Eco Recyclers Pty Ltd (Eco), a contractor that performs demolition work in the construction industry, has become drawn into a larger dispute between the Construction, Forestry, Mining and Energy Union (CFMEU) and the Victorian Government, in relation to the Government’s “Implementation Guidelines to the Victorian Code of Practice for the Building and Construction Industry” (the Guidelines), which, along with the Code of Practice itself, applies to construction work undertaken for the Victorian Government.

The Code and Guidelines specify that any expression of interest or request for tender must include an undertaking to apply the Code and Guidelines to the project and to all future public and private construction work. This means that a tenderer for a public sector project will be in contravention of the Code and Guidelines if any of its projects (either public sector or private) or any related entity is non-compliant.

Under the Guidelines, the following clauses are prohibited in enterprise agreements that govern the relevant construction work:

  • Clauses requiring employers display a union or any other logo or indicia;
  • Clauses prescribing the number of temporary, casual or permanent employees on any particular site/area/within a company;
  • Terms and conditions of labour for any person not party to the instrument; and
  • Clauses that require an employer to consult or seek the approval of a union over the number, source, type (eg casual/contract) or payment of labour.

The dispute was the subject of an urgent interlocutory application by the CFMEU on 24 January 2013, who sought orders to:

  1. Prevent Eco (the first respondent) from seeking to vary its existing industrial agreement, the “Eco Recyclers P/L T/AS Eco Group and the CFMEU Demolition Enterprise Agreement 2011-2015” (the Eco Agreement), to comply with the Code/Guidelines;
  2. Restrain the second respondent, McCorkell Constructions Pty Ltd (McCorkell), the building company which proposed to engage Eco, from requiring the Eco Agreement to be compliant with the Code/Guidelines; and
  3. Similarly restrain the third respondent, the State of Victoria, from requiring or inducing McCorkell to not engage or use Eco’s services, because of any actual or perceived non-compliance of the Eco Agreement with the Guidelines.

The CFMEU alleged in the Federal Court that the requirement to comply with the Guidelines, constituted adverse action and coercion within the meaning of sections 340 and 343 of the Fair Work Act 2009 (FW Act).

In his decision, Justice Bromberg found that a serious issue to be tried existed in the CFMEU’s application, and that interim relief was appropriate. Pending the full hearing of the application, the Court accepted undertakings from the CFMEU, McCorkell and the State of Victoria that no steps would be taken to enforce Eco’s compliance with the Guidelines, on the basis that, if the application was dismissed, the CFMEU would pay compensation to all parties adversely affected by the ‘status quo’.

Until the Court determines the CFMEU’s application in relation to Eco and the Eco Agreement (and of course subject to any appeal), Victorian building contractors who undertake Government work are in the unenviable position of deciding whether or not to include (or retain) clauses in their enterprise agreements that would otherwise offend the Code/Guidelines. Non compliance with the Code/Guidelines may doom any tender for Government work, however to insist on a compliant enterprise agreement may invite similar legal proceedings. This will be an important ‘watch this space’ until a decision is made.