New Building Code transition period drastically cut

The new national Building Code 2016 commenced on 2 December 2016 to coincide with the re-establishment of the Australian Building and Construction Commission. The governing legislation is the Building and Construction Industry (Improving Productivity) Act 2016 (Act).

The new Code applies to building contractors carrying out building work from the first time they submit an expression of interest or tender for Commonwealth funded building work on or after 2 December 2016. The new Code lists a range of prohibited content which, if found in a contractor’s enterprise agreement (EA), will render the EA non-code compliant.

Under the current Act, if a contractor has a non-compliant EA that was made before 2 December 2016, the contractor can still submit expressions of interest, tender for and be awarded Commonwealth funded building work until 29 November 2018 (after which time the EA must be Code compliant). If a contractor has a non-compliant EA that was made after 2 December 2016 the contractor cannot tender for Commonwealth-funded building work.

Bill to amend the transition period

On 8 February 2017, the Government introduced the Building And Construction Industry (Improving Productivity) Amendment Bill 2017 (Bill). If passed, the Bill will have the following effects:

1. The Bill will bring forward expiry of the transitional exemption from 29 November 2018 to 1 September 2017;
2. If a contractor has a non-compliant EA that was made before 2 December 2016, the contractor can still submit expressions of interest and tender but cannot be awarded Commonwealth funded building work until the contractor is code-compliant; and
3. If a contractor has a non-compliant EA that was made after 2 December 2016 the contractor cannot tender for Commonwealth-funded building work.

The Bill will have a significant effect on contractors who currently have non code-compliant EAs because it will mean that they will not be able to be awarded Commonwealth-funded building work until they have made new EAs that are code-compliant.

The amendments will apply from the date the Bill becomes law. This means that until then, the exemptions under the current Code will apply i.e. until 29 November 2018 a code covered entity can still be awarded Commonwealth-funded work if it has a non-compliant EA that was made before 2 December 2016.

Next steps

The introduction of the Bill has been met with significant opposition from trade unions who will likely continue to voice their opposition to the amendments to the current Act. The Bill will be put to a Senate Committee for review and the Senate is expected to release its report in the next 1-2 weeks.

We will provide you with an update as more information is released and we will monitor the progress of the Bill.

If you currently have an EA that is not code-compliant or has not been reviewed for code compliance please do not hesitate to contact Construction and Engineering team to discuss the implications of the current Act and the Bill on your ability to tender for or be awarded Commonwealth-funded building work.