The duties of officers

Officers of registered organisations must meet certain standards of good financial governance when performing their duties under the Fair Work (Registered Organisations) Act 2009 (the RO Act). In certain circumstances, some of the obligations also apply to employees. The Commission monitors practices to ensure they comply with the RO Act.

In this module you’ll learn about the statutory duties of officers and the consequences for breaching them.

		Officers’ duties The general duties of officers under the RO Act apply to all officers of registered organisations with financial management duties. The duties of officers include: the duty to exercise care and diligence the duty to act in good faith and for a proper purpose the obligation not to misuse your position and information. Officers must also disclose material personal interests, and there are restrictions on participating in decision-making where there is a conflict of interest. You’ll learn about the disclosure requirements of officers in our disclosures module. A failure to comply with the general duties can result in significant civil penalties (a fine) being imposed by the Federal Court. A breach that involves recklessness or intentional dishonesty can also be a criminal offence. Read our duties of officers guidance note for an overview of the duties.
		Care and diligence Officers must exercise their powers and discharge their duties with the level of care and diligence that a reasonable person would exercise if they were an officer holding the same position. This includes: acting with care to minimise risk or damage being properly informed before making a decision. The reasonable judgement rule protects an officer who makes a decision to take (or not take) action if they: make the decision in good faith for a proper purpose do not have a conflict of interest inform themselves before making the decision rationally believe that it’s in the best interests of the organisation. Read a summary of a case where the Court found an officer breached their duty of care and diligence (ROC v ANMF).
		Good faith and a proper purpose Officers must exercise their powers and discharge their duties in good faith in the best interests of their organisation, and for a proper purpose. An officer may be in breach of these duties if they: engage in conduct they know is not in the best interests of their organisation and for a proper purpose act for a purpose that they know, or ought to have known, was an improper use of power. Read a summary of a case where the Court found an officer breached their duty of good faith and a proper purpose (General Manager of the Fair Work Commission v Thomson).
		Misuse of position and information Officers and employees who exercise financial management duties hold positions of trust and are able to access information about the registered organisation when performing their role. These officers and employees of registered organisations must not improperly use their position or information they are able to access to: gain an advantage for themselves or someone else cause detriment to the registered organisation or to someone else. These duties may be breached if an officer or employee: gives themself or someone else an advantage or special favour they were not entitled to uses information obtained in their role to make a personal gain (an advantage for themselves) or cause detriment to the organisation or to another person.
		Officer financial training Financial training helps officers to better understand their duties under the RO Act. All officers with financial management duties must complete approved financial training within six months of taking office, unless they have an exemption. Read our fact sheet to find out when an officer must complete financial training.
		Your turn! Practice what you’ve learnt Question 1: Relying on others Scenario Ishan is an officer of a registered organisation and sits on the committee of management. As a member of the committee of management, he exercises powers to approve financial transactions, investment activities and financial reports. Ishan has had a busy week and has not had time to read the organisation’s annual financial report, which is being presented to a committee of management meeting for approval before it is provided to members. Ishan relies on the other members of the committee to identify errors. Question: Has Ishan acted appropriately? What duties are relevant to Ishan’s conduct? Ishan has not acted appropriately. As an officer, Ishan must exercise care and diligence, and act in good faith. He must also make proper enquiries. Ishan should not rely on other officers on the committee of management to identify any issues and errors. He should have informed himself by reading the report so that he has a sufficient understanding and a rational basis for approving the report. It is important to remember that officers deciding matters collectively can still be individually in breach of their duties. Question 2: Creative accounting Scenario Klaus is the Secretary of a registered organisation. He is responsible for overseeing the finances and membership register. Throughout the year the organisation receives funds from its training activities. Klaus instructs that some of the funds should be recorded in the organisation’s account management system as membership revenue to cover the fees of unfinancial members. These members are then treated as having paid their fees. Question: Has Klaus acted appropriately? What duties are relevant to his conduct? As an officer Klaus had an obligation to act in good faith and in what he believes to be in the best interests of the organisation. He has not acted in good faith. It is not in the best interests of the organisation to falsify financial records to increase member numbers. This will also impact the accuracy of the financial statements. It’s also not in the organisation’s best interests to expose it to a civil penalty for failing to keep a true and accurate membership record. Read our summary of a case where the Court found an officer had breached their duties for similar conduct (ROC v AWU & Melhem).