Australia: New code addresses productivity and restrictive work practices in the construction sector

On 17 April, the Federal Government published an advance release of the Building and Construction Industry (Fair and Lawful Building Sites) Code 2014 (Code), which aims to address productivity issues in the construction sector and prohibit restrictive work practices and discriminatory provisions.

The proposed Code sets out the standard of workplace relations conduct expected from contractors when performing work funded by the Commonwealth Government, and is part of a number of changes which include re-establishing the Australian Building and Construction Commission (ABCC).

The Code will replace the existing Building Code 2013 and will come into effect when the Building and Construction Industry (Improving Productivity) Bill 2014 commences as an Act (expected to be around July 2014). Importantly, the Code will apply to enterprise agreements made after 24 April 2014.

Who is covered?

Building contractors and building industry participants, who are already covered by the Building Code 2013, will be required to comply with the new Code.

Once the Code takes effect, subcontractors, building suppliers and other building contractors who submit an expression of interest or tender for new Commonwealth-funded building work will be covered by the Code.

Once covered by the new Code, building contractors and participants are required to act consistently with the Code in relation to all their future building work, including both Commonwealth and privately funded work.

What are the new changes?

Under the new Code, enterprise agreements will no longer be able to contain restrictive work practices or discriminatory provisions. Building contractors and participants must also not engage in any conduct, procedure or practice that would have the same effect as a prohibited clause in an enterprise agreement.

Some examples of clauses and practices that will not be permitted by the Code include:

• requiring contractors to employ a non-working shop steward or job delegate
• 'one in, all in' clauses where, if one person is offered overtime, all the other workers must be offered overtime, whether or not there is enough work
• 'jump up' provisions that prevent engaging subcontractors unless they provide certain terms and conditions required by unions to workers, despite their existing lawful industrial arrangements
• requiring contractors to obtain the approval of a union over the number and types of employees that a contractor may engage on a project.

The Code also requires strict compliance with the right of entry laws by building contractors and for building contractors to monitor and ensure that subcontractors comply with the Code while undertaking Commonwealth-funded building work.

When does the Code take effect?

Compliance with the Code generally will be required once the Code commences operation later this year.

Importantly, the prohibition on restrictive work practices and discriminatory content in enterprise agreements will have retrospective effect. A business with an enterprise agreement made after 24 April 2014, which does not comply with the new content requirements, will not be eligible to tender for and be awarded Commonwealth-funded building work.

Compliance

The ABCC will take the role of enforcing all non-compliance with the Code by building contractors or participants, when the Code commences. The ABCC may issue a formal warning or impose a sanction, which excludes tendering and contracting for Commonwealth funded work for a period of up to one year.

Employers in the building industry should therefore ensure that any enterprise agreements entered into from 24 April 2014 do not contain clauses which will make them ineligible for work on Commonwealth-funded projects.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.