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Union cash grab of employee entitlements must be stamped out

"The Australian Industry Group (Ai Group) expressed strong support today for the Federal Government’s Fair Work Laws Amendment (Proper Use of Worker Benefits) Bill 2017, which is set to be introduced into Parliament today. The Bill addresses the widespread, highly inappropriate current practice of unions deriving millions of dollars a year from money contributed by employers to employee entitlement funds which are meant to be for the benefit of their own employees," Chief Executive of the Australian Industry Group, Innes Willox, said today.

"Throughout the Royal Commission into Trade Union Governance and Corruption, a key issue focussed upon by Ai Group was the millions of dollars in revenue that flows every year to unions from the inappropriate practices of some construction and electrical contracting industry redundancy funds, including:

  • The regular distribution of millions of dollars in so-called “surpluses” to unions, from the investment earnings on funds contributed by employers for the benefit of their employees;
  • Discriminating between union members and non-union members when providing certain benefits;
  • Making payments to workers on strike under the guise of “hardship payments”.  

"Money paid into employee entitlement funds is paid by employers for the benefit of their own employees – not for the benefit of union head offices. It is time to protect employees’ entitlements from the cash-grabs of union head offices.

"The vast sums that construction unions receive each year from employee entitlement funds allows them to operate a law-breaking model. They can readily afford the fines that they incur for breaking the law because the funds that they receive from employee entitlement funds far exceed the fines incurred. In any civilized society, all organisations and citizens need to comply with the law.

"The application of appropriate governance standards to employee entitlement funds is long overdue. Superannuation funds are subject to rigorous governance standards, but these do not apply to construction and electrical contracting industry redundancy funds, even though billions of dollars of employee entitlements are held in these funds. Members of superannuation funds rightly expect to, and do, benefit from the investment earnings on employer contributions to superannuation funds. It is not right that investment earnings on employer contributions to most construction and electrical contracting industry redundancy funds are diverted to union head offices. This practice is ripping-off workers and needs to be stamped out as recommended by both the Heydon and Cole Royal Commissions," Mr Willox said.  

Media enquiries: Tony Melville – 0419 190 347