an application for the cancellation of the registration of an organisation or alternative
orders under new sections 28 or 28A.
Item 11 - Application of amendments
167. This item explains how the amendments to the Act made by Schedule 2 will apply
upon commencement of this Schedule.
168. In finding whether a ground for cancellation of registration of an organisation set out
in an application under new section 28 or 28A is established, the Federal Court may only have
regard to conduct engaged in after commencement (subitem (1)).
169. However, once a ground has been established, the Court may have regard to matters
occurring before or after commencement for the purposes of new subparagraphs 28J(1)(b)(iv)
and 28L(2)(b)(ii), and new paragraph 28L(3)(b). These provisions give the Court the power to
have regard to other matters it considers relevant in determining whether it is unjust to
exercise its power under those sections (subitem (2)).
170. Subitem (3) provides that, in relation to the application of sections 28 and 29 of the
Act as in force immediately before commencement, these provisions continue in effect after
commencement and, despite the amendments in Schedule 2, in relation to:
conduct engaged in before commencement (subitem (3)(a)); and
conduct engaged in before or after commencement in relation to an order or
injunction made before commencement (subitem (3)(b)).
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Amendment (Ensuring Integrity No. 2) Bill
2019
Schedule 2 - Amendments relating to cancellation of registration and alternative orders
171. Subitem (4) clarifies that for the purposes of the operation of sections 28 and 29 of the
Act as continued in effect by sub-item (3), the amendments made by Schedule 2 are taken not
to have been made.
172. Subitem (5) defines the term 'commencement' for the purposes of item 11 to mean the
start of the day item 11 commences.
House of Representatives 28 Fair Work (Registered Organisations)
Amendment (Ensuring Integrity) Bill 2019
Schedule 3 - Amendments relating to administration of dysfunctional organisations etc.
SCHEDULE 3 - AMENDMENTS RELATING TO
ADMINISTRATION OF DYSFUNCTIONAL
ORGANISATIONS ETC.
173. Section 323 of the Act provides for applications to be made to the Federal Court for a
declaration in relation to an organisation or any part of it. If a declaration is made, the Federal
Court may approve a scheme for the taking of action to resolve the matters to which the
declaration relates.
174. Schedule 3 repeals section 323 and substitutes it with new Part 2A of Chapter 11. New
part 2A expands current section 323 through three key amendments:
the standing for seeking a declaration and order for a scheme will be expanded to
include the Commissioner and the Minister;
the categories of declarations in subsection 323(1) of the Act will be expanded; and
the Federal Court's power to approve a scheme consequent to the making of a
declaration will be amended to expressly permit the appointment of an administrator
under a scheme and clearly set out the functions of an administrator.
175. These amendments are remedial in nature, modelled and adapted from broadly
equivalent provisions of the Corporations Act, and ensure that governance issues within an
organisation, or individual branches or divisions, can be addressed promptly and transparently
to ensure that the interests of members are protected.
Fair Work (Registered Organisations) Act 2009
Item 1 - Section 6
176. This item amends section 6 to insert new definitions of 'administrator', 'books',
'financial misconduct' and 'part'. The definition of 'administrator' includes any interim
administrator appointed for the time being by the Federal Court under new subsection
323A(1). The definition of 'financial misconduct' is inclusively defined and includes misuse
of funds and false accounting. Whether other conduct constitutes financial misconduct will
turn on the facts of each case. The definition of a part of an organisation follows current
subsection 323(1)(a).
Item 2 - Subsection 280(6)
177. This item repeals existing subsection 280(6), which contains a definition of 'books'.
This definition is currently limited to section 280 and will no longer be required because of
the insertion of an identical definition in section 6 by item 1.
Item 3 - Section 317
178. This item amends the simplified outline of Chapter 11 to include an outline of new
Part 2A.
House of Representatives 29 Fair Work (Registered Organisations)
Amendment (Ensuring Integrity No. 2) Bill
2019
Schedule 3 - Amendments relating to administration of dysfunctional organisations etc.
Item 4 - Section 323
179. This item repeals existing section 323 and substitutes it with new Part 2A.
Section 323 - Declaration of dysfunction, misconduct etc. or vacancy in offices
180. New subsection 323(1) gives standing to the following persons to seek a declaration or
declarations from the Federal Court of the type set out in new subsection 323(3), if the
applicant considers that circumstances mentioned in a paragraph of that subsection exist in
relation to an organisation:
the Commissioner;
the Minister;
the organisation in relation to which the declaration is sought;
a member of the organisation in relation to which the declaration is sought; and
any other person having a sufficient interest in the organisation in relation to which
the declaration is sought.
