2016-02-17
Senator RICE: I want to start with the court matters that have been commenced by the FWBC. I would like a complete list of all court matters commenced in which one or more individual employees have been named as respondents in those proceedings.
Mr Corney: As at 31 December 2015, there were five cases involving employees. I can provide the court references if you like. All of these are 'Director, Fair Work Building Industry Inspectorate', which is the legal name for the fair work building and construction entity. The first one is that entity against Campbell McCulloch and others, and that is an unlawful industrial action matter. The second one is the same entity against Scott Adams and others, which again is an unlawful industrial action matter. The third one is the same entity against Michael Huddy and others, and that is a coercion matter. The fourth one is the same entity against McDonald, CFMEU and others, and that is an unlawful industrial action matter. And the last one is the same entity against Mamdoudi and others, and that is an unlawful industrial action matter. Those are the five cases as at 31 December.
Senator RICE: How many individual employees are currently respondents to proceedings initiated by FWBC?
Mr Corney: I do not know that we have a total of the actual number. As I said, there are five individual matters. I will take it on notice to find out the actual numbers who are involved.
Senator RICE: Have you got some of the information there that you could share with us now?
Mr Corney: For the last one, the Mamdoudi matter, the original application was in respect of 22. The crown matter involved something in the order of 70. These numbers do move around, but they are of that sort of order.
Senator RICE: Could you take that on notice and also give us a breakdown of the current status of each matter involving individual employees.
Mr Corney: Certainly. I can give you an update in respect of those matters if that would be of assistance.
Senator RICE: That would be good.
Mr Corney: In the Campbell McCulloch matter a pre-trial conference has been listed and a five-day trial commencing in June 2016 has been set down. Obviously these things do move around because they are at the whim of the court. But June 16 is the five-day trial, and a pre-trial conference is yet to come. In the second matter, the matter of Adams, a liability decision was handed down in the middle of last year. That was subsequently appealed and the decision is yet to be concluded on that matter. The third one is the Huddy matter. The director's case has been closed on that and evidence is to continue. For the McDonald matter, a five-day trial has been listed for 27 June 2016, with a pre-trial conference to occur in June 2016. The last one, the Mamdoudi matter, has a requirement that defences are presently being filed and served with replies and a date is yet to be concluded. Again, that matter is well in progress. I trust that assists.
Senator RICE: Yes. What is the total amount of penalties that have been imposed so far on individual employees arising out of FWBC initiated court proceedings?
Mr Corney: In respect of the first six months of 2015-16, the court has issued penalties of $856,475 in respect of FWBC cases.
Mr Hadgkiss: Since 1 July, there has been $856,475 in penalties, 94 per cent of which is against the CFMEU. That represents a figure of $805,225 against the CFMEU and its officials.
Mr Corney: The senator's question was in respect of individual employees, and I will need to take that on notice.
Senator RICE: Thank you. What are the maximum penalties that can be imposed on individual employees in the proceedings that are currently underway?
Mr Corney: There is a range of penalties. In respect of the act, the penalty for individuals is $10,800, on index, and it is $54,000 in respect of the corporation or the union.
Senator RICE: So that is $10,800 for an individual and $54,000 for a union.
Mr Corney: On an index.
Senator RICE: And what is the total amount of penalties imposed so far this year on employees out of your court proceedings?
Mr Hadgkiss: We had the case of Baulderstone. I understand that the company was penalised and two of its HR managers were also penalised by the Federal Court. I will have to take that on notice. And there is one other company—
Senator RICE: You do not have that information there?
Mr Hadgkiss: Not to hand, no.
Senator RICE: Can you tell me what contraventions those penalties were imposed for?
Mr Hadgkiss: From memory it was coercion.
Senator RICE: How many employers are currently respondents to proceedings initiated by the FWBC?
Mr Corney: As of 31 December 2015 there were four employers before the courts. The matters are the legal entity against ADCO, which was a discrimination matter, and another one against the CFMEU and others, which also incorporates an employer, and Harris, which is an unlawful industrial action matter, principally. The third matter is a matter involving Devine Constructions, which is an adverse action matter. And the fourth one is the entity against Hutchison, which is an unlawful industrial action matter.
