Predictably, reactions to the passing of the legislation to reinstate the Australian Building and Construction Commission (ABCC) in December were mixed.

On the employer’s side, Master Builders Australia said the legislation would help to restore the rule of law within the sector. Builders, workers, subcontractors and everyone else within the supply chain would be able to ‘have the confidence of going to work every day without fear of being bullied.’

On the flip side, Construction, Forestry, Mining and Energy Union national secretary (Construction and General Division) David Noonan was fuming. The new Act, he said, would take away worker rights and endanger safety and conditions of workers on building sites.

Beyond the debate and arguments, however, it is important to understand what the new rules are and how they work. In this regard, it is important to understand both the legislation itself and the operation of a new code of conduct which will apply to contractors and suppliers who bid for work on federal government projects.

In terms of the legislation, the Building and Construction Industry (Improving Productivity) Act 2016 re-establishes the former Australian Building and Construction Commission which was introduced by the Howard Government in 2005 but was abolished by the then Labor government in 2012 in place of Fair Work Building and Construction (FWBC).

According to the Act, the ABCC is to investigate any forms of what the Act specifies is unlawful workplace behaviour on building sites and to take appropriate action where warranted. The Act also creates the office of a Federal Safety Commissioner, whose role it will be to promote the benefits of safe work practices on building sites and provide accreditation under a WHS accreditation scheme under which contractors will need to be accredited if they wish to perform work on Commonwealth funded projects.

In terms of actual conduct, two critical areas in which the Act deals with are coercion and unlawful industrial action.

With respect to unlawful action, Chapter 5 of the Act makes it clear that any form of unlawful industrial action or unlawful picketing are considered to be an offence and enables courts to grant interim injunctions against people engaging in such behaviour. An unlawful picket in this context is any action which either intends to prevent someone from accessing or leaving a site or would reasonably intimidate someone accessing or leaving a site and which is done with the intention of advancing claims in respect of employment/subcontracting arrangements or advancing the industrial objectives of unions.

The Bill also specifies that the ban on strike pay contained within the Fair Work Act also applies on building sites but imposes much tougher penalties for breaches of this law. Whereas maximum penalties under the Fair Work Act would in fact be 60 penalty units ($9,328), those under the new law in respect of building work are set at 1,000 penalty units ($155,460).

Chapter 6 of the Bill deals with coercive behaviour and makes coercion or intended coercion unlawful in three key areas: who to employ and engage on projects, superannuation and the making or terminating of enterprise agreements. On the first point, the Act makes it unlawful to pressure builders or other parties to employ or refuse to employ any particular worker, engage or refuse to engage any particular contractors or to either allocate or refuse to allocate specific duties to particular workers or contractors. On the second, it specifies that coercion of either employers to pay superannuation contributions of their workers into a particular fund or scheme or workers to nominate a particular scheme is unlawful. Finally, it is illegal for anyone to pressure any employer into making, varying, extending or terminating an enterprise agreement or to agree not to make such agreements.

These provisions are aimed at tackling a number of what employers say have been unfair coercive practices on the part of unions. Employers have complained for example, about unions attempting to coerce companies into using industry superannuation funds run by unions and into refraining from using certain contractors on the basis that the contractor in question did not have an union based enterprise bargaining agreement in place.

It should be acknowledged that in relation to both unlawful picketing and coercion, a reverse onus of proof applies and it is in fact the responsibility of the party who is subject of the complaint to establish on the balance of probabilities that their action was not indeed carried out unlawfully.

In terms of enforcement, Chapter 7 of the Act enables to Commissioner (with 14 days’ minimum notice) to give anyone whom they reasonably feel will be able to assist with an investigation of a suspected contravention of the Act an examination notice which requires them to either give information, produce documents and/or appear in person. Anyone who is required to attend may choose to be represented by a lawyer but failure to comply with such a notice will face up to six months in jail. On site, ABCC inspectors and federal safety officers have the power to enter premises, ask about names and addresses and require people to produce names or documents.

A point of controversy in respect of evidence gathering revolves around the removal of the right to silence for those who are the subject of ABCC enquiries and investigations. This takes place via Clause 102, which specifies that no one can be excused from giving information or responding to questions on the basis of self-incrimination. Whilst Clause 103 specifies that any information obtained as a result of this will not be admissible as evidence in any proceedings against the person in question except in very limited circumstances (such as proceedings relating to false evidence), both unions and some legal groups remain concerned that the existence of Clause 102 will in fact weaken levels of protection against self-incrimination.