181. New subsection 323(1) has expanded the standing in existing subsection 323(1) to
include the Commissioner and the Minister. The issue of the Minister's standing in terms of
having a sufficient interest, was considered but not resolved in Brown v Health Services
Union [2012] FCA 644 per Flick J at [51]. New paragraph 323(1)(b) addresses this
uncertainty.
182. 'Sufficient interest' has been interpreted as an interest beyond that of an ordinary
person and includes those whose rights, interests and legitimate expectations would be
affected by the decision.
183. New subsection 323(2) enables the Federal Court to make the declaration if the Court
is satisfied that the circumstances exist in relation to the organisation.
184. New subsection 323(3) sets out the declarations the Federal Court may make:
that an organisation or part of an organisation has ceased to function effectively and
there are no effective means under the organisation or part's rules by which the
organisation or part can be reconstituted or enabled to function effectively (new
paragraph 323(3)(a)) and is modelled on existing paragraph 323(1)(a) of the Act.
New subsection 323(4) provides for a new inclusive definition of when an
organisation or part of it has ceased to function effectively;
that one or more officers of an organisation or part of an organisation have engaged
in financial misconduct in relation to carrying out of their functions or in relation to
the organisation or part (new paragraph 323(3)(b)). An inclusive definition of
financial misconduct is inserted into section 6 by item 1 of this Schedule;
that a substantial number of the officers of an organisation or part of an organisation
have, in affairs of the organisation or part, acted in their own interests rather than in
the interests of members of the organisation or part as a whole (new paragraph
House of Representatives 30 Fair Work (Registered Organisations)
Amendment (Ensuring Integrity) Bill 2019
Schedule 3 - Amendments relating to administration of dysfunctional organisations etc.
323(3)(c)). New paragraph 323(3)(c) is adapted from paragraph 461(1)(e) of the
Corporations Act;
that affairs of an organisation or part of an organisation are being conducted in a
manner that is oppressive or unfairly prejudicial to, or unfairly discriminatory
against, a member or members or in a manner that is contrary to the interests of the
members of the organisation or part as a whole (new paragraph 323(3)(d)). New
paragraph 323(3)(d) is adapted from paragraph 461(1)(f) of the Corporations Act;
and
that an office or position in an organisation or part of an organisation is vacant and
there is no effective means under the organisation or part's rules to fill the office or
position (new paragraph 323(3)(e)). New paragraph 323(3)(e) reflects existing
section 323(1)(b).
185. New subsection 323(4) provides that for the purposes of new section 323, without
limiting the circumstances in which an organisation or a part of an organisation ceases to
function effectively, an organisation or a part of an organisation is taken to have ceased to
function effectively if the Court is satisfied that officers of the organisation or a part of an
organisation have:
on multiple occasions, contravened designated laws (new paragraph 323(4)(a)); or
misappropriated funds of the organisation or part (new paragraph 323(4)(b)); or
otherwise repeatedly failed to fulfil their duties as officers of the organisation or part
of the organisation (new paragraph 323(4)(c)).
186. The term 'designated law' is defined under amended section 6 and new section 9C
(items 1 and 2 of Schedule 1).
Section 323A - Federal Court may make certain orders if declaration made under section 323
187. New section 323A sets out orders that the Federal Court may make if a declaration is
made under new section 323.
188. The Federal Court may, by order, approve a scheme for the taking of action by the
organisation or part of an organisation, or by an officer or officers of the organisation, or part
of the organisation, to resolve the circumstances set out in the declaration (new subsection
323A(1)). The power under new subsection 323(1) provides a broad remedial discretion.
189. New subsection 323A(2) provides that, without limiting subsection 323A(1), a scheme
ordered under new subsection 323A(1) may include the appointment of an administrator for
the organisation or part of it, reports to be given to the Court under the scheme, information
about when the scheme begins, and ends and when elections (if any) are to be held under the
scheme.
190. New subsection 323A(3) provides that the Court must not make an order under new
section 323A unless it is satisfied that the order would not do substantial injustice to the
organisation or any member of the organisation. This subsection reflects existing subsection
323(4).
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Amendment (Ensuring Integrity No. 2) Bill
2019
Schedule 3 - Amendments relating to administration of dysfunctional organisations etc.
191. New subsection 323A(4) provides that if a scheme approved under new section 323A
provides for its own end, the Court may only approve the scheme if the scheme provides that
it does not end unless the Court is satisfied that the circumstances set out in the declaration
have been resolved or no longer exist.
192. New subsection 323A(5) provides that if a scheme approved under new section 323A
involves provision for an election for an office, the Court must not approve the scheme unless
the scheme provides for the election to be conducted by the Australian Electoral Commission
and in accordance with Chapter 7.
