Major changes to Building Code

On Monday 25 July 2022, the Government registered a legislative instrument called the Code for the Tendering and Performance of Building Work Amendment Instrument 2022 (Amended Code).

The Amended Code took effect on 26 July 2022.

Overview

The Amended Code removes most substantive requirements from the Code. However, it leaves in place:

• The obligation on code covered entities to undertake Labour Market Testing;
• The obligation on Funding Entities to ensure that certain information is provided by the preferred tenderer before a contract is entered into in respect of Commonwealth funded building work
• The obligation on Funding Entities to only enter into a contract in respect of Commonwealth funded building work with a code covered entity that only uses products in building work that comply with the relevant Australian standards published by, or on behalf of, Standards Australia; and
• Code Exemptions.

All other substantive requirements are removed.

Key messages

The FWA and the Building and Construction Industry (Improving Productivity) Act 2016 (BCIIP Act) continue to apply. The Commissioner retains all of his powers and functions under the BCIIP Act. The legislative remit of the ABCC continues until such time as the Act is amended or repealed.

1. From 26 July 2026, the ABCC will no longer issue Determinations of Compliance. Code covered contractors should no longer seek Determinations of Compliance from potential subcontractors.

   Should contractors refuse to engage a subcontractor on the basis that the subcontractor is covered by an enterprise agreement that was not compliant with the former Code, the contractor risks contravening the adverse action provisions of the Fair Work Act 2009 (Cth) (FWA), as this refusal to engage the subcontractor would not have the protection of the Code as a law of the Commonwealth under section 342(3) of the FWA.

2. The FWA and the Building and Construction Industry (Improving Productivity) Act 2016 (BCIIP Act) continue to apply. The Commissioner retains all of his powers and functions under the BCIIP Act. The legislative remit of the ABCC continues until such time as the Act is amended or repealed.

3. The Amended Code does not contain any requirements in relation to Workplace Relations Management Plans (WRMPs). For this reason the ABCC will no longer assess WRMPs. The ABCC will not be accepting new WRMPs submissions and any WRMPs previously submitted will not be assessed. Commonwealth WRMPs are no longer required on any building projects.

What obligations remain?

'Application of this Code of Practice' (section 5). This section sets out the mechanism by which contractors become code covered entities. It provides that building contractors or building industry participants (and their related entities) will be covered by the Amended Code from the first time they express interest in or tender for Commonwealth funded building work.

Essential Services Exemptions (section 6A and 6B). Providers of Essential Services and Essential Services Infrastructure may apply to the Minister for an exemption from the Amended Code.

Labour Market Testing (section 11F). The Amended Code continues to require that a code covered entity must ensure that no person that is not an Australian citizen or Australian permanent resident (within the meaning of the Migration Act 1958) is employed to undertake building work for the code covered entity unless:

a) the position is first advertised in Australia; and

b) the advertising was targeted in such a way that a significant proportion of suitably qualified Australian citizens and Australian permanent residents would be likely to be informed about the position; and

c) any skills or experience requirements set out in the advertising were appropriate to the position; and

d) the employer demonstrates that no Australian citizen or Australian permanent resident is suitable for the job.

Funding Entity Requirements (25A and 26(2). Funding Entities must:

• ensure that before a contract is entered into in respect of Commonwealth funded building work, the preferred tenderer provides the following information:
  • a) the extent to which domestically sourced and manufactured building materials will be used to undertake the building work;
  • b) whether the building materials to be used to undertake the building work comply with relevant Australian standards published by, or on behalf of, Standards Australia;
  • c) the preferred tenderer's assessment of the whole-of-life costs of the project to which the building work relates;
  • d) the impact on jobs of the project to which the building work relates; and
  • e) whether the project to which the building work relates will contribute to skills growth.
• only enter into a contract in respect of Commonwealth funded building work with a code covered entity that only uses products in building work that comply with the relevant Australian standards published by, or on behalf of, Standards Australia.

What is removed?

All other Code obligations have been removed.

There is no longer a prohibition on being covered by a non-compliant enterprise agreement, or contracting for Commonwealth funded building work while covered by a non-compliant enterprise agreement.

In addition, among other things, Code covered entities are no longer required to:

• Comply with a WRMP (s7);
• Provide certain information in tenders and EOIs (s8);
• Require downstream code compliance from subcontractors (s8);
• Comply with the security of payment provisions of the Code, including reporting disputed or delayed progress payments under State security of payment laws to the ABCC (s11D);
• Maintain any policies with respect to freedom of association (s13);
• Restrict the rights of entry of an officer of a building association to rights provided under the FWA and relevant work health and safety laws (s14);
• Carry out any drug or alcohol testing under the Code or maintain a policy about drug and alcohol testing (s16(A) & 25);
• Report actual or threatened industrial action to the ABCC (s16)
• Report any code breaches to the ABCC (s17).