Workplace law experts weigh in on CFMEU chaos

While the Australian Council of Trade Unions secretary Sally McManus said she has “absolutely” no knowledge of organised crime, she told ABC’s 7.30 that she was aware of unrelated rumours regarding particular members of the CFMEU. That followed reports in the Nine newspapers Victorian Premier Jacinta Allan and Prime Minister Anthony Albanese were sent comprehensive evidence that CFMEU officials had threatened and banned particular firms from state and federal infrastructure projects.

Labor’s federal governing body has voted to suspend the construction branch of the CFMEU from the New South Wales, Victorian, South Australian, and Tasmanian branches of the party “until further notice.”

Under the suspension, the ALP will not accept any affiliation fees or donations for any branch of the Labor party from the suspended branches, nor can those branches of the CFMEU participate in party processes. If branches other than the Victorian branch of the CFMEU are also placed into administration, the executive “will consider extending the suspension of affiliation to other branches.” The CFMEU donated more than $1.9 million to Labor ahead of the last election, up 230 per cent ahead of the previous campaign. Of all the union money donated to Labor in 2021-22, one-third came from the CFMEU.

There have been renewed calls for federal and state governments to suspend affiliations with unions and to indefinitely ban political donations, at least from the CFMEU. According to Allan, she had written to police and the Independent Broad-based Anti-corruption Commission (IBAC) on 16th July requesting an investigation of organised crime within the CFMEU Victorian branch. The branch was placed into administration according to the Fair Work (Registered Organisations) Act 2009 (Cth) section 32 following the allegations emailed to both Albanese and Allan from an Indigenous labour-hire firm. The same firm had sent documents evidencing CFMEU bullying and banning of firms in 2022. The national leadership of the CFMEU has already appointed an administrator – from an independent law firm – to run the Victorian Branch, while its officials are investigated.

On 13 July, high-profile trade union figure John Setka resigned as secretary of the Victorian branch of the CFMEU after 12 years, five years after quitting the Labor Party under pressure from Albanese in 2019 following Setka’s inflammatory comments about domestic violence campaigner Rosie Batty, which he later denied.

Federal parliament recently passed new laws to break up the CFMEU, which would have allowed the manufacturing division to leave the broader union. Allan has flagged that further laws are being introduced to restrict bikie activity within unions.

NSW premier, Chris Minns, has asked for the CFMEU affiliation with the state Labor party to be immediately suspended and donations and fees to be stopped after further allegations have arisen about union leaders, including a video published by Nine newspapers that allegedly captured the NSW union boss Darren Greenfield being passed a $5000 cash bundle in a suspected kickback deal.

Greenfield, the state’s union secretary, has been charged over the issue and is defending the case, which is before the courts.

NSW MP Damien Tudehope, when acting as the state’s Opposition Leader, called for a royal commission into the CFMEU.

James Mattson, Partner at Bartier Perry, is an expert in workplace law. He counters, “We’ve already had Royal Commissions into the building industry and the appalling behaviour going on in the sector is nothing new, especially to industry participants. So, it would not be worth the time and expense to find out what everyone already knows. What we are seeing now is almost like history repeating.”

“Given the construction sector makes up around 10 per cent of the Australian economy, and the problems that have emerged are well known, there is a strong case for a dedicated body that can investigate and deal with corruption and unlawful conduct,” he says.

“You need a structure where businesses can confidentially and confidently blow the whistle on inappropriate conduct and not fear this will cost them work or indeed their business and livelihoods of their staff.”

Trouble going back over a decade

While there have been calls for deregistration of the union, the impact this would have on union members regarding their negotiation powers on wages and safety conditions has to be weighed in proportion to the benefit to the industry.

Minns told media there was “no room for criminality in the construction sector” and claimed he would take action against anyone acting criminally within the CFMEU. He also claimed the NSW Labor party was not taking donations from the union other than affiliation fees.

The Royal Commission into Trade Union Governance and Corruption was established on 13 March 2014 by the former Governor-General Quentin Bryce AC CVO.