193. New subsection 323A(6) provides that if the Court makes an order approving a
scheme, the Court may give any ancillary or consequential directions it considers appropriate,
including but not limited to directions about the matters referred to in new subsection
323A(2). This subsection reflects existing subsection 323(3).
Section 323B - Federal Court order has effect despite other provisions
194. New section 323B provides that an order or direction under new section 323A, and
any action taken by an administrator or other person in accordance with the order or direction,
has effect despite anything in the organisation or part's rules to which the order or direction
relates and any previous order, direction or exemption made under the Act.
Section 323C - Elections while under administration
195. New section 323C provides that any election for an office held while the organisation
or any part of it is under administration must be conducted by the Australian Electoral
Commission.
Section 323D - Administrators--conflict of interest
196. New section 323D provides that within 21 days after an administrator acquires any
interest, pecuniary or otherwise, that could conflict with the proper performance of his or her
duties, or becomes aware that any interest, pecuniary or otherwise, that he or she has or is
likely to acquire, could conflict with the proper performance of his or her duties, the
administrator must notify the Federal Court in writing of that interest.
197. New section 323D is broadly modelled on section 436DA of the Corporations Act,
which requires a voluntary administrator to report to creditors and the Australian Securities
and Investments Commission on their independence by declaring relevant relationships and
indemnities.
Section 323E - Administrators--termination of appointment
198. New section 323E provides that the Federal Court may terminate the appointment of
an administrator at any time. This includes, but is not limited to, if the administrator has a
conflict of interest and has notified the Court of that conflict under new section 323D.
Section 323F - Functions of administrator
199. New section 323F sets out the functions of an administrator appointed under a scheme
in new section 323A. New section 323F is modelled on section 437A of the Corporations Act.
House of Representatives 32 Fair Work (Registered Organisations)
Amendment (Ensuring Integrity) Bill 2019
Schedule 3 - Amendments relating to administration of dysfunctional organisations etc.
Section 323G - Officers etc. to help administrator
200. New section 323G imposes obligations on certain persons to assist an administrator.
New subsections 323G(1) to (4) are modelled on similar obligations in section 438B of the
Corporations Act.
201. New subsections 323G(1) and (2) provide that officers and employees of an
organisation or part of an organisation under administration, or a person who ceased to be an
officer of an organisation or part because of or following the appointment of an administrator,
must attend on the administrator at such times and give the administrator such information
about the organisation or part's business, property, affairs and financial circumstances as the
administrator reasonably requires.
202. New subsection 323G(3) creates an offence if the person does not comply with an
administrator's reasonable request under new subsection 323G(2). The penalty is 120 penalty
units.
203. New subsection 323G(4) provides that the offence in new subsection 323G(3) does
not apply if a person has a reasonable excuse.
204. New subsection 323G(5) makes it clear that that the privilege against self-
incrimination is a reasonable excuse under new subsection 323G(4). New subsection 323G(6)
also provides that new section 323G does not affect the law relating to legal professional
privilege.
205. The offence in new section 323G and the level of penalty is modelled on the similar
obligation in section 438B of the Corporations Act.
206. The inclusion of the reasonable excuse defence ensures consistency with the
Corporations Act.
Section 323H - Right to organisation's books
207. New section 323H gives an administrator a right to an organisation's books. This
section is modelled on section 438C of the Corporations Act.
208. New subsection 323H(1) prevents a person from retaining possession of the books of
an organisation or part of an organisation, or claiming or enforcing a lien on the books of an
organisation or part of an organisation, however, such a lien is not otherwise prejudiced.
209. New subsection 323H(2) preserves a secured creditor's right of possession over books
(other than because of a lien) but provides that an administrator is entitled to inspect and make
copies of such books at any reasonable time.
210. New subsection 323H(3) permits an administrator to give written notice to a person
requiring the person to deliver to the administrator books that are in the person's possession.
The written notice must specify the books that are in the person's possession to be delivered
to the administrator.
211. The compliance period for a notice given under new subsection 323H(3) must be at
least 3 business days and this must be specified in the notice (new subsection 323H(4)).
House of Representatives 33 Fair Work (Registered Organisations)
Amendment (Ensuring Integrity No. 2) Bill
2019
Schedule 3 - Amendments relating to administration of dysfunctional organisations etc.
212. New subsection 323H(5) creates an offence if a person is given a notice under
subsection 323H(3) and the person does not comply with the notice. The penalty is 120
penalty units.
