The Victorian Australian Workers Union extended a Howard-era WorkChoices agreement that disadvantaged its members in ­exchange for a $25,000 payment and a list of employees it could add to its membership lists, the royal commission into trade unions has heard.

The agreement meant that its members were paid less than half of what they would have under a more modern award.

A level one casual cleaner, who worked after-hours or weekends, got $18.14 an hour, while under a new award they would have got $50.17 an hour, or 176 per cent more. A level 3 cleaner working on Sundays got $19.86 an hour instead of $41.44, or 121 per cent more.

Under the deal with Clean­event, the company sent the union a list of its employees, which was randomly selected and took no ­account of whether they were ­already union members, and agreed to pay their memberships.

According to counsel assisting the commission, Jeremy Stoljar SC, the deal inflated the membership of the Victorian AWU, whose secretary was Cesar Melhem, now a member of the Victorian Legislative Council.

Some of the employees, who were unaware they had been signed up to the union, were ­already paying union fees.

It meant that the Victorian AWU got extra votes on the union’s national body, and more delegates to the Labor Party’s conference, and therefore influence over Labor policy and selection of political candidates.

A side letter contained the agreement to pay up to $25,000 a year to the

Counsel for Mr Melhem suggested that the $25,000 was a ­ “service fee” but Mr Webber said he did not recall that.

Mr Stoljar said the royal commission would examine if union officials broke the Fair Work Act by entering into an agreement which benefited themselves and the company, but which was detrimental to their own members.

It would also examine whether they had falsified accounting records.