Employers connected with the construction industry will be aware that in April the Minister for Employment issued an advance release of the Building and Construction Industry (Fair and Lawful Building Sites) Code (Draft Code) as part of the proposed reforms of the building and construction industry.  The advance release coincided with attempts by construction unions to pre-empt the new code by making agreements preserving non-compliant content before it commenced operation.

In an early win for the reform measure, the advance release has curtailed this strategy by providing that the Draft Code will apply to agreements made after 24 April 2014. Our recent experience in the sector reveals that construction unions have altered course: ceasing to press for early agreements, and instead seeking to extend the operation of existing agreements.

The Draft Code substantially unwinds the measures put in place by the Rudd and Gillard governments, and closely reflects the form of the National Building Code of Practice and Implementation Guidelines in operation between 2006 and 2009 under the Howard government and the state codes and guidelines subsequently implemented in Victoria, New South Wales and Queensland.

Previous experience at federal level was that the National Building Code of Practice and Implementation Guidelines, together with scrutiny and “front end” enforcement undertaken by the ABCC, changed the typical “leverage equation” for employers and contractors negotiating industrial agreements. These measures promoted compliance (at least superficially) and were particularly effective for contractors, because the longer-term value of compliance exceeded the shorter-term value associated with agreeing to union requests.  

The Draft Code seeks to reinstate this equation and achieve industry reform through use of the Commonwealth government’s commercial buying power.  It will apply to a broad range of building works which receive direct or indirect Commonwealth funding, requiring both building contractors and other industry participants to meet certain standards in their industrial arrangements.  Importantly, once the Draft Code applies, many of the standards must be met by all related companies on any other new contracts (including privately funded contracts).

Past experience demonstrates that construction unions will continue to press for arrangements designed to delay the impact of and/or “work around” the Draft Code. This raises an important risk assessment for employers engaging with unions in the building and engineering construction sector. Employers with a consistent and principled approach towards achieving satisfactory workplace outcomes may find additional leverage from the new arrangements. The challenge is to avoid relying solely on Code-compliance as a rationale for resisting claims, which may invite pressure to accede to creative (but questionable) methods to obtain the desired result.