Trade unions Royal Commission commences in Sydney - Employee Rights/ Labour Relations

A preliminary hearing of the Royal Commission into Trade Union Governance and Corruption (Commission) was held on 9 April 2014, with formal statements made by the Commissioner The Hon John Dyson Heydon AC QC and counsel assisting the Commission, Mr Jeremy Stoljar SC.

The terms of reference issued by the Governor General were formally read, and Mr Stoljar noted that the Governor of Queensland had issued letters patent to the Commission with identical terms of reference to those issued by the Governor General, on 24 March 2014.

In addressing the Terms of Reference, the Commissioner acknowledged that although expressed broadly, they rest on assumptions that are not hostile to trade unions. Specifically, the inquiries the Commission will make are not premised on the basis that trade unions ought to be abolished or their roles curtailed or diminished. To this end the Commission recognises the role of trade unions in protecting and advancing the interests of members. Consequently, the Commission considers it worth inquiring into whether the roles of trade unions are performed lawfully and/or whether the roles can be performed better or more lawfully.

FOCUS OF THE INQUIRY

Mr Stoljar SC stated that inquiry will focus on determining allegations that trade unions establish and operate slush funds. The enormity of this inquiry was acknowledged, given the legal structure of slush funds could be infinitely various including taking the form of an organisation, an unincorporated association or simply a bank account.

Where these allegations prove correct, the Commission will further inquire into the transparency of slush funds, including where the funds are originating from, what the funds are being used for and whether there is any wrongdoing in operating such funds. Mr Stoljar SC noted an examination of slush funds in this regard would necessarily involve extensive accounting analysis of trade unions, slush funds and any entities that pay money into the funds.

It was recognised that the results of the inquiry may reveal divergences in the practices of trade unions. To understand why these differences exist, the Commission will also receive evidence on structures, rules or understandings that are in place to prevent improper or unlawful conduct.

The Commission will also consider whether the legal framework that applies to union officials is appropriate, having regard to comparable legal obligations applying to officers in corporate and other roles.

OFFENCES RELATING TO EVIDENCE AND DOCIMENTATION

The Commissioner outlined the laws against obstructing the inquiry, in particular that witnesses are not to testify falsely, be prevented from testifying, be bribed or injured and that documents are not to be tampered with or destroyed. Relevantly, the Commissioner also noted that it is an offence for an employer to disadvantage or dismiss an employee who gives evidence as part of the inquiry. Significant penalties will be imposed on persons or entities associated with such conduct and depending on the conduct the Commissioner noted penalties up to a $20,000 fine and 5 years prison apply. The Commissioner also noted the power to draw inferences against persons and entities involved in such conduct.

FUTURE MATTERS

Mr Stoljar SC noted that a number of summonses to produce documents have already been issued and the recipients are in contact with the Royal Commission in relation to the scope and production of documents.

With a reporting date of 31 December 2014, the Commission informed that deadlines for complying with summonses will be treated strictly.

Further information including hearing dates will be published on the Commission's website.

BRIEF THOUGHTS:

Organisations that expect to have an involvement in the Commission should give consideration to the following matters:

the Commission's investigations will involve detailed accounting analysis of slush funds and entities that paid money to slush funds. We would expect the Commission's lawyers to review union slush fund transactions, and then issue summonses to any organisations that have paid money (directly or indirectly) to union slush funds. It is a priority for organisations to understand the extent of any exposure and how that is reflected in the organisation's financial and other records. The corporate governance aspects of any illegal payments will be serious. Expert forensic assistance may be necessary, and boards should consider independent legal and accounting assistance.
organisations will need to have a plan in place in relation to employee disclosures to both the organisation and to the Commission regarding issues that the Commission is inquiring into.
the task of responding to summonses from the Royal Commission on short notice may be difficult, particularly if the relevant matters occurred some years ago. Steps should be taken to understand how and where relevant information will be stored (both electronically and in hard copy) within the organisation. It will also be crucial to put in place measures that prevent relevant information from unauthorised access, and from deletion or tampering. The Commissioner explicitly noted the penalties that apply under the Royal Commissions Act, and the destruction of evidence may also be an offence under other Federal and State laws.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.


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