From 1 January 2017, a new code of conduct will apply to contractors tendering or entering into contracts for new State building and construction projects.

The Western Australian Building and Construction Industry Code of Conduct 2016 (the “Code”) seeks to ensure that the State only contracts with contractors who act in a safe and responsible manner in their dealings with the State and the broader construction industry by promoting positive workplace relations, safe practices, and fair subcontracting policies. If a contractor (or its subcontractors) breach the Code, it could potentially see it (and their related entities) excluded from working on future State construction projects.

Who does it apply to?

The Code applies to contractors who tender for, or execute a contract to undertake:

  • State Building Work after 1 January 2017 – initially for contracts worth more than $10 million (subject to an expression of interest or tender process); then to all other contracts once suitable model clauses have been developed (anticipated by mid-2017); and
  • Private Covered Building Work for which the tender documentation was released, or the contract was executed, while the contractor was subject to the Code.

The Code will apply from the time the contractor submits its tender response until it is either unsuccessful in the tender or, if it is successful, once the relevant contract ends. A contractor will only be covered by the Code if the State Tender Process or contract for State Building Work includes a term or condition requiring compliance. That is, compliance is not a legislative requirement.

Obligations under the Code

The Code will apply to the contractor’s on-site activities and related off-site activities. The obligations imposed by the Code include the following.

Ensuring compliance by subcontractors and Building Industry Participants Contractors must pass through the obligation to comply with the Code to their subcontractors (and sub-subcontractors), including those undertaking Private Covered Building Work and take reasonable steps to ensure Code compliance by subcontractors and any Building Industry Participants. This is broader than the Commonwealth’s Building Code, which doesn’t extend to subcontractors on private projects. However, a contractor will not be in breach of the Code for a subcontractor’s acts or omissions if the acts or omissions occurred in the context of Private Covered Building Work and were necessary in order to avoid breaching an obligation owed to a third party in certain circumstances.
Workplace Relations Management Plan (“WRMP”) Similarly to the Commonwealth code, a Code-compliant WRMP must be in place prior to commencing any State Building Work exceeding $10 million in value. To be compliant, the WRMP must either satisfy the requirements set out in Schedule 2 of the Code or the requirements set out in the Commonwealth code.
Security of Payment Contractors must not include any prohibited provisions under the Construction Contracts Act 2004 (WA) (“CCA”) in their contracts, must make ‘reasonable and timely’ payments and ensure payment disputes are resolved in a ‘reasonable, timely and consultative way.’
Interactions with the Building and Construction Code Monitoring Unit (“BCCMU”) Contractors must: • provide the BCCMU with access to the site, employees, contractors, documents and information  • assist the BCCMU in accessing information • not obstruct the BCCMU. A contractor will not be in breach for failing to comply with these requirements if the breach was necessary to prevent the contractor from breaching a contractual obligation owed to a third party in certain circumstances.
Execution of private contracts over $2 million Contractors must advise the BCCMU in writing when it executes a contract for Private Building Work in excess of $2 million.
Compliance with laws, orders and determinations Contractors must comply with all relevant building and industrial laws as set out in the Code, including any “Relevant Orders”, and must not enter into or facilitate any arrangement which conflicts with a Relevant Order. Relevant Orders include adjudication determinations made under the CCA.
Obligations regarding workplace relations and safety The Code also contains a number of prohibitions and restrictions that relate to unregistered or un-certified agreements, sham contracting, harsh or unfair contracts, the engagement of non-citizens or non-residents, workplace arrangements, above entitlement payments, freedom of association, entry to premises, dispute settlement procedures, workplace reform, industrial action, health & safety, matters involving small businesses, and collusive tendering.
Breach and enforcing compliance Contractors must notify the BCCMU of any breach or suspected breach as soon as practicable within 48 hours of becoming aware.   The BCCMU has a general power to undertake monitoring and compliance activities, including site visits and inspections, interrogations, audits and record inspection, reporting breaches to Government agencies or statutory bodies and allowing contractors to rectify any breaches. The BCCMU may also prepare a Code Compliance Report addressing the contractor’s compliance or non-compliance with the Code.  Any findings of a material non-compliance can jeopardise the prospects of, or prevent, a contractor and its related entities from being awarded future State Building Work.

More information

An Implementation Guide is available on the Department of Commerce website to assist Building Contractors in complying with the Code. The Department will also run information sessions for Building Contractors in December 2016 and January 2017.