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12 December, 2016
Building and Construction Industry (Improving Productivity) Bill 2013 and the Building and Construction Industry (Fair and Lawful Building Sites) Code 2014
What you need to know
The Building and Construction Industry (Improving Productivity) Bill 2013 was passed by the Senate earlier today, re-establishing the Australian Building and Construction Commission (ABCC).
Shortly after the Bill receives Royal Assent, the Minister for Employment will make the Building and Construction Industry (Fair and Lawful Building Sites) Code 2014 which will apply to all building industry participants that wish to tender for Commonwealth funded building work.
In passing the Bill, the Senate has granted building contractors covered by enterprise agreements made before the new Code is issued two years to comply with the enterprise agreement content requirements contained in the Code. Enterprise agreements made after the new Code is issued must comply with the Code's enterprise agreement content requirements.
What you need to do
Be aware of the expansion of the ABCC's jurisdiction (due to a broadening of the concept of "building work" under the Bill).
Be aware of the ABCC's enhanced investigative powers.
Entities working in the building and construction sector should review their employment-
related practices to ensure that they remain compliant with the Bill and the Code.
Organisations that engage building industry participants to perform building and construction work should review their construction contracts and determine whether any amendments are required to align with the Bill and the Code.
Keep across other potential areas for employment and industrial relations reforms, now that both the Registered Organisations Commission and ABCC legislation have been passed by the Parliament. The Government may consider other reforms now it has secured the passage of this Bill.
Background
This morning the Senate passed the Building and Construction Industry (Improving Productivity) Bill 2013, which was one of the triggers for the double dissolution election earlier this year. The Bill will re establish the Australian Building and Construction Commission (ABCC) as the workplace relations regulator for the building industry.
The reintroduction of the ABCC fulfils a promise made by the Coalition Government ahead of the 2010, 2013 and 2016 Federal elections.
The new building and construction regulatory regime
The purpose of the Bill is to:
- re-establish the ABCC;
- strengthen the ABCC's powers to police unlawful industrial action, coercion, discrimination and unenforceable agreements; and
- strengthen the ABCC's investigatory and enforcement powers.
In early 2014, the Minister published an advance release of the Building and Construction Industry (Fair and Lawful Building Sites) Code 2014 (the Code) which, once made, would replace the Building Code 2013. The Code sets out particular requirements that building industry participants must comply with. The Minister will formally issue the Code after the Bill has been passed by Parliament.
The Bill
The Bill departs from its predecessor (the Fair Work (Building Industry) Act 2012) in a number of respects including those set out below.
Building work
The definition of "building work" has been expanded to include transporting or supplying goods to building sites, including resources platforms, where work is, or may be, performed.
This change is intended to ensure that work on large projects is not disrupted by a delay in
the supply of materials.
Unlawful industrial action and picketing
Under the Bill unprotected industrial action or unlawful picketing can give rise to a Grade A civil penalty (of up to $180,000 for a union or corporation and up to $36,000 for an individual) being imposed.
The Bill defines an unlawful picket as action that:
- has the purpose of preventing or restricting a person from accessing or leaving a building site or an ancillary site; or
- directly prevents or restricts a person accessing or leaving a building site or an ancillary site; or
- would reasonably be expected to intimidate a person accessing or leaving a building site or an ancillary site.
An ancillary site is a location:
- from which goods are transported or supplied, or building industry participants are transported, directly to a building site; or
- at which a building industry participant does work relating to building work that it is performing or managing on a building site.
To constitute unlawful picketing such action must be:
- motivated for the purpose of supporting or advancing claims against a building industry participant in respect of the employment of employees or the engagement of contractors by the building industry participant;
- motivated for the purpose of advancing industrial objectives of a building association; or
- unlawful (apart from section 47).
n addition to exposure to civil penalties, the Bill permits any person to apply to a relevant court for an injunction to prevent or stop unlawful industrial action or an unlawful picket.
Coercion and discrimination
The anti-coercion provisions contained in Chapter 6 of the Bill will make it unlawful for a person to do something (or threaten to do something) intending to coerce another person:
- to employ or not employ a person;
- to engage or not engage a contractor;
- to allocate or not allocate duties or responsibilities relating to building work;
- to designate a building employee or contractor as having or not having particular duties or responsibilities;
- in relation to the choice of superannuation fund for the superannuation contributions of a building employee; or
- to agree to make, vary or terminate a Commonwealth industrial instrument relating to building work.
Reverse onus of proof
The Bill reverses the onus of proof in relation to allegations of coercion, discrimination and unlawful picketing in breach of the Bill. If it is alleged that a person engaged in such conduct for a particular reason, it will be presumed that the person took the action for that reason. It is for the accused to prove that their reasons for taking the action did not include the alleged reason.
The Senate amended another aspect of the Bill, by removing from the Bill a "burden of proof" requirement concerning industrial action. The amendment removes an express provision that placed the burden of proof on a person relying upon an exception that industrial action was taken due to a reasonable concern about an imminent risk to safety, to prove that the exception applied.
