Corrupting benefits

The Fair Work Amendment (Corrupting Benefits) Act 2017 (the Amendment Act) made changes to the Fair Work Act 2009 (the Act). The changes were in response to recommendations of the Royal Commission into Trade Union Governance and Corruption. They relate to corrupting benefits and add new disclosure rules which apply during enterprise bargaining.

• It is an offence to give, receive or solicit a corrupting benefit.
• It is an offence for employers to give, and unions to receive or solicit illegitimate cash or in kind payments.
• Employers and registered organisations that are bargaining representatives for a proposed enterprise agreement are required to disclose certain financial benefits that they, or a person or body reasonably connected with them, may derive from the proposed agreement. Employees must have access to the disclosure document before they vote on the proposed agreement.

For a comprehensive understanding of the changes please refer to the relevant sections of the Act.

Giving, receiving or soliciting a corrupting benefit

Giving a corrupting benefit (section 536D(1))

A person must not dishonestly provide, cause the provision of, offer to provide, or cause an offer to provide a benefit to another person with the intention of influencing an officer or employee of a registered organisation.

Receiving or soliciting a corrupting benefit (section 536D(2))

A person must not dishonestly request, receive, obtain or agree to receive or obtain a benefit from another person:

• with the intention that the receipt, or expectation of receipt, of the benefit will influence an officer or employee of a registered organisation
• with the intention that the provider believes that the receipt, or expectation of receipt, of the benefit will influence an officer or employee of a registered organisation.

What penalties apply?

An individual who gives, receives or solicits a corrupting benefit may be imprisoned for a period of up to 10 years and/or may be fined a maximum of 5,000 penalty units. A body corporate may be fined a maximum of 25,000 penalty units. 

What is a ‘benefit’?

Benefit is given a wide meaning in the Act and includes any advantage and is not limited to property (see section 536D(7)). 

What is ‘influence’?

The intention to influence an officer or employee involves an intention to influence them:

• in the performance of their duties or functions as an officer or employee
• in the exercise of their powers or performance of their functions under the Act or the Fair Work (Registered Organisations) Act 2009 (the RO Act)
• to give an advantage of any kind which would not be legitimately due to the person, their spouse or an associated entity of the person.

However, section 536D(3) states that the intention to influence does not need to:

• be in relation to a particular officer or employee of an organisation
• be in relation to an officer or employee using their powers or functions, or performing their duties in a particular manner or giving a particular advantage to a particular person
• result in a person actually being influenced. 

Giving, receiving or soliciting cash and in kind payments

Sections 536F and 536G create offences relating to cash and in kind payments.

If an employer (or their spouse or an associated entity) employs a person whose industrial interests a union is entitled to represent, it is an offence for:

• the employer to offer or provide a cash or in kind payment to the union (or its prohibited beneficiaries)
• the employer to cause a cash or in kind payment to be provided or offered to the union (or its prohibited beneficiaries)
• the union, or an officer or employee of the union to request, receive, or agree to receive a cash or in kind payment from the employer.

This does not include legitimate payments.

What penalties apply?

An individual who offers, gives, receives or solicits a cash and in kind payment may be imprisoned for up to 2 years and/or may be fined a maximum of 500 penalty units. A body corporate may be fined a maximum of 2500 penalty units.

What is a cash or in kind payment?

A cash or in kind payment is a benefit that is in cash, any other money form, or goods or services.

What is a legitimate payment?

A legitimate payment may include any of the following, provided that the payment does not fall within the meaning of a corrupting benefit in section 536D:

• membership fees of an organisation deducted from the wages of employees who have agreed to become a member in writing
• benefits provided and used for the sole or dominant purpose of benefitting the employer’s employees, or former employees in relation to their former employment
• gifts or contributions to a deductible gift recipient
• benefits of nominal value for travel or hospitality during consultation, negotiation or bargaining
• token gifts or event invitations of nominal value given in accordance with common courteous practice among employers and organisations
• payments made at market value for goods and services supplied to an employer in the ordinary course of an organisation’s business
• payments made under or in accordance with a law of the Commonwealth, a state or a territory
• benefits provided in settlement of a genuine legal dispute or in accordance with an order, judgment or award of a court, tribunal or the Commission.

Who is a ‘prohibited beneficiary’ of a union?

Prohibited beneficiaries include:

• an entity controlled by the union
• the union’s officers or employees
• an officer or employee’s spouse or controlled entity,
• a person or entity to whom the union or other prohibited beneficiary directs the employer to provide a cash or in kind payment to.

Disclosure Requirements

Sections 179 and 179A require employers and registered organisations that are bargaining representatives for a proposed enterprise agreement to disclose certain financial benefits (disclosable benefits) that they or parties closely connected to them may derive under the terms of the proposed agreement. Employees must have access to the disclosure document before they vote on the proposed agreement.

What penalties apply?

Failure to comply with disclosure requirements may give rise to a fine of up to 60 penalty units for a person and 300 penalty units for a body corporate. However, a contravention of the disclosure requirements will not preclude the approval of an enterprise agreement by the Commission.

What is a disclosable benefit for an organisation?

A disclosable benefit for an organisation is:

• a financial benefit, that will be (or could reasonably be expected to be) 
  • received as a direct or indirect consequence of one or more terms of the proposed agreement
  • received by the organisation or a related party of the organisation
• but does not include a financial benefit that is:
  • payable to an individual as an employee (covered by the agreement)
  • payment of a fee for membership of the organisation.

What is a disclosable benefit for an employer?

A disclosable benefit for an employer is:

• a financial benefit, that will be (or could reasonably be expected to be)
  • received as a direct or indirect consequence of one or more terms of the proposed agreement,
  • received by the employer or an associated entity of the employer
• but does not include a financial benefit that is received in the ordinary course of business.

Disclosure document

Organisations and employers with a disclosable benefit must prepare a disclosure document as prescribed by schedule 2.1A of the Fair Work Regulations 2009. The disclosure document can be accessed from the Federal Register of Legislation External link (opens in new window).

The disclosure document must include:

• the beneficial terms of the proposed agreement
• the nature and the amount of each benefit
• the name of each beneficiary
• the name of the person providing the benefit.

The organisation and employer must not knowingly or recklessly make a false or misleading representation in a disclosure document.

Provision of an organisation’s disclosure document

An organisation must provide the disclosure document to each employer covered by the proposed agreement no later than the end of the fourth day of the access period.

The employer must then take all reasonable steps to ensure that, as soon as practicable, the relevant employees are either given a copy of the disclosure document or have access to a copy throughout the remainder of the access period.

Provision of an employer’s disclosure document

The employer must take reasonable steps to ensure that the employees covered by the proposed agreement are either given a copy of the disclosure document or have access to a copy of the document no later than the end of the fourth day of the access period.

What is the 'access period'?

The access period is the seven-day period immediately before voting for the agreement commences.