In brief

  • The new Victorian Code of Practice for the Building and Construction Industry 2014 (Victorian Code) came into effect on 8 October 2014, and applies to all entities tendering for, and delivering, Victorian Government building and construction work, as well as their related entities.
  • An employer covered by the Victorian Code must ensure that any agreement, arrangement, practice or procedure that it enters into after 8 October 2014 is compliant with the code – this includes enterprise agreements, common law contracts and policies entered into after 8 October 2014. 
  • The consequences of non-compliance with the Victorian Code are potentially severe, with the potential for sanctions banning entities (and their related companies) from tendering for future Victorian government building and construction work.
  • In addition, though it has not yet commenced, the Building and Construction Industry (Fair and Lawful Building Sites) Code 2014 (Federal Code) will apply retrospectively from 24 April 2014 to employers in the building and construction industry who are involved in Commonwealth funded building work, in the event that enabling legislation is passed by Federal Parliament.
  • In light of these developments, it is vital that employers take action to ensure they are compliant with the Victorian and Federal Codes, particularly those preparing for their next round of bargaining for enterprise agreements.

When does the new Victorian Code apply?

The new Victorian Code came into effect on 8 October 2014.1 It replaces the 1999 Victorian Code of Practice for the Building and Construction Industry (1999 Victorian Code) and the most recent Implementation Guidelines.

The Victorian Code applies:

  • to ‘participants’ (which includes clients, contractors, suppliers, and industry associations) and their related entities,
  • in respect of all public building and construction work undertaken in Victoria from 8 October 2014,
  • from either:
    • 8 October 2014, if a participant or its related entities was already subject to the Implementation Guidelines, or
    • the date on which a participant or its related entity expresses interest in or tenders for on-site public building and construction work, if they were not already subject to the Implementation Guidelines.

Once a participant is subject to the Victorian Code, it will also apply to any subsequent privately funded building and construction work undertaken by that participant.

Compliance with the Victorian Code

All workplace conduct, agreements, arrangements, practices or procedures, including  enterprise agreements, other workplace instruments, common law contracts, and policies (Arrangements) must comply with the Victorian Code.

An Arrangement will not be Code-compliant if, among other things, it:

  • imposes limits on the rights of a participant to manage its business or to improve productivity,
  • is designed to avoid a participant’s legal obligations,
  • discriminates against certain persons or classes or employees or contractors,
  • is inconsistent with the freedom of association requirements set out in the Victorian Code,
  • provides for or permits unregistered written agreements,
  • requires the display of union logos, mottos or indicia to company supplied property or equipment, or
  • requires consultation with or approval of a union in relation to the engagement of subcontractors, or prescribes the terms and conditions on which subcontractors are engaged.

The key exception is that if an Arrangement was entered into prior to 8 October 2014, it will not be inconsistent with the Victorian Code if the type of Arrangement is listed under clause 6.1 of the Victorian Code. Clause 6.1 sets out Arrangements that are normally considered non-compliant, including those listed at the dot points above. The exception ‘deems’ these types of Arrangements to be compliant with the Victorian Code as long as they were entered into before 8 October 2014.

An Arrangement entered into after 8 October 2014 will not be captured by the exception, and companies covered by the Victorian Code need to ensure that agreements made after 8 October 2014 comply.

Consequences of non-compliance

The Construction Code Compliance Unit (CCCU) is the body responsible for monitoring participants’ compliance with the Victorian Code and investigating alleged breaches.

The CCCU is required to report to the Minister for Finance all proven breaches. Any such breaches can lead to sanctions against participants including formal written warnings, reporting the breach to an appropriate statutory body, and a reduction in tendering opportunities for future government work.

Differences under the new Victorian Code

The Victorian Code 2014 differs in a number of respects from earlier versions of the 1999 Victorian Code and Implementation Guidelines, though none of the changes alter the fundamental obligations of parties already subject to these instruments.

A table summarising the key differences under the Victorian Code 2014 can be viewed here.

What is happening with the Federal Code?

In April 2014, the Federal Government published an advance release of its proposed Building and Construction Industry (Fair and Lawful Building Sites) Code 2014 (Federal Code).2 The Federal Code has not yet commenced, as it is due to commence when section 3 of the Building and Construction Industry (Improving Productivity) Bill 2013 passes the Senate.

The Federal Code is broadly similar in content to the Victorian Code, and employers whose enterprise agreements do not comply with the Federal Code face the risk of sanctions prohibiting them from tendering for, or being awarded, Commonwealth funded building work.

Once the Federal Code does commence, it will operate retrospectively and apply to any enterprise agreements that are made after 24 April 2014. It is therefore prudent for employers in the building and construction industry to ensure that any enterprise agreements being voted on by employees are compliant with both the Federal Code and the Victorian Code (if applicable).

What should employers be doing now?

Any employer intending to carry out Commonwealth or Victorian Government building and construction work will need to prioritise compliance with both the Federal Code and Victorian Code (the Codes).

There are a number of steps that employers can take now to ensure compliance with the Codes going forward. Among other things:

  • employers should review their current arrangements and identify any areas that might be deemed to be non-compliant with the Codes in future – this includes any policies or other common law employment agreements that might be ‘entered into’ going forward, and
  • employers negotiating new enterprise agreements with their workforce should ensure that any changes required to ensure compliance with the Codes are part of their overall planning for bargaining negotiations.