REPLACEMENT EXPLANATORY STATEMENT

Issued by the authority of the Minister for Employment and Workplace Relations

Fair Work (Registered Organisations) Act 2009

Fair Work (Registered Organisations) (CFMEU Construction and General Division Administration) Determination 2024

AUTHORITY

Subsection 323B(1) of the Fair Work (Registered Organisations) Act 2009 (the FWRO Act) provides that the Minister may, in writing, determine a scheme for the administration of the Construction, Forestry and Maritime Employees Union (CFMEU) Construction and General Division (Division) and its branches, if the Minister is satisfied that, having regard to Parliament’s intention in enacting the FWRO Act, it is in the public interest for the Division and its branches to be placed under administration.

The Attorney-General, having regard to the requirements under the FWRO Act, was satisfied that it is in the public interest for the Division and its branches to be placed under administration.

A scheme determined under subsection 323B(1) of the FWRO Act is a legislative instrument within the meaning of the Legislation Act 2003 (Legislation Act) (subsection 323B(2) of the FWRO Act).

The Fair Work (Registered Organisations) (CFMEU Construction and General Division Administration) Determination 2024 (Instrument) establishes the scheme as set out in Annexures A, B and C.

PURPOSE AND OPERATION

The purpose of the Instrument is to establish a scheme for the administration of the Division and its branches. The scheme provides for the matters set out in subsection 323B(3), and other appropriate matters pursuant to subsection 323B(4A) of the FWRO Act.

CONSULTATION

Before making the Instrument, the Attorney-General considered the general obligation to undertake appropriate consultation pursuant to section 17 of the Legislation Act. Given the urgent need to determine whether to place the Division and its branches into administration, being satisfied it is in the public interest to do so, it was not reasonably practicable to undertake consultation. This urgency is reflected in subsection 323B(4) of the FWRO Act, which provides that the Minister is not required to observe any requirements of the natural justice hearing rule in making a decision under section 323B.

NON-DISALLOWABLE INSTRUMENT

In accordance with subsection 323B(2) of the FWRO Act, section 42 (disallowance) of the Legislation Act does not apply to the Instrument.

COMMENCEMENT

The Instrument commenced immediately after the Instrument was registered.

ADDENDUM

This part of the replacement explanatory statement includes additional text responding to matters raised by the Standing Committee for the Scrutiny of Delegated Legislation:

• in Monitor 12 of 2024 dated 9 October 2024, at paragraphs 1.41–1.91;
• in Monitor 13 of 2024 dated 22 November 2024, at paragraphs 1.60–1.114; and
• in Monitor 1 of 2025 dated 5 February 2025, at paragraphs 1.68–1.118.

These Monitors are published on the Committee’s website: https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Scrutiny_of_Delegated_Legislation.

This means the addendum may reference events that occurred after commencement of the Instrument.

The text of the original correspondence has been re-formatted with minor changes of an editorial nature (for example to maintain editorial consistency), to remove footnotes, outdated information and unnecessary duplication.

In this replacement explanatory statement, the following abbreviations are used:

1.        The following information was first provided in response to Monitor 12 of 2024. In some cases, the information has been supplemented by further responses provided to additional questions raised in subsequent Monitors, as indicated below.

Retrospective effect

Relevant provisions

1.       Clause 12 of the Instrument relates to disciplinary action taken by the administrator.
    
2.        Subclause 12(a) empowers the administrator to suspend, remove, expel or disqualify a member or an office holder of the Division or one of its branches, if the administrator is satisfied they are of bad character or for misconduct.
    
3.        Subclause 12(c) provides the administrator’s powers under subclause 12(a) may be exercised in relation to conduct that occurred before or after the commencement of the Instrument. In this way, the Instrument allows the administrator to consider conduct retrospectively.

1.        Section 323K(3) of the FWRO Act requires the administrator to promote compliance by the Division with Commonwealth, state and territory laws, including workplace laws.

1.        Section 323K(4) of the FWRO Act provides the administrator must ensure officers and employees of the CFMEU have complied with their obligations under that Act, and to the extent officers or employees have not complied with their obligations (including those that applied before the commencement of Part 2A of the FWRO Act), the administrator must, as far as reasonably practicable, ensure they are held accountable for not having done so.

