Cleaners working in low-paid jobs were not told of an agreement between a union and their employer that inflated the union's membership numbers but cut their wages, the trade unions royal commission has heard.
The Australian Workers' Union (AWU) struck a deal with major cleaning contractor Cleanevent in 2010 to keep casual cleaners on lower rates of pay and save the company $1.5 million in salary costs, the commission heard on Monday.
In return, Cleanevent would pay the AWU $25,000 a year as membership fees for casual cleaners.
The Cleanevent senior executive who gave final sign-off on the agreement, Julianne Page, at first told the commission she could not explain why an email from the company's head of HR said the union would not agree to having a trade-off for lower wages listed in the same document as a payment for membership.
In a May, 2010 email to Ms Page, HR executive Michael Robinson wrote: "It would be crazy for the union to put that down on a page and to be honest I wouldn't feel happy with it being on the same document either."
Ms Page told the court she supposed it "would look bad for the union".
"It would look like it was some sort of payoff," she said.
Counsel assisting the commission, Jeremy Stoljar SC, asked if it also looked bad for the company.
"You received a trade-off for lower wages with a payment for membership of casuals," he said.
Ms Page replied: "Correct."
Cleanevent employees were not told of the arrangement, the court heard, and it was not explained in a 2010 Memorandum of Understanding that bound workers to the lower rates of pay of a 2006 agreement.
They were also not told they had been signed up as union members, the court heard.
The court was shown an October, 2010 letter from Mr Robinson to the-then AWU Victorian state secretary Cesar Melhem, which listed the $25,000 agreement separately to the memorandum.
Mr Melhem succeeded federal Labor leader Bill Shorten as Victorian AWU secretary and held the role until he entered the Victorian parliament in 2013.
Internal Cleanevent emails tendered to the commission also show Mr Robinson discussing structuring pay rises to "make the AWU look fantastic to their members".
"If we agree to a 0% increase for these casuals and then give them a hit in year 2 and 3 the union can claim that because of their membership they went into bat for them and got them an increase, which will make the AWU look fantastic to their members and won't hurt your bottom line," Mr Robinson wrote to colleagues including Ms Page during discussion of the agreement.
The commission has heard previously that increased membership is an indicator of a successful union and can give it greater influence within the Australian Labor Party.
The hearing continues on Tuesday.
