Australia: Building and Construction Industry (Fair and Lawful Building Sites) Code 2014

Labour, Employment and Workplace Safety Alert
Last Updated: 29 April 2014
Article by Christa Lenard

The Federal Government has published an 'advance release' of its new Building and Construction Industry (Fair and Lawful Building Sites) Code 2014 (Code).

The new Code will come into effect when the Building and Construction Industry (Improving Productivity) Bill 2014 commences as an Act – this is expected to occur after changes to the Senate in July.

The Code will replace the existing Building Code 2013, introduced by the Labor government and coincides with the reintroduction of the Australian Building and Construction Commission (ABCC).

What Remains the Same?

Like all previous iterations of the Code (and prior Implementation Guidelines), a building contractor or building industry participant (ie head contractors, subcontractors and building suppliers) who tenders for Commonwealth funded building work for the first time after the new Code takes effect, will need to demonstrate that they and any related entities are compliant with the Code. Once compliant, a contractor is required to act consistently with the Code, including when undertaking privately funded work.

Importantly, any enterprise agreement entered into by a building industry participant from 24 April 2014 must be compliant with the new Code as the provisions relating to workplace arrangements will have a retrospective effect as of this date.

What has Changed?

The Code reintroduces tighter and more prescriptive restrictions on what can or cannot be included in enterprise agreements and, in this respect, is reminiscent of the previous Howard government's Implementation Guidelines. For example, section 11 of the Code sets out clauses and practices that will not be permitted by the Code, including

  • 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 union dictated terms and conditions 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.

Of course, these restrictions do not authorise the taking of action that would otherwise constitute a contravention of the Fair Work Act (FW Act), and should be read in a manner that ensures consistency with the FW Act. For example, the prohibition on a clause which requires union approval over the number and types of employees a contractor may engage is not intended to override section 205 of the FW Act. Section 205 provides that an enterprise agreement must include a consultation term that provides for consultation on major changes at the workplace.

The Code introduces the requirement for a Workplace Relations Management Plan (WRMP) which is similar to the current Victorian and New South Wales State Guidelines. A WRMP will be a condition of tender for any Commonwealth funded building work where:

  • the value of the Commonwealth's contribution to the project that includes the building work is at least AUD5 million and represents at least 50% of the total construction project value, or
  • the Commonwealth's contribution to the project that includes the building work is at least AUD10 million (irrespective of its proportion of the total construction project value).

The ABCC will be responsible for approving any WRMP which is required to be submitted by a prospective contractor and will only approve a proposed WRMP if it:

  • demonstrates how the Code covered entity will comply with the requirements of the Code on the project to which the WRMP relates, and
  • sufficiently addresses the matters required to be addressed in Schedule 3 of the Code (including information relating to workplace arrangements, productivity measures, risk management, past performance and Code compliance) for the particular project.

The Code requires strict adherence to the Federal and relevant State right of entry and safety laws, and inviting an officer of a building association to enter the site other than as permitted under the FW Act will be considered a breach of Code.

Any threatened or actual industrial action will need to be reported to the ABCC as soon as practicable and no later than 24 hours after first becoming aware of the threatened or actual action. Similar notification requirements exist in respect of any potential breaches of the Code.

If a Code covered entity is found to have breached the Code, the ABC Commissioner may:

  • impose an exclusion sanction on the Code covered entity, or
  • issue a formal warning to the Code covered entity that a further failure may result in the imposition of an exclusion sanction on the Code covered entity.

What Building Contractors and Industry Participants Need to do

Although we do not yet know the exact date as to when the Code will take effect, all enterprise agreements made as of today will need to be compliant with the new Code. It is therefore important that building contractors and building industry participants who are in the process of, or will soon be negotiating enterprise agreements, ensure their enterprise agreements meet the requirements of the Code.

More generally, building contractors and building industry participants should ready themselves for the introduction of the new Code by ensuring that steps are taken to meet the compliance requirements, including anticipating the submission of a comprehensive and compliant WRMP for applicable Commonwealth funded projects they intend to tender for.

Once engaged on a Code complaint project, building participants must consider onsite behaviour, including ensuring they do not engage in conduct, or implement a procedure or practice which is, or is likely to be prohibited under the Code, even if it would be fine to do so under a pre-existing enterprise agreement .

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.

K&L Gates has been awarded a 2012 EOWA Employer of Choice for Women citation acknowledging our commitment to workplace diversity.

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