Building and Construction Industry Improvement Consequential and Transitional) Bill 2003

Building and Construction Industry Improvement
Bill 2003

Building and Construction Industry Improvement (Consequential and Transitional) Bill 2003

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Annex A - Summary of Key Issues

Annex B Chapter Analysis

Chapter 1 - Preliminary

Chapter 1 contains the object of the Bill and key definitions that determine the Bill's coverage.

Clause 3 states that the object of the Bill is to provide an improved workplace relations framework for building work to ensure this is carried out 'fairly, efficiently and productively for the benefit of all building industry participants and for the benefit of the Australian economy as a whole'.

Clauses 4-8 in Chapter 1 contain definitions that determine the coverage of the Bill. A definition of 'building and construction industry' is not included.

Clause 5 contains the key definition of 'building work'. As the Explanatory Memorandum notes, this definition:

determines the scope of the Bill by forming the basis of terms such as building employee and building agreement, and hence terms such as building employer and building association. The coverage of all provisions of the Bill is ultimately determined by reference to the definition of building work.⁽¹⁾

A definition of 'building and construction industry' is not included.

The definition of 'building work' specifically includes:

-         A broad range of activities whether these are traditionally thought of as 'building' or not, including restoration, repair and demolition (paragraphs 5(1)(a) and (b))

-         fit-out of buildings (including any installation of power, lighting, communications systems (paragraph 5(1)(c)), and

-         any work 'part of or preparatory to' the activities in 5(1)(a) (c) (paragraph 5(1)(d). A number of activities are listed as examples of 'building work' for the purpose of this Bill, covering activities from 'site clearance' and 'laying of foundations' to 'site restoration' and 'landscaping' etc.

        In a change from the exposure draft, the 'pre-fabrication of made-to-order components' has been specifically included in 5(1)(d).

Specific exclusions from the definition of 'building work' include:

-         mining and extraction activities (paragraphs 5(1)(e) and (f)), and

-         domestic building, including alteration or extension (paragraph 5(1)(g)), except where this is part of a project including at least 5 single-dwelling houses (subclause 5(2).

Regulations can be made including or excluding additional activities from the definition of 'building work'. According to the Explanatory Memorandum, it is intended that regulations would be used 'where it is not clear whether or not a particular activity falls within the definition.'⁽²⁾

Clause 4 contains the bulk of the definitions. Key definitions with application throughout the Bill (and which lead to its potentially broad coverage) include:

Building agreement, building award and building certified agreement are defined to mean any agreement, award or certified agreement that has application to 'building work', whether or not they also apply to any other kind of work. This definition needs to be read in conjunction with the broad coverage of 'building work' (see above). As the Explanatory Memorandum notes, an agreement whose provisions apply to both commercial construction and other work will be a 'building agreement' for the purposes of the Bill.⁽³⁾

Building employee means a person whose employment includes 'building work' or who accepts an offer of engagement as an employee undertaking 'building work'. The Explanatory Memorandum notes that an employee who performs other work as well as building work will be a 'building employee' for the purposes of the Bill.⁽⁴⁾

Building employer means an employer (as defined in section 4 of the Workplace Relations Act) who employs, or offers to employ, 'building employees'.

Building contractor means a person who has entered into, or offered to enter into, a contract for services under which the person carries out 'building work', or arranges for 'building work' to be carried out.

Building industry participant means persons and entities involved with the building industry, not only including building employees, employers and contractors, but also clients of a building contractor as well as employees, officers, delegates or other representatives of a building association and the building association itself.

Building association is defined to mean any industrial association (as defined in section 298B of the Workplace Relations Act) whose eligibility rules allow membership by building employers, building employees or building contractors.

While the AIG supports a statute specific to the building and construction industry, in its view 'the definitions used within the Bill to define the coverage of the legislation are inappropriate for workplace relations legislation.' The AIG is concerned that the definition of 'building work' 'deems large parts of the manufacturing sector, together with various service sectors, as being part of the building and construction industry'. The AIG wants to exclude the manufacturing sector because it is 'constantly faced with claims by unions to extend construction industry terms and conditions to areas outside of the commonly accepted boundaries of the building and construction industry.'⁽⁵⁾

Key Issues

Chapter 2 and Chapter 12 Part 2 Australian Building and Construction Commissioner

According to the Explanatory Memorandum, the Australian Building and Construction Commission will operate as a 'one-stop shop' for the industry, responsible for enforcing federal workplace relations laws on building sites. The Government expects the impact of the ABCC to be significant 'as it will be a body which will have the power to deal with the lawlessness which was found by the Royal Commission to be endemic in the industry'.⁽⁶⁾ As the Government's summary of the exposure draft said, 'in practical terms, the ABCC will function as the industry "watch dog"'.⁽⁷⁾ It will either deal with matters itself or refer them to other agencies for action.⁽⁸⁾

The ABC Commissioner will initially have offices in Melbourne, Sydney, Perth and Brisbane. These offices will also service the Northern Territory, South Australia, Tasmania and the Australian Capital Territory and may include a presence on large regional projects.⁽⁹⁾

The Bill provides for the ABCC to be headed by a Commissioner, and supported by Deputy Commissioners. ABCC inspectors would regularly visit building sites to monitor compliance with the Workplace Relations Act, the Bill and the envisaged Building Code. (see Chapter 3 of the Bill). The ABCC will be able to institute proceedings for non-compliance with industrial laws.

The ABCC's inspectors would be backed by lawyers, financial analysts, industry experts and support staff, and 'will rely on a range of sources to monitor and act on issues in the industry: telephone hotlines, spot visits at the invitation of a party, referrals from other entities, eg police, the Australian Taxation Office, the Australian Competition and Consumer Commission (ACCC), peak industry bodies and unions'.⁽¹⁰⁾

Employers and other industry participants will be required to provide the ABCC with specified information about industrial activity, such as demands for strike pay and threats of industrial action. Applicants in court proceedings will be required to serve the ABCC with a copy of the application. In AIRC proceedings, the Australian Industrial Registry will be required to notify the ABCC of applications made under the proposed building law, and any other orders made.

The ABCC will also be able to engage a 'loss assessor to determine the cost to an employer of industrial action'. The Bill establishes a 'detailed system of reporting' that would involve naming non-compliers in parliament and a system of annual reporting. Although a statutory body, the ABCC could also be given written directions from the Minister (in similar vein to the Minister's control over the Office of the Employment Advocate).

Proposed Chapter 2 of the Bill establishes the ABCC. Proposed Chapter 12 Part 2 provides the ABCC with a range of powers.

