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Back to the future - ABCC set to return under Building and Construction Industry (Improving Productivity) Bill

Submitted By Firm: Corrs Chambers Westgarth

Contact(s): John Tuck

Author(s):

Simon Billing (Partner), Anthony Forsyth (Consultant) & Joshua Levy (Graduate Lawyer)

Date Published: 2/27/2014

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On 14 November 2013, the Abbott Government introduced the Building and Construction Industry (Improving Productivity) Bill 2013 (Bill) into Parliament. The Bill fulfils the Coalition’s election promises to re-establish the Australian Building and Construction Commission (ABCC), return to stronger regulation of unlawful conduct, and promote respect for the rule of law in the construction industry.

The ABCC was originally established by the Building and Construction Industry Improvement Act 2005 (Cth) (BCII Act), implemented by the Howard Government in response to the 2003 Royal Commission into the Building and Construction Industry. However the Fair Work (Building Industry) Act 2012 (Cth) (FWBI Act) abolished the ABCC and replaced it with the Fair Work Building Industry Inspectorate, which operated as Fair Work Building and Construction (FWBC) but had significantly reduced powers compared to the ABCC. The FWBI Act also lowered the penalties applicable to building industry participants for breaches of industrial laws, and limited the circumstances in which unlawful industrial action attracted penalties.

In this In Brief, we examine the key aspects of the Bill, which marks a return to the stricter regulatory scheme that existed under the BCII Act with some important additions and modifications. The Bill is explained in terms of how its provisions would operate in the event they are passed in their present form, although amendments are likely as the Bill progresses through the legislative process.

Key points for employers

  • The definition of building work is expanded to include transportation or supply of goods to building sites, and offshore resources platforms.
  • The ABCC is to be re-established, armed with the powers it previously held to compel the attendance and production of documents by persons with information relevant to an investigation.
  • New limits are imposed on unlawful industrial action and unlawful picketing, backed up by tougher penalties. This is largely a response to a number of high-profile disputes in the construction industry, most prominently the CFMEU/Grocon Myer Emporium dispute in 2012.
  • Prohibitions on coercion and discrimination are expanded, with “reverse onus” provisions to make it easier to prove breaches.
  • A new Building Code will be issued, imposing further obligations on building industry contractors and other participants in the industry as conditions of obtaining work on Commonwealth-funded projects.
  • The Bill is unlikely to be passed and come into effect until after 30 June 2014.

Main provisions of the Bill

Definition of building work expanded

The Bill applies to “building work”, the definition of which has been expanded to include the transportation or supply of goods to building sites (including any offshore resources platforms) where “work is being or may be performed.” In the Second Reading Speech, Christopher Pyne MP (representing Employment Minister, Senator Eric Abetz) explained that “this is a change from the previous ABCC legislation and is included to ensure that large resource construction projects [onshore and offshore] cannot be indirectly disrupted through coordinated ‘go-slows’ on the supply of materials to those projects.”

Other key terms relating to the scope and application of the Bill are based on the definition of building work, including “building industry participant”, “building employee”, “building employer” and “building association” (which includes unions and employer associations).

A regulator with sweeping powers

The Bill provides for the establishment of the ABCC (replacing the Labor Government’s FWBC), headed by the Australian Building and Construction Commissioner (ABC Commissioner). The Commissioner’s functions include:

  • monitoring and promoting appropriate standards of conduct by building industry participants;
  • investigating suspected contraventions of relevant building laws and the Building Code;
  • instituting or intervening in legal proceedings; and
  • providing assistance, advice and representation to building industry participants where appropriate.

Although the Minister for Employment can give directions to the ABC Commissioner that must be complied with, directions cannot be given about a particular case.

To fulfil these functions, the Commissioner can appoint persons as Australian Building and Construction Inspectors (ABC Inspectors). ABC Inspectors can enter premises where they believe breaches of building laws are occurring or likely to occur, or where there are records or documents relevant to compliance purposes on the premises. While on the premises, ABC Inspectors can inspect work, conduct interviews and require the production of records.

The Bill further augments the ABC Commissioner’s investigative powers by restoring the “coercive powers” formerly held by the ABCC under the BCII Act. These powers are considered by the Government to be “a key tool for breaking down the historical and unacceptable ‘culture of silence’” in the construction sector:

  • Chapter 7 of the Bill allows the ABC Commissioner to serve an examination notice on a person that the Commissioner reasonably believes has information or documents relevant to an investigation or is capable of giving evidence relevant to an investigation.
  • The examination notice may require the person to give information, produce documents or attend before the ABC Commissioner.
  • A person commits a criminal offence if they fail to comply with the examination notice, such as by failing to give information in accordance with the notice or failing to answer questions. The penalty is imprisonment for up to 6 months. However, any information or answers provided by a person in response to an examination notice will not be admissible as evidence in any proceeding against that individual.
  • The ABCC’s exercise of these coercive powers will be overseen by the Commonwealth Ombudsman.

