Australia: Businesses tendering for Commonwealth funded construction work need to comply with the new national workplace relations Building Code 2013

Last Updated: 11 March 2013
Article by Jennifer Irwin

In brief - New Building Code commenced on 1 February 2013

If you regularly undertake, or simply intend to submit a one-off tender or an expression of interest in connection with Commonwealth or Commonwealth-funded building and construction work, you are required to comply with the new national workplace relations Building Code 2013 (Code).

No new obligations imposed by Code

The Code, which emanates from section 27(1) of the Fair Work (Building Industry) Act 2012, commenced on 1 February 2013. It does not create or impose any new obligations, rather, it codifies the range of existing obligations contained in the Australian Government Implementation Guidelines for the National Code of Practice for the Construction Industry - May 2012.

The explanatory notes to the Code state that the purpose of the Code is to:

"promote fair, cooperative and productive workplace relations in the building and construction industry. The Code will ensure industry stakeholders comply with the Commonwealth's expectations and requirements when tendering for Commonwealth-funded construction work or when awarded Commonwealth funded construction work".

Who needs to comply with the Code?

You need to comply with the Code if you are a building contractor (being either a corporation or a body corporate incorporated in a territory) or a building industry participant.

A building industry participant is either:

  • a building employee, employer or contractor
  • a person who enters into a contract with a building contractor under which the building contractor agrees to carry out building work or to arrange for building work to be carried out
  • a building association, an officer, delegate or other representative of a building association, or an employee of a building association

What kind of work does the Code apply to?

The Code essentially applies to Commonwealth funded and/or initiated building and construction works.

A building contractor or participant will be subject to the Code if it submits an expression of interest or a tender from 1 February 2013 onwards, (irrespective of whether the expression of interest or tender was called for before 1 February 2013), for the following type of work:

  • building works that are undertaken by a funding party, or that involve a pre-commitment lease to which a funding party is a party. A funding party is a Department of State of the Commonwealth, a Department of the Parliament, a prescribed Agency under the Financial Management and Accountability Regulations 1997, or a Commonwealth authority or a wholly-owned Commonwealth company that are required to apply this Code.
  • building works that are funded indirectly by the Commonwealth, or that receive advance assistance prior to construction from the Commonwealth where the funding is for $5 million or more and represents 50% and over of the total project value, or where the funding is for $10 million or more, irrespective of the total project value.
  • a "Build, Own, Operate Project", or a "Build, Own, Operate, Transfer Project" initiated by a Commonwealth agency for the delivery of functions or services of the Commonwealth.
  • building works that involve a Public Private Partnership (PPP) or a Private Finance Initiative (PFI) for the delivery of functions or services of the Commonwealth.

What does the Code require?

The Code requires compliance with all relevant statutory requirements that apply to the building contractor or participant. The Code specifically references compliance with key workplace and industrial relations initiatives including:

  • dispute resolution requirements, enterprise agreements, workplace reform measures and sham contracting prohibitions as articulated in the Fair Work Act 2009
  • the right to freedom of association and the right to join, or not join, unions
  • ensuring a Work, Health, Safety and Rehabilitation (WHS&R) plan is in place
  • the employment criteria for non-citizens and non-residents as governed by the Migration Act 1958

While there are new substantive requirements, procedures or obligations which arise from this Code, there are certain procedural and enforcement requirements you are required to comply with, including:

  • ensuring your subcontractors are compliant with the Code
  • allowing access to Fair Work Building Industry Inspectorate inspectors to monitor your compliance with the Code
  • notifying the relevant funding entity of any threatened and actual industrial action
  • notifying the Director of Fair Work Building Industry Inspectorate of any breach or suspected breach of the Code within 21 days of becoming aware of the breach or suspected breach

What happens if you do not comply?

A building contractor or participant who does not comply with the Code runs the risk of being excluded from being granted Commonwealth funded building and construction work for a period of time.

This does not however detract from the extensive range of civil and criminal penalties that are associated with a breach or non compliance with the underlying statutes that the Code is built around.

How can you ensure compliance?

Assuming you are complying with all of the relevant statutory industry requirements, there is nothing new for building contractors to add to the list.

However, the introduction of the Code does provide an opportunity to review workplace and industry policies to ensure that your workplace systems, health and safety procedures, employment process, dispute resolution arrangements, records and training programmes are compliant with the current statutory requirements.

If you are engaging subcontractors, you are required to ensure that your subcontractors act in a manner consistent with the Code. Accordingly, you should review standard subcontract agreements and purchase orders to ensure that suitable terms are included or revised to ensure you are compliant with the Code, and further, actively monitor your subcontractors to ensure they are acting in compliance with the Code.

For more information about the operation of the Code, please also see our article New national Building Code inconsistent with state based building codes.

Jennifer Irwin
Construction and engineering
Colin Biggers & Paisley

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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Jennifer Irwin
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