Advice

1.       Subclause 12(c) of the Instrument is intended to operate with retrospective effect in the manner described above, and this is necessary and appropriate so the administrator can exercise their functions in accordance with the FWRO Act.

1.        In order to promote compliance with Australian laws, and ensure officers and employees are held accountable if they have not done complied with the FWRO Act in the past, it is appropriate that the Instrument empower the administrator to take action in relation to past conduct.

1.        Affected people were, and are still, required to comply with Commonwealth, state and territory laws. The Instrument only provides for how the administrator is able to promote compliance with laws and ensure others are held to account for past noncompliance of the FWRO Act. This is analogous to a new manager in the Division stepping into a new role, becoming aware of misconduct that occurred before came into their new role, and taking steps to address that misconduct.

1.    In terms of safeguards and minimising disadvantage:

1.        The administrator must be satisfied they are acting in the best interests of members of the Division when they exercise powers and perform functions under the FWRO Act and the Instrument, including under this section (FWRO Act, subsection 323K(5)).

1.        Before the powers set out in subclause 12(a) can be exercised, the administrator must be satisfied the office holder is of bad character or has engaged in misconduct.

1.        If the administrator acts under subclause 12(a), they may determine the process for taking action however that process must afford procedural fairness (subclause 12(d)).

Conferral of discretionary powers

Relevant provisions

1.   Section 323K of the FWRO Act sets out the functions of the administrator. The Instrument confers powers on the administrator to enable them to carry out their functions and responsibilities, including to:

1.        alter the Divisional Rules, including to make new Divisional Rules or delete Divisional Rules, in accordance with section 323H of the FWRO Act (subclause 4(2));
2.        exercise the powers and duties of the offices and deliberative bodies of the Division (subclauses 6(1)(a)-(c));
3.        appoint Divisional trustees and terminate or appoint an auditor, including a Special Purpose Auditor (subclauses 6(1)(d)-(e); clause 13);
4.        suspend officers or delegates and terminate employees in accordance with the scheme’s disciplinary procedures (subclauses 6(1)(f)-(g));
5.        refer misconduct to bodies established, or officeholders appointed, by or under any law of the Commonwealth, State or Territory, including law enforcement agencies, regulators or decision-makers (subclause 6(1)(h));
6.         commence and discontinue proceedings in the name of the CFMEU (subclause 6(1)(i));
7.        request the Minister to exercise their power to vary or revoke the scheme (subclause 6(1)(j));
8.        delegate powers, functions or duties under the Instrument or the FWRO Act (subclause 6(3));
9.         exercise all powers and functions afforded to any person who continues to hold office or employment person under the CFMEU rules, FWRO Act and scheme (subclause 7(1));
10.         employ or engage persons to assist in performing the administrator’s functions (subclause 8(1));
11.        undertake investigations into past and/or current practices of the Division (subclause 9(1)(a));
12.         make changes to the Divisional Rules the administrator considers necessary and appropriate to ensure the lawful and effective operation of the Division and encourage the democratic functioning and control of the Division (subclause 9(1)(b));
13.     establish and implement policies within the Division (subclause 9(1)(c));
14.        suspend, remove, expel or disqualify members or office holders, if satisfied they are of bad character (subclause 12(a));
15.        suspend or terminate the employment of any employee, or suspend or remove any delegate (subclause 12(b)); and
16.        arrange for the conduct of elections for office (subclause 14(1)).

Advice on factors and safeguards informing the exercise of these discretionary powers

1.   These powers are necessary to ensure the administrator can, from the commencement of the scheme and thereafter, assume effective control of the Division, redress governance issues and alleged misconduct, and ensure the Division is functioning lawfully and effectively.

1.    The following provisions of the FWRO Act inform the administrator’s exercise of discretionary powers:

1.        In performing functions and exercising powers, the administrator must be satisfied they are acting in the best interests of members of the Division and its branches (FWRO Act, paragraph 323K(5)(a)).

1.        In performing functions and exercising powers, the administrator must have regard to the lawful objects of the CFMEU as defined in its rules (FWRO Act, paragraph 323K(5)(b)).

