October 2005

Workplace reform - Stage 1: The Building and Construction Industry Improvement Act 2005

The first cab off the rank in the Federal Government's reform of workplace relations is the building industry. On 12 September 2005 the Building and Construction Industry Improvement Act 2005 ("the BCII Act") commenced operation, though some provisions relating to unlawful industrial action and strike pay are taken to have commenced on 9 March 2005.

The Act aims to stamp out "lawlessness" in the building industry. It aims to achieve that goal by regulating industrial activity and providing limited circumstances under which strikes will be lawful. The legislation attacks practices of establishing project agreements, requiring all workers on site to be union members and obliging subcontractors to have a union recognised EBA.

Who does the Act apply to?

The Act generally applies to unions (such as the CFMEU) registered under the Federal Workplace Relations Act 1996 ("WRA"), covers conduct that occurs in a Territory or Commonwealth place or conduct by or affecting a constitutional corporation (a company and not a partnership or sole trader), all in relation to "building work".

"Building work" is defined broadly to include, amongst other things, the construction, alteration, extension, restoration, repair, demolition or dismantling of buildings that form part of land and the installation in any building of fittings forming part of land including heating, lighting, air-conditioning, ventilation, power supply, fire protection, security and communication systems. It also includes any operation that is part of or preparatory to that work but excludes domestic building work.

As can be seen the BCII Act potentially captures a wide range of building activities.

Australian Building and Construction Commissioner ("ABCC")

The Act establishes the ABCC to monitor and promote appropriate standards of conduct by building industry participants. The ABCC is invested with broad powers to investigate breaches of the BCII Act, the WRA and the Building Code.

ABCC inspectors have broad powers to require building industry participants to answer questions and produce documents. The ABCC inspectors also have powers to enter premises to investigate breaches. Failure to comply with the inspectors powers may result in imprisonment of up to 6 months or penalty of up to $110,000.

The Building Code

The Minister may issue a Building Code which must be adhered to by all building contractors that are constitutional corporations or building industry participants in a Territory or Commonwealth place. A Building Code is yet to be issued but can include matters dealing with occupational health & safety. The ABCC may direct a building contractor to report on compliance with the Code or face a penalty of up to $11,000.

Federal Safety Commissioner ("FSC")

The Act also establishes a FSC. The FSC is responsible for promoting health and safety in relation to building work and also monitoring compliance with the Building Code so far as it deals with safety.

Commonwealth building contracts

The Act says that Commonwealth building contracts are not to be entered into unless the contracting party is accredited. Regulations are yet to outline the scheme for accreditation.

Prohibited action

Most importantly, the Act prohibits a range of inappropriate activity in terms broader than the WRA. For example, the BCII Act provides:

  • A person must not engage in unlawful industrial action (s.38). Generally, industrial action will be unlawful unless it is protected industrial action for the purposes of the WRA.

  • There must be no industrial action "in any respect" during the life of a certified agreement (s.41). This provision seeks to overcome the Emwest decision which allowed industrial action during the term of a an agreement in respect of issues not covered by that agreement.

  • Unions cannot rely on health & safety as an excuse for industrial action unless they establish the reason is genuine (s.36(2)).

  • A person must not organise or take action with intent to coerce another to employ or not employ a person, engage or not engage a person as a contractor or to allocate or not to allocate responsibilities to a particular person (s.43).

  • A person must not discriminate against another person on the grounds that its employees are not covered by a particular kind of industrial agreement (s.45).

  • Project agreements which intend to secure standard employment conditions for building employees in respect of building work are unenforceable unless certified under WRA (s.64).

Breach of these provisions may result in injunctions restraining the prohibited activity, an award of damages for loss suffered and penalties up to $110,000.

Conclusion

The building industry is still required to comply with the Federal Workplace Relations Act 1996 and State based occupational health & safety legislation. The Building and Construction Industry Improvement Act 2005 regulates in more detail industrial activity to minimise disruption by unlawful practices.

While the intention of the Act is clear, its drafting is complex and may give rise to uncertainties in the future. Nevertheless all employers in the building industry ought to consider the impact of the Act on its business operation and practices.