Australia: Stay of execution for the QBCC head contractor licensing exemption

On 29 March 2022, the Queensland Parliamentary Counsel introduced the Building and Other Legislation Amendment Bill 2022 (Qld) (Bill). If passed, the Bill will mean that the current QBCC head contractor licensing exemption will not be abolished as previously foreshadowed. Additionally, a licence category may be introduced for head contractors undertaking high-risk work.

A quick refresher: What is the head contractor licensing exemption?

Section 42(1) of the Queensland Building Construction and Commission Act 1991 (Qld) (QBCC Act) provides that it is unlawful to carry out, or undertake to carry out, building work without the appropriate licence.

An exemption to this requirement is contained in section 8, Schedule 1A of the QBCC Act which provides that an unlicensed person does not contravene section 42(1) of the QBCC Act if they engage an appropriately licensed contractor to perform any building work requiring a licence.

This exemption was initially introduced in 2013 and has been relied upon by head contractors to engage licensed subcontractors to carry out elements of building work for which the head contractor may be unlicensed.

In 2020, the Building Industry Fairness (Security of Payment) and Other Legislation Amendment Act 2020 (Qld) (BIFOLA Act) was enacted, which provided for the abolition of the head contractor licensing exemption. The abolition was due to commence in July 2021, but was postponed until 24 July 2022 to enable further industry consultation.¹

The head contractor licensing exemption will remain in force

Following extensive industry input, the Bill introduced by the Government on 29 March 2022 proposes to remove the reference to the head contractor licensing exemption from the BIFOLA Act. This would mean that the head contractor licensing exemption will remain in force.

This will be welcome news for industry participants who have raised concerns regarding the additional costs and administrative burdens that would have resulted from the head contractor exemption being abolished.

A regulation requiring licensing for high-risk work may be introduced

Although the head contractor exemption will remain in force going forward, it may be accompanied in the future by a regulation requiring licensing of head contractors for high-risk work.

The Explanatory Notes provide that:²

'However, the amendment provides that the exemption will not apply if a regulation is made requiring the head contractor to be licensed. A regulation may be made for individuals undertaking high risk work such as fire protection and mechanical services.'

In providing this carve-out to the head contractor licensing exemption, the Explanatory Notes to the Bill identified that there are concerns in the industry that the head licensing exemption may allow entities to circumvent Queensland's licensing system (for example, minimum financial requirements and security of payment protections).

As well, there are concerns that where unlicensed persons or entities assume the role of head contractor, they may not have sufficient skills and experience to administer and manage the procurement of building work, particularly in complex projects or high-risk work, such as mechanical services or fire protection.³

In response to these concerns, the Queensland Parliamentary Counsel has noted that it has the flexibility to respond to emerging issues as they arise, while also facilitating commercial contracting by allowing most unlicensed head contractors to continue entering building contracts that offer to procure building work.⁴

Footnotes

¹The BIFOLA Act was postponed by the Building Industry Fairness (Security of Payment) and Other Legislation Amendment (Postponement) Regulation 2021 (Qld).

² Explanatory Notes, Building and Other Legislation Amendment Bill 2022 (Qld) 10.

³ Explanatory Notes, Building and Other Legislation Amendment Bill 2022 (Qld) 3.

⁴ Explanatory Notes, Building and Other Legislation Amendment Bill 2022 (Qld) 3.

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