Unlawful industrial action and unlawful picketing

Chapter 5 of the Bill contains prohibitions on organising or engaging in “unlawful industrial action”; or organising/engaging in “unlawful picketing” (a new concept under the Bill). To be covered by the Bill, these prohibited forms of action must be taken by – or in a way that affects – a “constitutionally covered entity” (i.e. a corporation, the Commonwealth, a Commonwealth authority, a body incorporated in the ACT or NT, or a federally-registered union or employer organisation).

Unlawful industrial action is defined as industrial action that is not protected action. “Industrial action” is defined in similar terms to the Fair Work Act 2009 (Cth) (FW Act), and includes various forms of action by employees as well as employer lockouts. The definition of “protected industrial action” in the Bill also follows that in the FW Act, with the important difference that industrial action for a proposed enterprise agreement will only be protected if it is engaged in by protected persons. Protected persons include:

  • employee organisations that are bargaining representatives for a proposed enterprise agreement;
  • members of such organisations who are employed by the employer and will be covered by the proposed agreement;
  • officers or employees of such organisations acting in that capacity; and
  • employees who are bargaining representatives for the proposed agreement.

This means that the involvement of individuals who are not protected persons will invalidate the protection afforded to the relevant industrial action, marking a return to provisions that previously existed under the BCII Act.

An unlawful picket includes action that:

  • has the purpose of preventing or restricting a person from accessing or leaving a building site or ancillary site;
  • directly prevents or restricts a person accessing or leaving a building site or an ancillary site (e.g. persons intentionally blocking access to building work); or
  • would reasonably be expected to intimidate a person accessing or leaving a building site or an ancillary site.

Ancillary sites are locations from which goods are transported or supplied to building sites; locations from which building industry participants are transported to building sites or perform work relating to building work on a building site; or an offshore platform (e.g. transporting supplies by vessel from an onshore supply base).

In order to constitute an unlawful picket, the action must be industrially motivated, i.e.:

  • motivated for the purpose of supporting or advancing claims against a building industry participant in respect of employees or the engagement of contractors by the building industry participant;
  • motivated for the purpose of advancing industrial objectives of a building association; or
  • otherwise unlawful.

The unlawful picketing provisions are drafted broadly, and are aimed at a number of recent instances of disruptive picketing by construction industry unions – including the CFMEU blockade of Grocon’s Myer Emporium Project and the Geelong Little Creatures Brewery dispute.

Chapter 5 of the Bill also extends the operation of the prohibitions on payment during periods of industrial action (e.g. strike pay) under Part 3-3 of the FW Act, with modifications.

Penalties and injunctions against unlawful industrial action or picketing

The penalties for unlawful industrial action are increased under the Bill to $34,000 for individuals and $170,000 for corporate entities (including unions). The same penalties apply for unlawful picketing. The Government states that these increased penalties are needed to “act as a deterrent to unlawful behaviour” and “blatant disregard for court orders”.

A court can grant an injunction (including an interim injunction) in terms it considers appropriate. The court must be satisfied that unlawful industrial action or an unlawful picket is:

  • occurring; or
  • threatened, impending or probable; or
  • being organised.

The courts will therefore have wide-ranging injunctive powers under these provisions, including the power to injunct on the basis of a union’s threat of a picket. Additionally, the power of a court to grant an injunction may be exercised irrespective of whether:

  • the defendant has previously engaged in the conduct complained of or intends to engage in similar conduct again; or
  • there is imminent danger of substantial damage to any person as a result of the unlawful industrial action or picketing.

Coercion and discrimination

Chapter 6 of the Bill provides that it is unlawful for a person to take (or threaten to take) action with the intention of coercing another person to:

  • employ, or not employ, a particular person as a building employee; or
  • engage, or not engage, a particular independent contractor as a building contractor; or
  • allocate, or not allocate, particular duties or responsibilities to a building employee or building contractor (e.g. as a full-time shop steward or health and safety representative (HSR)); or
  • designate a building employee or building contractor as having, or not having, particular duties or responsibilities (e.g. as a shop steward or HSR, or to reflect work demarcations between unions).

