Fair Work Amendment (Corrupting Benefits) Act 2017

The Fair Work Amendment (Corrupting Benefits) Act 2017 is an amending Act. It changed the Fair Work Act 2009 and did not create a separate standalone compliance code. That is the starting point for reading it properly. If your business is checking obligations, you need to look at the Fair Work Act as amended, not treat this Act as a self-contained workplace regime.

The amendments introduced two main sets of rules. Schedule 1 inserted Part 3-7 into the Fair Work Act 2009. That Part deals with corrupting benefits. Division 2 creates criminal offences for giving, receiving or soliciting corrupting benefits connected with organisations. Division 3 separately prohibits certain cash or in kind payments between national system employers and employee organisations or connected beneficiaries unless a listed exception applies.

Schedule 2 inserted disclosure rules into the enterprise agreement framework. These rules require certain organisation bargaining representatives and certain employers to disclose financial benefits that may arise directly or indirectly from the operation of one or more terms of a proposed enterprise agreement. The disclosure rules only apply to proposed enterprise agreements that are not greenfields agreements.

The Act received Royal Assent on 16 August 2017. Sections 1 to 3 and anything else not covered by the commencement table started on Royal Assent. Schedules 1 and 2 commenced on 11 September 2017.

The corrupting benefits rules are especially relevant to national system employers, employee organisations, and officers or employees of those organisations. In practical terms, most private sector employers are national system employers, so many Australian businesses will be within scope. The legislation also specifically refers to employee organisations and to connected people or entities described as prohibited beneficiaries.

The employer-side cash or in kind payment offence applies where the employer is a national system employer other than an employee organisation, the payment is made to an employee organisation or prohibited beneficiary, and the employer or a connected person employs someone who is, or is entitled to be, a member of that organisation and whose industrial interests the organisation is entitled to represent.

The disclosure rules apply in bargaining for a proposed enterprise agreement that is not a greenfields agreement. An organisation bargaining representative may have disclosure obligations if it is not itself an employer that will be covered by the agreement and a financial benefit may flow to it or certain related persons because of the agreement terms. An employer that will be covered by the proposed agreement may also have disclosure obligations if it or an associated entity may receive a relevant financial benefit because of the agreement terms.

Businesses outside the national workplace relations system may not be caught by every part of these amendments. The Act also says that, for the cash or in kind payment provision, sections 30D and 30N do not apply to extend the meaning of national system employer in that section. If your structure is unusual, or you operate in the public sector or through mixed entities, check coverage carefully before relying on this page.

Part 3-7 Division 2 creates criminal offences for giving, receiving or soliciting a corrupting benefit. These offences are not limited to cash. The Act says benefit includes any advantage and is not limited to property.

A person commits an offence if they dishonestly provide, cause, offer or promise a benefit to another person with the intention of influencing a registered organisations officer or employee in the performance of their duties or functions, in the exercise of powers or functions under the Fair Work Act or the Registered Organisations Act, or to give an advantage in connection with relevant affairs that would not be legitimately due.

A person also commits an offence if they dishonestly request, receive, obtain, or agree to receive or obtain a benefit with the intention that, or the intention that the provider believes that, the receipt or expected receipt of the benefit will influence a registered organisations officer or employee in those ways.

The Act expressly defines dishonesty for this Part. Conduct must be dishonest according to the standards of ordinary people, and known by the defendant to be dishonest according to those standards. The legislation also says the question of dishonesty is for the trier of fact. That means these offences are not triggered by every payment or benefit. The dishonesty element is central to the criminal corrupting benefit offences.

Importantly, the prosecution does not need to prove that anyone was actually influenced. The law says it is not necessary that any person actually be influenced. It also says the intention does not need to relate to a particular officer or employee, or to a particular way they would act. When working out whether an advantage would not be legitimately due, the legislation says to disregard whether it might be customary, necessary or required in the situation, the value of the advantage, and any official tolerance of it.

The penalties are serious. For these offences, an individual faces imprisonment for 10 years or 5,000 penalty units, or both. A body corporate faces 25,000 penalty units.

Part 3-7 Division 3 separately prohibits certain cash or in kind payments. This is different from the dishonesty-based corrupting benefit offences. Here, the focus is on a national system employer giving a cash or in kind payment to an employee organisation or a prohibited beneficiary in the required circumstances.

A cash or in kind payment includes a benefit in cash or any other money form, goods or services, or anything prescribed by regulations. A prohibited beneficiary can include an entity controlled by the organisation, an officer or employee of the organisation, a spouse of such an officer or employee, an entity they control, a person or entity nominated by the organisation or another prohibited beneficiary to receive the payment, or another prescribed connected person.

The employer-side offence applies where the employer is a national system employer other than an employee organisation, the payment is made or offered to an employee organisation or prohibited beneficiary, and the employer or a connected person employs someone who is, or is entitled to be, a member of the organisation and whose industrial interests the organisation is entitled to represent.

There is also a matching offence for an employee organisation, or its officer or employee, to request, receive or obtain such a payment from a national system employer in the corresponding circumstances.

The penalties for these payment offences are lower than the corrupting benefit offences but still significant. An individual faces imprisonment for 2 years or 500 penalty units, or both. A body corporate faces 2,500 penalty units.

The Act recognises that some dealings with employee organisations are legitimate. Subsection 536F(3) lists payments and benefits that are carved out of the employer-side offence, and the receiving offence in section 536G does not apply to those same payments.

These exceptions include payroll deductions for union membership fees where the employee has agreed in writing to become a member and the deduction is for the membership fee payable by that employee. They also include a benefit provided and used for the sole or dominant purpose of benefiting the employer's employees, or former employees in relation to their former employment.