Clause 11 of the Bill establishes the office of ABC Commissioner, to be assisted by a number of Deputy ABC Commissioners. Clause 25 provides for the appointment of staff under the Public Service Act 1999 and stipulates that the ABC Commissioner and public service staff together constitute a Statutory Agency for the purposes of that Act.

        The position of Deputy ABC Commissioners is left unstated on a strict reading of clause 25 the Deputy Commissioners have not been specifically included within the ABCC as a Statutory Agency.

Functions of ABCC

Proposed clause 12 sets out the ABC Commissioner's broad functions. These are to:

        monitor, and promote compliance with the Bill, the Workplace Relations Act and the proposed Building Code (see Chapter 3)

        refer matters to other relevant agencies and bodies

        investigate suspected contraventions of

-         the Bill

-         the Workplace Relations Act

-         an award, certified agreement, Australian Workplace Agreement or order of the Australian Industrial Relations Commission ('AIRC'), or

-         the Building Code

        institute, or intervene in, proceedings in accordance with the Bill

        provide information, advice and assistance to building industry participants about their rights and obligations under the Bill and the Workplace Relations Act

        provide representation to a building industry participant in proceedings under the Bill or the Workplace Relations Act if the ABC Commissioner considers that this would promote enforcement, and

        disseminate information relevant to building industry participants.

In addition to the broad functions in clause 12, the ABC Commissioner will have other functions, including:

        nominating an ABC Inspector to assess damages resulting from unlawful industrial action (clause 77)

        applying to the Industrial Registrar for:

-         revocation or suspension of a right of entry permit (clause 184), and

-         issue of a deregistration certificate where damages for unlawful action have not been paid (clause 215)

        applying to the Federal Court for:

-         an injunction to restrain pattern bargaining in respect of building employees (clause 67), and

-         an order disqualifying a person from holding office in a Commonwealth building organisation (clause 217).

Clause 13 provides that the Minister may direct how the ABC Commissioner is to exercise his or her powers and functions, although in a change from the exposure draft not in relation to a particular case. Such directions by the Minister are disallowable instruments and must be tabled in Parliament within 15 sitting days.

Clause 15 allows the ABC Commissioner to delegate his or her powers and functions.⁽¹¹⁾ However the Commissioner's power to obtain information under clause 230 (see below) can only be delegated to a Deputy ABC Inspector.

        In a change from the exposure draft, a list of all such delegations must be included in the annual report for the ABCC (clause 16).

Powers of ABC Commissioner

Chapter 12 Part 2 Division 1 of the Bill gives the ABC Commissioner a range of powers to compel the provision of information, both through the giving of oral evidence and the production of documents.

Clause 230 provides that if the ABC Commissioner believes on reasonable grounds that a person has information or documents or is capable of giving evidence relevant to an investigation, the Commissioner can issue a written notice requiring the person to provide the information or documents or to appear before the Commissioner to answer questions. A person required to appear before the Commissioner is entitled to legal representation. The Commissioner can require a person to provide information under oath or affirmation. Stating facts on oath or affirmation while knowing those facts to be false amounts to the crime of 'false swearing' in most Australian jurisdictions.⁽¹²⁾

Subclause 230(6) provides that it is an offence punishable by 6 months imprisonment if a person fails to provide information by the time or in the manner or form required by the Commissioner, or does not answer questions relevant to an investigation. Deliberately providing inaccurate or incomplete information in response to a demand by the ABC Commissioner would also be an offence under the Commonwealth Criminal Code by virtue of sections 137.1 or 137.2 ('False or misleading information or documents'; punishment 12 months imprisonment) and section 149.1 ('Obstruction of Commonwealth public officials'; punishment 2 years imprisonment).

Clause 231 provides that a person is not excused from providing information under clause 230 because they might contravene another law, incriminate themselves or otherwise expose themselves to another penalty or liability. Such information can be used in evidence against the person for offences against paragraph 230(6) itself, or sections 137.1, 137.2 and 149.1 of the Commonwealth Criminal Code, although not for other offences.

Under clause 232, a person will not commit an offence merely because they provide, in good faith, information in accordance with section 230.

Powers of ABC Inspectors

Chapter 12 Part 2 Division 2 provides for the appointment of 'ABC Inspectors' with a range of powers.

Under clause 235 the ABC Commissioner may appoint employees or office holders of the Commonwealth, a State or Territory, or consultants engaged by the ABC Commissioner, as 'ABC Inspectors'.

Clause 237 provides that the powers of an ABC Inspector can be exercised for 'compliance purposes', namely:

-         to ascertain whether a 'designated building law' (i.e. the Bill, the Workplace Relations Act, or an award or agreement made under Commonwealth industrial law), a court order or the Building Code is being complied with, or

-          to assess damages resulting from unlawful industrial action.

Under subclause 237(2) the powers of an ABC Inspector can be exercised during ordinary working hours or at any other time 'necessary for compliance purposes'.

Subclause 237 (3) gives an ABC Inspector the power to enter without force any premises where the inspector reasonably believes that:

        a breach of a 'designated building law' or the proposed Building Code 'has occurred, is occurring or is likely to occur'

        there are documents relevant to 'compliance purposes'

        'building work' under a Commonwealth award or agreement or to which the propose Building Code applies is being carried out.

Subclause 237(5) provides that after using his or her power of entry under subclause 237(3), an ABC Inspector can inspect any work, machinery or other item; take samples of goods; interview any person; take copies of any document; or require a person with custody of a document to produce it within a specified period.

In addition, under subclause 237(9), an ABC Inspector can separate from the power of entry under subclause 237(3) also enter other 'business premises' if the inspector has reasonable cause to believe that a person who performs work or conducts business there has information 'relevant to compliance purposes'.

As in the case of the ABC Commissioner, obstructing or otherwise preventing an ABC Inspector doing his or her job could lead to charges under section 149.1 of the Commonwealth Criminal Code.

