Businesses seeking building work from the Commonwealth, NSW, Victorian or Queensland governments must comply with the building code issued by the relevant government authority which sets out the conditions on which funding will be granted. These building codes are a controversial political issue as they relate to the bigger question of to what extent the building industry requires government regulation, particularly in respect of the role of unions.
It is a rapidly changing environment, including retrospective operation of the Commonwealth regime, which may have a devastating business impact if it is not correctly applied. Failure to comply with a relevant code may mean that businesses are excluded from the government tendering process.
For employers in the construction industry, this is well known and well understood. However, other businesses may be caught by the broad operation of these building codes and need to prepare accordingly. A business may also be caught by its related entities and these related entities may need to be code compliant.
The current Commonwealth code
The Building Code 2013 commenced on 1 February 2013.1 Supporting Guidelines were issued alongside it.2 The Code applies to any work in respect of which the Commonwealth government provides funding directly or indirectly. The Building Code 2013 aims to establish higher standards of workplace relations behaviour and improve flexibility and productivity.
The Building Code 2013 remains in effect today even though it was implemented by the previous Labor government and the current Coalition government has pledged to replace it with a new code.3
The proposed Commonwealth Code
On 17 April 2014, the Coalition government published an advance release of the Building and Construction Industry (Fair and Lawful Building Sites) Code 2014 (2014 Code). A revised advance release of the 2014 Code was released on 28 November 2014.4 As yet, no supporting guidelines have been introduced although an Explanatory Statement has been released.5
If it takes effect, the 2014 Code will, among other things, require strict compliance with right of entry laws contained in the Fair Work Act 2009 (Cth) by all industry participants. It will not allow enterprise agreements to contain restrictive work practices or discriminatory provisions. It will prohibit reading down clauses in enterprise agreements and require a code covered entity to comply with its obligations under the Migration Act 1958 (Cth).
Although the 2014 Code has not yet come into effect, it has been announced that it will apply retrospectively in respect of enterprise agreements made on or after 24 April 2014. This means that, from the commencement of the 2014 Code, contractors covered by enterprise agreements that were made on or after 24 April 2014 that do not meet the 2014 Code’s content requirements, will not be eligible to tender for or be awarded Commonwealth- funded building work. Businesses negotiating enterprise agreements now within the building industry, or who are a related entity, must therefore ensure that they comply with the 2014 Code.
The Coalition government has also introduced the Building and Construction Industry (Improving Productivity) Bill into Parliament.6 If the Bill passes, it will re-establish the Australian Building and Construction Commission as a specialist regulator of the sector.
The New South Wales Code
Tenderers for building work which is directly or indirectly funded by the NSW government are subject to the NSW Code of Practice for Procurement 2005 (NSW Code).7 The NSW Code is to be read in conjunction with the Implementation Guidelines to the New South Wales Code of Practice for Procurement: Building and Construction (issued 1 July 2013) (NSW Guidelines).8
This means that a building industry participant must comply with the NSW Code and NSW Guidelines in order to be eligible to undertake NSW Government building work.
In understanding the NSW Code and NSW Guidelines and their impact on businesses, it is important to note that a practice direction applies in NSW.9 This practice direction provides that certain aspects of the NSW Guidelines will be overridden by terms found in modern awards or enterprise agreements made under the Fair Work Act. In practice, this may relieve businesses of some of the more onerous aspects of the NSW Code and NSW Guidelines.
The Victorian Code
Tenderers for building work which was directly or indirectly funded by the Victorian government were formerly subject to the Victorian Code of Practice for the Building and Construction Industry 2014, until it was abolished on 18 January 2015 by the newly elected Labor government in fulfilment of an election promise. The Victorian Construction Code Compliance Unit was also abolished on the same day.
No specific code currently applies to Victorian government projects, although contractors must continue to comply with all other legislative requirements on projects. The Victorian government has published an FAQ in light of these new circumstances.10
The Queensland Code
Tenderers for building work which is directly or indirectly funded by the Queensland government are subject to the Queensland Code of Practice for the Building and Construction Industry (Queensland Code).11 The Queensland Code must also be read in conjunction with the Implementation Guidelines to the Queensland Code of Practice for the Building and Construction Industry (Queensland Guidelines)12 which expand on the priorities and objectives of the Queensland Code. As in NSW, a practice direction applies and parts of the Queensland Guidelines will be overridden by any conflicting terms found in modern awards or enterprise agreements made under the Fair Work Act.13
It must be noted that the future of the Queensland Code is currently uncertain, following the 31 January 2015 election in that State. The Queensland Code had been implemented by the previous Coalition government and may now be subject to review.
Interaction of the Codes
Businesses which tender for work from the Federal, NSW or Queensland governments must comply with each government’s code and, if Victoria introduces a new code, with that code too in respect of Victorian government projects. This leads to difficulties as the codes are not consistent with one another, which is of particular concern given that the different codes are in a state of flux.
The state of play for businesses in the building industry in NSW, Victoria & Queensland
It is vital that businesses ensure that they comply with their relevant codes if they wish to tender for government work in the future. This requires consideration of their current enterprise agreements and careful deliberations if new enterprise agreements are being negotiated. If an otherwise innocuous provision of an enterprise agreement does not comply with a code, it could cost a business the opportunity to tender for government work until the provision is rectified.
It is hoped that this complex situation will be simplified by the implementation of uniform codes and guidelines in the future. There are unfortunately no current proposals for such codes and businesses must therefore do their best to navigate the web of codes and guidelines now before them