New Commonwealth Building Code: will you be compliant in time?

In November 2016, the Turnbull Government introduced legislation to remove the Fair Work Building Industry Inspectorate (FWBII) and re-introduce the Australian Building and Construction Commission (ABCC) as watchdog for the building industry.

The same legislation gave effect to the Commonwealth Building Code 2016 (Code), outlining the criteria businesses must meet before they can tender for Commonwealth funded building work.

Transition Period

Originally, businesses were to be given a grace period up until 29 November 2018 to ensure that their enterprise agreements were compliant with the Code. However, following cross-bench negotiations on 15 February 2017, the Senate brought forward the expiry of the Code transition period to 31 August 2017.

The effect of reducing the transition period for contractors is that unless specific circumstances apply (e.g. a contractor tendered for Commonwealth funded building work in the period from 2 December 2016 to 16 February 2017 and was subsequently awarded a contract for that work), a contractor cannot tender for, or commence work on, Commonwealth building work from 31 August 2017 unless their enterprise agreement complies with the Code.

What effect does the Code have on Enterprise Agreements?

The Code prohibits a range of content from being included in a contractor’s enterprise agreement. Among the extensive list, prohibited content includes any clauses which:

• prescribe the number of employees or subcontractors that may be employed or engaged on a particular site, in a particular work area, or at a particular time;
• require, or result in, discrimination between classes of employees because of the basis on which they are lawfully entitled to work in Australia;
• prescribe the terms and conditions on which subcontractors are engaged (including the terms and conditions of employees of a subcontractor);
• prescribe the scope of work or tasks that may be performed by employees or subcontractors;
• limit, or have the effect of limiting, the right of an employer to make decisions about redundancy, demobilisation or redeployment of employees based on operational requirements;
• prohibit the payment of a loaded rate of pay;
• require, or have the effect of requiring, the allocation of particular work to individual employees only if that allocation is extended to all other employees in the class of employees to which the individual employee belongs;
• include requirements to apply building association logos, mottos or indicia to company supplied property or equipment;
• directly or indirectly require a person to indicate support, or lack of support, for persons being members of a building association, or any other measure that suggests that membership is anything other than a matter for individual choice; and
• provide for the establishment or maintenance of an area which is intended to be designated to be used by members, officers, delegates or other representatives of a building association in that capacity.

The Code further requires a dispute settlement term to be included in the enterprise agreement, and for any decision by an arbitrator or other binding outcome in relation to the dispute to be consistent with the Code.

Drug Testing

The Code includes a requirement to have in place a Code-compliant Workplace Relations Management Plan and comprehensive fitness for work policy on all sites. Importantly, this policy must provide for drug and alcohol testing, and address how those on site will be required to comply with the relevant fitness for work policy.

The fitness for work policy must:

• require the use of an objective medical testing method to detect the presence of drugs or alcohol in a worker’s system;
• outline which detecting method/s is to be used (urine testing and saliva testing are both permitted);
• outline the processes in place if a positive test is returned;
• outline the procedures in place for the selection of personnel to be tested;
• provide for the testing of alcohol, opiates, THC, cocaine, benzodiazepines, amphetamines and methamphetamines; and
• provide for random drug and alcohol testing to occur at least once per month.

The Code provides for a minimum number of workers to be tested per month as follows:

• if there are less than 30 workers on site, at least 10% of the workforce must be tested;
• where there are 30 to 100 workers on site, a minimum of five workers per month must be tested; or
• where there are more than 100 workers on site, a minimum of 10 workers per month must be tested.

Lavan comment

From 31 August 2017, the ABCC will be assessing enterprise agreements to check for consistency with the requirements of the Code.

It is an uncertain time for businesses in the construction industry. With the reduction of the exemption time for the application of the Code, it is imperative that businesses take steps now to review their processes and enterprise agreements to determine what updates are required if they wish to continue performing work on Commonwealth funded building projects.

With the limited amount of time businesses have to comply with the Code, it is highly advisable to begin planning the process for negotiating a new enterprise agreement and seeking the necessary advice, so that there is minimal or no impact on your business’ ability to tender for Commonwealth work.

If you require assistance in re-negotiating your enterprise agreement, please contact Lavan’s Employment and Safety Team.