Other exceptions include a deductible gift or contribution under section 30-15 of the Income Tax Assessment Act 1997 used in accordance with the law, nominal value travel or hospitality benefits during consultation, negotiation or bargaining, and nominal value token gifts, event invitations or similar benefits given in accordance with common courteous practice among employers and organisations. The legislation says nominal value means no more than 2 penalty units.

Payments made at no more than market value for goods or services supplied to the defendant in the ordinary course of the organisation's business are also excepted. So are payments made under Commonwealth, State or Territory law, and benefits provided in accordance with an order, judgment or award of a court or tribunal, or in settlement of a matter before the Fair Work Commission or a genuine legal dispute. Regulations may also prescribe non-corrupting benefits or circumstances.

These exceptions are practical but narrow. A business should not assume a payment is safe just because it seems routine. The legislation places an evidential burden on the defendant in relation to the listed exceptions. That means documentation matters. If you rely on an exception, keep records showing exactly why it applies.

Schedule 2 inserted disclosure obligations into the enterprise agreement approval process. These rules apply only to a proposed enterprise agreement that is not a greenfields agreement.

An organisation that is a bargaining representative may need to give each employer that will be covered by the agreement a disclosure document if, as a direct or indirect consequence of one or more terms of the agreement, the organisation or certain related persons will, or can reasonably be expected to, receive or obtain a financial benefit. The document must be given to the employers no later than the end of the fourth day of the access period for the agreement.

The document must itemise the beneficial terms, describe the nature and, as far as reasonably practicable, the amount of each disclosable benefit for each beneficiary, and name each beneficiary. The organisation must not knowingly or recklessly make a false or misleading representation in the document.

Employers may also have their own disclosure obligation. If an employer will be covered by a proposed enterprise agreement and, as a direct or indirect consequence of one or more terms of the agreement, the employer or certain associated entities will, or can reasonably be expected to, receive or obtain a financial benefit, the employer must prepare a document with similar content requirements.

The Act then requires employee access steps. If the employer receives an organisation's disclosure document by the end of the fourth day of the access period, the employer must take all reasonable steps to ensure relevant employees are given a copy as soon as practicable, or are given access to a copy as soon as practicable and continue to have access throughout the remainder of the access period. If the employer is required to prepare its own disclosure document, it must take all reasonable steps to ensure relevant employees are given a copy by the end of the fourth day of the access period, or are given access by then and continue to have access throughout the remainder of the access period. The employer must not knowingly or recklessly make a false or misleading representation in the document employees receive or can access.

The Act also clarifies that failure to comply with these disclosure provisions does not itself amount to reasonable grounds for believing the agreement was not genuinely agreed to, and is not otherwise relevant to Fair Work Commission approval of the agreement. Even so, the disclosure provisions are civil remedy provisions and should be treated as real compliance obligations.

For an organisation bargaining representative, a section 179 disclosable benefit is any financial benefit other than a financial benefit payable to an individual as an employee covered by the agreement, payment of a membership fee for membership of an organisation, or another prescribed excluded benefit.

For an employer, a section 179A disclosable benefit is any financial benefit other than a financial benefit received or obtained in the ordinary course of the employer's business, or another prescribed excluded benefit.

The trigger is broad. The benefit can arise directly or indirectly as a consequence of one or more terms of the proposed agreement. That means businesses should look beyond obvious cash payments and consider whether agreement terms create some other financial advantage for the employer, an associated entity, an organisation, or a related party.

Because the document must describe the amount as far as reasonably practicable, businesses should make a genuine attempt to quantify the benefit where possible and explain the basis used. If the amount cannot be stated precisely, the document should still identify the beneficial terms, the nature of the benefit and the beneficiary.

The corrupting benefits part does not exclude or limit State or Territory laws that can operate concurrently. The legislation says this expressly. It also says concurrent operation can continue even if the State or Territory law has different penalties, different fault elements, or different defences or exceptions.

For businesses, the practical point is simple. Compliance with the Commonwealth provisions is not necessarily the end of the analysis. Conduct involving benefits, payments or inducements may also need to be checked against other laws that apply in the State or Territory where the conduct occurs.

The Act was assented to on 16 August 2017. Sections 1 to 3 and anything else not covered by the commencement table started on Royal Assent. Schedules 1 and 2 commenced on 11 September 2017.

The transitional rule for the disclosure amendments says they apply in relation to a proposed enterprise agreement where the access period under subsection 180(4) begins on or after commencement of that Part. Businesses looking at older bargaining conduct should check the timing of the access period before assuming the disclosure rules applied.

Businesses often assume these rules only target obvious bribery or large donations. The legislation is broader than that. A benefit can include any advantage, and a cash or in kind payment can include goods or services as well as money. That means ordinary commercial arrangements, hospitality, payroll deductions, bargaining side arrangements and settlement terms all need to be checked against the actual wording of the Act.

Another common mistake is to focus only on whether a payment seems harmless. For the Division 3 payment offences, the key question is not simply whether the payment feels routine. It is whether the statutory elements are met and, if so, whether a listed exception clearly applies. For the Division 2 corrupting benefit offences, the dishonesty element is critical, but businesses should still avoid informal arrangements that could later be characterised as intended to influence organisation officers or employees.

In bargaining, timing is also important. The disclosure rules are tied to the access period, including the end of the fourth day. If your business is preparing to put an agreement to employees, leave enough time to identify any direct or indirect financial benefits, prepare the required document, and make sure employees are given copies or access in time.

This page is based on the Federal Register of Legislation version of the Fair Work Amendment (Corrupting Benefits) Act 2017 and the amendments it made to the Fair Work Act 2009. If you are dealing with a live bargaining process, a proposed payment, or possible criminal exposure, check the current legislation and obtain legal advice on the specific facts.