Honeymoon period ends early for construction industry: review enterprise agreements now

Businesses in the construction industry will need to immediately review and re-negotiate their current enterprise agreements if they wish to win Commonwealth-funded work.  This comes after the Federal Parliament passed the Building and Construction Industry (Improving Productivity) Amendment Bill 2017, which will:

• reverse the current two year transitional period - accelerating the commencement of the new Building Code for enterprise agreements from August this year; and
• immediately stop non-code-compliant businesses from winning Commonwealth project work - while these businesses can tender for Commonwealth projects during the new nine-month transition period the new legislation will bar them from winning this work.

The Government expects that these amendments will toughen the Australian Building and Construction Commission (ABCC) laws passed in November last year by restoring these provisions which it was forced to remove to gain the support of cross-bench Senator Derryn Hinch.

While the new Building Code has been welcomed by most businesses, these sudden amendments are likely to impact an estimated 1,500 enterprise deals.  These employers will be immediately barred from obtaining Commonwealth funded project work until they have renegotiated their current enterprise agreements.  This will include any current tenders that were submitted after December 2, when the ABCC was established.

How will the Building Code affect your business?

The new Building Code:

• includes requirements for companies' contractual arrangements with contractors and subcontractors; and
• enables further Commonwealth control over the industrial practice of companies tendering for federally funding projects.

In addition to complying with new fitness for work and union entry regimes, building industry participants will need to ensure that enterprise agreements do not include provisions which restrict employers rights in relation to:

• labour hire;
• engagement of subcontractors;
• payment of subcontractors and employees;
• operational requirements and productivity; and
• making other decisions free from intrusive union involvement.

Is your business ready for the building code?

Building industry participants will need to:

• immediately review their contractual arrangements with contractors and subcontractors to ensure they are up to date and that any issues identified are quickly addressed;
• immediately review the relevant requirements in the Building Code and consider how they affect their business and their ability to undertake Commonwealth-funded project work;
• consider whether their current enterprise agreement complies with the Building Code and whether re-negotiation is necessary;
• if re-negotiation is required, seek advice and take immediate action to begin the re-negotiation process so that it can be finalised as quickly as possible, this may include a plan for any industrial campaign and protected industrial action that may be taken. 

NOTE: This article was updated to reflect the passage of the Bill on 15 February 2017.