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In brief - Businesses tendering for government construction work faced with conflicting building codes

The new national Building Code 2013 (Federal Code) purports to cancel out all other state building codes. Businesses which comply with a state code could be ruled out of tendering for federally funded work, but if they comply with the federal code, they may miss out on state-based opportunities.

New Federal Code has priority over all other state-based building codes

On 25 January 2013, the Federal Government passed the Fair Work (Building Industry) Act 2012 (Cth) which seeks to give legal priority to the Federal Code ahead of all other state based building code guidelines. The Federal Code started on 1 February 2013.

During the operation of the WorkChoices legislation, the Howard government introduced a number of national codes of practice for the construction industry. These codes sought to ensure that building and construction companies did not enter into agreements with unions which beneficially favoured unions rather than complying with the legal obligations of the WorkChoices legislation and the government's own tendering policies. Failure to comply with the then national code led to a construction company to being ineligible to tender for federal government work.

Since then, there has been a continuing arm wrestle between state and federal governments for the supremacy of their respective codes.

Federal Code more tolerant of unions

As one can appreciate, state based codes under Liberal state governments have been more prescriptive and harsher on union activities. The Federal Code, on the other hand, is more relaxed towards unions.

All this has been a headache for businesses as they have been forced to choose their poison. If they comply with a state code, then this could rule them out of federally funded work. If they comply with the Federal Code on the other hand, then they may have forgone state based opportunities. The cumulative effect of these various federal and state guidelines is that businesses that seek to tender for government work in the construction field must comply with often conflicting government codes of practice.

Building codes are policies, not legislation

The gist of the Federal Code is that it purports to cancel out state building codes. The Federal Code expresses itself to be a comprehensive code to be followed in the building and construction industry nationally.

But, although the Federal Code is expressed to be comprehensive, it is uncertain as to whether it can operate in priority to state guidelines in the same way as, say, federal instruments which have constitutional superiority over state instruments if they are inconsistent.

There is some doubt as to whether the Commonwealth's Federal Code can cancel an inconsistent state code, as neither are instruments which would have the weight of constitutional authority. The situation is different if there is inconsistent Commonwealth and state legislation, as section 109 of the Constitution says that Commonwealth laws always prevail ahead of state laws if there is an inconsistency.

But does this also apply to inconsistent codes in the construction industry? For this we will have to see what the courts say.

What is the reach of the Federal Code?

The Federal Code applies to all on-site construction work. It does not apply to any work done off-site.

But, there is expression in the Code that it applies to any activity that "relates to on-site activities" that do not occur on site. This appears to be a catch-all phrase and may be used by the Commonwealth to expand the capacity of the Federal Code to catch all sorts of construction operators and professionals.

At this stage however, the Department of Education, Employment and Workplace Relations has stated that they will be assuming that off-site workers are not affected by the Federal Code unless the Department for Fair Work Building Industry Inspectorate (FABIO) advises them that it does cover such operators.

Federal Code permits businesses to breach state codes

The Federal Code allows a construction business to consider a proposal made by a union even if it breaches a state code. The Federal Code also relaxes the impact on a construction business of agreeing to anything with a union that may breach a state code.

Similarly, a construction business may agree with a union to a more relaxed form of right of entry obligations, even if such a proposal is likely to breach obligations under a state building code.

The sanctions that are related to the powers of the construction industry watchdog FABIO remain, but this may help render it a toothless tiger.

In the event that there is a breach of the Federal Code, there are no penalties available, although sanctions with respect to procurement will continue to apply.

The Federal Code regrettably, however, puts business in a quandary. Does a business try to comply with the looser arrangements that are proposed by the Federal Code (and thus secure federal work)? Or does a business seek to comply with the more stringent obligations at state level and thus preserve state relations? These are matters that only a business can answer for itself.

For more information about the Federal Code, please see also our article Businesses tendering for Commonwealth funded construction work need to comply with the new national workplace relations Building Code 2013.

This article has been published by Colin Biggers & Paisley for information and education purposes only and is a general summary of the topic(s) presented. This article is not specific legal advice. Please seek your own legal advice for any questions you may have. All information contained in this article is subject to change. Colin Biggers & Paisley cannot be held responsible for any liability whatsoever, or for any loss howsoever arising from any reliance upon the contents of this article.​

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