Constructing Fairness in the Building Industry


Constructing Fairness in the Building Industry

On 17 April 2014, the Government published an advance release of the Building and Construction Industry (Fair and Lawful Building Sites) Code 2014. When this code commences, its provisions will apply retrospectively to enterprise agreements made after 23 April 2014.

The Government designed the code to “restore the rule of law and fairness to Australia’s construction sector” and will come into effect when the Building and Construction Industry (Improving Productivity) Bill 2014 commences as an Act. This will not be before July 2014 when changes in the composition of the Senate take effect.

In discussing the Bill, Senator Eric Abetz has stated “it is important that contractors that want to work on projects funded by the taxpayer have the ability to operate efficiently and flexibly to ensure projects are delivered on time and on budget” and “for too long, the building and construction sector has provided the worst examples of industrial relations lawlessness”.

Who does the code apply to?

The new code will apply to Commonwealth funded building work for which:

  1. the Commonwealth is the sole funder
  2. the Commonwealth’s contribution is at least $10 million or
  3. the Commonwealth’s contribution is at least $5 million and 50  per cent of the total funding.

What does the code mean?

This code of practice aims to:

  1. promote an improved workplace relations framework for building work to ensure that building work is carried out fairly, efficiently and productively for the benefit of all building industry participants
  2. assist industry stakeholders to understand the Commonwealth’s expectations of, and requirements for, entities that choose to tender for Commonwealth-funded building work, are awarded Commonwealth funded building work, or both
  3. establish an enforcement framework under which building industry participants may be excluded from tendering for, or being awarded, Commonwealth funded building work if they do not comply with this code of practice.

Under the Fair and Lawful Building Sites Code 2014, contractors that choose to be eligible for Commonwealth-funded building work will need to comply with the new code. If contractors do not comply with the code, they will not be eligible to work on Commonwealth-funded projects.

The code will apply to all contractors from the first time they tender for Commonwealth-funded building work. These contractors will be required to act consistently with the code, including on future privately-funded work.

Enterprise agreements and other ‘procedures’ can no longer contain restrictive work practices or discriminatory provisions. For example, some of the key clauses and practices that will not be permitted by the new code include:

  • clauses that impose limits on the right of the entity to manage its business
  • clauses that restrict freedom of association (eg clauses that require/result in the employment of a non-working shop steward or job delegate)
  • clauses that prescribe the number of employees or subcontractors that may be employed or engaged on a particular site, in a particular work area, or at a particular time
  • clauses that restrict employment by reference to the type of contractual engagement (eg limiting the employment of casual or daily hire employees)
  • ‘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
  • clauses which prescribe the terms and conditions on which subcontractors are engaged (including the terms and conditions of employees of a subcontractor)
  • provisions that prevent engaging subcontractors unless they provide certain union-dictated terms and conditions to workers despite their existing lawful industrial arrangements
  • clauses requiring contractors to obtain the approval of a union over the number and types of employees that a contractor may engage on a project
  • clauses that limit or have the effect of limiting the right of the employer to make decisions about redundancy, demobilization or redeployment based on operational reasons
  • clauses that provide rights of entry more extensive than contained in the Fair Work Act 2009 or relevant work health and safety legislation.

What are the sanctions for non-compliance?

In the event that the code is breached, the Commissioner of the Australian Building and Construction Commission (ABCC) may impose an ‘exclusion sanction’ on the relevant entity which could restrict the entity from being awarded, or tendering for, Commonwealth funded building work for a period up to one year.

When the code commences, contractors who have entered into enterprise agreements that were made after 24 April 2014 and who do not comply with the code’s content requirements for enterprise agreements, may not be eligible to tender for and be awarded Commonwealth-funded building work if such a exclusion sanction is put in place by the ABCC.

The code also requires that a workplace relations management plan approved by the ABCC is included in all expressions of interest and tender documents in relevant projects.

New freedom of association and industrial action prohibitions

The code introduces new freedom of association rules that prohibit code covered entities ( unions and contractors) from:

  • organising,taking or threatening to take, industrial action with the intent to coerce a contractor from making above-entitlements payments, to contribute to a particular fund or scheme, or support a particular product
  • applying undue pressure or influence on a contractor to make above-entitlements payments, to contribute to a particular fund or scheme, or support a particular product.

In addition, the code now requires code-covered entities to implement policies that protect freedom of association and to ensure measures designed to promote equal opportunity, anti-discrimination and remove common features of building sites such as ‘no ticket, no start’ arrangements and ‘show card ‘ days.

Senator Abetz said in summary “Our new code, together with a stronger Australian Building and Construction Commission, will help get the building and construction industry back on track.”

What should building contractors do?

It is critical that employers who have implemented an enterprise agreement since 24 April 2014, or are in the process of negotiating a new enterprise agreement, ensure their agreements are code compliant. The code sets out a range of new requirements that are not detailed in this article. If a contractor enters an enterprise agreement that does not comply with the code, they run the risk of an exclusion sanction being placed on them and may be ineligible to have Commonwealth-funded building work awarded to them.

Seek legal advice to ensure your agreement is code compliant, including where the current CFMEU template enterprise agreement is put forward for consideration.