1.        The administrator has the function of promoting compliance by the Division with the laws of the Commonwealth, the states and the territories (FWRO Act, subsection 323K(3)).

1.    The following provisions of the Instrument and FWRO Act are safeguards on the use of discretionary powers:

1.        The administrator is required to report regularly to the Minister about the operation of the administration, including the administrator’s activities, with the report to be tabled in Parliament (FWRO Act, section 323T).

1.        The General Manager of the FWC may conduct an investigation into whether the scheme is being effectively implemented (FWRO Act, paragraph 331(1)(e)).

1.        The General Manager of the FWC may terminate the appointment of the administrator if they are proven to be unable to perform their duties, including because of misbehaviour by the administrator (subclause 2(2)).

1.        The administrator is required to regularly report to the Minister about the operation of the administration, including the administrator’s activities, with the report to be tabled in Parliament (FWRO Act, section 323T).

1.    This advice was supplemented by responses provided to additional questions raised in Monitor 13 of 2024. The supplementary information is tabled at Attachment A to this Addendum. The discretionary powers listed above are included in column 1 of the table. Advice on the purpose and scope of these powers is in column 2. Advice on weighing factors before the exercise of these powers is in column 3.

Qualification and skills of the administrator

1.   The Attorney-General named in the Instrument, and the General Manager of the FWC subsequently appointed, Mark Irving KC as administrator (subclause 2(1)).

1.    Mr Irving KC has appropriate qualifications and skills, having been a barrister since 1997 and senior counsel since 2017. Mr Irving KC specialises in employment, industrial and anti-discrimination law and has worked for unions, their members, workers, employers, employer organisations and regulators. Mr Irving KC’s skills and experience mean he is appropriately placed to exercise the discretionary powers conferred by the Instrument and the FWRO Act. A biography for Mr Irving KC has been made available by the FWC and published on their website: https://www.fwc.gov.au/documents/reporting/mark-irving-kc-bio.pdf.

1.    If Mr Irving KC’s appointment as administrator ceases, the General Manager must appoint another person as administrator and must be satisfied the person is qualified for appointment, having regard to the person’s knowledge and experience (subclause 2(3)).

Delegation of administrative powers and functions

Relevant provisions

1.   Subclause 6(3) of the Instrument provides the administrator may delegate to a person any of the powers, functions or duties of the administrator under the Instrument or any powers or functions the administrator may exercise under the FWRO Act.

1.    Subclause 6(3) is included in the Instrument in accordance with paragraph 323B(3)(i) of the FWRO Act, which provides the Instrument must provide for the delegation by the administrator of the administrator’s functions or powers.

Advice

1.   Allowing the administrator to delegate powers and functions is necessary and appropriate to give practical effect to the administration.

1.    The Division and its branches are ordinarily run by various governing bodies and office holders, reflecting the breadth of the Division’s work and remit. To ensure the Division can continue operating, noting the administrator’s finite individual capacity, it is appropriate the administrator be able to delegate powers and functions to others.

1.    The requirement in the FWRO Act for the administrator to exercise their powers and functions in the best interests of the Division’s members, and the overarching obligation on the administrator to promote compliance with Australian laws, act as safeguards on the delegation of powers and functions. In practice, these obligations will inform the administrator’s consideration of whether a person is appropriately skilled and qualified to exercise delegated powers so that members’ best interests are served and compliance with the law promoted.

Privacy

Relevant provisions about information gathering and advice

1.   In addition to relevant provisions in the FWRO Act, the Instrument provides for the administrator to collect, use or disclose personal information in the following ways:

Advice on publication of office holders’ names and offices in Annexures B and C

1.    The publication of office holders’ names and offices in Annexures B and C was appropriate for several reasons.

1.    It provided certainty to CFMEU office holders and members, as well as building and construction industry participants and regulators, about which individuals have been removed from their offices, which has consequences under the FWRO Act and Fair Work Act. For example, individuals who were ‘removed persons’ under the Fair Work Act were no longer able to act as a bargaining representative without a certification from the FWC that they were a fit and proper person.

1.    The publication of this information in Annexures B and C also enabled the CFMEU to comply with its obligations as a registered organisation to record and notify the FWC of changes to office holders (FWRO Act, sections 230 and 233).

