Zero tolerance; Federal Court slaps down Fair Work Ombudsman’s cosy deal with unions

A Full Federal Court has quite rightly thrown out a plea bargain between the Fair Work Ombudsman and the CFMEU and the CPEU after the Ombudsman (FWO) and the unions agreed upon a penalty to be imposed for breaches of the FWBII Act during a sham contracting campaign. The case was argued by very aggressively by the parties, and is almost unique in that the Commonwealth intervened to have barristers argue both for and against the proposition that a regulator such as the FWO should be able to plea bargain with entities targeted by it. The court would have none of it saying it was “for the court to fix the penalty” and said the parties’ agreed statement and penalties was “no more than an expression of a shared opinion” and therefore inadmissible.
“Even if the offender nominates a substantial figure as the penalty to which it will submit, the Court must still fix the appropriate penalty, taking into account such contrition as well as all other relevant considerations….the agreed amount offers no assistance in fixing the amount of the appropriate penalty.”
The case does not auger well for similar regulators such as the ACCC, ASIC and the ATO who have become accustomed to this cosy arrangement which has always been regarded by the legal profession as unlikely to withstand scrutiny given that if effective it renders the regulators prosecutor, judge and jury.
Director, Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union (2015) FCAFC 59 delivered 1 May 2015.

An appeal against this decision has been launched to the High Court with the Federal Government also seeking to intervene to argue that the decision is wrong. (Added 18 June 2015)
On 19 August, the High Court granted the appellants leave to appeal.