Senator RICE: Are the penalties imposed on Baulderstone that you have taken on notice of the same order of magnitude as the penalties that have been imposed on the 856,000?
Mr Corney: The advice we have just received is that the Baulderstone penalties were in the order of $3,500 for each manager, and there were two managers involved, and $25,000 against the company.
Senator RICE: So, $32,000 in total.
Mr Corney: Yes, that is correct.
Senator RICE: We have a situation whereby the FWBC seems to be refusing to deal with employer breaches relating to nonpayment of workers' wages and conditions, even though there remains a high volume of complaints coming to the FWBC about underpaid wages. I understand that your 2014-15 annual report shows that by far the highest number of all referrals to the FWBC to other agencies is made to the Fair Work Office. The report explains the referrals in this way:
- In the past, a high number of calls coming to the FWBC hotline relating to wages and entitlement matters resulted in an option being added to the FWBC hotline allowing a caller to be transferred directly to FWO if their call related specifically to wages and entitlements. The provision of this option reduces the amount of FWBC resources that are devoted to recording matters which are not of relevance to FWBC core business. Given that we have an entire category of complaints against employers who are allegedly underpaying their workers—it has been automatically hived off to the Fair Work Ombudsman—how is it that the director can make the claim in the last annual report that: The extent to which unions and employers are the subject of investigation or legal proceedings, reflects the extent to which complaints are received of alleged contraventions. And: FWBC acts impartially and does not single out any industry participant.
Mr Hadgkiss: That is correct, yes.
Senator RICE: But you have a whole lot of complaints against employers who are underpaying their wages that you are not—
Senator Cash: I think you need an explanation as to the position of the agency versus the position of the Fair Work Ombudsman. That is the appropriate body.
Mr Hadgkiss: And, with great respect, this question has been posed at numerous previous estimates hearings. The simple fact is that they are not complaints. Most of them are queries about wages entitlements and they are referred to the appropriate agency, which is the Fair Work Ombudsman.
Senator RICE: What proportion of them? Do you keep statistics as to what proportion of them are inquiries rather than complaints?
Mr Hadgkiss: No, there is an automatic referral when the 1-800 number is rung. If it is a wages and entitlements matter they are put through to the Fair Work Ombudsman hotline.
CHAIR: Which is the appropriate place for that—
Mr Hadgkiss: The appropriate agency, yes. It has the expertise that we do not.
Senator RICE: Nevertheless, there is a whole body of complaints that you are not tracking. So, in terms of saying that there are complaints—
Mr Hadgkiss: Well, they are not complaints; they are queries.
Senator RICE: No, but some of them are complaints.
Mr Hadgkiss: They could be.
Senator RICE: But you do not even know how many of them are complaints, because you just automatically hive them off.
CHAIR: Let's let Mr Hadgkiss—
Senator Cash: I think the evidence he has given is that it is not the responsibility of the Fair Work Building Commission to undertake that, and they refer it to the appropriate body. If the Fair Work Ombudsman was here, you could put all of these questions to the Fair Work Ombudsman.
Senator CAMERON: But that is not quite true, is it Minister? What has happened is that the Fair Work Building Commission has entered a memorandum of understanding with the Fair Work Ombudsman where Fair Work Building and Construction has determined that it is not a priority to look after workers' wages for the Fair Work Building Commission, or any breaches. That is what has happened, and they actually have obligations under the act that are not being carried out by this agency.
Senator Cash: I do not think that is what the evidence was.
CHAIR: Let's give Mr Hadgkiss an opportunity to respond to Senator Cameron.
Mr Hadgkiss: There was, from Senator Cameron—
CHAIR: What is the number?
Mr Hadgkiss: From 2013-14, it was EM0031_14, whereby Senator proposed: FWBC - sham contracting and wage and entitlement investigations - consistency with Fair Work (Building Industry) Act 2012 How is the transfer of investigation of sham contracting and other wages and entitlements investigations to the Fair Work Ombudsman consistent with the functions of the Director set out in section 10 of the Fair Work (Building Industry) Act 2012? The answer provided by the agency was: The Fair Work Ombudsman has powers to deal with wages and entitlements investigations under the Fair Work Act 2009.