Mandatory Reporting to the ABCC

The Explanatory Memorandum notes that 'the central role of the ABC Commissioner is to monitor the industry and enforce this Act, the WR Act and the Building Code.' Apart from the functions and powers described above, this role is enshrined in the Bill through the following mandatory reporting and similar provisions:

        employers will be required to notify the ABC Commissioner of certain industrial matters (see Chapter 6 'Industrial action')

-          an employer must notify the ABCC in writing within 72 hours of becoming aware of any claim for 'strike pay' that would contravene section 187AA of the Workplace Relations Act (clause 137). This is a 'Grade A civil penalty provision'. Failure by an employer to notify the ABCC within the specified time could lead to proceedings by the ABCC with a maximum penalty of $110,000 (for a body corporate) or $22,000 (for an individual)

-         an employer must notify the ABC Commissioner within 72 hours of becoming aware of 'notifiable industrial action', i.e. action that is 'industrially-motivated' and 'constitutionally-connected' (clause 135). This is a 'Grade B civil penalty' provision, which means that failure by an employer to notify the ABCC within the specified time could lead to proceedings by the ABCC against the employer (under clause 227) with a maximum penalty of $11,000 (for a body corporate) or $2,200 (for an individual)

-         an employer must notify the ABC Commissioner within 14 days of becoming aware that employees have ceased 'unlawful industrial action' (clause 76). This is a 'Grade B civil penalty provision

-         potential donors must notify the ABCC in writing within 30 days of receiving any request that a donation exceeding $500 be made to a 'Commonwealth building organisation' (see Chapter 10 'Accountability of organisations' clause 213). Failure to notify the ABCC within the specified time could lead to proceedings by the ABCC with a maximum penalty of $11,000 (for a body corporate) or $2,200 (for an individual)

        under clauses 48 and 49, if an employee engages or threatens to engage in strike action on safety grounds or if an employer makes a payment for a period when an employee has taken such action the employer must notify the ABC Commissioner in writing within 72 hours. Failure to notify the ABCC within the specified time could lead to proceedings by the ABCC with a maximum penalty of $11,000 (for a body corporate) or $2,200 (for an individual)

        the ABC Commissioner will have a particular role in monitoring compliance with the proposed new right of entry requirements (see Chapter 9 'Union right of entry'):

-         a permit holder seeking entry will be required to provide a copy of the 'entry notice' or 'exemption certificate' to the ABC Commissioner prior to exercising right of entry (clauses 190 and 200);

-         the ABC Commissioner will have a right to be heard in right of entry permit matters before the Industrial Registrar (clause 208);

         the Industrial Registrar will be required to provide the ABCC with at least seven days notice of hearings relating to the certification of a 'building agreement' (see Chapter 5 'Awards, Certified Agreements and Other Provisions About Employment Conditions', clause 53) so the ABCC can decide whether to intervene in the proceedings under clause 250.

        the Industrial Registrar must also notify the ABCC of all applications lodged with the AIRC or Australian Industrial Registry (AIR) under the Bill or the Workplace Relations Act as affected by the Bill, and the outcome of each such application (clause 251).

Reaction to the ABCC proposal

The ACCI has expressed qualified support for the creation of the ABCC. It queries whether the ABCC should have the power to compel people to answer questions and to remove the protection against self-incrimination in its investigations.⁽¹³⁾ The ACCI also notes that it is not clear how the ABCC will deal with potential clashes of power with the Australian Competition and Consumer Commission (ACCC) or the AIRC.⁽¹⁴⁾

The AIG supports the creation of the ABCC, noting that it had 'argued strongly that a body should be established to stop unlawful conduct and to pursue prosecutions when the law is breached.'⁽¹⁵⁾

The ACTU says that the establishment of the ABCC is 'both unnecessary and undesirable'.⁽¹⁶⁾ In its view, enforcement of industrial relations legislation can be adequately handled by existing structures. The ACTU believes that Workplace Relations Inspectors and the Office of the Employment Advocate:

have powers appropriate to the investigation and prosecution of industrial relations law. These include the power to enter premises, require the production of documents and other things, and the power to interview relevant persons.⁽¹⁷⁾

The ACTU says there is no evidence that these authorities 'do not have sufficient powers to deal with alleged unlawful conduct in the building and construction industry'.⁽¹⁸⁾

The ACTU is concerned about the proposed power of the ABCC to require persons to attend and answer questions in relation to an investigation:

This power would enable the Commissioner to require individual building workers to attend its premises and answer questions under oath about issues such as why they took or did not take industrial action, or why they did or did not vote for a certified agreement. Such treatment would be terrifying for most workers and union officials, as it would be for most Australians, and is quite disproportionate to the scale of any identified problem. With sweeping coercive powers and a $60 million budget, the Royal Commission did not find evidence of the kind of intimidation which would justify this kind of investigative approach.⁽¹⁹⁾

The ACTU is particularly concerned that the proposed legislation overrides the common law privilege against self-incrimination.

The ACTU believes that there should be an independent process involved in initiating applications for the proposed civil penalties, noting that 'the ABCC is likely to act in a partisan and political way, as has been the case with the Office of the Employment Advocate'.⁽²⁰⁾

In the ACTU's view, 'a particularly absurd element of the scheme' is the requirement for mandatory reporting by employers ('all 80,000 of them') of industrial action or requests for strike pay. It also criticises the proposal that union officials provide copies of each 'notice of entry' to the ABCC, observing that 'building industry unions would expect an organiser to make a number of site visits each day'. Similarly, while the Bill proposes that the Industrial Registrar notify the ABCC of each hearing to certify a building agreement, the ACTU notes that 'thousands of such agreements are certified' each year. According to the ACTU, 'this level of monitoring and reporting cannot be seen as anything other than bureaucracy gone mad - hardly what is needed in the building and construction industry'.⁽²¹⁾

In relation to the extensive powers envisaged for the proposed ABCC, the Employee Relations Partner with law firm Freehills observed that:

The ABCC would have enormous powers. For example, under its proposed powers it has the right to intervene in any case or hearing in the AIRC that involves the building and construction industry. In that regard alone, the Construction Commission would have more power than the Minister himself.⁽²²⁾

Key Issues

Chapter 3 the Building Code

Proposed Chapter 3 of the Bill allows the Minister to issue a mandatory code of practice for the building and construction industry. According to the Government, the purpose of Chapter 3 is to allow it to 'more rigorously apply and extend' the National Building Industry Code of Practice introduced in 1997 'to cover all construction projects that have Australian Government funding, subject to certain financial thresholds'.⁽²³⁾

In the Government's view,

The new Building Code will enable the Australian Government to demonstrate leadership by promoting best practice outcomes in workplace relations and occupational health and safety on Australian Government funded construction projects.⁽²⁴⁾

Clause 26 provides that the Minister may issue a code of practice ('the Building Code') to be complied with in respect of 'building work'. The clause specifically empowers the Minister to issue documents in relation to occupational health and safety, after consulting the proposed Federal Safety Commissioner (see Chapter 4). 'Constitutional corporations' and those undertaking work in a Territory or for the Commonwealth can be required to comply with the Code. The Code must be made publicly available.

