In our article published 14 June 2016, we summarised the obligations introduced under the Code for the Tendering and Performance of Building Work 2016 (the Code). These obligations apply to building contractors or building industry participants which may include principals, head contractors or contractors that have expressed interest in, or tendered for, Commonwealth funded building work on or after 2 December 2016 (Code Covered Entities). The final transitional provisions will end shortly, as the Code applies in full effect on 1 September 2018. From this date onwards, obligations to report to the Australian Building and Construction Commission (ABCC) arise in relation to industrial action, secondary boycotts, breaches (or suspected breaches) of the Code and security of payment disputes.
How will it affect you?
Compliance with the Code's reporting requirements is essential. A failure by a Code Covered Entity (and/or its related entities) to meet mandatory reporting obligations is a trigger for the Minister of Employment to exercise his or her discretion to impose an exclusion sanction, rendering the Code Covered Entity (and/or its related entities) ineligible to tender for Commonwealth funded building work for up to a year. The reporting requirements apply irrespective of the value of a project and the type of building work, meaning reporting obligations extend to both state and privately funded building work. Code Covered Entities and their sub-contractors must have processes in place to comply with these Commonwealth reporting obligations, while taking into account any applicable state building code.
In addition, recipients of Commonwealth funding must consider whether they are required by the Code to impose corresponding obligations on their suppliers and subcontractors.
The Code contains several mandatory reporting requirements, creating a number of obligations for Code Covered Entities to report to the ABCC.
The obligation to report industrial action arises as soon as practicable (but no later than 24 hours) after actual or threatened industrial action occurs. To the extent reasonably practicable, a Code Covered Entity must also take steps to prevent or bring an end to unlawful industrial action.
Secondary boycott conduct involves a person acting in concert with another to hinder or prevent a third party from supplying goods or services to, or, acquiring goods or services from, a fourth person, with the effect or likely effect of causing substantial loss or damage to the business of the fourth person. This conduct attracts heavy penalties under the Competition and Consumer Act 2010, for both corporations and individuals. A request or demand made by a building association to engage in conduct that appears to be for the purposes of a secondary boycott must be reported as soon as practicable (but no later than 24 hours).
Breaches of the Code
The new monitoring arrangements in the Code require a Code Covered Entity to notify the ABCC as soon as practicable (but no later than two working days), after becoming aware of a breach or suspected breach of the Code. When notifying the ABCC, the Code Covered Entity is also required to set out the steps it proposes to take to rectify the breach and within 14 days it must notify the ABCC of the remedial action it has taken. For example, a head contractor must ensure that all its subcontractors comply with Workplace Relations Management Plans, a failure by either party is considered a breach of the Code that will need to be reported to the ABCC.
Security of payment disputes
The Code requires Code Covered Entitles to:
- ensure payments are made in a timely manner and are not unreasonably withheld;
- ensure that they have, and comply with, a documented dispute settlement process that includes referral to adjudication and details how disputes about payments to subcontractors will be resolved and;
- comply with any applicable requirements relating to the operation of any project bank account or trust arrangement; and
- to report any disputed or delayed progress claims to the ABC Commissioner and the relevant funding entity (if any) as soon as practicable after the date on which the payment falls due.
This reporting requirement only arises in relation to:
- Delayed payments: a failure to pay amounts in accordance with a contractual date for payment as agreed between the parties, or as a result of a failure to issue a payment schedule in response to a payment claim under the relevant state or territory Security of Payments legislation.
- Disputed payments: unpaid amounts notwithstanding an obligation to pay arising from a dispute resolution procedure (i.e. a determination by a court, arbitrator, expert or adjudicator).
How to notify
The ABCC also works collaboratively with Code Covered Entities to ensure that their Code obligations are fulfilled. To request advice or assistance, contact the ABCC on 1800 003 338 or via email.