The Commissioner, Dyson Heydon, provided his Final Report to the Governor-General on 28 December 2015, and it was tabled in the Australian Parliament on 30 December 2015. It revealed widespread misconduct that had taken place in every polity in Australia except for the Northern Territory.

Heydon’s report recommended the re-establishment of the Australian Building and Construction Commission (ABCC), which Turnbull implemented in late 2016, along with harsher penalties for illegal strikes and pickets. However, in 2022, Albanese abolished the ABCC and the specialist regulator for trade unions, the Registered Organisations Commission (ROC), transferring its functions to the Fair Work Commission (FWC). Under the Fair Work (Registered Organisations) Act 2009 (Cth), the CFMEU can be deregistered.

Anthony Forsyth is Distinguished Professor in the Graduate School of Business and Law at RMIT University.  He says the ABCC and the ROC had “mixed effectiveness”, but were ultimately an ideological response that imposed limitations and penalties upon unions that went beyond the scope of addressing corruption.

“The general manager of the Fair Work Commission, who is the one who has responsibility for registered organisations, is looking into what powers he may need to exercise here,” Forsyth says,

“But, because a lot of the conduct we’re talking about in relation to the CFMEU is criminal in nature, a lot of that is not within the jurisdiction of the Fair Work Commission. The current concerns are partly about how the union is being run, but it is primarily a matter for the police and anti-corruption bodies like IBAC in Victoria.”

Minister for Employment and Workplace Relations of Australia Tony Burke has asked the FWC to make an application to the Federal Court to put relevant CFMEU branches into administration.

“If those branches are put into administration, then an external person – likely a retired judge – will go in there to run the union until it’s in a state where it can be handed back to elected officials,” Forsyth says.

“Of the various options under existing laws, it’s the best one. It worked with the HSU over a decade ago and that union is running well now and is free of corruption, as far as I know. The CFMEU is a much bigger and harder one because of nature of personnel and criminality.

“Putting aside criminality, the culture of the CFMEU over a fairly long period of time has been very confrontational and aggressive, and that’s had a positive in the sense of that’ s how it has been able to win very good wages and conditions for members and to ensure safety in the industry, which is one of the most dangerous worksites and industries there is.

“Since the Howard government, and the introduction of the ABCC, on-and-off for twenty years we’ve had specialist regulation of the construction industry, so it has been singled out for additional scrutiny and penalties.

“None of that excuses what has now happened, because it’s inexcusable, but I do think it helps to understand a culture that has developed of what we could describe as lawlessness.”

But he believes that deregistration “would be quite chaotic.”

“For members, awards and agreements would continue to remain in place. So, people’s wages and conditions wouldn’t be threatened, but the arrangements around enforcement of awards – so if you’re underpaid or if there’s some other breach – you would no longer have the ability of the union to bring an action to support you because only registered organisations can do that,” he says.

“The union would no longer have right of entry onto building sites so workers would lose that form of representation. There is a significant impact on the members because in a sense you’re putting the union outside the law as it exists now. The union doesn’t disappear because it’s deregistered. It would continue to exist but in a different legal form.”

“Fit and proper person” test necessary

Forsyth says a system used in labour hire company licensing could work well in terms of appointing officials within the CFMEU.

“Part of the test is whether the people running the company are fit and proper – free of past criminal convictions for certain types of offences, not having any past involvement in workplace law breaches or a history of failed companies. It would be a modification of that approach,” he says.

“We already have provisions in the Registered Organisations Act that enable union officials to be disqualified from office if they have recent past convictions for fraud related offenses, drug offenses, anything relating to violence, or damage to property. Rather than saying that’s the basis on which you can get rid of an official, that might need to form part of the test of whether you can be elected as an official.”

Forsyth recalls that the HSU was under administration for six months. He says, “I would expect the initial appointment of an administrator for the CFMEU would be for around 12 months, given the extent and nature and size of the union.”