1.    Even with the list of removed officers being clear on the face of the Instrument, there was considerable confusion amongst stakeholders and misreporting in the immediate aftermath of the Instrument taking effect regarding which office holders were removed and who retained their office. If these names had not been published, it was expected that the risk of misinformation and inadvertent noncompliance with the law would have increased.

1.    Additionally, the publication of names and offices of individuals impacted by the administration of a registered organisation is not uncommon when administration has been sought in other circumstances, such as applications to the Federal Court under section 323 of the FWRO Act. For example, these details are set out in publicly available orders of the Federal Court appointing an administrator in Brown v Health Services Union [2012] FCA 644, and were also set out in the draft scheme contained in the application made by the General Manager of the FWC to the Federal Court on 2 August 2024 seeking orders to place the Division and some of its branches into administration.

1.    Further, the Commission publishes on its website the information organisations are required to lodge under sections 230 and 233 of the FWRO Act, including the names of office holders.

Safeguards

1.   The collection, use and disclosure of personal information by the administrator will be undertaken in accordance with safeguards on the administrator’s functions and powers in the FWRO Act and Instrument. In this regard, the administrator must:

1.        be satisfied they are acting in the best interests of members and have regard to the lawful objects of the CFMEU set out in its rules (see FWRO Act, subsection 323F(5)); and

1.        promote compliance by the Division with laws (including workplace laws) of the Commonwealth, states and territories and must ensure officers and employees of the CFMEU comply with the FWRO Act (FWRO Act, subsections 323F(3) and (4)).

1.    In relation to the Privacy Act, the Australian Privacy Principles (APPs) at Schedule 1 of that Act are expressed to apply to ‘APP entities’. Section 6 of the Privacy Act defines ‘APP entity’ as an agency or organisation. Section 6 of the Privacy Act defines ‘agency’ as a body not being an organisation registered under the FWRO Act or a branch of such an organisation. However, section 6C of the Privacy Act defines ‘organisation’ to include a body corporate. Under section 27 of the FWRO Act, the CFMEU, as an organisation for the purposes of that Act, is a body corporate. Nothing in the Instrument is expressed to displace the APPs or obligations imposed on APP entities set out in the Privacy Act.

1.    This advice was supplemented by responses provided to additional questions raised in Monitor 13 of 2024, regarding subclauses 6(1)(h), 9(1)(a), 9(1)(d) and clause 12 as follows.

Subclause 6(1)(h)

1.   Subclause 6(1)(h) of the scheme contemplates the administrator referring the conduct of current or former officers, officials, shop-stewards, delegates or employees (however described) to anybody established under a law of the Commonwealth, state or territory.

1.    The nature and scope of personal information that may be referred under this provision will change from case to case and depend on the nature of the referral. For example, a referral of conduct to, for example, the Fair Work Ombudsman for a suspected contravention of the Fair Work Act might include the individual’s name and contact information.

1.    Referring information about a suspected contravention of the law is an appropriate course of action if that information is uncovered, including because it is consistent with the statutory framework under which the administrator has been appointed. That framework requires, among other things, that the administrator promote compliance by the Division with the laws of the Commonwealth, the states and the territories (FWRO Act subsection 323K(3)), and ensure officers and employees of the CFMEU have complied with and continue to comply with their obligations under the FWRO Act, and to the extent that officers or employees have not complied with those obligations – as far as reasonably practicable, ensure they are held accountable for having not done so (FWRO Act subsection 323K(4)).

Subclause 9(1)(a)

1.    Subclause 9(1)(a) contemplates the administrator undertaking investigations into past and/or current practices of the Division and its branches. This subclause does not limit what such investigations may be about and who they may involve.

1.    The extent to which investigations involve collecting, using or disclosing personal information will change from case to case and depend on the nature of the investigation.

1.    It is possible this could include, for example, the collection and use of a person’s name and contact information, so that appropriate action can be taken if investigations lead to findings of misconduct or suspected unlawful behaviour.

