Federal Government Tightens Construction Code - International Law Office

Revised Guidelines Released
Changes
Comment


In Australia construction contractors have until November 1 2005 to examine and rectify their industrial instruments, agreements and practices if they want to be in the running for federal government construction projects.

Revised Guidelines Released

On September 29 2005 the federal government released its revised Guidelines for the National Code of Practice for the Construction Industry. The guidelines are likely to result in a change to the tendering and subcontracting practices of many contractors. Contractors have been given until November 1 2005 to ensure all of their projects (private and public) are compliant if they want to be able to bid for federal government construction work.

Changes

The revised guidelines require contractors to ensure that subcontractors and suppliers are compliant with the code and guidelines with respect to all of their privately funded Australia-based construction activities.

The effect is potentially significant; contractors must ensure compliance with respect to not only the industrial arrangements proposed by the potential subcontractors of a particular project, but also the industrial arrangements proposed by those subcontractors for all of their projects, whether private or public. Therefore, a new level of complexity will be added to the evaluation of subcontract tenders.

In addition, contractors must ensure that all entities related to a proposed subcontractor are compliant with the code and guidelines. In this respect, a 'related entity' includes one that is connected to the subcontractor or 'related' within the meaning of the Corporations Act 2001 (Cth). This could mean that otherwise separate, competitive companies are effectively grouped for the purpose of code compliance.

Under the revised guidelines, industrial instruments (including certified agreements) must not:

• include union entry provisions allowing access in addition to legislative union entry rights;
  
  
• prescribe the number of employees a company may engage on a particular site or work area, or within their company in general;
  
  
• include a provision requiring union approval for casual/contract labour;
  
  
• contain selection criteria for redundancy that ignores the employer's operational requirements or determines redundancy solely by reference to seniority; or
  
  
• include a provision requiring the employer to negotiate future agreements with a union.

Comment

The detailed guidelines mean that contractors must quickly change their tendering and subcontracting strategies. With regard to tendering and subcontracting strategies, contractors are therefore advised to ensure compliance with the new guidelines and to conduct audits of industrial arrangements to ensure they do not miss out on construction work funded by the federal government.

For further information on this topic please contact Stuart Kollmorgen or Michael Moy at Deacons by telephone (+61 3 8686 6000) or by fax (+61 3 8686 6505) or by email (stuart.kollmorgen@deacons.com.au or michael.moy@deacons.com.au). The Deacons website can be accessed at www.deacons.com.au.