New Code of Conduct

Apart from the new legislation itself, contractors who tender for public sector work need to be aware of the new Code for the Tendering and Performance of Building Work 2016, which was issued by Employment Minister Michaela Cash in pursuant to subsection 34 (1) of the Act and which sets out standards which those who wish to perform work on federal government projects are expected to meet.

The new Code covers all building contractors and other building industry participants as soon as they submit either a tender or an expression of interest for projects in which the Commonwealth’s contribution to the project either exceeds $10 million or alternatively is between $5 million and $10 million and represents at least 50 per cent of the overall construction value. Essential service providers such as gas and electricity companies who need to install utility related infrastructure are exempt.

In essence, to meet the requirements of the Code:

  • Builders and subcontractors will have to comply with all designated building laws in areas such as workplace relations, occupational health and safety, foreign worker employment and marketplace competition.
  • Enterprise agreements cannot (1) impose limits upon the ability of the employer to manage their productivity, (2) discriminate against certain classes of employees or subcontractors or (3) be inconsistent with the rules of freedom of association.
  • Employers much not engage in sham contracting or collusive tendering practices, must observe all relevant security of payment laws and must advertise locally before hiring migrant workers
  • Entities covered by the Code must not exert pressure on subcontractors or consultants to make above award payments or to fund any particular type of scheme such as particular income protection insurance schemes or training schemes which use specific providers.
  • Employers must comply with all right of entry laws and ensure as much as practicable that union representatives who enter work sites do so for legitimate right of entry purposes and obey all industrial and safety laws whilst on site.
  • Enterprise agreements must include dispute settlement procedures.
  • Employers must report any form of actual or threatened industrial action (whether protected or otherwise) to the ABCC as soon as possible and at least within 24 hours after becoming aware of the action and must take reasonable steps in order to prevent unlawful action.
  • Employers must have in place a management plan for drug and alcohol issues in the workplace.
  • Employers much notify the ABCC of any breaches or suspected breaches of the Code within two working days.
  • Employers must have a workplace relations management plan in place which has been approved by the ABCC.

Of course, it should be acknowledged that a number of the requirements of the new Code are already contained in the Building Code 2013, which was in place prior to the passing of the ABCC legislation.

A workplace relations management plan is an interesting and controversial concept. Set out in Section 32 of the Code, such a plan must describe the systems, processes and procedures which the company has in place in order to ensure a fair, lawful, efficient and productive workplace that the requirements of the code will be implemented.

At a minimum, it must include a fitness for work policy to manage alcohol and drugs in the workplace as well as details of processes which will be put in place to ensure that Security of Payment legislation will be followed. The ABCC may also require additional information as set out in Schedule 3 of the Code.

Specific details about the requirements with regard to fitness for work/drug and alcohol management plans are set out in Schedule 4 of the Code. Under these rules, the fitness for work policy must outline how those on site will be required (through contractual or other enforceable means) to comply with the policy as well as the testing methods which will be used on site. The policy must also outline how those who test positive will be deemed unfit for work and prevented from returning to work until they are fit for work as well as arrangements for periodic testing and procedures for random selection in cases where not everyone is indeed tested.

Employers will need to explain how their policy will tent for high risk activities as well as how those who test positive will be counselled and helped in addition to any disciplinary actions which might apply. Specific substances which need to be tested for include alcohol, opiates and amphetamines.

Whilst dangers associated with alcohol and drugs in a high-risk workplace are not disputed, the mandatory testing regime outlined above remains controversial amid fears on the part of unions that testing will be used more as a means of punishment as opposed to supporting and assisting workers who need help.

It should be noted that the Code requires firms who are subject to it to apply the Code across all of their projects, including those which are privately funded. Builders and subcontractors cannot, for instance, apply the rule of this Code only to Commonwealth funded work and then ignore the Code’s requirements on privately funded work (although some of the Code’s requirements do apply only to Commonwealth Funded agreements).

Whilst the Code is applicable immediately in the case of new enterprise bargaining agreements, those companies and unions/employees who have existing EBAs in place will have until November 29, 2018 in order to make their EBAs compliant with the Code.

The legislation to reinstate the Australian Building and Construction Commission will have a significant impact upon building sites across Australia.

By making themselves aware of the basic workings of the legislation and the Code, builders and others will be able to ensure that they comply with the legislation completely and fully.