The ABC Commissioner must provide an annual report to the Minister on compliance with the Building Code. The report must be tabled in Parliament (clause 27). Similarly, the Federal Safety Commissioner must provide an annual report in relation to compliance with occupational health and safety matters (clause 29).

The ABC Commissioner can direct a person required to comply with the Code to provide a written report on the extent of compliance. Failure to provide a report within the specified time (which must be at least 14 days) could lead to proceedings by the ABCC with a maximum penalty of $11,000 (for a body corporate) or $2,200 (for an individual) (clause 30).

The ABC Commissioner can publish details of non-compliance with the Code, including names of relevant persons (clause 28).

Reaction to the proposed Building Code

The main organisations representing building employers are concerned about the absence from the Bill of parliamentary oversight of the proposed Building Code and the lack of a statutory requirement to consult the building industry in its preparation.

The AIG has said that in view of the requirement for all corporations to comply with the Code i.e. it will operate as law it should be given effect through regulation and therefore be disallowable, rather than merely being published.⁽²⁵⁾

According to the ACCI:

On the face of the legislation there are inadequate checks and balances on the executive in the development and promulgation of the Code. The clause is a brief conferral of power to issue a 'document'. Statutory recognition of the Code raises a need for more direct reference to the checks and balances relating to its development and implementation including industry consultation.⁽²⁶⁾

Similarly, in the ACTU's view, if the Code is not reviewable through disallowable regulations:

it would appear that its content will be entirely at the discretion of the Minister, with publication and report to Parliament the only controls applicable - a clearly unsatisfactory situation, given its broad operation.⁽²⁷⁾

Key Issues

Chapter 4 and Chapter 12 Part 2 Division 3 Occupational Health and Safety

Chapter 4 is the Government's response to concerns expressed by the Cole Royal Commission about Occupational Health and Safety (OHS) in the Australian building and construction industry. The chapter establishes the Federal Safety Commissioner, and provides for the establishment of an OHS accreditation scheme to be administered by the Safety Commissioner. As the Explanatory Memorandum notes, the accreditation scheme will ensure that any person wishing to contract with the Commonwealth for building work must meet certain OHS standards.⁽²⁸⁾

Chapter 4 also stipulates the process to be followed in cases where employees stop work due to OHS concerns. According to the Government, 'the new provisions will ensure that employees who abide by the proper processes will be entitled to be paid while addressing the Royal Commission's concern about misuse of OHS for industrial purposes'.⁽²⁹⁾

As one commentary noted, with its (constitutional) focus on Commonwealth projects, it appears that the Federal Safety Commissioner is not intended to affect the role of the State based Workcover Authorities in the administration of the legislation for the individual states.⁽³⁰⁾

Part 1 Federal Safety Commissioner

Clause 32 sets out the Federal Safety Commissioner's functions. These are to:

        promote:

-         OHS in relation to building work

-         the benefits of the accreditation scheme (established by clause 50), and

-         compliance with the OHS aspects of the Building Code

        disseminate information about the accreditation scheme and the OHS aspects of the Building Code

        monitor compliance with the occupational health and safety aspects of the Building Code

        perform functions as the accrediting authority for the accreditation scheme, and

         refer matters to other relevant agencies or bodies.

Clause 33 provides that the Minister may direct how the Federal Safety Commissioner is to exercise his or her powers and functions, although in a change from the exposure draft not in relation to a particular case. Such directions by the Minister are disallowable instruments and must be tabled in Parliament within 15 sitting days.

The Federal Safety Commissioner can delegate any of his or her powers (clause 35) and must provide details of investigations to the Minister in an annual report which is to be tabled in Parliament (clause 36).

Part 2 OHS action

Clause 47 limits the circumstances in which employees can be paid for periods when they refuse to work due to OHS concerns. Penalties will be imposed on both employees and employers if payments are made outside the specified circumstances.

Subclauses 47(2) and 47(3) prohibit employers from making, and employees from accepting, any payment in relation to a 'pre-referral non-entitlement period'. This is a period before the matter has been referred to a Commonwealth or State authority where an employee has refused to work due to OHS concerns and has failed to comply with a 'relevant dispute resolution procedure'. Subclauses 47(4) and 47(5) prohibit employers from making, and employees from accepting, any payment in relation to a period after the matter has been referred to a Commonwealth or State authority unless:

-         a 'prohibition notice' (i.e. a notice under an OHS law of the Commonwealth or a State) has been issued and the employee complied at all times with the relevant dispute resolution procedure, or

-         strike action ceased before the payment was made and before the relevant authority began an inspection of the workplace, and the employee complied at all times with the relevant dispute resolution procedure.

Making or accepting a payment in contravention of clause 47 can attract penalties of up to of $110,000 (for a body corporate) or $22,000 (for an individual).

Under clauses 48 and 49, if an employee engages or threatens to engage in strike action on OHS grounds or if an employer makes a payment for a period when an employee has taken such action the employer must notify the ABC Commissioner in writing within 72 hours. Failure to notify the ABCC within the specified time could lead to proceedings by the ABCC with a maximum penalty of $11,000 (for a body corporate) or $2,200 (for an individual).

Part 3 Accreditation Scheme for Commonwealth Building Contracts

Clause 50 provides for an accreditation scheme for persons who wish to enter into building contracts with the Commonwealth or Commonwealth authorities. Subclause 50(4) prohibits such contracts unless each of the persons is an 'accredited person' at the time the contract is made.

The accreditation scheme will be set out in regulations. The Federal Safety Commissioner will be the accrediting authority.

Chapter 12 Part 2 Division 3

This section of the Bill sets out proposed powers for 'Federal Safety Officers'.

Under clause 238 the Federal Safety Commissioner may appoint employees or office holders of the Commonwealth, a State or Territory, or consultants engaged by the Federal Safety Commissioner, as 'Federal Safety Officers'.

Under clause 240 a Federal Safety Officer can exercise his or her powers for the purpose of determining whether the Building Code is being complied with. A Federal Safety Officer can enter, without force, any premises on which the officer has reasonable cause to believe that 'building work' has been or is being carried out, or where a breach of the Building Code has occurred or is likely to occur. Such officers can also enter any business premises relevant to compliance with the Building Code.

A Federal Safety Officer can inspect any item or work on the premises, take samples, interview any person and require a person to produce documents within a specified time. A person who fails to comply with the requirement to produce a document could be charged with 'obstruction of a Commonwealth public official' under section 149.1 of the Criminal Code (punishment 2 years imprisonment).

An occupier of premises cannot refuse or unduly delay entry to a Federal Safety Officer (sub-clause 240(14)). Contravention of this sub-clause can attract penalties of up to of $110,000 (for a body corporate) or $22,000 (for an individual).