1.    Fettering the types of personal information that may be collected by the administrator in the course of exercising power under this subclause would not be appropriate. Doing so would risk hindering the investigation of unlawful conduct and misconduct by and within the Division and may disincentivise people from coming forward with concerns, including under the whistleblower provisions of the FWRO Act as bolstered by section 323HA in the context of the administration.

Subclause 9(1)(d)

1.    Subclause 9(1)(d) contemplates the administrator maintaining a copy of the register of members of the CFMEU as it relates to the Division and its branches, to record any person joining or resigning from any branch and their financial status.

1.    Section 230 of the FWRO Act requires all organisations to keep (among other things) a register of members showing the name and postal address of each member and showing whether the member became a member under an agreement entered into under rules made under subsection 151(1) of that Act. In order to comply with the FWRO Act, maintaining a copy of the register of members will require the collection, use and/or disclosure of the personal information listed. Failing to do so risks noncompliance with section 230 of the FWRO Act, which attracts a civil penalty of up to 60 penalty units (currently valued at $19,800).

Clause 12

1.   Clause 12 relates to the administrator taking disciplinary action. The extent to which such action involves collecting, using or disclosing personal information will change from case to case and depend on the type of action being taken and the purpose for taking it.

1.    For instance, the administrator could receive a complaint from a building industry employer about the conduct of a Divisional official on a worksite. That complaint would likely include the official’s name, though the administrator is likely to have the official’s contact details already by virtue of having control of the affairs and property of the Division (including staff records) under section 323K of the FWRO Act.

1.    It is necessary and appropriate that the administrator have the capacity to collect, use and disclose personal information when taking disciplinary action in relation to those who engage in misconduct or unlawful behaviour within the Division (for example, using a person’s contact details to engage with them about disciplinary proceedings).

1.    Without this, disciplinary action may not be able to be taken at all, or taken effectively, and the administrator’s capacity to refer misconduct to law enforcement and regulatory bodies for investigation and appropriate enforcement action risks being curtailed. This would be inconsistent with the administrator’s duties to promote compliance with Australian laws and ensure those within the CFMEU who do not comply with their obligations under the FWRO Act are held accountable for having not done so. It would also risk hindering the investigation of unlawful conduct and misconduct by and within the Division, for which disciplinary action may need to be taken, and may disincentivise people from coming forward with concerns, including under the whistleblower provisions of the FWRO Act as bolstered by section 323HA in the context of the administration.

Procedural fairness

Relevant provisions

1.   The Instrument does not interfere with the principles of natural justice with respect to the exercise of the administrator’s functions and powers under the Instrument. Under the Instrument, the administrator may:
    

1.        suspend officers or delegates and terminate employees in accordance with the scheme’s disciplinary procedures at clause 12 (subclauses 6(1)(f)-(g));

1.        suspend, remove, expel or disqualify members or office holders, if satisfied they are of bad character (subclause 12(a));

1.        suspend or terminate the employment of any employee, or suspend or remove any delegate (subclause 12(b)).

1.    Subclause 12(d) provides the administrator must afford procedural fairness in exercising their powers to take action against members and officer holders under subclause 12(a).

1.    In relation to subclause 12(b) and the termination of employment of any employee, the Instrument is not expressed to displace considerations in, for instance, section 387 of the Fair Work Act about whether dismissal is harsh, unjust or unreasonable, which apply in unfair dismissal disputes in the FWC. Specifically, paragraphs 387(b) and (c) provide for considering whether the employee was notified of the reason for their dismissal and given an opportunity to respond. These considerations would apply in an unfair dismissal dispute where the employment of an employee of the Division is terminated by the administrator.

1.    For completeness, section 323B of the FWRO Act provides the Minister is not required to observe (but is not precluded from observing) any requirements of the natural justice hearing rule in making a decision under that section. This is confined to decisions of the Minister under that section of the Act and is not framed as extending to decisions of the administrator under the Instrument.

