Written by Workforce chief journalist Paul Karp.
ACT Police’s criminal blackmail charge against Construction Forestry Mining Energy Union (CFMEU) ACT organiser John Lomax relates to a site rates clause, casting doubt on whether Lomax made an “unwarranted demand” by insisting a subcontractor sign a union enterprise agreement (EA) with the minimum rates.
Lomax’s charge sheet seen by Workforce alleges between March 17 and April 10, 2014 Lomax made “an unwarranted demand with menace, namely that an enterprise bargaining agreement be signed between [Canberra painting subcontractor] Nel Trading Pty Ltd and the CFMEU”.
The police claim Lomax made the demand to Nel Trading director Woong-Yul Park when Park called him about lead organiser – and Lomax’s co-accused – Fihi Kivalu’s threats to kick him off Bloc Construction’s Queanbeyan site if he didn’t sign up to a CFMEU EA.
Park had called Lomax as he considered him a “friendlier” CFMEU organiser. However, Lomax told Park to sign the EA or he would “keep getting phone calls and possibly be kicked out of the Queanbeyan job site”, according to the account.
The charge sheet said Park then signed a union EA at the CFMEU’s headquarters believing he had “no choice” or else his company would not get further work and risk “financial ruin”.
Lomax offered to help Nel Trading find work by kicking other companies without union EAs off sites in favour of Nel Trading, it said.
Police claim Lomax made the demand to sign the union EA “with the intention of causing a loss”.
The EA caused “financial losses” because, “due to being tied to EA-mandated wages, the lowest [Park] can pay his workers is $26 an hour”.
“Competing companies often pay workers as low as $17 an hour and Park estimates this has led to him being unsuccessful in about 50% of the jobs he tenders for as the higher wages he must pay mean his quoted prices for jobs are not competitive,” the charge sheet said.
Police said this constituted an “unwarranted demand”, despite noting the CFMEU’s role “is to negotiate and secure improvements in working conditions and wages”.
They claim Lomax therefore committed blackmail under ACT Criminal Code s342, punishable by a maximum penalty of a $238k fine, 14 years in prison or both.
Paying site rates caused ‘financial loss’ to subbie
Under the Bloc (ACT) Pty Ltd 2013-2016 EA, Bloc agreed to a “job security” clause that obliges it to engage contractors on “the same terms and conditions of engagement (or terms no less favourable) as they would receive if they were engaged as employees”.
That is, at site rates of a minimum $27.16 an hour.
Bloc engaging a subcontractor for less than $27.16 an hour would constitute a breach of the EA. Workforce understands, given Nel Trading was a sub-contractor on the Bloc-run site, the clause casts doubt on whether Lomax demanding Nel Trading sign an EA with the same rates constitutes an “unwarranted demand”.
It also casts doubt on whether a threat that Nel Trading would “possibly be kicked off site” would constitute a “menace” or rather be enforcement of the head builder’s EA.
EA not usually an ‘unwarranted demand’: expert
Laying criminal charges over what is industrial conduct has been called unprecedented by the CFMEU.
The claims against Lomax would normally be dealt with by coercion provisions under s343 of the Fair Work Act.
Criminal law expert and Stary Norton Halphen principal Robert Stary told Workforce this week the blackmail charge was “novel” and “very surprising” because “working within the usual scope of enterprise bargaining … a workplace agreement wouldn’t be an unwarranted demand” (WFD 30/07/15).
Stary warned it could cause a “a ripple effect, as both sides [employers and unions] will then use [the precedent] in whatever way they could”.
In its interim report last year, the Trade Union Royal Commission recommended referring CFMEU Qld secretary Michael Ravbar for extortion charges for allegedly forcing companies to sign union EAs (WF 19/12/14).
TURC also recommended possible blackmail charges against CFMEU Vic secretary John Setka over the union’s alleged secondary boycott against Boral.
However, state police and prosecutors in those jurisdictions have yet to take any action.
CFMEU national secretary Dave Noonan has called for the Australian Federal Police to drop Lomax’s blackmail charge, arguing it was “for doing nothing more than advocating higher wages for the union’s members”.
Use of criminal law ‘extremely worrying’: ACTU
Australian Council of Trade Unions secretary Dave Oliver told Workforce “the appropriate legal framework to deal with industrial matters is, and always has been industrial relations law”. He said rights and responsibilities around bargaining were set out in the Fair Work Act.
“Any departure from this sets an extremely worrying precedent,” he said.
“We are deeply concerned by any attempt to mischaracterise union officials and workers seeking to exercise legitimate workplace rights as criminal behaviour.”
Oliver said “seeking better wages and conditions of employment is not a crime”. “I doubt we’ll see employers charged with blackmail every time they threaten a worker with being sacked or a pay cut.”
(This story first ran in Workforce 19725, 31 July, 2015)
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