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Worker Benefits Bill needs to be passed without delay to protect employee entitlements

"The Australian Industry Group (Ai Group) today publicly released its submission on the Fair Work Laws Amendment (Proper Use of Worker Benefits) Bill 2017, which is before a Senate Committee inquiry. The Bill would deliver vital and long overdue reforms to protect workers' entitlements. The current lack of governance of worker entitlement funds that hold billions of dollars in workers' entitlements is indefensible," Innes Willox, Chief Executive of Ai Group, said today.

"Current inappropriate practices include:

  • The regular distribution of millions of dollars in so-called 'surpluses' to unions from the investment earnings on money contributed by employers for the benefit of their employees to construction and electrical contracting industry redundancy funds;
  • Unions siphoning off a portion of the money contributed by employers to welfare and charity funds operated or supported by unions;
  • Employee entitlement funds discriminating between union members and non-union members when providing certain benefits; and
  • Employee entitlement funds 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. Employees’ entitlements need to be protected from 'cash-grabs' by 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 money that they receive from employee entitlement funds far exceeds the fines. The CFMEU has reportedly incurred around $10 million in fines for unlawful conduct over the past 10 years in cases pursued by the Australian Building and Construction Commission and its predecessors. This amount is dwarfed by the reported $75 million in revenue flows to the CFMEU over the past five years from employee entitlement funds.

"The Bill also addresses the current misuse by unions of the enterprise bargaining laws to coerce employers to purchase substandard, grossly overpriced income protection insurance products. If there was free competition in the market it is highly unlikely that these insurance products would be purchased because employers are typically able to purchase insurance products that provide much more favourable benefits for workers at a much lower cost (e.g. through an industry superannuation fund or through the insurance company which the company uses for other types of insurance). Many employers have advised Ai Group that they can purchase income protection insurance for 1/3 to 1/5 of the cost of the insurance products that the unions coerce them to purchase. It is obvious that unions are enriching themselves at the expense of both workers and employers.

"Superannuation funds are subject to rigorous governance standards but these do not apply to employee entitlement funds, even though billions of dollars of worker entitlements are held in these funds. Members of superannuation funds rightly expect to, and do, benefit from the investment earnings on employer contributions. It is not right that investment earnings on employer contributions to employee entitlement funds are diverted to union head offices.

"Workers need to be protected from these inappropriate practices. The Bill needs to be passed without delay," said Mr Willox.

Read Ai Group's submission in full


Media enquiries:
Tony Melville – 0419 190 347