Availability of independent merits review

Rationale

1.    The FWRO Act and Instrument do not provide for independent merits review of decisions of the administrator made under the Instrument. This is necessary and appropriate to ensure the administrator can take swift action, through the exercise of their functions, to address the allegations of unlawful conduct within the Division which have been widely reported since July 2024. It is also broadly consistent with the underlying legal framework and contains other safeguards. Those functions include:

1.        promoting compliance by the Division with Commonwealth, State or Territory laws (FWRO Act, subsection 323K(3));

1.        ensuring officers and employees comply with their obligations in the FWRO Act and held accountable if they have not done so (FWRO Act, subsection 323K(4));

1.        establishing an internal complaints procedure and investigating, or referring to regulators or law enforcement agencies, complaints about members, delegates, officers or employees of the Division (FWRO Act, section 323HA; clause 11);

1.        referring the conduct of current or former officers, delegates or employees of the Division to regulators or law enforcement agencies (subclause 6(1)(h));

1.        establishing and implementing policies to ensure the Division operates lawfully and effectively (subclause 9(1)(c)(iii)); and

1.         suspending or removing officers for bad character or misconduct (clause 12).

1.    In order for the administrator to be able to effectively execute such functions and responsibilities, including to respond to the particular circumstances of the Division and address the governance and other issues alleged to have arisen within it, it is appropriate that procedural decisions made by the administrator are not frustrated or delayed.

1.    Further, the availability of merits review may significantly impede the capacity of the administrator to exercise the powers and duties of the officers and governing bodies of the Division, and each branch, under the rules (subclause 6(1)). This includes the management and control of the affairs Division, and each branch, on a day-to-day basis, in circumstances where the rules of the Division (which are certified by the General Manager of the FWC under the FWRO Act and govern the usual functioning of the Division) do not otherwise provide for independent merits review. In practice, this means before the administration, administrative decisions made within the Division were not the subject of independent merits review, and this has not changed upon the appointment of an administrator to make similar decisions.

1.    The absence of an independent merits review process with respect to decisions of the administrator made under the Instrument is also broadly consistent with the framework established under the Fair Work Act and FWRO Act, which do not expressly provide for merits review of decisions made under that legislation by tribunals such as the Administrative Review Tribunal. Relatedly, the Administrative Decisions (Judicial Review) Act 1977 (ADJR Act), which provides an avenue for statutory judicial rather than merits review, does not apply to decisions made under the Fair Work Act and the FWRO Act (ADJR Act, section 3 (definition of ‘decision to which this Act applies’) and Sch 1, paragraph (a)).

1.    However, to ensure openness and accountability of decisions made by the administrator, the FWRO Act and Instrument contain several oversight mechanisms to ensure the administrator is held accountable for decisions made and powers exercised, including under the existing regulatory regime established under the FWRO Act, where the General Manager of the FWC has regulatory oversight of registered organisations. These include:

1.        The administrator must report to the Minister regularly about the operation of the administration, including the administrator’s activities, with the report to be tabled in Parliament (FWRO Act, section 323T; Instrument subclause 10(1)).

1.        The General Manager of the FWC may conduct an investigation into whether the scheme is being effectively implemented (FWRO Act, paragraph 331(1)(e)) and, if the administrator is proven to be unable to perform their duties because of incapacity or misbehaviour, the General Manager may terminate the administrator’s appointment (Instrument subclause 2(2)).

1.        In performing functions and exercising powers, the administrator must be satisfied they are acting in the best interests of the members of the Division and its branches (FWRO Act, subsection 323K(5)).

1.    This advice was supplemented by a similar response provided to additional questions raised in Monitor 13 of 2024. Further advice and analysis was provided in relation to questions raised in Monitor 13 of 2024 as follows.

1.   Specific justification can be provided for excluding independent merits review for decisions made under the Instrument by reference to the criteria listed at Chapter 3 or 4 of the ARC’s Guide.

1.    Chapter 3 of the ARC’s Guide sets out two-types of decision that are unsuitable for merits review: ‘legislation-like decisions’ and ‘decisions that automatically follow from the happening of a set of circumstances’. Chapter 4 of the ARC’s Guide sets out factors that may justify excluding merits review.

1.    Several, but not all, types of decisions of the administrator under the Instrument align with, or share characteristics of, the factors in Chapter 4. For decisions under the Instrument that do not align with the factors in Chapter 4, alternative review mechanisms may apply. For example, the Fair Work Act provides mechanisms for disputing decisions made by the administrator relating to termination of employment (see protections against unfair dismissal (Part 3-2) and the general protections, including against adverse action (which can include termination of employment) (Part 3-1)).