213. New subsection 323H(6) provides that new subsection 323H(5) does not apply to the
extent that the person is entitled to retain possession of the books. Subsection (6) also contains
a note identifying the relevant provision in the Criminal Code that deals with the evidential
burden that a defendant bears in relation to the matter in subsection (6). The imposition of an
evidential burden does not impose a legal burden of proof and is consistent with the common
law and the Criminal Code. When a defendant wishes to take advantage of a defence, the
defendant always has the burden of adducing or pointing to evidence that suggests the
reasonable possibility that the matter exists or does not exist. When the defendant discharges
this evidential burden, the prosecution then has the legal burden to disprove the matter beyond
a reasonable doubt.
214. The definition of books is similar to the Corporations Act definition and section
280(6) of the Act, which defines books broadly to include any record of information or a
document. Whether a person is entitled to retain possession of relevant books is a matter
peculiarly within the person's knowledge. A person relying on the defence in subsection
323H(6) must adduce evidence to discharge the burden of proof by pointing to the fact that
information belongs to the person or contains personal information belonging to the person.
215. The offence in new section 323H and the level of penalty is modelled on the similar
obligation in section 438C of the Corporations Act.
216. The inclusion of the reasonable excuse defence ensures consistency with the
Corporations Act.
Section 323J - Remuneration determinations
217. New section 323J gives the Federal Court discretion to make any orders it considers
appropriate to provide for an administrator's remuneration.
218. If the Court makes an order providing for remuneration of an administrator, new
section 323J sets out the process for determining an administrator's remuneration. This
section is modelled on the process for Court approval of an administrator's remuneration
under Division 60 of Schedule 2 of the Corporations Act.
Section 323K - Administrator not to be sued
219. New section 323K excludes an administrator appointed under new section 323A, or a
person acting under the direction of an administrator, from liability for acts or omissions done
in good faith in the performance or exercise, or purported performance or exercise, of any
function or power of the administrator.
220. Section 323K is modelled on s 290D of the Industrial Relations Act 1996 (NSW). The
provision is directed at immunity from civil proceedings only. For the immunity to apply, it
would need to be proven that the administrator was acting in good faith in the performance or
exercise of their functions or powers. The reference to 'purported' performance or exercise of
any function or power reflects the indemnity provisions of the Corporations Act (s 443D(aa)).
Acts and omissions an administrator mistakenly thought were in the scope of their functions
House of Representatives 34 Fair Work (Registered Organisations)
Amendment (Ensuring Integrity) Bill 2019
Schedule 3 - Amendments relating to administration of dysfunctional organisations etc.
will be covered by the proposed immunity, provided that the administrator was acting in good
faith.
Item 5 - Paragraph 324(2)(p)
221. This item amends paragraph 324(2)(p) to preserve the right of persons to apply to the
Minister for financial assistance where they are a party to a proceeding under new Part 2A.
Item 6 - After paragraph 343B(2)(h)
222. This item amends subsection 343B(2) to insert new paragraph 343B(2)(ha), which
provides that the Commissioner's standing to seek a declaration under new subsection 323(1)
is not delegable.
House of Representatives 35 Fair Work (Registered Organisations)
Amendment (Ensuring Integrity No. 2) Bill
2019
Schedule 4 - Amendments relating to a public interest test for amalgamations
SCHEDULE 4 - AMENDMENTS RELATING TO A PUBLIC
INTEREST TEST FOR AMALGAMATIONS
223. Part 2 of Chapter 3 of the Act provides the procedure for the amalgamation of two or
more organisations. The existing regulatory framework does not require the FWC to decide
whether an amalgamation is in the public interest when considering the amalgamation of two
or more organisations.
224. Currently, the FWC need only be satisfied of matters contained in subsection 73(2) of
the Act before fixing an amalgamation day. That is, the FWC must ensure that valid ballot
proceedings on the question of amalgamation have been conducted, there are no proceedings
(other than civil proceedings) pending against an existing organisation that is seeking to
amalgamate, and that the newly amalgamated organisation will assume all legal
responsibilities and liabilities that arise from an existing organisation.
225. Schedule 4 of the Bill will allow the FWC to decide as a threshold matter, whether a
proposed amalgamation should be subject to a public interest test, based on the compliance
history of the relevant organisations, and provide for the application of the public interest test
to a proposed amalgamation that meets the requisite compliance history threshold.
226. The new provisions supplement and do not override the existing amalgamation
provisions contained in Part 2 of Chapter 3 of the Act.
Fair Work (Registered Organisations) Act 2009
Item 1 - Section 6
227. Item 1 amends section 6 to add a cross-reference to the definition of the term
'compliance record event' in new section 72E.
