Insights

In brief - Building industry employers and participants should take action before August 2017

An amendment to the Building and Construction Industry (Improving Productivity) Act 2016 (BCIIP) broadens the Australian Building and Construction Commission's powers to monitor the building industry.

Employers in this industry should consider how they will be affected by these reforms and take action to ensure compliance with the BCIIP and its accompanying new Building Code. Failure to ensure compliance will affect the ability of construction companies to undertake Commonwealth-funded work. 

New construction industry watchdog created under the BCIIP 

On Wednesday 30 November 2016, the Australian Senate passed the Building and Construction Industry (Improving Productivity) Bill 2016. Parliament also passed the Building and Construction Industry (Improving Productivity) Amendment Act 2017 (Cth) on 16 February 2017.

The BCIIP creates a new construction industry oversight body - the Office of the Australian Building and Construction Commission (ABCC) under Chapter 2. 

The ABCC will replace the Office of the Fair Work Building Industry Inspectorate. 

The ABCC is, in some ways, a reflection of the former ABCC created under the Building and Construction Industry Improvement Act 2005. The ABCC's role will broadly relate to:

  • monitoring and promoting appropriate standards of conduct by building industry participants
  • investigating suspected contraventions of relevant building laws and the Building Code
  • instituting or intervening in legal proceedings, and
  • providing assistance, advice and representation to building industry participants where appropriate 

How might building industry participants be affected by ABCC's changed focus? 

Following an amendment in the Senate, the ABCC will be required to focus its attention over the entire building industry and to allocate its resources evenly between stakeholders such as employers, employees, unions, employer organisations and others. 

The effect of this amendment is yet to be directly felt. However, recent sanctions against one of Australia's largest building industry participants (under the superseded 2013 code) may provide some insight into how seriously the ABCC will take its responsibilities. 

In view of these reforms and recent sanctions, now is the time for employers in the building industry to ensure that they understand their obligations so as to ensure compliance and to avoid sanctions, adverse publicity and the risk of missing out on contracts.

ABCC's investigative powers

The ABCC holds significant powers to gather information and investigate, such as the ability to require a person to give information, produce documents or attend an interview to give evidence in relation to an investigation. Details and procedures relating to examination notices and the conduct of examinations are set out in the BCIIP.

The ABCC can investigate or prosecute a matter even if the parties to the dispute have already settled the dispute.

Building industry participants should ensure that they provide training to their staff about how to respond to an investigation and what can and can't reasonably be required by the ABCC.

Compliance with new Building Code is key to retaining right to perform Commonwealth building work

The BCIIP is to be accompanied by a new Building Code, the Building and Construction Industry (Fair and Lawful Building Sites) Code 2014, which will be phased in over the next year. 

The Building Code imposes some significant obligations on building industry participants, including provisions relating to sham contracting, collusive tendering practices, drug and alcohol guidelines, workplace relations management plans, terms of industrial agreements and freedom of association.

Building industry contractors and participants will be required to comply with the Building Code in order to be eligible for Commonwealth-funded construction projects. 

Employers will have the opportunity to amend any non-compliant industrial agreements while still being eligible for Commonwealth-funded construction projects up until 31 August 2017. 

It may be difficult for employers in the sector to reform non-compliant industrial agreements in the face of comments by CFMEU officials to the effect that they will not re-open negotiations of agreements to make them compliant with the Building Code's requirements. 

However, despite these likely difficulties, once the Building Code applies to a building industry participant, they must comply with the Building Code on all public and private building work they undertake to retain the right to perform Commonwealth building work. In this way, the Building Code  has the potential to significantly transform the entire building industry.

Unlawful industrial action and unlawful picketing to attract increased maximum penalties

The BCIIP also brings in new rules and powers relating to unlawful action. Under the Act, unlawful action includes organising or taking of unlawful industrial action in addition to the newly introduced "unlawful picketing" provisions. 

Under the BCIIP, the maximum penalties for unlawful industrial action and unlawful picketing are increased from $54,000 to $180,000 for corporate entities (including unions), and from $10,800 to $36,000 for individuals.

Building work definition extends scope and jurisdiction

Building work is broadly defined as the construction, alteration, extension, restoration, repair, demolition or dismantling of buildings, structures or works that form, or are to form, part of land. 

Under the Building Code, building work now also includes the transporting or supplying of goods to be used in work covered by [the above building work description] directly to building sites (including any resources platform) where that work is being or may be performed.

The definition has also been extended to include work on ships, Australian ports and offshore rigs as part of the definition of "building work". Consequently, the scope of ABCC powers and the jurisdiction of the BCIIP will include ships, ports, offshore rigs and transport of goods used in building and construction projects. 

Australian made requirements

The BCIIP and the Building Code present opportunities for suppliers of locally-made building products and materials. To be eligible to undertake Commonwealth-funded work, contractors will now have to comply with requirements relating to the investigation and use of Australian made products.

Discrimination and unwritten or informal agreements prohibited

The ABCC Act prohibits any action being taken against a person because they are, or are not, covered by an enterprise agreement. 

Additionally, the new Act outlaws unwritten or informal agreements, so called "project agreements", which aim to set terms and conditions of employment across whole projects or building sites.

What should building industry participants do? 

Building industry participants should act now to ensure that they are compliant with the new requirements before August 2017. To remain eligible for Commonwealth-funded work, building industry businesses will need to ensure that their enterprise agreements are compliant with the Building Code (save for the transitional exemptions).

Building industry participants should:

  1. Carefully review their enterprise agreements and where necessary, begin the process of changing the agreements now, noting that there may be resistance to such change from employees and unions.
  2. Check whether they are now participants in the building industry owing to the extended definition of the term.
  3. Consider how they will respond to the ABCC if it commences an investigation involving the employer or its employees.
  4. Plan for issues relating to right of entry under the new rules by gaining an understanding of the changes and preparing policies and procedures.
  5. Check its procurement practices to ensure that they comply with the new framework.
  6. Update and train their staff in relation to the changes, in particular to the ABCC's information and investigation functions.

Building industry participants need to prepare for these changes to ensure that they are meeting their obligations. Obtaining appropriate legal advice will assist you to manage the risks presented by these reforms.

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.​