A union boss-turned-Victorian MP allegedly orchestrated a $25,000 per year “side deal” with a cleaning company to keep its staff on Workchoices-era wages.
Former Victorian secretary Cesar Melhem asked for the annual sum in a 2010 meeting with Cleanevent officials, the trade union royal commission heard on Wednesday.
When discussing extending the 2006 enterprise bargaining agreement, Mr Melhem allegedly asked for a service fee, John-Paul Blandthorn, a former organiser at the Australian Workers Union and now adviser to Victorian premier Daniel Andrews, told the commission.
“I could read the expression on their face that this wasn’t something they would normally want to engage in,” Mr Blandthorn said of Cleanevent officials Michael Robinson and Steven Webber.
Mr Blandthorn said the company told the union they were struggling to compete with “black market labour” and couldn’t afford higher penalty rates.
“Mr Melhem sort of stated to the company that … they get a good service out of the AWU and its delegates… and that they should look to pay some sort of service fee to the AWU for that type of work. But I can’t recall what number was said,” Mr Blandthorn said on Wednesday.
The original amount proposed was $10,000 but Mr Melhem allegedly told Mr Blandthorn to increase it to $25,000.
He said he didn’t personally tell the national union office about the arrangement because it wasn’t his position.
“I was always under the instruction of Mr Melhem,” Mr Blandthorn said.
The deal allegedly cost workers $2 million a year in unpaid penalty rates, while the company paid $25,000 a year to the AWU.
Mr Melhem on Monday denied saying the $25,000 was necessary to secure the extension of the EBA.
His statement to the hearing said it was a service fee for the branch to provide industrial representation for a pool of casual employees who weren’t union members.
Mr Blandthorn controlled negotiations with the company, he said.
A letter signed by Cleanevent HR manager Mr Robinson in October 2010 says the company agreed to pay ’employees union fees’ up to $25,000 with an agreement AWU wouldn’t commence any enterprise bargaining.
Mr Andrews, who employs Mr Blandthorn in his office and gave Mr Melhem the position of government whip, has refused to comment on the case while it is before the royal commission.
Opposition spokesman John Pesutto said Mr Andrews should stand down both men down after they gave conflicting evidence.