Posted on 09 Aug. 2017
Can you smell what the ROC is cooking?
By Slater and Gordon
As of 2 May 2017, the Fair Work (Registered Organisations) Amendment Act 2016 (Cth) (ROC Act) is now in effect. It amends the Fair Work (Registered Organisations) Act 2009 (Cth) (Reg Orgs Act) to provide for the establishment of the Registered Organisations Commission (ROC), a new regulator with sweeping coercive powers to police the internal governance of unions. The ROC Act also introduces new financial disclosure requirements and new and increased civil penalties and criminal offences for governance breaches, including for taking action against union whistleblowers.
Below are some lowlights.
The single largest change brought about by the ROC Act is the establishment of the ROC.
The ROC now has jurisdiction over:
- annual reporting
- financial reporting and statements of loans, grants and donations
- inquiries and investigations into breaches of the Reg Orgs Act
- governance training
- bringing civil penalty proceedings, and referring criminal proceedings to the relevant authority
- access to records
- providing education, assistance and advice to promote management, accountability, and compliance
The ROC Commissioner has taken over the vast majority — but not all — of the functions and powers previously conferred on the FWC’s General Manager.
Coercive powers of the ROC
The ROC, much like the ABCC, has coercive powers to investigate breaches of the Reg Orgs Act and to gather information for the purposes of such investigations. These include powers to:
- Require the production of information, documents or records — the General Manager previously had this power
- Require a person to attend to be questioned on oath by an investigator — the General Manager previously had this power
- Require a person to give “reasonable assistance in connection with the investigation”— new power
- Apply for a warrant to seize documents and use seized documents for the purposes of proceedings — new power
- Compel the provision of information about documents where documents are not produced, including where the documents may be found, who last had possession, custody or control of the documents, and where that person may be found — new power
- Compel a person to identify property of the union and to explain how the union has kept account of that property — new power
The pre-existing disqualification process under the Reg Orgs Act by which individuals could be disqualified from holding or standing for office in a union on the basis that they had committed a “prescribed offence” has been retained. The definition of “prescribed offence” has been broadened slightly to include several of the new criminal offences created by the ROC Act:
- acting in bad faith or for an improper purpose (which applies to union officials)
- misuse of position (which applies to union officials and employees)
- misuse of information (which applies to current and former union officials and employees)
- taking a “reprisal” against a whistleblower
In addition to the “prescribed offences” regime, the Federal Court now has very broad powers to make orders disqualifying a person from holding office in a union for an “appropriate period” where the person is found to have contravened a civil penalty provision.
The Reg Orgs Act now contains 98 civil penalty provisions. Some of the most significant for practical purposes are those contained in ss 297–303. The effect of these sections — which apply retrospectively under s 303A — is that a contravention of an order of the FWC or the Federal Court made under the Reg Orgs Act that applies to a union, or a union official, employee or member is punishable as a civil penalty.
New disclosure requirements
Many of the underlying disclosure obligations are similar to the previous disclosure requirements.
Some differences include:
- The requirement to disclose material personal interests now only applies to officials whose duties relate to the financial management of the union or branch, rather than all officials
- The Reg Orgs Act now specifies that disclosure of material personal interests must be made to the committee of management of the organisation or branch
- The personal interests of relatives are now no longer required to be disclosed
- Standing disclosures of material personal interests now cease to be effective if there is a change in the composition of the body to which the disclosure was made
- Failure to record a disclosure of a material personal interest in the minutes of the meeting of the body to which the disclosure is made is now punishable as a civil penalty
- Officers with a material personal interest in a case are now required to absent themselves from deliberations that relate to that interest unless there is a resolution allowing them to be present
- The remuneration (including remuneration for board membership and from related parties as well as the union or branch, and remuneration in kind as well as in cash) of the top 5 highest paid officers of each branch now must be disclosed (rather than the top 2 only)
- There is now a specific mechanism by which a union or branch must inform its members about material personal interests disclosed to the committee of management. The committee of management must provide details of the disclosures within 28 days if requested to do so in writing by a member. Failure to do so is punishable as a civil penalty against the union or branch. The maximum penalty is $18,000 for an individual and $90,000 for a union.
New and increased criminal offences
The ROC Act creates a number of new criminal offences. The most significant of these (in terms of penalties) are:
- Failure to exercise powers or discharge duties in good faith in the best interests of the union and for a proper purpose — $360,000 fine or imprisonment for 5 years (or both) — this offence largely reflects a pre-existing civil penalty provision, which also continues in force
- Misuse of position to gain an advantage (including for someone else) or cause a detriment to the union — $360,000 fine or imprisonment for five years (or both) — this offence largely reflects a pre-existing civil penalty provision, which also continues in force
- Misuse of information to gain an advantage (including for someone else) or cause a detriment to the union — $360,000 fine or imprisonment for five years (or both) — this offence largely reflects a pre-existing civil penalty provision, which also continues in force
- Hindering or obstructing a person exercising the powers of the ROC or executing an ROC warrant — $18,000 fine or imprisonment for two years (or both)
- Failing to provide reasonable facilities and assistance to a person executing an ROC warrant — $4,500 fine or imprisonment for six months (or both)
- Failing to provide reasonable assistance to the ROC Commissioner as specified in an investigation notice — $18,000 fine or imprisonment for two years (or both)
- Failing to answer a question that an investigator requires to be answered in the course of an attendance before the ROC to answer questions —$18,000 fine or imprisonment for two years (or both)
- Failing to explain a case that the ROC requires to be explained about either the content of a document produced to the ROC under compulsion, or any case that relates to such a document — $18,000 fine or imprisonment for two years (or both)
- Where the ROC issues a notice requiring the production of particular documents, and those documents are not produced, failing to explain (when required by the ROC) where the documents may be found, and who last had possession, custody or control of the documents and where that person may be found — $18,000 fine or imprisonment for two years (or both)
- Failing to comply with a requirement by the ROC to identify property of an organisation and explain how the organisation has kept account of that property — $18,000 fine or imprisonment for two years (or both)
- Concealing documents relevant to an ROC investigation — $36,000 fine or imprisonment for five years (or both)
- Failure by a lawyer to provide the required written notice when legal professional privilege is claimed over documents required to be produced to the ROC — $1,800 fine or imprisonment for six months (or both)
New and increased civil penalties
Along with this litany of new and more severe criminal offences, the ROC Act substantially increases many of the civil penalties that were already part of the Reg Orgs Act. Previously the maximum civil penalty that could be imposed for any contravention of the Reg Orgs Act was $10,800 for an individual and $54,000 for a union, although many of the maximum penalties were less. These maximum penalties have been increased almost across the board. In most cases the maximum penalty has been increased to $18,000 for an individual and $90,000 for a union.
In addition, the ROC Act stipulates that a number of pre-existing, new or amended civil penalties relating to audits will attract a higher penalty still: $36,000 for an individual and $180,000 for a union or other body corporate.
Finally, the ROC Act provides that “serious contraventions” of certain civil penalty provisions (some new and some pre-existing) will attract a penalty of $216,000 for an individual and $1.08 million for a union. A “serious contravention” is defined as one that:
- materially prejudices the interests of the organisation or branch, or the members of either;
- materially prejudices the ability of the organisation or branch to pay its creditors; or
- is serious. (Seriously!)
The introduction of ROC and the legislation supporting it represents a significant attack on the rights of unions to self-govern. The imposition of a dedicated regulator focussed squarely on Unions is attempt to ensure that Unions are focussed on compliance with costly and unwieldly regulation at the expense of organising and representing members.
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