The Building Code 2013 (Building Code) and the Building Code 2013 – Supporting Guidelines for Commonwealth Funding Entities (Supporting Guidelines) took effect on 1 February 2013. The Building Code and Supporting Guidelines replace all previous versions of the Implementation Guidelines for the National Code of Practice for the Construction Industry (Implementation Guidelines).
While the Building Code 2013 Explanatory Memorandum states that the Building Code does not create new obligations, but rather codifies existing ones, this is not entirely accurate.
This article considers some of the some of the key differences which building employers need to be aware of.
Who does the Building Code apply to?
The Building Code applies to building contractors and building industry participants (Building Contractors and Participants) if they submit (or have previously submitted) an expression of interest or tender for Commonwealth funded building work (including projects which are directly or indirectly funded by the Commonwealth including Public Private Partnerships for the delivery of functions or services of the Commonwealth).
Therefore, Building Contractors and Participants who submitted an expression of interest or tender for Commonwealth building work prior to 1 February 2013 will also be subject to the Building Code, irrespective of whether they were covered by previous versions of the Implementation Guidelines.
Once a Building Contractor or Participant has become subject to the Building Code, they must also comply with the Building Code on privately funded building work.
Building Contractors and Participants must also ensure that their contractors comply with the Building Code on building work, other than privately funded building work.
What building work does the Building Code apply to?
Again, the intention was that the scope of work covered by the Building Code would remain the same.
The previous Implementation Guidelines 2012 applied to parties who participate in on site construction activities (including building work performed on an auxiliary or holding sites separate from the primary construction site(s)), but the Building Code is also expressed to apply to “conduct that relates to on-site activities but does not occur on site”. We are yet to see what this means in practice.
What other significant changes have been introduced?
Some of the main changes are:
- Interaction with State Procurement Guidelines: the Building Code attempts to exclude the operation of state and territory guidelines which apply to the procurement of building work, including guidelines that impose additional requirements about:
- the matters which a Building Contractor or Participant can or cannot include in an enterprise agreement; or
- workplace practices that the Building Contractor or Participant is or is not required to carry out in relation to the building work.
Last year the Victorian Government introduced The Implementation Guidelines to the Victorian Code of Practice for the Building and Construction Industry December 2012 (Victorian Guidelines), which was designed to stamp out inappropriate workplace practices in the building and construction industry. On 6 December 2012, the NSW Government released draft guidelines for public consultation in similar terms to the Victorian Guidelines (Draft NSW Guidelines). Click here to view our previous update.
The Victorian Government took steps to exclude certain building companies from undertaking state government work because their enterprise agreements did not meet the requirements of the Victorian Guidelines. This is currently subject to legal challenge by the Construction, Forestry, Mining and Energy Union.
The changes to the Building Code appear to be a response to this controversy. However, it is questionable what effect this provision in the Building Code will have, because while the Building Code can override a state law, it cannot override a state policy such as the Victorian Guidelines. This means that the safest course for a Building Employer to take, if they wish to engage in Victorian government building work, is to comply with both the Victorian Guidelines and the Building Code.
- Enterprise Bargaining: under the Building Code, Building Contractors and Participants cannot refuse to consider a proposal made by a bargaining representative, such as a Union, on the grounds that a third party (such as State Government) has indicated that it will or will not procure its services if it agrees to proposal. This is in direct conflict with the Victorian Guidelines on this issue.
This will pose a dilemma for Building Contractors and Participants who are engaged in negotiations for new enterprise agreements, as there will be commercial risks of including terms in their enterprise agreements that are proscribed under the Victorian Guidelines or the Proposed NSW Guidelines.
- Right of entry: previously the Implementation Guidelines required Building Contractors and Participants to strictly comply with legislated right of entry requirements. The Building Code now merely requires Building Contractors and Participants to “comply” with all right of entry laws and notes that the relevant laws may not regulate all circumstances in which a person (whether a permit holder or not) may enter a worksite. This less restrictive regime could potentially create difficulties for Building Employers who have relied on a strict application right of entry laws.
- Work Health Safety and Rehabilitation: whilst there appear to be little change to the requirements previously contained in the Implementation Guidelines with respect to the requirement to have a WHS&R management system, the Building Code has expressed the requirements for a management plan as minimum requirements (as opposed to general requirements).
What are the consequences of breaching the Building Code?
Although there are no monetary penalties for failing to comply with the Building Code, the Code Monitoring Group in the Department of Education, Employment and Workplace Relations (CMG) may impose certain sanctions. For instance, the CMG can issue a formal warning if a breach occurs. However, if a first breach is of serious nature, such as a breach of applicable legislation, the party can be precluded from tendering for Commonwealth-funded work for up to six months, and the period of preclusion may be extended a further six months for each breach thereafter. A sanction of this nature can have disastrous commercial effects on an organisation.
What should you do next?
Every organisation who seeks to perform building work funded by Commonwealth should ensure that it and its contractors are code complaint so that they are not ‘blindsided’ by the Building Code 2013.