Preliminary or procedural decisions and decisions which have limited impact

1.    The administrator’s functions include controlling and managing the property and affairs of the Division (FWRO Act, section 323K(1)). To facilitate this, the Instrument provides that the administrator may exercise the powers and duties of officers and governing bodies of the Division and its branches under the rules of the CFMEU and establish and implement policies to enable the Division to operate lawfully and effectively (subclauses 6(1)(a)-(c), 9(c)(ii)). The exercise of those functions and powers largely involves decisions of an administrative nature to ensure the day-to-day functioning of the Division and its branches, such as those directed towards managing payroll and staff, record-keeping and authorising routine payments to external suppliers.

1.    The availability of independent merits for such decisions of a minor administrative nature would be inappropriate as:

1.        it may unnecessarily frustrate or delay the administration of the Division with respect to procedural or administrative matters (see paragraph 4.4 of the ARC’s Guide); and

1.        the costs of providing independent merits review would be vastly disproportionate to their significance (see paragraphs 4.56 to 4.57 of the ARC’s Guide).

1.    However, to ensure appropriate regulatory oversight of registered organisations generally, the regime established under the FWRO Act provides the General Manager of the FWC with certain powers. These include, amongst other responsibilities, the power to conduct inquiries and investigations and registered organisations’ finances and financial administration, including the conduct of officials within those organisations. The General Manager also has the express power to investigate whether the scheme of administration established by the Instrument is being effectively implemented by the administrator.

Decisions of a law enforcement nature

1.    The administrator may undertake investigations into past practices of the Division and its branches and has the function of promoting compliance by the Division with the law (FWRO Act, subsection 323K(2A), (6); Instrument, subclause 9(1)(a)).

1.    Further, the administrator must establish a complaints procedure that allows for the making of complaints in respect of improper, unlawful or criminal conduct engaged in, or alleged to have been engaged in, by officers, employees, delegates or members of the CFMEU (FWRO Act, s 323H; Instrument. Clause 11). The administrator (or another complaint recipient authorised by the administrator) must use best endeavours to investigate a complaint under such a procedure in certain circumstances (FWRO Act, subsection 323HA(8)).

1.    The availability of independent merits review regarding the conduct of an investigation could jeopardise that investigation (see paragraph 4.31 of the ARC’s Guide). For example, the viability of an investigation into criminal or other unlawful behaviour could be undermined if every stage of such an investigation could be subject to merits review.

Decisions to institute proceedings

1.   A related function of the administrator includes ensuring compliance with the provisions of the FWRO Act by officers and employees of the Division and ensuring that those who have not complied are held to account (FWRO Act, subsection 323K(4)). In addition, the administrator has standing to bring civil penalty proceedings for a contravention of a specified civil penalty provision (FWRO Act, subsection 310(1A); Fair Work Act, subsection 539(2)) and has the power to commence and discontinue proceedings in the name of the CFMEU (Instrument, subclause 6(1)(i)).

1.    The ARC’s Guide recognises that decisions to institute proceedings should not be subject to independent merits review as a matter of principle (paragraph 4.8).

Decisions that do not align with the ARC’s Guide

1.    The absence of merits review for decisions that do not align with factors in Chapter 4 is addressed by transparency and accountability mechanisms in the FWRO Act and the Instrument. These include:
    

1.        reporting requirements on the administrator (FWRO Act, section 323T);

1.        powers for the General Manager of the FWC to investigate whether the scheme of administration is being effectively implemented (FWRO Act, section 331);

1.        powers for the General Manager of the FWC to terminate the administrator's appointment in certain circumstances (Instrument, subclause 2(2)); and

1.        a requirement that the administrator be satisfied they are acting in the best interests of the members of the CFMEU when performing functions and exercising powers as administrator (FWRO Act, section 323K).

1.    Further, while the absence of merits review by a body like the Administrative Review Tribunal aligns broadly with the Fair Work Act and FWRO Act, the FWC – separate independent tribunal – is conferred with a range of powers and functions to review the merits of employment decisions.