With the exception of protected industrial action, it is also unlawful to take action to coerce another person to agree or not agree to make, vary or terminate a building enterprise agreement.

Employers are protected from coercion or other action being taken against them because their employees are covered, or not covered, by a federal industrial instrument (e.g. a modern award or enterprise agreement). However, employers should be aware that it is also unlawful to coerce or place undue pressure on employees as to who will be their bargaining representatives for a proposed agreement.

Individuals who cause or encourage others to take coercive action will also be deemed to have contravened relevant provisions of Chapter 6 of the Bill.

As with industrial action, coercion or discrimination must have some connection with a constitutionally-covered entity to be caught by the prohibitions in Chapter 6. The penalties for unlawful coercion or discrimination will also reflect the higher penalties applicable to industrial action under the Bill (see above).

Finally, Chapter 6 prohibits project agreements whereby unions seek to secure standard employment conditions across a particular site or sites, because in the Government’s view these agreements “inhibit genuine enterprise bargaining”.

Reverse onus provisions

If it is alleged that a person has taken or engaged in action with a particular intent that would amount to coercion, discrimination or unlawful picketing, then it is presumed that the action was taken for that reason unless proven otherwise (except in an application for an interim injunction). This mirrors the reverse onus provisions relating to adverse action in section 361 of the FW Act.

The reverse onus provisions will make it easier for employers and the ABCC to prove breaches of relevant provisions of the Bill. Further, where multiple reasons for the taking of unlawful action exist, a person will be deemed to have taken action for a particular reason as long as it is found to be one of the reasons for that action.

Enforcement

Chapter 8 of the Bill confers jurisdiction on the Federal Court, Federal Circuit Court and certain state courts in matters involving alleged breaches of the civil remedy provisions of the Bill.

ABC Inspectors and persons affected by an alleged contravention (among others) may apply to a court for the imposition of pecuniary penalties, damages, injunctions and other appropriate orders (including orders for the sequestration of assets).

Individuals will also be liable where they are found to have aided and abetted a contravention of the Bill. Any action taken by the management committee, officers or agents of a building association acting in that capacity will be taken to have been taking by the association itself, unless it can demonstrate that it has taken all reasonable steps to prevent the action.

Provisions in the FWBI Act which prevented FWBC from bringing or continuing proceedings, where the parties had settled the issues in dispute, do not form part of the Bill (therefore the ABCC will be able to bring enforcement proceedings in these situations).

Building Code

Chapter 3 of the Bill allows the Minister for Employment to issue a Building Code by legislative instrument, containing further obligations that must be complied with by building industry contractors and other building industry participants. Those bound by the Code must also report on their compliance with it, when requested to do so by the ABC Commissioner.

The issuing of such a Code would replace the Building Code introduced by former Workplace Relations Minister, Bill Shorten MP, with effect from 1 February 2013.[1] Building industry contractors and participants must comply with this Code in order to be eligible for Commonwealth-funded construction projects.

The Coalition’s pre-election industrial relations policy outlined its intention to re-visit the Building Code and Supporting Guidelines, to ensure consistency with state building codes following litigation arising from the interaction of Victoria’s Construction Code and the adverse action provisions of the FW Act.[2] The Second Reading Speech for the Bill confirms that the new Code is currently being developed.

Federal Safety Commissioner and Accreditation Scheme

Chapter 4 of the Bill retains:

  • the role of the Federal Safety Commissioner, to “promote work health and safety in relation to building work”; and
  • the existing Australian Government Building and Construction Industry OHS Accreditation Scheme which applies to Commonwealth-funded building work.[3]

What should building industry employers do next?

The Bill has been referred to an inquiry by the Senate Education and Employment Committee, which is due to report on 2 December 2013.

While the Government intends the re-established ABCC, the new Building Code and other features of the Bill to commence operation from 1 January 2014, this is highly unlikely given the opposition of the ALP and Greens which will prevent passage of the Bill through the Senate. The Government will have better prospects of securing passage of the Bill after 30 June 2014, when the composition of the Senate changes.

In anticipation of the provisions of the Bill taking effect some time next year, construction employers/head contractors might consider re-assessing industrial relations management plans and associated legal contingency plans, to deal with unlawful industrial action, unlawful picketing and coercion and to provide for use of the new remedies that become available.

It will also be important to assess and ensure compliance with any new Building Code once it is introduced, to ensure continued eligibility for work on Commonwealth-funded projects.

For now, employers and head contractors in the building industry should monitor developments (we will provide updates in future Corrs In Briefs).


[1] See here.

[2] See here.

[3] See here.

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