Clause 241 provides similar powers for Federal Safety Officers in relation to the proposed Commonwealth accreditation scheme in clause 50.

Reaction to the proposed OHS provisions

The proposal in the Bill for a Federal Safety Commissioner and an OHS accreditation scheme for Commonwealth building work coincides with increased concern over OHS issues in the Australian construction industry. Greens MP Michael Organ has proposed federal legislation on industrial manslaughter.⁽³¹⁾ The Workplace Relations Minister has suggested that the Federal Safety Commissioner could also deal with industrial manslaughter issues.⁽³²⁾

In response to the OHS proposals in the exposure draft, the AIG called on the Federal Government to avoid adding to the already onerous OHS requirements on employers, focussing in particular on the differing laws in this area under Australia's federal system. In the AIG's view, it is:

vital that any reforms implemented to improve occupational health and safety in the construction industry do not simply result in the imposition of another layer of regulation which would lead to further confusion about which of the various federal and state laws, regulations, codes and standards.⁽³³⁾

On the other hand, the AIG 'strongly supports the provisions of the Bill which address the misuse of occupational health and safety issues in an industrial relations context'.⁽³⁴⁾

The ACCI supports the creation of the Federal Safety Commissioner. However it has concerns about the proposed accreditation scheme, noting that the Federal Safety Commissioner will test contractors' OHS credentials on the job, as well as through their management policies and systems, before they can enter into contracts for Commonwealth work.⁽³⁵⁾

The ACCI says that despite the 'far reaching nature of this proposal, no criteria is specified for the accreditation scheme.' It wants to be consulted in the development of regulations establishing the scheme and calls in particular for rights of review or appeal.⁽³⁶⁾

The ACCI also notes that there is no reference in Chapter 4 to the National Occupational Health and Safety Commission (NOHSC), whose functions overlap those proposed for the Federal Safety Commissioner.⁽³⁷⁾

The ACTU has substantial concerns with the proposed Chapter 4, including:

        the potential for different OHS laws to apply on the same building site

-         the ACTU is concerned that corporations could be subject to Commonwealth OHS arrangements under the proposed Building Code, while others working on the same site (eg. subcontractors who are not incorporated) would not be subject to those Commonwealth arrangements. In the ACTU's view:

Health and safety protection could be undermined if different employees at a worksite or related worksites in the same state or territory were to be subject to different provisions of different governments.⁽³⁸⁾

        the restriction on the common law right to refuse to work on reasonable safety grounds and to receive payment when refusing to work on such grounds

-         the ACTU notes that entitlement to be paid in relation to OHS action would be 'more restricted in the hazardous building and construction industry than that which applies to the rest of the workforce'.⁽³⁹⁾ Under both the Workplace Relations Act and State legislation there is provision for payment for periods when an employee does not work based on a reasonable concern about risks to his or her safety. The ACTU notes the view of Professor Richard Johnstone that at common law:

The employee is entitled to receive wages or salary even though she or he has not performed any work, because the refusal to work does not amount to a breach of the employee's contract of employment.⁽⁴⁰⁾

        the accreditation process

-         the ACTU is concerned that the Bill does not outline processes to be followed by the Federal Safety Commissioner, or any rights available to people seeking Commonwealth contracts, including a right of appeal against a decision of the Commissioner.⁽⁴¹⁾

Key Issues

Chapter 5 Awards, certified agreements and other employment conditions

Part 1 Awards

As Creighton and Stewart note, for many years the most significant constraints on the content of awards made by the Australian Industrial Relations Commission (AIRC) concerned the range of matters that were properly within the scope of the term 'industrial dispute' in section 51(35) of the Constitution and the Conciliation and Arbitration Act 1904.⁽⁴²⁾ The High Court accepted that matters with sufficient connection to the employer/employee relationship were 'industrial' issues and could be included in awards made by the AIRC. In Re Cram (1987) the Court said this could extend to matters relating to 'managerial prerogative', such as technological change, redundancy, staffing levels and occupational health and safety.⁽⁴³⁾

In the Workplace Relations Act the Coalition Government legislated to restrict the list of 'allowable award matters' that the AIRC could address. Matters relating to the organisation of work or managerial decision-making were excluded. Section 89A contains a list of 20 allowable award matters that can be dealt with by the AIRC in 'preventing or settling an industrial dispute by making an award or order'.⁽⁴⁴⁾

The Explanatory Memorandum notes that:

the National Building and Construction Industry Award 2000 currently contains 41 special rates and 21 allowances and contains complicated provisions in relation to rostered days off, overtime and special time, shift work and weekend work which is confusing for both employers and employees.⁽⁴⁵⁾

Clause 52 of the Bill requires the AIRC 'to have regard to the desirability of minimising the number, and complexity, of allowances' in relation to any building industrial dispute.

Clause 51 reduces the scope of 'allowable award matters' for the building and construction industry for the purposes of the Workplace Relations Act. The 20 allowable award matters listed in subclause 51(2) are less extensive than their equivalents in section 89A of the Workplace Relations Act, i.e. some matters which are able to be included in awards under the Workplace Relations Act have been omitted from this Bill. In addition, lists specific issues that are not allowable award matters.

Comparing subclause 51(2) of this Bill and taking into account subclause 51(4) produces a list of matters that could not be covered in construction industry awards made under the Workplace Relations Act. Matters that could not be covered in construction industry awards made under the Workplace Relations Act, based on clause 51, include:

         'Skill-based' career paths

         Bonuses

         Long service leave

         Cultural and similar leave

         Public holidays other than those declared by State and Territory Governments

         Allowances outside those listed in subclause 51(2)(j)

         Redundancy payments outside the scope of subclause 51(2)(n)

         Notice of termination

         Times of the day that count as ordinary time

         Times at which Rostered Days Off can be taken

         Clauses requiring employers to record start and finish times and hours of work

         Accident make-up pay

         Apprentice to trades ratios

         Jury service make-up pay

         Training/education (except in relation to leave and allowances for trainees or apprentices)

         Specification of superannuation funds

         Restrictions on part-time/casual work

         Transfers between locations

         Union representation rights (eg when bargaining for a certified agreement)

         Types of employment and moves between these

         The number or proportion of employees in particular types of employment

         Prohibitions on types of employment

According to the Explanatory Memorandum, matters such as 'skill-based career paths' and 'bonuses' are not included as allowable award matters because these could be more appropriately dealt with at the enterprise or workplace level (including if necessary by a certified agreement or Australian workplace agreement); and other matters such as long service leave and jury service are excluded because these are dealt with under State and Territory legislation.⁽⁴⁶⁾

