The Building Code 2013 (Code), which takes the form of a legislative instrument, codifies and replaces the Australian Government Implementation Guidelines for the National Code of Practice for the Construction Industry and various related guidelines. The Code is accompanied by the Supporting Guidelines for Commonwealth Funding Entities issued February 2013 (Supporting Guidelines).  

The stated intent of the Code and the Supporting Guidelines is to use the Federal Government’s purchasing power to ‘promote best practice and ensure compliance with all legal obligations imposed on building contractors and building industry participants’.  

Who does the Code apply to?  

The Code applies to:  

  • building contractors and building industry participants  
  • who submit an expression of interest or tender  
  • for various types of directly or indirectly Federal Government funded building work.  

The Code also now applies to all projects covered by any form of previous guidelines. However, the Code only applies in relation to on-site activities and conduct that relates to on-site activities.  

What is the Code?  

The Code has been issued under section 27(1) of the Fair Work (Building Industry) Act 2012 (Cth) and is essentially a workplace relations code of practice for the building industry. The Code contains obligations on building contractors and building industry participants to, among other things:  

  • ensure there is a compliant work health safety and rehabilitation (WHS&R) system in place for relevant building work  
  • require compliance with the Code from all subcontractors  
  • not partake in “sham-contracting”  
  • ensure that persons who are engaged to undertake building work for the contractor or participant are lawfully entitled to be engaged under Australian law  
  • include a genuine dispute resolution procedure in its enterprise agreements.

Section 20 of the Code relates to WHS&R requirements and obligations. The section stipulates that a building contractor or building industry participant must have a WHS&R management system that:  

  • is fully documented and clearly communicated throughout the relevant business
  • systematically covers the ways in which people are expected to work safely
  • shows the ways in which the contractor or participant will ensure that other people work safely  
  • demonstrates how the contractor or participant intends to improve its practices over time.  

A WHS&R management plan must be prepared prior to a contractor or participant commencing work, must be comprehensive and site specific and must comply with other legislation.  

Industry participants should note that the Federal Government has introduced the Australian Government Building and Construction OHS Accreditation Scheme (Scheme) which is separate from the Code and Supporting Guidelines. The Scheme is administered by the Federal Safety Commissioner and applies to building work that is directly or indirectly funded by the Federal Government. Where the value of such work exceeds various financial thresholds, a builder cannot enter into a head contract to undertake that work unless they are accredited pursuant to the Scheme.

How does this affect you?

Despite the Federal Government indicating that it is not the intent of the Code to create new obligations on industry participants, the introduction of the Code has changed the industry regulation landscape, including by adding new obligations and expanding previous obligations on building industry participants. Possible sanctions for breaching the Code include an exclusion from tendering opportunities for Federal Government building work for a fixed period of time.  

State regulation of the building and construction industry

The Code purports to be a comprehensive statement of:  

  • the matters required or not required to be included in an enterprise agreement  
  • the workplace practices required to be carried out or not carried out  
  • the arrangements required to be made or not to be made.

by an industry participant or building contractor.  

For example, the Code expressly notes that State guidelines that apply to the procurement of building work cannot include additional requirements about these matters. However, various State Governments have their own approach to regulating workplace relations in the building industry.  

In Victoria, the building industry has recently witnessed high profile attempts by the Victorian Government to strictly enforce compliance with the Victorian Code of Practice for the Building and Construction Industry (Victorian Code) being successfully challenged by the Construction, Forestry, Mining and Energy Union (CFMEU) in the Federal Court.  

Decisions of the Federal Court  

The CFMEU brought two separate proceedings concerning the new Bendigo Hospital and Circus Oz projects in Victoria. In both cases potential contractors, namely Lend Lease Project Management & Construction (Australia) Pty Ltd (Lend Lease) and Eco Recyclers Pty Ltd (Eco), had entered into enterprise agreements with CFMEU members which were noncompliant with the Victorian Code.  

Despite both enterprise agreements being approved by Fair Work Australia, the Victorian Construction Code Compliance Unit communicated to Lend Lease and Eco that they were not compliant with the Victorian Code.  

Justice Bromberg found that the State of Victoria had breached the Fair Work Act 2009 (Cth) (FW Act) by threatening to take adverse action against Lend Lease’s employees and taking adverse action with the intent to coerce Eco and its employees to exercise their workplace rights to vary their enterprise agreement.  

Consequences and next steps  

In June 2013, the Victorian Government released new implementation guidelines that expressly clarify the relationship of the Victorian Code with the Code and the FW Act.  

Further, in light of the proceedings, the Victorian, New South Wales and Queensland Governments have issued practice directions indicating that their respective implementation guidelines do not operate on or in relation to Workplace Instrument Based Conduct.  

As a consequence of the decisions, contractors do not need to amend enterprise agreements to tender for Victorian Government work. However, the Victorian code still applies and must be complied with including in relation to health and safety matters.