Item 2 - Section 34
Item 3 - Section 34
228. Items 2 and 3 amend the simplified outline of Chapter 3 in section 34 to take account
of the amendments made by this Schedule.
Item 4 - Section 37
Section 37 - Exercise of the FWC's powers under this Part
229. Item 4 repeals and substitutes existing section 37. New subsection 37(1) provides that
the powers of the FWC under Part 2 of Chapter 3, except in relation to the public interest test
for amalgamations, are exercisable only by a Presidential Member of the FWC. New
subsection 37(2) provides that the public interest test for the amalgamations function of the
FWC is exercisable only by a Full Bench of the FWC.
230. One effect of this requirement is that a decision of a Full Bench on the question of the
public interest is not subject to merits review. The intent is not to restrict the right of
organisations affected by a decision to fair decision-making about whether an amalgamation
is in the public interest. Rather, the requirement for a Full Bench protects the integrity of the
House of Representatives 36 Fair Work (Registered Organisations)
Amendment (Ensuring Integrity) Bill 2019
Schedule 4 - Amendments relating to a public interest test for amalgamations
decision-making process by ensuring that a decision on the question of an amalgamation is
made by a number of senior members of the FWC.
231. This would not be a new exclusion from merits review, rather, decisions on the public
interest test for amalgamations would simply fall into the existing exclusion from merits
review that applies to all decisions of the Full Bench of the FWC under the Act and the FW
Act.
232. Item 4 does not exclude a right of judicial review to the Federal Court or High Court.
Decisions by the Full Bench of the FWC are reviewable by the High Court under section
75(v) of the Constitution or the Federal Court under section 39B of the Judiciary Act 1903.
Item 5 - Subsection 56(1)
233. Item 5 is a consequential amendment to the amendments in this Schedule providing
for a public interest test for amalgamations. It amends subsection 56(1) to note the exception
to the section 56 objections provision for objections provided for by the public interest test
amendments.
Item 6 - At the end of section 67
234. Item 6 is a consequential amendment to the amendments in this Schedule providing
for a public interest test for amalgamations. It adds new subsection 67(4) to provide that
subsection 67(2) does not authorise the FWC to dispense with deciding whether the public
interest test applied to a proposed amalgamation, or, if the public interest test is to apply to the
proposed amalgamations, the amalgamation is in the public interest when making orders in
relation to a further ballot if an amalgamation is not approved in a ballot.
Item 7 - Before section 73
235. Item 7 inserts new Subdivision A, 'Public interest test for amalgamations', comprising
new sections 72A-72F, and the new title Subdivision B, 'Amalgamation taking effect', for the
remaining provisions of the Part, into Part 2 of Chapter 3.
Subdivision A - Public interest test for amalgamations
Section 72A - Decision whether the public interest is to apply to the proposed amalgamation
and, if so, whether the amalgamation passes that test
236. New section 72A provides that before fixing an amalgamation day under section 73
of the Act for a proposed amalgamation, the FWC must:
decide whether the public interest test in paragraph 72A(1)(b) is to apply to the
amalgamation; and
if the public interest test is to apply to the amalgamation - decide whether the
amalgamation is in the public interest.
237. Note 1 to new subsection 72A(1) alerts the reader to the fact that in deciding whether
the amalgamation passes the public interest test, the FWC must have regard to the matters in
section 72D.
House of Representatives 37 Fair Work (Registered Organisations)
Amendment (Ensuring Integrity No. 2) Bill
2019
Schedule 4 - Amendments relating to a public interest test for amalgamations
238. Note 2 to new subsection 72A(1) further alerts the reader to the fact that an
amalgamation does not take effect if the FWC decides that the public interest test is to apply
to the amalgamation and the amalgamation fails that test.
239. New subsection 72A(2) provides that the FWC must, and may only, decide under
paragraph (1)(a) that the public interest test is to apply to the amalgamation if there is
information before the FWC that at least 20 compliance record events have occurred for one
or more of the existing organisations seeking to amalgamate within the 10 year period prior to
the most recent application relating to the amalgamation under section 44 of the Act.
240. The note to new subsection 72A(2) alerts the reader to the fact that the FWC has ways
of informing itself about whether compliance record events have occurred as outlined in
section 590 of the FW Act. These include: conducting inquiries and requiring a person to
provide copies of documents or records, or to provide any other information to the FWC. It
will be a matter for the FWC to determine how to inform itself in each particular case.
241. The effect of this new section will therefore be to require a Full Bench of the FWC to
consider, as a preliminary matter, whether a proposed amalgamation should be subject to the
public interest test in the Bill. This is intended to ensure that organisations that abide by
workplace laws and therefore do not have a history of non-compliance with the law, will not
be subject to a public interest test should they wish to amalgamate.
