This week, the Building and Construction Industry (Improving Productivity) Amendment Bill 2017 passed the Senate to bring forward the start of the Code for the Tendering and Performance of Building Work 2016 (Code), which significantly shortens the time for Code compliance of enterprise agreements. 

The Code imposes stringent standards for management of workplace relations by employers wishing to perform Commonwealth-funded building work.  The Code requires employers to conduct frequent workplace drug and alcohol tests and also requires employers to ensure building union officials strictly comply with right-of-entry laws. It also sets rules for content of enterprise agreements covering employers and employees performing that work.

Employers previously had until the end of November 2018 to ensure their enterprise agreements were compliant with the Code. However, last night this was brought forward, meaning employers can only be awarded Commonwealth-funded building work if their enterprise agreements comply with the Code and new drug testing rules from 1 September this year. 

During this much shorter transitional period, an employer with a non-Code compliant enterprise agreement (made before 2 December 2016 - when the new Code commenced) will still be eligible to submit expressions of interests or tender for Commonwealth-funded building work.  However, they will need to ensure that they have a Code compliant enterprise agreement before they can be awarded or actually commence work on a contract to perform Commonwealth-funded building work, otherwise they cannot be awarded or commence such work. 

Any non-Code compliant employer that is awarded a contract or tender between 2 December 2016 and the commencement of these amendments (which will be the day after they receive royal assent – we do not yet know exactly when this will be) can start or continue to undertake the building work under transitional arrangements.

No exemptions apply to employers with enterprise agreements made after 2 December 2016.  

What does this mean for the Construction Industry?

Employers with non-Code compliant enterprise agreements are at immediate risk of being unable to be awarded or commence work on Commonwealth-funded building projects.  Even though employers can still tender for Commonwealth-funded work during the transitional period, varying or renegotiating an enterprise agreement takes time and is unlikely to be achieved between the period of tendering and being awarded, or commencing work on a project. 

Employers who are affected will need advice about the extent of non-compliance with the Code and the options available to make their enterprise agreements Code compliant.  These options include:

Vary existing enterprise agreement

Many employers negotiated enterprise agreements in the last bargaining round on the basis of commitments from building unions that they would agree to vary the enterprise agreement if and when the Code was introduced.

Employers should consider whether they can rely on those commitments to achieve variations within the requisite, condensed time frame.  It is expected the building unions will dispute the view of the Government and/or the employers as to the changes required to achieve compliance.

Make new enterprise agreement

If the changes required for Code compliance are significant, employers might seek to negotiate a new enterprise agreement that applies for 3 or 4 year term.  This of course will be difficult if opposed by the building unions.  It may also open the doors for employees and unions to bring in other demands, and negotiations of this nature take time.

Apply to terminate existing enterprise agreement unilaterally

This option will certainly sanitise the employer in respect of a non-Code compliant enterprise agreement if granted by the Fair Work Commission, however, the application will most likely be fiercely contested by the building unions and/or impacted employees.

Update Fitness for Work Policies and Procedures

Code covered employers should undertake a review of current fitness for work policies and procedures and update these to ensure they are compliant with the requirements of the Code. Employers should ensure that there is an approach to managing drug and alcohol issues in the workplace to help ensure that no person attending a building site to perform building work does so under the influence of drugs or alcohol, so that they reflect the requirements of the Code.

For further information contact Justine Ansell, Workplace Relations & Safety Special Counsel, Holding Redlich on (07) 3135 0507.

Author: Justine Ansell



Rachel Drew, Partner
T: +61 7 3135 0617

Justine Ansell, Special Counsel
T: +61 7 3135 0507


Charles Power, Partner
T: +61 3 9321 9942


Stephen Trew, Managing Partner
T: +61 2 8083 0439

Michael Selinger, Partner
T: +61 2 8083 0430


The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this publication is accurate at the date it is received or that it will continue to be accurate in the future. We are not responsible for the information of any source to which a link is provided or reference is made and exclude all liability in connection with use of these sources.

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