The new Building and Construction Industry (Improving Productivity) Act 2016 and the Building Code 2016 (Code) are in force. With the confusion surrounding the implementation of these instruments, many in the industry are left to work through these instruments to identify the implications of the commencement on their business and construction work.

While the old Building Code 2013 (2013 Code) continues to apply to some ongoing building work, the application of the Code will quickly extend as building industry participants submit expressions of interest/tenders for building work covered by the Code.

Importantly, once a building industry participant is covered by the Code, any related entities will also be covered. Further, while the Code will only start to apply to a building industry participant when they submit an expression of interest or tender for Commonwealth funded building work, once they do so the Code will apply to all building work (including private building work).

So, what are the major changes?

Content of enterprise agreements (EA)

Some of the most significant changes introduced by the new regime are the requirements relating to the content of enterprise agreements of Code covered entities. Although businesses have been aware of content requirements since the draft Building Code 2014 was released, this is the first time these content requirements will be in force. When compared against many current enterprise agreements in the industry, these restrictions will mean many current enterprise agreements require significant variation. For example, the Code contains prohibitions on clauses that:

  • impose or purport to impose limitations on the right of the employer to manage its business or improve productivity
  • prescribe the number of employees/subcontractors that may be employed/engaged
  • require consultation/approval from a union regarding the source or number of employees to be engaged, the type of employment offered, or the engagement of subcontractors
  • limit the ability of the Code covered entity to make decisions about redundancy, demobilisation or redeployment
  • provide for the monitoring of the enterprise agreement by persons other than employer/employees
  • require union logos, mottos or indicia to be affixed to the Code covered entities’ property (this would include, for example, flying union flags on cranes)
  • limit the ability of an employer to determine with its employees when and where work can be performed to meet operational requirements
  • provide for the rights of a union to enter premises other than in compliance with the right of entry provisions in the Fair Work Act 2009
  • provide for an area to be used by the union.

Many of these prohibitions and restrictions are broad and potentially far-reaching. For example, it is possible that clauses which prescribe certain rostering practices may be interpreted as imposing limits on the right of the employer to improve productivity.

For many building industry participants, these prohibitions will mean developing strategies to ensure compliance, such as changes to enterprise bargaining strategy or variation or termination of current enterprise agreements.

Timing of Code application and consequently, EA content requirements

The dates on which current enterprise agreements need to be compliant with the prohibitions in the Code vary. The date on which code compliance is required depends on several variables including:

  • when the enterprise agreement was made
    • before 25 April 2014 (and not varied)
    • on or after 25 April 2014 and before 2 December 2016
    • on or after 2 December 2016.
  • when an expression of interest or tender has been made for relevant work
    • before or after 2 December 2016
    • before 17 February 2017
    • between 17 February 2017 – 31 August 2017
    • on or after 1 September 2017.
  • when the work is to be awarded/performed.

Other major changes

The Code also imposes operational requirements on Code covered entities. Some of the most notable of these, given their differences to the 2013 Code, include:

  • the requirement that makes requests from funding entities (as defined in the Code) for expressions of interest/tenders for Commonwealth funded building work require the respondents to:
    • confirm they will comply with the Code in respect of the work from the time of lodging the expression of interest/tender
    • confirm they are eligible to perform Commonwealth funded building work at the time of lodging the expression of interest/tender
    • demonstrate a positive commitment to the provision of appropriate training and skill development for their workforce
  • entry to a premises by a union must now only be for the purposes for which a right of entry permit could be exercised under the Fair Work Act 2009 or relevant state occupational health and safety legislation, and entry to such persons must not be granted unless they strictly comply with all legislative requirements (i.e. permit and notice requirements)
  • Workplace Relations Management Plans (WRMP) must now be developed in respect of particular types of building work. A WRMP will demonstrate how the Code covered entity proposes to comply with the Code on the relevant project.

The new regime is vastly different to, and significantly more onerous than the previous regime, and requires affected businesses to make necessary changes over varying periods to varying projects.

Many businesses are grappling to understand when and how they need to comply with the Code requirements. Our experienced industrial relations lawyers would be pleased to meet with you to discuss the implications of the new regime on your business, and assist you to develop a strategy to ensure your business complies with the new regime by the necessary dates.