Section 72AA - Writing an publication requirements for these FWC decisions
242. New section 72AA requires the FWC to publish written reasons for decisions made
under new subsection 72A(1) as soon as practicable after making the decision. Any decision
and reasoning must be expressed in plain English and be easy to understand in structure and
content. This new provision does not limit the FWC's power to put decisions in writing or
publish decisions.
Section 72B - Hearings about public interest
243. If the FWC decides that the public interest test in new paragraph 72A(1)(b) is to apply
to a proposed amalgamation, the FWC must:
fix a time and place for hearing submissions in relation to the matters mentioned in
subsection 72D(1) (record of compliance with law), and whether the amalgamation is
otherwise in the public interest (new paragraph 72B(1)(a));
promptly notify the existing organisations concerned in the amalgamation of the time
and place of the hearing (new paragraph 72B(1)(b)); and
promptly publish a notice on the FWC website, or in any other way the FWC
considers appropriate, of the hearing details (new paragraph 72B(1)(c)).
244. This last requirement is for the benefit of persons who are not expressly notified.
Section 72C - Persons who may make submissions about public interest
245. New section 72C provides for persons who can make submissions in relation to the
matters mentioned in subsection 72D(1) concerning the organisations' record of compliance
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Schedule 4 - Amendments relating to a public interest test for amalgamations
with the law and whether the amalgamation is otherwise in the public interest. The FWC is
required to have regard to those submissions (new subsection 72C(2)).
246. Submissions about the matters relevant to whether an amalgamation is in the public
interest can be made by:
the existing organisations (new paragraph 72C(1)(a));
other organisations that represent the industrial interests of employers or employees
in the industry or industries concerned or that may otherwise be affected by the
proposed amalgamation (new paragraph 72C(1)(b));
bodies, other than organisations, that represent the industrial interests of employers
or employees in the industry or industries concerned (new paragraph 72C(1)(c));
the Commissioner (new paragraph 72C(1)(d));
the Minister (new paragraph 72C(1)(e));
a Minister of a referring State or Territory with responsibility for workplace relations
(new paragraph 72C(1)(f)); and
any other person with a 'sufficient interest' in the amalgamation (new paragraph
72C(1)(g)).
247. 'Sufficient interest' has been judicially interpreted as an interest beyond that of an
ordinary person and includes those whose rights, interests or legitimate expectations would be
affected by the decision.
Section 72D - Matters to which the FWC must have regard
248. New section 72D lists the matters the FWC must have regard to in deciding whether
an amalgamation is in the public interest. The FWC may also have regard to other matters it
considers relevant.
Record of compliance with the law
249. In deciding under paragraph 72A(1)(b) whether the amalgamation is in the public
interest, the FWC must have regard to any compliance record events within the meaning of
new section 72E that have occurred for each of the existing organisations (subsection
72D(1)).
250. New subsection 72D(2) provides that if the FWC considers, having regard to the
incidence, age and gravity of compliance record events for each existing organisation, that the
organisation has a record of not complying with the law, the FWC must decide under new
paragraph 72A(1)(b) that an amalgamation is not in the public interest.
Other matters of public interest
251. New subsection 72D(3) requires that if the public interest consideration is not
concluded under new subsection 72D(2), the FWC must, in deciding under paragraph
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Schedule 4 - Amendments relating to a public interest test for amalgamations
72A(1)(b) whether the amalgamation is otherwise in the public interest, have regard to the
impact the amalgamation is likely to have on:
employees in the industry or industries concerned (new paragraph 72D(3)(a)); and
employers in the industry or industries concerned (new paragraph 72D(3)(b)).
252. Subsection 72D(4) makes it clear that the FWC may have regard to other matters it
considers relevant when determining whether the amalgamation is in the public interest. Other
relevant matters could include the likely impact upon the industry or industries concerned or
the economy or an important part of it.
Section 72E - Compliance record events
253. New section 72E provides for when a compliance record event occurs for an
organisation.
254. In relation to compliance record events involving an organisation or members, these
are defined by new subsection 72E(1) to be:
designated findings against the organisation (new paragraph 72E(1)(a)). 'Designated
finding' is defined by new subsection 9C(1) inserted by item 2 of Schedule 1 to this
Bill;
findings of contempt of court against the organisation relating to an order or
injunction made under a designated law (new paragraph 72E(1)(b));
where the organisation, part of the organisation or a class of members of the
organisation organised or engaged in 'obstructive industrial action' as defined by
new subsection 28G(2) inserted by item 4 of Schedule 2 to this Bill (new paragraph
72E(1)(c)).
