New Legislation To Reshape Commonwealth Procurement And Enterprise Bargaining Incentives

The Albanese Government has introduced the Workplace Relations Legislation Amendment (Building Cooperative Workplaces No 1) Bill 2026 (the Bill), proposing a range of amendments across Australia’s workplace relations framework.

The Bill amends the Fair Work Act 2009 (Cth) (the Fair Work Act), the Fair Work (Registered Organisations) Act 2009 (Cth) and the Independent Contractors Act 2006 (Cth) addressing matters including measures to support more efficient Fair Work Commission processes, changes to road transport contractor provisions, amendments to the National Construction Industry Forum's ministerial membership (as noted in the previous blog post - Australia: New legislation to address AI and the Fair Work Commission's caseload challenge). 

In its explanatory materials, the Government has framed the Bill as part of a broader effort to improve the operation of the workplace relations system and encourage greater participation in enterprise bargaining.

Of particular interest for those businesses who tender for Commonwealth work, however, is a targeted change to the general protections framework that will affect Commonwealth procurement and grant-making activities placing greater emphasis on Commonwealth entities to preference employers with enterprise agreements or enterprise agreements covering particular employee organisations.

The Bill 

A key feature of the Bill, unrelated to the raft of amendments designed to streamline Fair Work Commission procedures to manage the Fair Work Commission’s caseload, is a targeted exemption from the prohibition on discrimination against employers under section 354 of the Fair Work Act.

Under the proposed amendments, a “Commonwealth entity” (as well as persons acting as required or authorised under a contractual arrangement with a Commonwealth entity or a person acting as required or authorised under a contractual arrangement in a Commonwealth contractual arrangement chain) is lawfully able to discriminate against an employer if the employees are not covered by an enterprise agreement or are covered by an enterprise agreement that does not cover an employee organisation when making procurement or funding decisions. 

This means that the Commonwealth can lawfully choose not to award a tender, or otherwise choose not to make or grant financial assistance, to an employer who is not covered by an enterprise agreement or even if they are covered by an enterprise agreement, if that enterprise agreement does not cover an employee organisation. 

In effect, this means that the Commonwealth can, and indeed the Explanatory Memorandum appears to suggest that the Commonwealth should, preference employers whose employees are covered by an enterprise agreement, or who are covered by an enterprise agreement that covers a particular employee organisation, when making or administering a grant of financial assistance or procuring goods or services.

Supply chain implications

The exemption is not confined to direct Commonwealth contracting. 

The Bill introduces the concept of "Commonwealth contractual arrangement chain", capturing situations where the obligations of a primary Commonwealth contract are performed through a series of downstream contractual relationships. 

The exemption applies throughout that chain. As a result, the ability to preference enterprise agreement coverage may extend beyond head contractors to subcontractors, subconsultants and other participants engaged at multiple tiers of any Commonwealth project.

This has potentially significant implications for supply chains, particularly in sectors where layered subcontracting arrangements are common like the construction industry. 

Government's position

As noted in the Explanatory Memorandum, the Government has described the exemption as narrowly confined to Commonwealth procurement and financial assistance arrangements. Outside of those settings, the existing protections in section 354 of the Fair Work Act, which prohibit discrimination against employers based on enterprise agreement coverage (or lack thereof) continue to operate unchanged outside of this context. 

The Government has also indicated that the amendment is intended to encourage increased participation in enterprise bargaining which appears to be engineered by allowing the Commonwealth to discriminate against employers who are not covered by an enterprise agreement or are covered by an enterprise agreement that does not cover an employee organisation with the intended effect to push the Commonwealth to preference employers who do have an enterprise agreement or covered by an enterprise agreement that covers a particular employee organisation. 

The Minister has publicly stated that the changes do not require the Commonwealth to exercise the preferencing power, and that its application will be considered as part of the development of the Secure Jobs Code which is currently in development (consultation on the Secure Jobs Code closed in February 2026). The Secure Jobs Code is intended to regulate Commonwealth procurement practices to ensure Government purchasing power is being used to support businesses that engage in lawful, fair, equitable and sustainable practices. A copy of the Secure Australian Jobs Code consultation paper can be found here. 

Sector-wide reach

While public discussion has largely focused on the construction industry, the drafting of the Bill is not sector-specific.

The exemption applies wherever Commonwealth funding or procurement arrangements are present, including construction, defence, aged care, technology and professional services. As a result, the implications of the amendments extend well beyond traditional building and construction projects, and may affect a broad range of organisations that participate in Commonwealth-funded work.

For employers in the building and construction industry the use of procurement requirements to seek to regulate industrial matters will be well known. The amendments are reminiscent of the Code for the Tendering and Performance of Building Work 2016 (Building Code) which imposed particular industrial relations requirements on employers who wished to tender for Commonwealth Government work and was subsequently been abolished by the current Labor Government. The difference being that these amendments do not positively require anything of employers wishing to tender for Commonwealth Government work but in practice will have a similar effect as the Code since the procurement preferencing power provides a powerful commercial incentive for the organisation to have an enterprise agreement in order to win Commonwealth Government work, regardless of how the Government labels it.

What this means for employers 

The proposed changes introduce a potentially significant shift in how enterprise agreement coverage may influence access to Commonwealth work for a range of sectors and will be reminiscent of the Code of employers in the construction industry.

For employers operating in, or seeking to enter, Commonwealth procurement or funding environments, the reforms emphasise the strategic and commercial importance of enterprise bargaining in order to win Commonwealth Government work. Businesses without enterprise agreements (or without agreements aligned to relevant employee organisations) may face a relative disadvantage in competitive procurement settings and this will likely drive these employers to enter into enterprise bargaining in order to be on a level playing field with their competitors which also meets the stated aim of the Government to increase participation in enterprise bargaining.

The extension of the regime throughout contractual chains also means that these considerations are likely to flow down to subcontractors and service providers who are more likely to be impacted by these reforms since smaller operators are more likely to operate without enterprise agreements.

Organisations should review their current industrial arrangements and procurement strategies to assess how they may be affected if the Bill is enacted. Early consideration of enterprise bargaining position, supply chain alignment and contractual risk allocation will be important in responding to these developments.