ABCC restored and non-code compliant enterprise agreements can continue to tender for government work up to November 2018

The Senate has passed the Government’s legislation to re-establish the Australian Building and Construction Commission (ABCC). Having done so, businesses within the construction industry should review their contractual arrangements with contractors and subcontractors, and any current enterprise agreements.

The two Bills, the Building and Construction Industry (Improving Productivity) Bill 2013 and the Building and Construction Industry (Consequential and Transitional Provisions) Bill 2013 were passed with significant amendments proposed by Derryn Hinch’s Justice Party and the Nick Xenophon Team.

The Hinch amendments are transitional provisions that will allow builders with enterprise agreements that are non-compliant with the 2014 Building and Construction Code (which Code forms part of the legislation) to still bid for Commonwealth-funded projects until November 2018.

The Xenophon amendments introduced a security of payments regime to the Code. This security of payments regime is still to be drafted by a working group. The provisions are intended to protect sub-contractors by requiring head contractors to hold money in a trust type arrangement. This money will be made accessible to unpaid businesses in the subcontracting chain.
Other amendments in the law include:

• abolishing the reverse onus of proof provision relating to proceedings for unlawful industrial action and picketing. The ABCC must now establish on the balance of probabilities that the activity was carried out for a particular reason; and

• allowing building industry participants to tender for and be awarded Commonwealth funded building work even if they have a non-compliant agreement up until 29 November 2018.

New enterprise agreements entered into after the Code commences must comply with the Code. Still, there will be a transition period for existing enterprise agreements.

Of course, the principal purpose of the law is to reintroduce the ABCC as the industry regulator in place of the Fair Work Building Industry Inspectorate. The ABCC will have increased jurisdiction and powers. The law also:

• expands the definition of “building work” to include the transportation or supply of goods to building sites and offshore resources platforms

• creates a prohibition on organising or taking of unlawful industrial action, including unlawful picketing. Unlawful picketing will include conduct that has the purpose of preventing or restricting access to, or from, a building, or ancillary site, if the conduct’s purpose is to advance industrial claims, or is otherwise unlawful

• expands the jurisdiction to order injunctions to stop unlawful action, including pickets

• expands the existing offence of coercion to include superannuation and to make it explicit that action intended to force an employer to enter into an enterprise agreement is unlawful

• prohibits specific agreements when the intention is to provide standard terms and conditions to workers across multiple employers outside of the Fair Work Act (pattern bargaining)

• expands the power to compulsorily examine people who may have been involved in a contravention, or who could otherwise assist the ABCC in its investigations

• removes the limitation on the ABCC from initiating or continuing enforcement action when parties involved have settled a dispute; and

• significantly increases penalties for unlawful industrial action committed by individuals and corporate entities.

The areas of greatest likely impact on construction businesses are:

• the Building Code for 2018 – which will give further Commonwealth control over the industrial practices of companies tendering for federally funded projects
  new procurement rules – taking effect from March 2017 requiring businesses bidding for government projects worth more than $4 million to show:

  • how much locally-produced material they will source

  • how they are contributing to local employment

  • how they are growing local skills

  • the whole-of-life cost of the project, not just the build cost; and

  • that the materials they use comply with Australian product standards; and

• a new unlawful picketing offence designed to include conduct by any person who disrupts the supply of goods, services and labour to building sites (not just unions).

Construction industry participants will need to:

• review contractual arrangements with contractors and subcontractors to ensure issues relevant to the law are addressed

• review relevant requirements in the Building Code and consider how they might affect their business for Commonwealth-funded building work; and

• consider whether their current enterprise agreement complies with the Building Code, and whether re-negotiation of the enterprise agreement is necessary in preperation for the new Building Code.

We will provide further updates on the effect on the legislation. If you have any further questions, please contact one of our lawyers.