255. In relation to compliance record events involving officers, these are defined by new
subsection 72E(2) to be:
designated findings, as defined by new subsection 9C(1) inserted by item 2 of
Schedule 1 to the Bill, against a person who was an officer of the organisation at the
time of the conduct to which the designated finding relates (new paragraph
72E(2)(a));
findings of contempt of court against a person in relation to an order or injunction if
the person was an officer of the organisation at the time of the conduct to which the
finding relates and the conduct was in the course of, or purportedly in the course of,
performing functions in relation to the organisation (new paragraph 72E(2)(b));
a person's disqualification from holding office in an organisation while the person
was an officer in the organisation (new paragraph 72E(2)(c)).
256. As a consequence of the definition of 'office' in section 9 and the definition of
'officer' in section 6, references to officers of an organisation include officers of branches of
organisations. This means, for example, that a finding that an officer of a particular branch of
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Schedule 4 - Amendments relating to a public interest test for amalgamations
an organisation organised or engaged in obstructive industrial action is a compliance record
event relevant to the FWC's overall decision about an organisation's compliance record.
Section 72F - Amalgamation not in public interest does not take effect
257. New subsection 72F(1) provides that the FWC is prohibited from fixing an
amalgamation day and the amalgamation does not take effect if the FWC decides under
paragraph 72A(1)(b) it is not in the public interest.
258. New subsection 72F(2) clarifies that if the FWC decides under new section 72A(1)(b)
that an amalgamation is not in the public interest at any time before the FWC approves the
submission of the amalgamation to ballot, the FWC must not approve a ballot to be held on
the question of amalgamation despite any other provision of Part 2 of Chapter 3.
Subdivision B - Amalgamation taking effect
259. Item 7 also inserts the new title 'Subdivision B - Amalgamation taking effect' before
section 73.
Item 8 - Subsection 73(1)
Item 9 - Subsection 73(2)
260. Items 8 and 9 are consequential amendments to the amendments in this Schedule
providing for a public interest test for amalgamations. They amend subsections 73(1) and (2)
to reflect the fact the two kinds of decisions can be made by the FWC under new section 72A.
Item 10 - Paragraph 73(2)(c)
261. Item 10 repeals and substitutes paragraph 73(2)(c) to provide that the FWC is to be
satisfied that there are no proceedings of the kind mentioned in new subsection 73(2A),
inserted by item 12, pending against any of the existing organisations concerned in the
amalgamation, before fixing an amalgamation day.
Item 11 - At the end of subsection 73(2)
262. Item 11 inserts a new note at the end of subsection 73(2) to clarify that,
notwithstanding subsection 73(1), an amalgamation does not take effect if the FWC decides
that it is not in the public interest.
Item 12 - After subsection 73(2)
263. Item 12 inserts new subsection 73(2A) to define the kinds of proceedings relevant to
new paragraph 73(2)(c). These are:
criminal proceedings in relation to a contravention of the Act, the FW Act or any
other law of the Commonwealth (new subparagraph 73(2A)(a)(i));
criminal proceedings in relation to a breach of an order made under the Act, the FW
Act or any other law of the Commonwealth (new subparagraph 73(2A)(a)(ii)); and
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Schedule 4 - Amendments relating to a public interest test for amalgamations
civil proceedings for a contravention of a provision mentioned in a subparagraph of
paragraph (b) of the definition of 'designated finding' in new subsection 9C(1)
inserted by item 2 of Schedule 1 to this Bill.
264. The amendments made by item 12 are required to clarify the scope of pending
proceedings against organisations which the FWC is satisfied of in determining whether to fix
an amalgamation day.
265. Existing paragraph 73(2)(c) is not internally consistent because it incorrectly suggests
that proceedings for breaches of modern awards or enterprise agreements can be the subject of
criminal proceedings. This reflects earlier law under which a breach of an award could
amount to a criminal offence, but is no longer the case. However, the contravention of an
FWC order may be an offence (s 675 of the FW Act).
266. New subsection 73(2A) will correct this and make clear which pending proceedings
are relevant to the FWC's consideration of whether to fix an amalgamation day. These are:
criminal proceedings for contravention of the Act, the FW Act or any other
Commonwealth law or a breach of an order made under the Act, the FW Act or any
other Commonwealth law (new paragraph 73(2A(a)); and
civil proceedings for contravention of a provision mentioned in subparagraph (b) of
the definition of 'designated finding' in new subsection 9C(1) inserted by item 2 of
Schedule 1 to this Bill.
