The Federal Government introduced the Building and Construction Industry (Improving Productivity) Bill in 2013 to replace the Fair Work (Building Industry) Act 2012 (FWBI Act). The Senate had successfully blocked the Bill until passing the Building and Construction Industry (Improving Productivity) Act 2016 (BCI Act) in November 2016. The BCI Act came into force on 1 December 2016.

The BCI Act introduces a new Building Code and reinstates the Australian Building and Construction Commission (ABCC), replacing the Fair Work Building Industry Inspectorate (FWBII).

This article looks at the key features of the BCI Act, including the reinstated ABCC and its powers, the new Building Code, and how this will impact participants in the building and construction industry.

What Does the BCI Act Regulate?

The BCI Act prohibits and penalises individuals and organisations which either:

  • undertake unlawful industrial action, or 
  • attempt to coerce employers or employees entering into or altering industrial agreements (e.g. enterprise agreements). 

Businesses can claim compensation for losses they incurred as a result of the unlawful industrial action.

The scope of the Act is determined by the definition of ‘building work’. Building work includes: 

  • construction, alteration, repair, etc., of buildings that form or will form part of the land;
  • installation in a building of fittings such as lighting, air-conditioning, power supply, drainage, fire and security protection;
  • any preparatory work; and
  • transporting or supplying goods.

The FWBI Act did not previously include transporting goods.

What is the 2016 Building Code?

The Code for the Tendering and Performance of Building Work 2016 (2016 Code) replaces the Building Code 2013. The 2016 Code sets out the standards for building and construction workplace relations for participants who want to undertake Commonwealth-funded building work, and applies to tenders made on or after 2 December 2016.

For Commonwealth-funded building work secured before this date, the Building Code 2013 continues to apply. Industry participants who are covered by enterprise agreements created before 2 December 2016 have until 29 November 2018 to make their agreements compliant with the 2016 Code.

To comply with the 2016 Code, enterprise agreements must not: 

  • include any restrictive work practices (e.g. prescribing how many contractors an organisation can engage for a particular work site); or
  • contain discriminatory provisions (e.g. excluding particular types of employees).

We set out some significant changes the 2016 Code introduced below.

Broader Freedom of Association and Industrial Action Provisions

Industry participants can choose whether they will become a member of an association, and participate in lawful industrial action. An organisation cannot discriminate against an individual based on this decision.

Stronger Security of Payment Obligations

There are strict prohibitions against fraudulent and coercive behaviour surrounding security of payment. An organisation must report disputes surrounding payment claims to the ABCC. Participants must have a detailed dispute resolution process that provides for referral to an independent adjudicator if parties cannot resolve a dispute.

Additional Obligations on Commonwealth Funding Entities

A funding entity must require the following information from organisations submitting tenders and expressions of interest: 

  • ‘whole life costs’ of the project; 
  • the extent that the organisation will use domestically sourced and manufactured materials; 
  • compliance with Australian standards; and
  • how carrying out the works will ‘contribute to skills growth’.

A funding entity must submit a Workplace Relations Management Plan (WRMP) to the ABCC for approval where the Commonwealth’s contribution to the building project is at least $5 million and 50% of the total project value. 

Head contractors must be vigilant when complying with its WRMP including compliance of its subcontractors. A failure to comply with the WRMP amounts to a breach of the 2016 Code, and penalties will apply.

Demonstrated Preference for Domestic Workers

An organisation must first advertise the job in Australia before offering to non-Australian citizens. If a job is offered to a non-Australian citizen, the employer must be able to show that ‘no Australian citizen of Australian permanent resident is suitable’ for the position. 

There are also new provisions that prohibit sham contracting and collusive tendering practices. Collusive tendering practices will generally include the exchange of information for money, meetings, or agreements between tendering parties so as to influence: 

  • who the successful tenderer will be;
  • fix prices or conditions under the contract; or 
  • secure a benefit for unsuccessful tenderers. 

What are the ABCC’s Powers?

The ABCC’s role is to enforce the 2016 Code as well as elements of the Fair Work Act including wages and entitlements.

Definitions

Term Definition
Industrial Action When an employee either:

  • does not come to work;
  • fails or refuses to perform any work; or
  • delays or limits the work they do.

Industrial action can also include when an employer locks an employee out of the workplace. An employer can agree to exclude industrial action but must provide this in advance and in writing.

Unlawful Industrial Action Industrial action which is not ‘protected industrial action’.
Protected Industrial Action

Employees can legally take industrial action when bargaining for a new registered agreement (e.g. enterprise agreements or collective agreements) was unsuccessful.

Industrial action will not be protected in individuals or engage in or organise the action are not ‘protected persons’.

Protected Persons Employee organisations or an employee that is a bargaining representative for a proposed enterprise agreement.

Coercion and Discrimination

Chapter 6 of the BCI Act sets out what conduct will amount to unlawful coercive or discriminatory conduct. It includes prohibitions on organisising any action or threatening to take action against a person with the intent to coerce that person to:

  • employ or not employ a particular individual, or engage a contractor;
  • allocate or not allocate certain work to an individual;
  • nominate a particular superannuation fund to receive an employees contributions;
  • make, vary or terminate a building enterprise agreement

Enforcement and Penalties

The ABCC when enforcing the 2016 Code, the BCI Act and the Fair Work Act has the power to commence proceedings against individuals or organisations that breach the legislation and can seek substantial penalties. Penalties under the BCI Act (which can apply per breach) have increased from:

  • $10,800 to $36,000 for individuals, and
  • $54,000 to $180,000 for corporations.

Investigative Powers

ABCC inspectors have broad powers to investigate potential breaches of the Act or the Code. They can enter the premises for inspection if there is a reasonable belief that there is relevant information available on the premises. The ABCC can also request an examination notice to obtain copies of documents or conduct interviews of relevant people to the investigation of a breach. 

Significantly, there is a new requirement that the ABCC act impartially between all industry participants by adopting policies and procedures and applying resources in a ‘reasonable and proportionate manner’. The ABCC Commissioner can be terminated if s/he fails to perform their role in this manner.

How Will This Affect Industry Participants?

If you operate in the building and construction industry and think the BCI Act may apply, you should review your procedures for managing industrial action. This includes reviewing record-keeping processes if the ABCC requests you produce documents.

If you have submitted a tender or expression of interest for a Commonwealth funded project, or may do so in the future, review the processes you have in place to ensure they are Code compliant. It’s worthwhile having a building and construction lawyer review your current process to assist you in identifying any deficiencies. 

If you are a head contractor, it’s also sensible to have a lawyer review your commercial contracts for protections should a subcontractor fail to comply with the Code.  

Industry participants have until 29 November 2018 to make their agreement comply with the 2016 Code. Any agreements entered into after that date must be Code compliant. If you have any questions or need assistance reviewing and updating your enterprise agreements, get in touch on 1300 544 755.

Bonnie-Anne Talese
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