Building and construction industry participants will be familiar with Australian Commonwealth and State governments’ strategy of influencing workplace relations practices in the building and construction industry by way of procurement guidelines requiring compliance with particular workplace relations standards. These codes have changed frequently and maintaining compliance is a complex and challenging exercise.

Late 2012 and early 2013 have seen fresh activity in this area. The first Commonwealth Code in legislative instrument form was introduced in February 2013. In addition, Victoria, NSW and QLD have all moved, or indicated intention to move, to codes inconsistent with the Commonwealth Code - but may be frustrated by proceedings currently before the Federal Court.

The current state of play is summarised below.

Commonwealth

Effective 1 February 2013, the Commonwealth has codified its former Implementation Guidelines for the National Code of Practice for the Building and Construction Industry (Commonwealth Guidelines) by way of a legislative instrument, the Building Code 2013 (Building Code), made under the Fair Work (Building Industry) Act 2012 (Cth).

The Building Code is applicable to publicly and privately funded building work carried out by building contractors who are constitutional corporations (and their related entities) or building industry participants carrying out work in Commonwealth or Territory places. It is coupled with Supporting Guidelines for Commonwealth Funding Entities, including new model clauses to be inserted in tenders and contracts for publicly and privately funded construction activities.

In terms of workplace relations requirements, the Building Code is broadly similar to the 2012 Commonwealth Guidelines. Importantly, the 2009 and 2012 Commonwealth Guidelines significantly modified the immediately preceding 2006 version, for example by largely ceasing application to off-site work; removing the earlier focus on minimising third party (essentially, union) involvement in the employment relationship; and taking a far less prescriptive approach as to permissible content of workplace agreements.

The Building Code purports to apply to all projects, regardless of when tenders or expressions of interest were first sought. Previously, the version of the Commonwealth Guidelines which applied to a project depended on the date when tenders or expressions of interest were first sought.

Importantly in the context of the State approaches discussed below, the Building Code also purports to be a complete statement of requirements in relation to workplace relations practices and agreements and to prohibit State or Territory procurement guidelines containing additional requirements of this type.

Victoria

In July 2012 the Victorian government, dissatisfied with the Commonwealth’s changes to regulation of workplace relations in the industry, introduced its own Implementation Guidelines, monitored by the Construction Code Compliance Unit (CCCU). The Victorian Guidelines, which are expressed to supplement the National Code and Guidelines and are to be interpreted in a manner that does not contravene either, apply in relation to entities (and their related entities) undertaking publicly and privately funded on-site building work from 1 July 2012. To date there have been two versions issued, in April and December 2012. Application of the Victorian Guidelines may be waived in some cases.

The Victorian Guidelines add to, and in some cases conflict with, the Building Code in a number of respects. Those familiar with the 2006 Commonwealth Guidelines will recognise many of their features in the Victorian Guidelines. For example:

  • the Victorian Guidelines prohibit all unwritten agreements, whereas the Building Code permits those which are designed to achieve deemed “socially desirable” objectives;
  • the Victorian Guidelines prohibit project agreements in a greater range of circumstances than does the Building Code; and
  • the Victorian Guidelines require industry participants to comply with more restrictive workplace conduct and agreement content rules. For example, the Victorian Guidelines impose restrictions on union-related content in industry participants’ enterprise agreements; are more restrictive on the issue of right of entry; and are far more prescriptive as to the content of dispute settlement clauses.

As is explored further below, already some builders compliant with the Fair Work Act 2009 (Cth) (FW Act) and the Commonwealth Code requirements have found themselves in difficulties as a result of the Victorian Guidelines.

New South Wales

NSW is presently proposing to introduce its own Implementation Guidelines (NSW Guidelines), which will apply to publicly funded work only. In contrast to the approach taken in Victoria, they will not extend to related entities. Currently, a 1 July 2013 implementation date is being considered.

The draft NSW Guidelines largely reflect the approach taken in Victoria, with some minor differences (for example, a slightly more flexible approach on the issue of inclusion of clauses relating to contractors in workplace agreements).

Queensland

Queensland has also released draft Implementation Guidelines (QLD Guidelines), which will apply to publicly funded work exceeding $2 million in value and will extend to related entities. Currently, a 1 July 2013 implementation date is being considered. A consultation process for the QLD Guidelines closes 21 March 2013.

The draft QLD Guidelines largely reflect the approach taken in Victoria and NSW, again with some differences (for example, additional requirements regarding dispute resolution).

The Federal Court challenge to the Victorian Guidelines

In Victoria, the Construction, Forestry, Mining and Energy Union (CFMEU) has commenced two sets of legal proceedings in relation to the Victorian Guidelines. Essentially, the CFMEU argue that the Victorian CCCU is in breach of the “adverse action” provisions of the Fair Work Act 2009 (Cth) (FW Act) in declaring that certain employers are not compliant with the Victorian Guidelines, and therefore cannot perform work on Victorian government funded projects, because they have workplace agreements which were lawfully made under the FW Act, but which not compliant with the requirements of the Victorian Guidelines.

In one matter, in January 2013, His Honour Justice Bromberg granted an interlocutory injunction preventing the offending conduct (against Eco Recyclers Pty Ltd) pending trial. In the other, Justice Gray accepted an undertaking from the State of Victoria that it would not exclude the relevant entity (Lend Lease Project Management and Construction (Australia) Pty Ltd) until the matter was heard.

The matters are currently being heard together before Justice Bromberg, with the hearing commencing on 19 March 2013.

Given the similarity of the Victorian and proposed NSW and QLD approaches, the outcome of the proceedings will have significant ramifications not only for Victoria, but also for NSW and QLD.

What about other States?

While each of WA and SA have Codes and/or Guidelines in force, neither has at this stage indicated a proposal to adopt a format like that in Victoria, NSW or QLD.

What do employers need to do?

Employers should:

  • continue monitoring developments in relevant Codes and Guidelines, including the pending Federal Court proceedings. We will be providing regular updates;
  • if operating in QLD, consider making a submission on the proposed QLD Code;
  • until further guidance from the Federal Court is available, seek advice before refusing to engage subcontractors on the basis of non-compliance with any State Guidelines;
  • check to ensure they, and their subcontractors, are compliant with all applicable Codes and Guidelines. If there is a difficulty with compliance with one or more Code, seek advice; and
  • ensure they adopt appropriate drafting in their contracts and tenders, including adopting revised model clauses where necessary.