Changes to the 2016 Code

On 26 July 2022, the Code for the Tendering and Performance of Building Work Amendment Instrument 2022 (Amended Code) came into effect.

What's gone?

There is no longer:

• A restriction on enterprise agreement content for entities performing Commonwealth funded building work.
• Code obligations regarding:

• Sham contracting or collusive practices;
• Compliance with security of payment laws;
• Coercion to make above-entitlement payments in respect of building work;
• Ensuring freedom of association – this includes there being no restriction on union paraphernalia such as flags being displayed on site;
• Ensuring right of entry is strictly in accordance with relevant legislation;
• Dispute settlement outcomes being consistent with the 2016 Code;
• Taking steps to prevent or bring an end to unprotected industrial action, and reporting industrial action to the ABCC;
• Drug and alcohol policies.

• A requirement for a code covered entities to require and monitor compliance by its subcontractors on Commonwealth-funded building work.
• A requirement to notify breaches of the Code to the ABCC, and no further entitlement for the ABC Commissioner to refer matters to the Minister with recommendations for sanctions.
• A requirement for tendering documents to require respondents to confirm compliance with the Building Code, other laws etc or a requirement for certain projects to have a Workplace Relations Management Plan approved by the ABCC.

What's left?

The only remaining obligations under the Amended Code are:

• The requirement for code covered entities to not engage non-citizens or residents without prior advertising and demonstrating that no Australian citizen or Australian permanent resident is suitable for the job.
• The requirement for funding entities to require preferred tenderers to provide information about:

• domestically sourced and manufactured building materials;
• whether the building products comply with Australian standards;
• whole-of-life costs of the project;
• whether the project will contribute to skills growth.

• For a funding entity to only enter into contracts with code covered entities that only use products which comply with Australian standards.

There are still exemptions for essential service providers or essential services infrastructure under the Amended Code and any exclusion sanctions which were in place before 26 July 2022 to continue in place.

The complete abolition of the 2016 Code and the ABCC requires repeal of the BCIIP Act. While the Government may hold a majority in the House of Representatives, they will likely have to rely on crossbench support to pass legislation in the Senate. A parliamentary vote is not expected until later this year. However, the ABCC's funding will be cut in the meantime and expectations are that it will have to close irrespective of whether the Government fails to pass the legislation to abolish it.

Important obligations still remain

Although the 2016 Code has been rolled back, employers still need to comply with:

• The Fair Work Act 2009 (Cth) (FW Act) and applicable modern awards / enterprise agreements.
• Work health and safety legislation. The WHS Accreditation Scheme requirements of the BCIIP Act and the Accreditation Scheme Rules continue to apply as well until the BCIIP Act is repealed.
• The Competition and Consumer Act 2010 (Cth) (C&C Act) (to the extent it applies to tendering or undertaking construction work).
• The Migration Act 1958 (Cth).
• Security of payment legislation.
• Other legislation, codes of practice and standards.

Further:

• Employers and occupiers of building sites can maintain a 'strict compliance' approach to right of entry by union officials under the FW Act or work health and safety legislation.
• Unprotected industrial action remains unlawful, as is the restriction on the payment of strike pay.
• Unions still need to comply with the FW Act during bargaining and an employer does not need to agree to any demands if it does not wish to.
• There may be contractual obligations linked to the 2016 Code which are technically unchanged. This will depend on the particular wording of the contracts.

Further, with a potential change of focus by Commonwealth regulators, employers should ensure that their practices and procedures are legally compliant.

Where to now for employers in the industry?

According to reports, the ABCC's prosecutions against the Construction Forestry Maritime Mining and Energy Union resulted in approximately $16.1 million in penalties since 2016, and the ABCC has had a very high success rate in its prosecutions.

Workplace Relations Minister Tony Burke has suggested that some functions of the ABCC will be transferred to the Fair Work Ombudsman (FWO). The FWO has powers to bring proceedings under the FW Act in relation to a number of matters including general protection claims, industrial action and right of entry disputes. The extent to which the FWO exercises those powers in the construction industry moving forward remains to be seen. Some members of the Senate crossbench may seek assurances from the Government that the FWO will be active in this regard to secure support for the abolition of the BCIIP Act and the ABCC.

The Australian Competition and Consumer Commission (ACCC) also has some scope to pursue claims involving breaches of the C&C Act. In fact, the ACCC's Commercial Construction Unit has a focus on anti-competitive conduct and unfair business practices in the construction industry. The ACCC may continue to take an active role in prosecuting breaches of the C&C Act, although the ACCC received assistance from the ABCC in the course of their investigations.

However, notwithstanding the powers of the FWO and ACCC to monitor and prosecute unlawful behaviour in the construction industry, this may not be their priority moving forward. As such, construction companies will need to consider their options for taking their own enforcement action to quell unlawful behaviour on their sites moving forward. The days of relying on the ABCC to do so are quickly coming to an end.