The Explanatory Memorandum notes that paragraph 51(2)(k) will allow the AIRC to include in building awards provisions that set the maximum number of hours per week that an employee can be required to work overtime. It does not allow the AIRC to set an industry-wide cap on hours that may be worked in the industry:

This is intended to address the productivity and OHS issues of excessive work hours and overtime in the building and construction industry. This retains flexibility while being designed to operate in a manner akin to the existing right of employees to refuse unreasonable overtime.⁽⁴⁷⁾

Reaction to Award Proposals

The ACCI supports the objective of limiting award provisions to 'basic minimum entitlements'.⁽⁴⁸⁾

The ACCI interpreted the exposure draft as allowing the AIRC through paragraph 51(2)(k) to impose a cap on working hours throughout the building industry, labelling this 'a failed French experiment that is even discredited in European countries'.⁽⁴⁹⁾ This concern appears to be addressed by the Explanatory Memorandum.

The ACCI suggests that paragraph 51(2)(t) concerning pay and conditions for 'outworkers' be amended. As the ACCI points out, the definition of 'outworkers' in sub-clause 51(15) refers to work performed at 'private residential premises'. This is contrary to the intention for the Bill to apply only to 'building work' as defined in clause 5, i.e. excluding work on a 'single-dwelling house'.

The ACCI also suggests that paragraph 51(4)(b) put beyond doubt that descriptions of training programmes in awards that are part of the establishment of wages and conditions are allowable.

The ACTU points out that because of the broad definitions of 'building work' and 'building employee', the limitations on the content of awards in clause 51 'would apply to awards which operate outside the building industry'. According to the ACTU, 'presumably this broad application is a plank of the Government's strategy to move the provisions of the Bill generally through the entire workforce'.⁽⁵⁰⁾

The ACTU has a detailed list of objections to the restrictions on allowable award matters in clause 51.⁽⁵¹⁾ In its view, 'the effect of these restrictions on awards will be a significant loss of earnings for many employees'. The ACTU believes that:

While many employees will succeed in including these provisions in certified agreements, this will not be the case for the most vulnerable and award-dependent sectors, some of whom may be outside the industry altogether, given the breadth of the application.⁽⁵²⁾

Part 2 Certified Agreements

Part 2 Division 1 imposes additional pre-conditions for certification of building agreements under Part VIB of the Workplace Relations Act. Such agreements are linked to the concept of 'protected industrial action' under Part VIB Division 8 of the Workplace Relations Act.⁽⁵³⁾

Clause 53 requires the AIRC to hold a formal hearing before a building agreement can be certified, giving the ABC Commissioner copies of the relevant documents at least 7 days before the scheduled hearing date. According to the Explanatory Memorandum, 'this will enable the ABC Commissioner to determine whether to intervene in the proceedings under clause 250 of the Bill'.⁽⁵⁴⁾

Under clauses 54-58, the AIRC must not certify a building agreement if it:

-         includes any matter not relating to the employment relationship between employer and employees

-         has effect for a period other than 3 years

-         includes any obligation on the employer to make retrospective payments

-         results from 'pattern bargaining' (see below)

-         contains 'objectionable provisions' (see below), or

-         does not contain the statutory 'freedom of association' statement (set out in Schedule 1 of the Bill).

In addition, a building agreement cannot be certified unless notice of a bargaining period has been given in accordance with section 170MI of the Workplace Relations Act (clause 59). A 'union-related' notice for initiation of a bargaining period has no effect unless all affected employees have the opportunity to vote on whether they wish the union to represent them in the bargaining process (clause 64).

Under clause 7, a provision is 'objectionable' if it:

-         requires or permits conduct that would contravene proposed Chapter 7 (Freedom of association)

-         directly or indirectly requires a person to encourage or discourage another person from becoming or remaining a member of a building association

-         indicates support or opposition for persons being members of a building association

-         requires or permits payment of a bargaining services fee to a building association,

-          requires or permits an officer or employee of a Commonwealth or State union to exercise rights covered by proposed Chapter 9 (Union right of entry)

Under clause 69, 'objectionable provisions' in a building certified agreement or building award are void.

Clause 8 defines 'pattern bargaining' as seeking common wages or other common conditions of employment extending beyond a single business. However, conduct is not 'pattern bargaining' if a person is 'genuinely trying to reach agreement' (subclause 8(2)). 'Genuinely trying to reach agreement' has the same meaning as in section 170 MW of the Workplace Relations Act (which refers to the decision of Justice Munro in Australian Industry Group v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union),⁽⁵⁵⁾ supplemented by the list of indicators in clause 62 of the Bill (see below).

Clause 62 contains a list of indicators as to when a party 'is genuinely trying to reach an agreement' in relation to a proposed building agreement. This is significant for the purposes of section 170MW of the Workplace Relations Act which gives the AIRC power to suspend or terminate a 'bargaining period' if a negotiating party organising or taking industrial action is not 'genuinely trying to reach agreement' with the other parties. In turn, ending a 'bargaining period' takes any such action outside the concept of 'protected industrial action' under Part VIB Division 8 of the Workplace Relations Act, rendering it 'unlawful'.

In addition, if a party is 'genuinely trying to reach agreement' they are not engaged in 'pattern bargaining' for the purposes of clause 8 even if the negotiations go beyond a particular enterprise.

According to the Explanatory Memorandum, 'the indicators describe a range of appropriate bargaining behaviours, designed to enhance the quality and efficacy of the bargaining process.' While the list of indicators is extensive, it is not intended to be exhaustive:

other behaviours and approaches may indicate that a party is genuinely trying to reach agreement. Similarly, the mere presence or absence of a factor does not, of itself, indicate that a party is or is not genuinely trying to reach agreement.⁽⁵⁶⁾

Clause 63 provides that where an employer makes a building agreement with an organisation of employees i.e. a union all employees, whether they are members of the organisation or not, should have an opportunity to make representations to the employer about the proposed agreement.

Clause 64 provides that initiation by a union of a bargaining period for a certified agreement has no effect unless all affected employees have the opportunity to vote on whether they wish the union to represent them. The vote must be 'fair' and comply with specified notification requirements. Where there are 10 or more employees affected by the proposed agreement, the vote must be by secret ballot (see Chapter 6 Part 3 below).

