On 21 March 2012, the Senate passed the Building and Construction Industry Improvement Amendment (Transition to Fair Work) Bill 2011. The Bill will come into operation when it receives Royal Assent.
The Bill significantly amends the Building and Construction Industry Improvement Act 2005 (Cth) (BCII Act) and largely implements the recommendations of the Honourable Murray Wilcox QC in his report entitled Transition to Fair Work Australia for the Building and Construction Industry (Wilcox Report).
Much like the BCII, the Bill affects the rights and obligations of “building industry participants”. This includes:
building employers, building employees (those who perform building work), building contractors and building associations (including officers, delegates, representatives and employees of those associations).
The definition of “building work” as existed under the BCII Act is largely retained with one important difference. The Bill now expressly excludes from the definition of “building work” off site pre-fabrication made to order components. This is intended to exclude manufacturing that takes place in permanent off-site facilities and separate from a building project.
The Inspectorate will be headed by a Director, appointed by the Minister. The functions of the Director include, amongst other things:
Inspectors who are appointed by the Director of the Inspectorate will have the same powers as inspectors appointed under the Fair Work Act 2009 (Cth) (the FW Act). This includes powers to enter premises, inspect any work, interview any person and require a person who has the custody or, or access to a document to produce that document.
The Bill retains provisions which have the ability to compel a person who is capable of giving evidence that is relevant to an investigation by the Director, to give the information or produce the documents to the Director, or attend before the Director to answer questions relevant to the investigation.
However, the Bill imposes a number of safeguards on the exercise of these coercive powers by the Director. These include:
Revised Guidelines were issued by Workplace Relations Minister Bill Shorten on 3 March 2012. The amended Guidelines will apply to all projects that are the subject of an expression of interest or tender let for the first time on or after 1 May 2012.
The most significant changes will relate to the removal of blanket prohibitions against project agreements. Project agreements will be allowed if they are made and approved under the FW Act or in accordance with State industrial law.
Further, whilst a general ban on unregistered agreements will be retained, the Guidelines will allow unregistered agreements to be made dealing with such things as community welfare activities, reduction of carbon pollution, initiatives to promote women, indigenous or mature aged workers, workers’ health and wellbeing initiatives (such as suicide prevention, health checks, dust diseases screening) and programs to reduce bullying, sexual harassment and workplace discrimination.
It will be considered a fundamental breach of the Guidelines if an employer is found to have engaged in sham contracting and employers may be subject to sanctions.
The former requirement that parties tendering for Australian Government funded construction activity must strictly comply with their right of entry requirements in accordance with legislation, court orders or industrial instruments appears to have been relaxed in the revised guidelines.
Finally, enterprise agreements made under the FW Act after 1 May 2012 must include a genuine dispute resolution process that provides, amongst other things, for an independent third party such as Fair Work Australia to conciliate or mediate a dispute. If the dispute is not resolved, an independent third party such as Fair Work Australia must have the capacity to settle the dispute via a binding decision.
Whilst the Bill introduces considerable changes to the BCII Act and in particular the range of matters considered unlawful as well as the nature of penalties that might be imposed, it would be unwise for any employer or union to become complacent.
Rather, there is a high likelihood that the Inspectorate will continue to actively monitor compliance with designated building laws, investigate any act or practice that may be contrary to a designated building law or a safety net contractual entitlement or ultimately commence proceedings in a court, or to make an application to Fair Work Australia.
Further, even though the use of the coercive powers has been curtailed, the Director retains considerable powers to obtain information, documents and answers to questions. We expect these powers to obtain information through means other than the exercise of the coercive powers will be utilised and for the presence of the Inspectorate on building sites to continue.
On a practical level, employers who have previously operated under the BCII Act need to come to terms with how the Bill will affect their operations and projects.
Some of the areas where employers should start taking immediate action include: