‘Dysfunctional’ structure leads to 86 breaches of the RO Act

Case Name

Registered Organisations Commissioner v Communications, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia [2020] FCA 96 external-icon.png

What were the issues?

An organisation was found to have had a dysfunctional organisational structure which contributed to contraventions of the Fair Work (Registered Organisations) Act 2009 (the RO Act) relating to the failure to keep accurate records of offices and office holders, and failures to notify the regulator about changes to this information. 

Although the organisation subsequently put systems in place to ensure it achieved higher levels of compliance, it was penalised $445,000 for its widespread contraventions over a considerable period of time.

What happened?

The Court found that the CEPU contravened the RO Act between March 2015 and May 2017: 

  • on four occasions by failing to keep accurate lists of its offices and office holders; and 
  • on 82 occasions by failing to lodge notifications of changes of offices and office holders within 35 days, including not notifying the changes at all on nine occasions.  

The Court found that the contraventions were widespread across all three of the CEPU’s Divisions, across six states and one territory and extended over a considerable period of time. On five instances the notifications were more than 100 days late and in nine instances there was no notification of changes made at all prior to the proceedings. 

This was despite the regulators placing information on their websites about what was required to be provided, as well as sending ongoing reminders and warnings to the CEPU, its divisions and branches. 

What can organisations learn from this?

Organisations with complex structures must take greater steps to ensure there are appropriate governance systems for accurate record keeping and compliance with regulatory obligations by their divisions and branches. 

Organisations must keep up-to-date lists of offices and office holders and notify the regulator within 35 days of all changes to these lists. This is important so that members of organisations, the public and the regulator can at any given time identify the offices and office holders in an organisation.

Organisations are encouraged to self-report contraventions of the RO Act and address the reasons for non-compliance as the failure to do so may result in higher penalties.

What did the judge say?

Justice Flick said at [13] that:

Although ss 230 and 233 may properly be described as “record keeping provisions”, those provisions impose important and “significant” obligations upon a registered organisation.

The judge said at [56]-[60] that the obligation to lodge with the ROC changes to the records included changes that the branch did not have the power to make. He said at [57] any alternative construction would:

have the potential to defeat or at least frustrate a presumed legislative intent that … the Commissioner was to be the repository of changes in fact made to offices or office and for those records to be publically available to those who seek to make inquiries as to what are the offices … and who are the persons who hold such positions…

In relation to the complex structure of the CEPU, operating as it was essentially as three separate unions comprising each of its divisions, the judge found at [97]: 

…the very fact of the Union having what can be described as a “complex structure” should have alerted it to the necessity to take greater steps than it obviously did in the past to ensure compliance with record keeping and reporting obligations…

He noted that the CEPU had self-reported many of the contraventions and had taken steps to implement changes to its reporting processes to make it more effective. However he rejected an argument that the imposition of a penalty may deter organisations from self-reporting and found at [118] that:

Those organisations who may be found to have contravened provisions of the Registered Organisations Act and which do not seek to address the reasons for non-compliance in the same manner as that pursued by the [CEPU] in this case may warrant the imposition of greater penalties.

What was the outcome and the penalty?

The CEPU admitted all but four of the contraventions prior to trial but argued that ‘either no or a very low pecuniary penalty should be imposed’. The ROC submitted that ‘a penalty at the lower end of the mid-range was warranted’. 

The Court took into consideration that the CEPU did not admit the contraventions as early as it could and waited more than a year before putting in place its system of compliance. However the Court credited the CEPU and its National Secretary for the reforms and changes ultimately put in place to ensure its reporting was more effective. 

The total penalty was $445,000.

Court reference

NSD 802 of 2018

 

Disclaimer
This information is of a general nature only and is not legal advice. The case summaries are designed to assist in gaining an understanding of the relevant provisions of the legislation and the work of the Registered Organisations Commission.