Under clauses 65 and 66 employees will be able to appoint an agent to initiate a bargaining period or give an employer notice of (protected) industrial action under section 170MO of the Workplace Relations Act on their behalf. The Explanatory Memorandum explains that this will give employees the option of remaining anonymous to their employer.⁽⁵⁷⁾ The name of the employee(s) must be given to the AIRC, but the AIRC is prohibited from disclosing the name(s), except where required or permitted to do so by this Bill or other legislation.

Reaction to Certified Agreement Proposals

The ACCI supports the Bill's encouragement of 'genuine bargaining' in the building and construction industry. In its view, measures such as restricting certified agreements to matters affecting the employer/employee relationship, the exclusion of retrospective pay rises and preventing certification of agreements resulting from 'pattern bargaining' are 'crucial to reform':

Coercion in agreement making is at the heart of the standover tactics in the industry that gives rise to unlawful industrial action, anti competitive practices, agreements that barely reflect a mutuality of interests and militant and unlawful union power over contractors or labour supply.⁽⁵⁸⁾

However neither the ACCI nor the AIG agree with the terms of clause 62 (indicators of 'genuinely trying to reach agreement'). According to the ACCI, 'the definition in clause 62 is highly process driven and its focus on process will allow for disputes over process.'⁽⁵⁹⁾ The AIG belives that the and that the list of indicators in clause 62 'are highly inappropriate and miss the point'. The AIG believes that the Bill should be amended to clarify the relationship between clause 62 and section 170MW of the Workplace Relations Act.⁽⁶⁰⁾

The AIG also opposes clause 55 stipulating a 3 year term for certified building agreements, noting that for major projects, a four or five year construction period is not uncommon and that 'most employers working on a construction project would prefer that their certified agreements not expire during the life of the project'.⁽⁶¹⁾

The ACTU believes that Chapter 5 Part 2 discourages the making of certified agreements in the building industry. The ACTU opposes the requirement for a hearing in clause 53 and the prohibition in clause 54 on matters not relating to the employment relationship in certified agreements.⁽⁶²⁾

According to the ACTU, the requirement in clause 59 that a bargaining period be initiated before an agreement can be certified and in clause 64 that a ballot of employees be conducted prior to the union initiation of the bargaining period 'are unnecessary, and will achieve nothing except involve parties in superfluous paperwork, while increasing the ability of the ABCC to argue that certification should be refused on technical grounds'.⁽⁶³⁾

In addition, in the ACTU's view:

Proposed section 55, which prevents agreements establishing their own period of operation or providing retrospectivity of entitlements, is, together with the prohibition on pattern bargaining, a recipe for uncertainty and chaos on building sites.⁽⁶⁴⁾

The ACTU believes that the proposed provisions, 'would guarantee only uncertainty, with certified agreements expiring in the middle of jobs, and industrial action potentially occurring sub-contractor by sub-contactor'.⁽⁶⁵⁾

Part 3 Other provisions about employment conditions

Proposed Part 3 of Chapter 5 gives the Federal Court power to issue injunctions to stop 'pattern bargaining' (i.e. seeking identical agreements across an industry), makes 'project' or 'site' agreements unenforceable unless certified under the Workplace Relations Act, and provides for substantial penalties for breach of AIRC orders in relation to building awards and agreements.

According to the Explanatory Memorandum, 'as of 30 June 2003, 66 per cent of all registered construction agreements with wage provisions were identified as pattern or "mirror" agreements, covering over 48 800 employees'. It refers to estimates from the Housing Industry Association that 'under pattern agreements the cost of employees can be 30 per cent or more higher than that of employees being paid under Award rates'.⁽⁶⁶⁾ It observes that:

Pattern agreements result in some enterprises paying wage increases for minimal, if any, improvement in productivity .Pattern bargaining entrenches the existing culture by reinforcing a mandated uniform approach, which does not allow for innovation and change, and does not enable the industry to realise its productivity potential.⁽⁶⁷⁾

Clause 67 allows the ABC Commissioner 'or any other person' to apply to the Federal Court for an injunction to restrain pattern bargaining in respect of building employees. The Court can grant an injunction in whatever terms it consider appropriate if satisfied that a person or 'industrial association' 'is engaging, has engaged or is proposing to engage in pattern bargaining'.

Sub-clause 67(3) limits the Federal Court's power to grant an injunction to situations within the Commonwealth's constitutional authority.⁽⁶⁸⁾ Sub-clause 67(5) provides that section 170MT of the Workplace Relations Act (preventing prosecution of 'protected industrial action') does not apply to the granting of injunctions under clause 67.

Clause 68 is a complex provision limiting the enforceability of project or site agreements, with exceptions. If an agreement seeks standard conditions for employees of different enterprises on a particular building site, it will be unenforceable if a party to the agreement is an organisation (i.e. a union) or a corporation unless the agreement is certified. Under clause 56, the AIRC cannot certify such an agreement unless it is satisfied that the agreement does not result from 'pattern bargaining.' As the ACCI notes, subclause 8(4) 'excludes from the definition of pattern bargaining proposed agreements which are characteristic of project agreements',⁽⁶⁹⁾ i.e. it allows for sub-contractors to be included in the principal contractor's building agreement for a particular site without this being defined as 'pattern bargaining' for the purposes of the Bill.

The end result appears to be that clause 68 allows project or site agreements covering individual employees from different businesses, plus those involving unions or corporations if they do not go beyond sub-contractors hired for the particular building project.

Clause 70 directs the AIRC to remove 'objectionable provisions' (defined in clause 7; see above under Part 2 - certified agreements) from building awards or certified agreements. An application to remove such provisions can be made by a person, organisation or other party covered by the award or agreement, or by the ABC Commissioner.

Clause 71 alters the application of Part VIII of the Workplace Relations Act by providing for substantially increased maximum penalties for breach of building awards, building certified agreements and building orders. Section 178 of the Workplace Relations Act is amended for the purpose of such awards, agreements and orders by increasing the maximum penalty for an individual from $2,000 to $22,000 and for a corporation from $10,000 to $110,000. The maximum amount payable in a small claims procedure under section 179D is increased from $5,000 to $25,000.

