The Federal Government released new Implementation Guidelines for the National Code of Practice for the Building and Construction Industry on 9 July 2009.

The new Guidelines will only apply where expressions of interest or tenders are called for after 1 August 2009 and do not apply to expressions of interest before this time.

Companies tendering for Commonwealth construction projects are required to continue to comply with the National Code of Practice for the Construction Industry 1997 (the Code) and the Guidelines issued under the Code.

The changes have been made to the Guidelines as a result of:

  • the Fair Work Act 2009;
  • the report by Murray Wilcox QC, Transition to Fair Work Australia for the Building and Construction Industry; and
  • consultations with State and Territory Governments and employee and employer associations.

The significant changes are as follows:

Scope

In accordance with the recommendations made by Murray Wilcox QC, the new Guidelines no longer state that the Code and Guidelines apply to material supply contracts and off site workers.

Unregistered Agreements

The Guidelines now specifically provide that the use of unregistered written agreements (other than common law agreements between an employer and an individual employee) are non compliant with the Code and Guidelines.

An unregistered agreement is an individual or collective agreement that has not been certified, registered, lodged or otherwise approved under an industrial law, but is concerned with the relationship between an employer and its employees and/or registered or unregistered industrial associations.

Under the previous Guidelines issued in June 2006 (June 2006 Guidelines) unregistered agreements were permitted provided that they complied with the Code and Guidelines. However, an unregistered agreement could not provide for a site allowance or include matters that would be prohibited content if included in a workplace agreement.

The new Guidelines do not prevent the inclusion of site allowances in unregistered individual common law employment contracts.

Restrictive Work Practices

The previous section 8.10.4 in the June 2006 Guidelines has been removed. That section prohibited the inclusion of certain types of provisions dealing with restrictive work practices in industrial instruments. Industrial instruments that included those types of provisions were non compliant with the Code and Guidelines.

Those types of provisions included prohibitions on:

  • ratios of employees;
  • ‘one-in-all-in’ arrangements for practices such as overtime;
  • ‘last on first off’ clauses for redundancy situations;
  • types of labour, for example the use of subcontractors; and
  • ‘all in payments’.

This section of the June 2006 Guidelines also required that any site allowance be contained in a registered industrial agreement and not in an unregistered agreement.

In one of the most significant changes under the Guidelines these requirements have all been removed.

It is now open to unions to seek to negotiate the inclusion of these types of provisions in industrial agreements.

Sham Contracting Arrangements

The Guidelines now specifically provide that sham contracting arrangements, where an employment relationship is held out by an employer as an independent contracting relationship, are inconsistent with the Code and Guidelines.

Employers need to ensure that they have appropriate arrangements in place with contractors and subcontractors, particularly where they are unincorporated and sole traders.

Workplace Arrangements

The emphasis on the importance of relationships at the workplace level contained in the June 2006 Guidelines has been removed. The focus of the Guidelines is now on work arrangements that involve duress or undue influence.

The new Guidelines now state that “The Code prohibits any party requiring or attempting to unduly influence (either through the tendering process or otherwise) subcontractors or suppliers to have particular workplace arrangements in place.”

Project Agreements and Project Awards

There are tighter restrictions on the use of project agreements and awards. Project agreements will not generally be permitted on projects worth less than $100 million - this is up from the current $25 million.

Freedom of Association

Section 6.4 of the June 2006 Guidelines dealing with Freedom of Association has been amended, and in particular several practices which were specifically mentioned in the June 2006 Guidelines as being inconsistent with the Code have been removed. This includes, for example, the removal of prohibitions on:

‘posters, helmets, stickers or union logos or flags etcetera that imply that union membership is anything other than a matter for individual choice.’

Right of Entry

The new Guidelines state that “Parties tendering for Australian Government funded construction activity must ensure they and their subcontractors strictly comply with their right of entry requirements in accordance with the applicable legislation, court and tribunal orders, and industrial instruments. These right of entry requirements include those applicable to workplace relations and OHS&R. These procedures govern access to employer and employee records and/or the holding of discussions with employees.”

The emphasis has changed from the June 2006 Guidelines.

Under the June 2006 Guidelines:

  • No employer or employee was to grant admission to a site by an employee or official of an industrial association other than in strict compliance with the Workplace Relations Act and any relevant OHS or State legislation;
  • Attempts to avoid right of entry requirements for union officials by allowing delegates or shop stewards to perform the same functions were inconsistent with the Code and Guidelines; and
  • An industrial instrument could not provide for any person or entity not a party to that agreement to ‘monitor’ its operation.

Under the new Guidelines the emphasis is on strict compliance with the applicable legislative requirements. A failure to allow entry when entry is permitted under the Fair Work Act 2009 would now be a breach of the Guidelines. Prosecution for breaching right of entry provisions or unduly hindering or obstructing an official would now be a breach of the Code and Guidelines.

There is now greater emphasis on allowing union officials appropriate access to sites and employers that do not comply with their legal obligations will be in breach.

Employers should ensure that they fully understand the requirements and that appropriate procedures and protocols are put in place.

Dispute Settlement

The new Guidelines no longer contain an express requirement that agreements contain arrangements for graduated steps for dispute resolution and provide for reasonable time limits.

The new Guidelines no longer expressly require that the dispute settlement provisions allow for freedom of choice in representation.

The new Guidelines no longer require that where there is provision for an arbitrated outcome that the clause contain an express limitation that any outcome not be inconsistent with the Code and Guidelines.

Employers should consider what dispute settlement provisions they will seek to include in future Enterprise Agreements as a part of their overall strategy for managing workplace issues.

Good Faith Bargaining

The new Guidelines expressly state that all parties must demonstrate good faith when bargaining which is consistent with the Good Faith Bargaining provisions included in the Fair Work Act 2009.

Security of Payments

The new Guidelines contain a new section dealing with security of payment which requires that parties make payments in a timely manner and settle any disputes over payments in a reasonable, timely and cooperative manner. This is likely to include payments to employees and subcontractors.

Employers may find that a protracted dispute with a union over whether all payments have been made to employees under applicable industrial instruments results in a breach of the Code and Guidelines.

Preference for Companies

The Government will be able to give preference to companies that demonstrate a commitment to training as well as companies that demonstrate a commitment to increasing the participation of women in the industry or the creation of jobs for indigenous employees.

This change will encourage construction and building employers to increase their equal opportunity and employee development efforts to provide an edge in bidding for Government funded projects

What should Employers do?

Employers who are seeking to be Code compliant should carefully review their industrial instruments and practices to ensure that they remain Code compliant after 1 August 2009.

In particular Employers should ensure that they fully understand their legal obligations concerning union right of entry and that their site managers are properly trained in this area.