Proceedings against the AWU and Mr Melhem
10 September 2019
In May 2018, the Registered Organisations Commissioner commenced proceedings in the Federal Court against the Australian Workers’ Union (AWU) and its former Victorian Branch Secretary, Mr Cesar Melhem, alleging multiple contraventions of the Fair Work (Registered Organisations) Act 2009 (Cth) (RO Act).
The allegations relate to the AWU's failure to keep an accurate register of members during the period from 2008 to 2013, when Mr Melhem was the Victorian Branch Secretary.
The Commissioner sought declarations and penalties against Mr Melhem for multiple alleged contraventions of his officer's duties under the RO Act on the basis that the conduct engaged in by Mr Melhem with various employers or associations artificially inflated the membership of the AWU and obtained for the AWU Victorian Branch payments that were not legitimately due to it.
The trial was listed for a hearing from 11 to 26 September 2019.
Admissions by Mr Melhem
The Commissioner and Mr Melhem have reached an agreement under which Mr Melhem admits he engaged in eight contraventions of the RO Act:
- three contraventions of s 286 of the RO Act. Section 286 requires an officer of an organisation or a branch to exercise his or her powers and discharge his or her duties in good faith in what he or she believes to be the best interests of the organisation; and
- five contraventions of s 285 of the RO Act. Section 285 requires an officer of an organisation or a branch to exercise his or her powers and discharge his or her duties with the degree of care and diligence that a reasonable person would exercise if he or she were in the officer's position.
The trial has been vacated. The Court will list a hearing to determine the appropriate penalty for the admitted contraventions of the RO Act.
Admissions by AWU
In August 2019, the Commissioner and the AWU reached an agreement under which the AWU admitted contraventions of the RO Act relating to the addition of some 851 non-members to its Register, and the failure to remove more than 1,000 unfinancial members from its Register.
The Commissioner is seeking the imposition of civil penalties on the AWU. A penalty hearing will also be listed by the Court to determine the appropriate penalty for the contraventions of the RO Act admitted by the AWU.
As part of its final report, the Trade Union Royal Commission (TURC) made a number of referrals to the General Manager of the Fair Work Commission (FWC) relating to potentially serious contraventions of the RO Act by the AWU and its former Victorian Branch Secretary Mr Cesar Melhem (the AWU referrals).
The AWU referrals were based on a series of case studies involving a scheme of conduct in which large sums of money were paid by employers to the Victorian Branch of the AWU between 2007 and 2013. The TURC found that in exchange for cash payments, the Victorian Branch of the AWU agreed not to seek better terms and conditions for certain of its members and that the arrangements involved both the false inflation of membership numbers and the falsification of documents.
The TURC found, amongst other things, that the AWU registered workers as members who did not know they had been registered. The TURC also found that while it would not otherwise have been difficult for the AWU to obtain better terms and conditions for the workers, all involved in the arrangements benefited except the workers that the AWU was supposed to be representing.
On 2 November 2016, the FWC commenced an independent investigation in relation to the AWU referrals. The investigation was transferred to the Registered Organisations Commissioner upon its establishment on 1 May 2017.
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