22 June 2018
The Registered Organisations Commissioner has welcomed today’s decision in the Federal Court because it highlights the obligations on office-bearers of every union and employer association to act with due care and diligence and for the benefit of their members in relation to their organisation’s finances.
In today’s judgment, Bromwich J imposed civil penalties on Mr Michael Mijatov, former Secretary of the International Division of the Flight Attendants Association of Australia (FAAA) for contraventions of the Fair Work (Registered Organisations) Act 2009 (the RO Act) in the sum of $2,000, for breaches of s.285 (duty to act with care and diligence) arising from the approval of a back-paid ‘salary adjustment’ to himself (to which he was not entitled), as well as the failure to prepare budgets for the Divisional Council to consider (in breach of the FAAA’s own rules) over 7 financial reporting years.
In his judgment at paragraph 46, Bromwich J noted that ‘Financial management obligations and contraventions must be taken seriously and be seen to be taken seriously’.
The Court also noted, at paragraph 53, that ‘General deterrence is of particular importance when it comes to … officials obtaining payments for themselves, especially when entitlement is not clear cut’. And further that ‘the maximum penalties have since increased, such that the same conduct, even with the same mitigation, would today result in a higher penalty’. The maximum penalty for these contraventions at the time they were committed was $2,200. The maximum is now 100 penalty units (i.e. $21,000) per contravention.
The ROC considered this an important action because compliance by office-bearers with their financial management obligations and in meeting their duty to act diligently is an essential part of ensuring that registered organisations act in the interests of their members.