Australia: Draft Guidelines propose shake-up of industrial relations in Victorian building and construction industry

Last Updated: 13 October 2011
Article by Kathy M. Dalton, Alice DeBoos and Duncan Fletcher

New draft Implementation Guidelines to the Victorian Code of Practice for the Building and Construction Industry (Guidelines), released by the Victorian Government for public comment on 7 October 2011, are set to create a number of changes to tendering processes, contract documents and project management procedures for building and construction work on Victorian Government-funded projects.

The Guidelines are intended to supplement and be interpreted in accordance with the National Code of Practice for the Construction Industry (National Code), and are designed to increase productivity and compliance with workplace laws on Victorian building sites, with particular focus on addressing unlawful industrial activity and breaches of freedom of association laws.

Although the Guidelines largely replicate the Australian Government Implementation Guidelines for the National Code of Practice for the Construction Industry (National Guidelines) previously released by the Federal Government to supplement the National Code, they propose to impose a number of new obligations on construction firms.

Broad Application

The Guidelines will apply to all on-site publicly funded building and construction work undertaken in Victoria, irrespective of the size of the project. A party will need to comply with the Guidelines from the date it first expresses interest in performing such work.

Companies intending to undertake Victorian Government-funded building and construction work will also need to comply with the Guidelines in performing privately-funded work. Similarly, all related entities will also need to comply with the Guidelines in respect of any building or construction work they undertake.

Parties intending to tender for publicly funded work will also need to demonstrate past compliance with the requirements contained in the Guidelines. If this cannot be demonstrated, consideration will be given to the extent of the lack of compliance and capacity for future compliance.

Key features of the Guidelines

Key aspects which are new to the Guidelines, include:

  • making project owners, project managers and principal contractors primarily responsible for ensuring the application of, and broad compliance with, the Guidelines, including making compliance with the Guidelines an integral component of contract management procedures and contractual and tendering documents
  • requiring relevant contractual documents to contain terms allowing Victorian Government authorised personnel to access sites, documents and personnel to monitor and investigate compliance with the Victorian Code and Guidelines
  • requiring Contractors and consultants undertaking work covered by the Guidelines to notify the Monitoring and Compliance Unit of any alleged breach of the Guidelines and voluntary remedial action taken within seven days of becoming aware of the alleged breach
  • imposing a ban on project agreements for public building and construction projects worth less than A$100 million and stringent criteria for the making of them where permitted
  • requiring tenderers to submit (and, if successful, comply with and ensure all subcontractors comply with) a detailed Workplace Relations Management Plan (WRMP) identifying how they will deal with various matters including labour requirements, mobilisation plans, selection procedures, developing and maintaining a productive workforce, engaging and using labour hire, managing relationships with unions and employees, and ensuring compliance with statutory workplace rights such as freedom of association, and freedom from coercion and discrimination
  • prohibiting discrimination against genuine independent contractors, including entering into arrangements that constrain or restrict the use of such contractors
  • requiring contractors to take all reasonable steps to resolve any disputes or threatened or actual industrial action at the earliest opportunity, including bringing unlawful industrial action to an end by taking legal action.

Enforcement of the Guidelines

The Victorian Government will promote awareness of the Guidelines and monitor and enforce the Guidelines. A dedicated Monitoring and Compliance Group (Unit) will undertake monitoring and compliance activities (such as site visits, inspections and audits), provide compliance feedback to contractors and report breaches of the Guidelines.

As with the National Guidelines, proposed sanctions for breaches include formal warnings, referral of complaints to relevant industry bodies, referral of breaches to appropriate statutory bodies, reduction in tendering opportunities and publicising the breach and identifying the party in breach.


  • The Victorian Department of Treasury will consider public submissions in finalising the Guidelines. Written submissions close on 28 October 2011.
  • Once implemented, the Guidelines will necessitate changes in the content of expression of interest, tender and contractual documents made in respect of Victorian publicly-funded projects. The Guidelines anticipate the provision of model clauses.
  • Construction industry participants intending to tender on Victorian publicly-funded projects will need to consider how the Guidelines will affect employment practices on their worksites, in respect of both publicly and privately funded projects and implement appropriate changes to ensure compliance.

Once the Guidelines are finalised following the consultative process, Middletons will develop comprehensive training packages designed to assist construction industry participants to comply with the Guidelines and manage the interaction between these new requirements and those already imposed by the National Guidelines.

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.

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