1.    The Instrument does not displace existing remedies under the Fair Work Act which may be available to employees of the Division. For example, protections against unfair dismissal provide the FWC must, when considering whether a dismissal was harsh, unjust or unreasonable, take into account factors such as whether the former employee was notified of that reason and given an opportunity to respond. The Instrument also does not prevent employees from accessing dispute resolution procedures provided for in any applicable industrial instrument, which may include the arbitration of disputes. These mechanisms enable the Commission, a court or another independent person (with respect a dispute under an enterprise agreement) to review, in this case, the actions of the administrator.

Significant matters in delegated legislation

Rationale

1.   A large volume of serious allegations were raised about people working in, and associated with, the Division engaging with organised crime and engaging in serious criminal and other unlawful behaviour, including corruption, intimidation, bribery, bullying, and threats to the safety of others. In order to deal with these allegations, it was necessary and appropriate that steps be taken to facilitate a decision being made as swiftly as possible about whether to place the Division and its branches under administration.

1.    Part 2A of the FWRO Act facilitated a decision about determining a scheme of administration, by allowing the Minister (or, on this occasion, the Attorney-General as authorised by the Minister) to make a determination if satisfied it is in the public interest to do so, having regard to the Parliament’s intention in enacting the FWRO Act. Given the Parliament has decided a scheme of administration may only be determined if the Minister is satisfied it is in the public interest, it is necessary and appropriate that the Minister, having weighed relevant public interest considerations and the factual circumstances of the Division, to also be empowered to determine the content of the scheme of administration.

1.    The Minister is empowered to determine the content of a scheme of administration after weighing public interest considerations, and is able to take those circumstance-specific considerations into account in deciding what is appropriate to include a scheme of administration. For instance, at the time these public interest considerations were weighed, real concerns existed about the governance of the Division and the allegations about serious unlawful activity engaged in by various officers, members and associates. Empowering the Minister to determine a scheme of administration to address these specific concerns, including by setting out how the administrator is permitted to take disciplinary action to address unlawful behaviour, was necessary and appropriate to ensure the scheme was fit for purpose and engaged with the specific circumstances of the Division at the time the decision was made.

1.    However, while it was necessary and appropriate to empower the Minister to make an engaged and circumstance-specific determination about the scheme of administration, the Parliament also legislated minimum content requirements in primary legislation, setting a clear baseline for what the scheme must include. These minimum content requirements are set out at subsection 323B(3) of the FWRO Act, and include, for example, declarations that certain offices are vacant, provisions for disciplinary action to be taken by the administrator, and giving reports to the Minister about the administration.

1.    The Revised Explanatory Memorandum to the Fair Work (Registered Organisations) Amendment (Administration) Act 2024, at paragraphs 29 to 31, provides justification for the Parliament’s decision about this delegation of power, including includes that the administration is time-limited to a maximum period of 5 years, is limited in scope (that is, the scheme only applies to the Division and its branches, not other Divisions of the CFMEU or other registered organisations), and the interests of members of the Division and the community more broadly are served by swift and decisive action to thoroughly investigate allegations of widespread criminal and other unlawful activity and, where such activity is detected, take steps to address it.

Parliamentary oversight

Rationale

1.   Indemnifying the administrator in the way contemplated in the Instrument serves several purposes. It is necessary and appropriate to ensure the administrator is not personally exposed to the risk and financial burden of defending litigation that may be commenced in large volumes or vexatiously by those impacted by the scheme, or by those seeking to frustrate the administration by occupying the administrator’s finite time and resources defending litigation rather than implementing the scheme and managing the Division in line with the Attorney General’s determination that it is in the public interest for a scheme of administration to be in place. The indemnification also seeks to deter individuals from engaging in deliberately disruptive behaviour, by commencing proceedings, where doing may have caused the administrator to incur personal expense and increase the risk of the scheme being undermined.

Scope of the indemnification

1.   Subclause 16(1) indemnifies the administrator regarding their exercise or non-exercise of functions, powers or duties under the Instrument and does not distinguish types of claims or proceedings falling into or out of the scope of the indemnity. However, this provision does not preclude a court from imposing criminal penalties such as imprisonment, if appropriate, upon the administrator in circumstances where they have engaged in conduct that would be punishable by a term of imprisonment.

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