Ensuring compliance with the new Building Code

On 2 December 2016, the Building and Construction Industry (Improving Productivity) Act 2016 (Cth) (the Act) commenced and the Federal Government also introduced the new Code for the Tendering and Performance of Building Work 2016 (the Code).

Compliance with the Code is mandatory for the award of Commonwealth-funded building work.

One of the most significant impacts of the Code is the introduction of an increased number of prohibitions on certain clauses in enterprise agreements which cover building industry participants.

Overview of prohibited clauses

The Code prohibits clauses that:

  • impose, or purport to impose, limits on the right of the building industry participant to manage its business or improve productivity (e.g. requiring a certain number of employees to be maintained);
  • discriminate or have the effect of discriminating against certain persons, classes of employees or subcontractors (e.g. contractor’s clause which limit their engagements including requiring union approval); or
  • are inconsistent with freedom of association requirements set out in section 13 of the Code (including the freedom not to become a member of a building association) (e.g. banning any ‘no ticket no start’ requirements).

Section 11(3) of the Code provides a non-exhaustive list of clauses which are not permitted to be included in enterprise agreements.

Timing for compliance

In February 2017, the Act and the Code were amended.  Amongst other things:

  • building industry participants covered by an enterprise agreement made before 2 December 2016 now only have until 31 August 2017 to ensure that their enterprise agreements are Code-compliant if they wish to submit expressions of interests and tenders for Commonwealth-funded building work and be awarded such work; and
  • building industry participants covered by an enterprise agreement made on or after 2 December 2016 must currently be compliant with the Code (this requirement was unaffected by the amendments).

The Code now contains some limited exemptions to the general requirement that enterprise agreements must be compliant with the Code, but only for enterprise agreements made before 2 December 2016.

Steps to ensure compliance

Building industry participants wishing to tender for Commonwealth-funded building work should immediately review their enterprise agreements for compliance with the Code, and then seek to re-negotiate any non-compliant terms.

A link to a copy of the Code can be found here.

A link to a copy of the Act can be found here.

A link to further information about the Code can be found here.

For additional advice regarding compliance with the requirements of the Code, please contact:

David Palser
Partner
M: 0447 606 059
E: dpalser@pageseager.com.au

Alastair Oxbrough
Partner
M: 0400 818 636
E: aoxbrough@pageseager.com.au

David Dilger
Partner
M: 0428 238 819
E: ddilger@pageseager.com.au

Published: 11 April 2017

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