CFMEU involved in deals linked to Australia’s $500m work theft case

CFMEU figures John Setka and Stephen Smyth, who is a third generation coal miner.

The likely size of Australia’s largest “wage theft” case has exploded from $100m to $500m as a result of a dramatic Fair Work Commission order that highlighted the anomaly.

The latest Fair Work rulings, making the liability simpler to calculate, have sent shockwaves through the union movement because of the deep involvement of the CFMEU in the wage deals which led to the massive underpayment.

Five wage hire companies, many of which have large Japanese equity, face the potential of also being forced to repay part of the money.

I suspect, while the CFMEU’s statements on the AFL Hobart stadium triggered some unions to distance themselves from the union, the CFMEU’s involvement in the looming coal miner “wage theft” scandal and its potential repayment liability bill are additional reasons for the distancing.

And because the CFMEU is a key funder of the ALP, there are political funding issues too.

Like other coal miners in NSW and Queensland, casual miners at the Callide coal mine at Biloela in central Queensland have not been receiving their 25 per cent casual entitlement.

Fair Work, which previously approved the union approved wage deals that excluded the miners’ 25 per cent casual entitlement, has reversed its position by using a provision in the Fair Work act to enable casual workers to receive their 25 per cent entitlement from November 1.

This simple casual pay ruling triggered miner pay rises of around $30,000 for the 2024-25 financial year. In addition, the “same work same pay” legislation added at least another $10,000 and there was an award rise of a similar amount.

The total miner 2024-25 take home pay therefore rises a staggering $50,000 — more than 40 per cent.

‘It’s a remarkable story and illustrates what can happen when unions and employers get too close together and the regulator does not intervene.’

The non-ACTU aligned Brisbane-based Independent Workers Union, a division of the so-called Red Union group with over 20,000 members mainly in the nursing and teaching sectors, has taken up the miners’ wage theft case and is now undertaking detailed research going back decades to document the miners’ back pay claim.

Wage deals without the casual entitlement were approved and sometimes negotiated by the CFMEU. They were all approved by Fair Work.

The mining section of the CFMEU has split off and is now called the Mining and Energy Union, and it brought the claim to have miners casual rate entitlement paid in 2024-25 but did not request back pay.

After the Fair Work decision, the MEU highlighted the rise achieved via same work, same pay legislation, but not the much larger increase gained as a result of the casual work entitlement.

The Callide mine was purchased in 2016 from Anglo American by a group of Brisbane business people. The higher pay will test the economics of the mine. But, the Callide mine is only a small part of the large number of NSW and Queensland coal mines where enterprise bargaining deals with no casual pay entitlement were signed over the past two decades.

It’s a remarkable story and illustrates what can happen when unions and employers get too close together and the regulator does not intervene.

The underpayment might never have been uncovered but for the work of one miner and the federal parliament, Malcolm Roberts, and the Independent Workers Union.

The black coal award makes it illegal for coal mining companies to hire casuals — their workers must be employees. But, most coal companies contracted out their mining to five labour hire companies who undertook the work using casuals — but did not pay those casuals the 25 per cent casual entitlement.

The Callide mine was purchased in 2016 from Anglo American by a group of Brisbane business people.

The radical agreements were CFMEU-approved and often negotiated by the union. They were then presented to the Fair Work Commission for approval.

In almost every other situation in Australia, the Fair Work Commission would have thrown them out with little debate.

Instead, the Fair Work Commission approved the CFMEU-endorsed casual labour with no 25 per cent margin deals on the basis of a highly dubious legal technicality which has been ruled out for 2024-25.

The coal labour agreements are subject to what is called the “better off overall test”, or BOOT, but because the black coal award makes it illegal for coal miners to hire casuals, the BOOT was matched against an award which does not include casuals.

The Fair Work Commission therefore decided the “better off” test does not apply because there is no casual rate to compare it with.

Now it has restored the casual entitlement for 2024-25, the next step is the back pay.

The Australian parliament is aware of the scandal and last May the Senate passed a motion which requires the government “to investigate claims that casual miners working under enterprise agreements in the black coal mining industry are, and have been, underpaid”.

If underpayments are found to have occurred, the government is “required to facilitate the reimbursement of the underpayments”.

I would add that surely taxpayers won’t be required the pay the $500m. The most obvious people liable are the Mining and Energy union and/or the CFMEU and the five labour hire companies.

But, it’s possible Fair Work itself may be held liable the part of the “wage theft”.