Item 13 - Application of amendments
267. Item 13 clarifies that the FWC must consider whether an amalgamation is in the public
interest for all proposed amalgamations, if, on the commencement day of this item, an
amalgamation day has not been fixed under section 73, regardless of whether the application
was made under subsections 43 or 44 of the Act before the commencement day of this item.
268. Item 13 also provides that a reference in the Act to a compliance record event includes
an event that occurred before this item commences.
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Schedule 5 - Minor and technical amendments
SCHEDULE 5 - MINOR AND TECHNICAL AMENDMENTS
269. Schedule 5 makes minor and technical amendments to the Act.
Fair Work (Registered Organisations) Act 2009
Item 1 - Section 6 (the definition of Australian Accounting Standards)
270. This item updates the definition of 'Australian Accounting Standards' on the basis that
the accounting bodies no longer have responsibility for setting accounting standards.
271. The ability for the Regulations to modify the standards is not new and is adapted from
the previous provision and is consistent with section 253.
Item 2 - Section 6 (the definition of Australian Auditing Standards)
272. This item updates the definition of 'Australian Auditing Standards' on the basis that
the accounting bodies no longer have responsibility for setting auditing standards.
273. The ability for the Regulations to modify the standards is not new and is adapted from
the previous provision and consistent with section 253.
Item 3 - Section 6 (paragraph (d) of the definition of authorised official)
274. This item updates paragraph (d) of the definition of 'authorised official' to refer to the
Australian Building and Construction Commissioner. This amendment reflects the passage of
the Building and Construction Industry (Improving Productivity) Act 2016.
Item 4 - Subdivision BB of Division 4 of Part 2 of Chapter 5 (heading)
275. This item repeals the redundant heading 'Subdivision BB of Division 4 of Part 2 of
Chapter 5'.
Item 5 - Subsection 329FA(1) (note)
276. This item replaces the note to subsection 329FA(1) to update the reference to the
Legislative Instruments Act 2003 to the Legislation Act 2003 following the passage of the Acts
and Instruments (Framework Reform) Act 2015.
Item 6 - Subparagraph 337A(1)(b)(iii)
277. This item omits the reference to 'subsection 15(1) of the Building and Construction
Industry (Improving Productivity) Act 2016', in relation to the Australian Building and
Construction Commissioner, to ensure consistent terminology across the Act.
Item 7 - Subparagraph 337A(1)(b)(iiia)
278. This item omits the reference to 'subsection 15(2) of the Building and Construction
Industry (Improving Productivity) Act 2016', in relation to a Deputy Australian Building and
Construction Commissioner, following the passage of the Building and Construction Industry
(Improving Productivity) Act 2016'.
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Schedule 5 - Minor and technical amendments
Item 8 - Paragraph 337BB(4)(d)
279. This item updates paragraph 337BB(4)(d) in relation to persons who may apply for a
civil remedy for protected disclosure reprisal action to refer to the Australian Building and
Construction Commissioner. This amendment reflects the passage of the Building and
Construction Industry (Improving Productivity) Act 2016.
Item 9 - Subsection 337C(1)
280. This item corrects the reference to subsection 337A(4) in subsection 337C(1) with a
reference to subsection 337A(3), being the provision by which disclosures to lawyers qualify
for protection under the protected disclosure provisions.
Item 10 - Paragraph 343A(2)(b)
Item 11 - Paragraph 343A(3)(aa)
281. These amendments remove the references to section 154C, relating to approval of
financial training, in the lists of the General Manager's delegable functions, following the
repeal of section 154C by the Amendment Act.
Item 12 - Subsection 343B(2A)
282. This amendment adds the Commissioner's functions or powers in relation to financial
training to those functions or powers delegable to a senior executive employee or acting
senior executive employee who is a member of the staff assisting the Commissioner.
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Schedule 6 - Functions of the Commissioner
SCHEDULE 6 - FUNCTIONS OF THE COMMISSIONER
Item 1 - Section 329AB
283. This item amends section 329AB so that the section now contains subsections. This
amendment is necessary for the purposes of item 2, which adds a new subsection to the end of
existing section 329AB.
Item 2 - At the end of section 329AB
284. This item amends existing section 329AB of the Act (Functions of the Commissioner)
to insert a new subsection 329AB(2). New subsection 329AB(2) provides that in carrying out
the function of promoting the efficient management of registered organisations and high
standards of accountability of registered organisations and their office holders to their
members, the Commissioner must give priority to matters that raise serious or systemic
concerns. This will mean that in the exercise of this function, the Commissioner will have a
comparatively lesser focus on trivial or otherwise minor matters.
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