The Federal Government has announced that the new Building Code 2013 will take effect from 1 February 2013. The Code will take the form of a legislative instrument and will replace the existing Implementation Guidelines for the National Code of Practice for the Construction Industry. It will operate together with supporting guidelines that set out Commonwealth procurement obligations.

Who will the Code apply to?

The Code will apply to building contractors and building industry participants who submit an expression of interest or tender for specified building work after 1 February 2013.

Any building contractors or building industry participants who are covered by any version of the Guidelines will be subject to the Code, irrespective of when they submitted an expression of interest or tender for the Commonwealth funded building work. The Government's intention in this respect is to streamline compliance by having only one set of requirements.

All privately funded building work will also be subject to the Code as soon as a building contractor or building industry participant becomes covered by the Code.

What are the main changes?

The Code has a similar form to the Guidelines. Its purpose is not to create additional obligations, but rather to codify the Guidelines to ensure compliance with relevant workplace relations laws.

Aside from ensuring that no form of the Guidelines will have effect from 1 February, the Code also gives additional guidance on the behaviour expected during bargaining for an enterprise agreement. It stipulates that building contractors and building industry participants must not refuse to consider a proposal made by a bargaining representative on the ground that a third party has indicated that it will not procure, or will only procure, services from a person covered by an industrial instrument that contains a particular provision.

It is likely that this additional requirement has been included in an attempt to water down the influence of the Victorian Government's Code Compliance Unit – specifically, its requirements regarding the form that an enterprise agreement must take for a contractor to be eligible for Victorian Government funded building work.

As the Code is issued under the Fair Work (Building Industry) Act 2012, it also clarifies that building contractors and building industry participants must notify the Director of the Fair Work Building Industry Inspectorate, which operates under the name of Fair Work Building and Construction (FWBC), of any alleged breaches, voluntary remedial action or other matters relating to the Code within 21 days of becoming aware of it.

Monitoring and consequences of non-compliance

FWBC has primary responsibility for monitoring compliance with the Code. The consequences for not complying with the Code can be significant. Depending on the seriousness of the breach, sanctions include being precluded from tendering for Commonwealth funded building work for a period of time.

If an employer engages in sham contracting, it will be considered a fundamental breach of the Code. Ensuring compliance in this respect is critical to maintaining an ongoing ability to tender for Commonwealth funded building work.

Implications for building industry participants

All building industry participants, particularly those who have made an expression of interest or tendered for specified building work before 1 February should be alert to the future application of the Code.

Building industry participants who have specific queries in relation to their obligations under the Code, or who want to ensure that any enterprise agreement that is being bargained for is Code compliant, should contact a member of the Workplace Relations and Safety team.

Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this bulletin. Persons listed may not be admitted in all states and territories.