Investigatory powers
The Bill as originally drafted conferred on the Commissioner the power to issue examination notices. However, the Senate has amended that aspect of the Bill to essentially maintain the status quo in this regard by providing that examination notices can be issued by the Administrative Appeals Tribunal on application by the Commissioner if the Commissioner has reasonable grounds to believe that a person:
- has documents or information relevant to an investigation into a suspected contravention by a building industry participant; or
- is capable of giving evidence relevant to such an investigation.
A person can be required to produce documents or information, or attend before the Commissioner to answer questions relevant to the investigation.
The Bill expressly recognises that:
- a person may be represented by a lawyer when giving evidence in person pursuant to an examination notice;
- any information or answers given by a person under an examination notice, and any evidence obtained as a direct or indirect consequence of the person giving information or answers under an examination notice, are not admissible against that person in proceedings.
It is an offence, punishable by up to 6 months imprisonment, for a person to fail to comply with an examination notice.
The Code
Application of the Code to building industry participants
A building industry participant becomes covered by the Code the first time it submits an expression of interest for Commonwealth Government funded building work after the Code commences operation.
Related entities of a Code-covered entity become subject to the Code at the same time as the covered entity. According to the Explanatory Statement to the Code this is intended to ensure that a related entity is in the same position, and subject to the same obligations, as a Code-covered entity.
Prohibited conduct, arrangements and practices
Section 11 of the Code prohibits the inclusion of clauses in enterprise agreements which:
- impose, or purport to impose, limits on the Code covered entity's ability to manage its
- business, or improve productivity;
- discriminate between classes of employees or subcontractors; and
- are inconsistent with the freedom of association requirements in section 13 of the Code (for example, a clause requiring the Code-covered entity to employ a non-working shop steward).
The Code contains specific examples of clauses that are prohibited by section 11, including clauses which:
- prescribe the number of employees or subcontractors that must be engaged on a particular site or work area or at a particular time;
- require a Code-covered entity to consult or seek the approval from a union officer, delegate or representative in respect of:
- – the source or number of employees to be engaged;
- – the type of employment offered; or
- – the engagement of subcontractors;
- prescribe the terms and conditions on which subcontractors are engaged;
- limit the ability of an employer to make decisions about redundancy and redeployment;
- provide for the rights of a building association official to enter a workplace other than as provided by Part 3-4 of the Fair Work Act 2009 (Cth) (FW Act).
In addition, the Code expressly prohibits a Code-covered entity from engaging in conduct, or implementing a procedure or practice, which would have any of the effects prohibited by section 11 of the Code (including those listed above). In other words, a building industry participant must not engage in conduct or practices intended to circumvent the requirements of section 11. For example, a contractor is prohibited from agreeing to run a redundancy process on a 'last on, first off' basis even if such a practice is not referred to in the contractor's enterprise agreement.
It was the Government's intention that the enterprise agreement content requirements would apply to enterprise agreements made after 24 April 2014. However, the Senate's amendments to the Bill allow Code-covered entities who are subject to an enterprise agreement made before the new Code is issued two years from the passage of the Bill to comply with the content requirements of the Code, and permit them to tender for and be awarded Commonwealth funded building work during that period. Enterprise agreements made after the new Code is issued must comply with the enterprise agreement content requirements imposed by the Code.
Unregistered agreements
The Code also prohibits a Code-covered entity from bargaining for, making or implementing an agreement that will not be registered, lodged or otherwise approved under the FW Act or the Code-covered entity reasonably believes will not be so registered, lodged or otherwise approved, if it:
- deals with matters that would not permitted by section 11 of the Code if the agreement was an enterprise agreement;
- provides for terms, conditions or benefits of employment of employees or subcontractors; or
- restricts or limits the form or type of engagement that may be used to engage subcontractors.
The Explanatory Statement notes that this prohibition is directed at agreements, such as project agreements, that seek to impose terms and conditions on multiple employers at a building site.
However, employers may still enter into common law agreements or individual flexibility arrangements with their employees.
Right of entry
The Code requires Code-covered entities to ensure, so far as reasonably practicable, that entry by an officer of a building association to premises where building work is performed:
- is for a purpose for which a right of entry could be exercised under Part 3-4 of the FW Act or a relevant work health and safety law; and
- occurs in strict compliance with all applicable legislative requirements in Part 3-4 of the FW Act or a work health and safety law, including permit and notice requirements.
Compliance and enforcement
Building participants that wish to tender for and be awarded Government work must comply with the Code requirements.
A Code-covered entity that fails to comply may be issued with a formal warning by the Commissioner.
Alternatively, the Commissioner may impose an exclusion sanction for up to 12 months, meaning that the entity and any related entity (that the Commissioner determines) will be unable to tender for Government work during the sanction period.
Further reform possible
Now that the Government has had the Registered Organisations Commission and ABCC legislation passed by Parliament, it is possible that it in 2017 it may turn to consider other legislative reform, such as its response to the recommendations of the Productivity Commission's Inquiry Report into the Fair Work Act, the Heydon Royal Commission into Trade Union Governance and Corruption, and the Harper Review of Australia's competition law (in relation to secondary boycotts).
For further information, please contact:
Steven Amendola, Partner, Ashurst
steven.amendola@ashurst.com