Senator RICE: In relation to compliance by employers with the Building Code 2013, which is a legally binding instrument, the last FWBC annual report says: As no audit activity was conducted in 2012 to 13, FWBC invited major contractors to participate in a Voluntary Advisory Audit (VAA) Program from March to December 2014. The VAA Program provided contractors with an opportunity to understand the new expectations of FWBC and commence rectification without consequence of sanction. Where breaches of the Building Code were identified, contractors were given advice and assistance to rectify the potential breaches and the necessary reform was initiated. And: In each instance where non-compliance was identified, rectification was achieved through correspondence and education of the contractor. Why does the FWBC take this approach of voluntary compliance for employers in code matters rather than resorting to court proceedings as they do for unions and workers?
Ms Cato: The approach with the Building Code is to try to encourage contractors who run best practice lawful sites to do work for the Commonwealth. The best way to achieve that is through education in the first instance. At the time you are talking about—the Voluntary Advisory Audit program—was when the Building Code was being looked at again for the agency and it was important for them to understand the position they were in and what the expectations were under the Building Code, which was a new law, essentially.
Senator RICE: Have you considered this type of approach rather than taking court action against employees?
Mr Hadgkiss: In fairness, there are two different things. One is a breach of the law and one is a breach of a code.
Senator RICE: It is a legally binding instrument.
Mr Hadgkiss: If I may finish, in the first instance it is fair to say that the Building Code work until 2013-14 had ceased. Upon taking up my position as director I put some energy into the code. It is fair to say that there was, as my colleague says, a great deal of education required. We would prefer rectification in the first instance, but it is fair to say that now it has come to the point where if contractors fail to adhere to the code and best practice it would lead to me writing to the minister seeking that they be sanctioned and unable to tender for Commonwealth work.
Senator RICE: In these instances, what court proceedings against people against the Building Code—
Mr Hadgkiss: There are no legal proceedings, as I said. It is a matter of whether the minister decides to have them sanctioned, in which case they are prevented from tendering for a certain period of time. That is at the discretion of the minister.
Mr Hadgkiss: I have written to employers a number—
Ms Cato: I can answer that question. There have been no recommendations for sanction at this time because we have been able to achieve agreements to rectify behaviour on all occasions, in contrast to what happens from a prosecution perspective when we have repeated behaviour of its kind. But should there be an opportunity or a situation where there is a failure to comply with promises that have been made as to the types of lawful site that they will keep, then we would be recommending a sanction.
Senator CAMERON: So there is zero tolerance, as Mr Hadgkiss has said, for the trade union movement and employees in the industry, but there is a process of working through the issues for employers.
Mr Hadgkiss: That is incorrect. I have never said there is zero tolerance for employees or unions.
Senator CAMERON: You have told me. The first time I ever met you, you told me—
Mr Hadgkiss: I have said there is a case-by-case—
Senator CAMERON: Mr Hadgkiss—
CHAIR: All right, let Mr Hadgkiss finish answering the question.
Mr Hadgkiss: In fairness, I have answered this numerous times.
CHAIR: I know.
Mr Hadgkiss: I have said it is a case-by-case basis. Where there is evidence and it is in the public interest, we take action, we prosecute employees, trade unions, trade union officials and employers. And as Mr Corney has just brought to the committee's attention, the number of employees is increasing. In fairness, what we are talking about here is the building code. It is not set as in breaches of the code go to the minister, they do not go to courts.
Senator RICE: Can you provide us with some evidence of approach of advice, assistance, correspondence, education with employees and unions?
Mr Hadgkiss: I have written to the trade union movement, particularly the ACTU and the CFMEU, and my letters have not been returned. I am quite happy—
Senator CAMERON: They do not trust you because you are biased in the operation of—
CHAIR: Senator Cameron, you are not being helpful and Senator Rice has the call.
Senator Cash: Senator Cameron, all because the attention is not on you at the moment you are going to interrupt.
Senator RICE: I have one further question: would you be able to provide us with updated details as to the total cumulative cost to the Australian taxpayer of the ABCC-FWBC since its establishment in 2005?
CHAIR: I am sure that is publicly available if you add up—
Senator Cash: I would have thought that it is in the annual reports, but I am sure the officers will take it on notice.
Mr Hadgkiss: Yes.