(see Chapter 12 below for general issue of penalties for non-compliance with the Bill)

Reaction to Proposed Chapter 5 Part 3

The ACCI supports the proposed restrictions on pattern bargaining in the Bill and prohibitions on protected industrial action in support of pattern bargaining claims. The ACCI also supports the proposal in the Bill to recognise the enforceability of certain project agreements, noting that 'the distinction between pattern bargaining and bargaining to establish a project agreement is important'.⁽⁷⁰⁾

The AIG strongly supports the imposition of constraints on pattern bargaining in the construction industry. However, while it supports the thrust behind the proposed reforms in the Bill, it has difficulty with the relevant provisions as they are currently drafted:

The definition of 'pattern bargaining' in the Bill fails to deal with several of the most damaging aspects of union behaviour which constitute pattern bargaining, whilst outlawing many legitimate forms of bargaining and other conduct. Indeed, the important decision of Justice Munro of the AIRC concerning pattern bargaining, which is referred to in a Note in s.170MW(2) of the Workplace Relations Act, would appear to be adversely disturbed by the provisions of the Bill.⁽⁷¹⁾

The AIG is also concerned that its own activities may be caught by the proposed definition of 'pattern bargaining'. The AIG 'regularly gives advice to its member companies about union claims'. In its view:

S.8(1) of the Bill could be interpreted as outlawing the giving of advice to more than one company in similar terms, if such advice was seen as 'a course of conduct' that involves 'seeking common wages or other common conditions of employment'. Such a result would be inappropriate, unfair and unworkable.⁽⁷²⁾

In the ACTU's view, the proposed prohibition on bargaining across more than one enterprise would impose serious inefficiency on the building and construction industry. It would require:

each employer, many of whom are also workers on the site, to engage in complex negotiations with unions or their employees in order to establish the terms and conditions which apply. The transactional costs of this approach on small business would be enormous.⁽⁷³⁾

The ACTU is particularly concerned about the proposed restriction on project or site agreements:

it ignores the fact that a building site or project is one enterprise or workplace, in which a number of different employers participate. It is simply common sense to have a single standard of employment conditions operating on the site, a reality which is recognised by most employees as well as by their employees.⁽⁷⁴⁾

The ACTU argues that the current law does not meet the needs of the building and construction industry, and that the additional restrictions proposed in the Bill 'on the seeking and achievement of common wages and conditions, particularly in the context of particular projects, would be harmful to the industry, especially to small employers'. It notes that 'nowhere else in the developed, industrialised world are there restrictions on industry-wide agreement-making as exist in Australia'.⁽⁷⁵⁾

Key Issues

Chapter 6 Industrial Action etc

According to the Explanatory Memorandum, proposed Chapter 6 is the Government's response to the Cole Royal Commission's recommendations in relation to industrial action. It makes certain forms of industrial action unlawful and provides 'improved access' to sanctions against unlawful industrial action in the form of injunctions, pecuniary penalties and compensation for loss.

Under proposed Chapter 6, employers will be required to notify the ABC Commissioner of threatened or actual industrial action and of the cessation of unlawful industrial action. It provides additional requirements for accessing protected industrial action for single business agreements including:

        mandatory cooling-off periods after 14 days of industrial action; and

        a requirement for a secret ballot of employees to approve industrial action.

The Explanatory Memorandum notes that consistent with the Cole Royal Commission's recommendation that a new 'statutory norm' of industrial action be established to bring greater clarity to the regulation of industrial action, these provisions, subject to constitutional limitations, will apply broadly within the building and construction industry.⁽⁷⁶⁾

Protected industrial action

Strikes are ordinarily regarded as illegal at common law because they constitute a breach of contract by the employee, giving the employer the right to terminate the contract of employment and to sue for damages. Striking employees and unions are also generally subject to sanctions provided for by legislation or the provisions of awards or agreements, such as non-payment of wages, fines, bans clauses, etc.⁽⁷⁷⁾

Creighton and Stewart note that in the 1993 reforms to the (then) Industrial Relations Act:

For the first time in the history of the federal system, the legislation provided for a measure of protection against civil liability in respect of industrial action during a 'bargaining period'.⁽⁷⁸⁾

The relevant provisions were retained in modified form in the Workplace Relations Act (Part VIB Division 8) introduced in 1996.

A pre-condition for 'protection' is that the party taking 'protected action' has initiated a 'bargaining period' in accordance with section 170 MI of the Workplace Relations Act. Another pre-condition is that such action is preceded by written notice in accordance with section 170 MO of the Act.

In regard to a bargaining period for a certified agreement, an employee or a union (including its officers or employees) can take industrial action against an employer in the form of a strike or work ban (section 170ML(2) Workplace Relations Act). If the prescribed conditions are met, such action is 'protected' from legal action including action in tort (section 170MT). For example, employees who engage in such industrial action can do so without breaching their contract of employment (section 170ML(2)). An employer may take industrial action against its employees in the form of a lockout or by standing down employees, without breaching the employment contract (section 170ML(4)).⁽⁷⁹⁾

In addition, employers are prohibited from dismissing or injuring an employee because the employee has taken protected action (section 170MU).

Section 127 of the Workplace Relations Act allows the AIRC to direct that 'industrial action' that is 'happening, or is threatened, impending or probable' should stop or not occur. However section 127 orders are not available in relation to 'protected' action under Part VIB Division 8 of the Act.

Part 1 Preliminary

Clause 72 sets out key definitions for Chapter 6.

        'building industrial action' is defined in sub-clause 72(1) in a similar, but not identical way, to the definition of 'industrial action' in the Workplace Relations Act. This definition determines the scope of 'unlawful' building industrial action under Part 2. (A further definition of 'industrial action' identical to that in clause 72 is included in Chapter 7).

-         as with the definition of 'industrial action' in section 4 of the Workplace Relations Act, clause 72 paragraph (1)(a) includes in the scope of 'building industrial action' conduct that results in 'a restriction or limitation on, or delay in, the performance of' building work

-         in contrast to the Workplace Relations Act, sub-paragraph (1)(a)(i) and paragraph (1)(b) include industrial action taken not only in relation to agreements and other instruments made under Commonwealth law but also in relation to instruments under State and Territory law (through the definition of 'industrial instrument' in clause 4). This increases the scope of 'unlawful' industrial action (although this is then restricted by the requirement in clause 73 that such action be 'constitutionally-connected' (i.e. within the Commonwealth's constitutional powers)⁽⁸⁰⁾

-         sub-paragraph (1)(a)(ii) and paragraph (1)(c) include action taken in relation to an 'industrial dispute' within the meaning of Chapter 7 as 'building industrial action'. The definition of 'industrial dispute' in Chapter 7 goes further than the definition of the same term in section 4 of the Workplace Relations Act

-          paragraph (1)(g) excludes from the definition of 'building industrial action', action by an employee based on a 'reasonable concern about an imminent risk to his or health or safety', provided the employee did not unreasonably fail to comply with a direction to perform other work 'that was safe for the employee to perform'. This is a narrower exclusion again increasing the scope of 'unlawful industrial action' than in section 4 of the Workplace Relations Act which requires an employer to direct an employee to perform work 'that was safe and appropriate for the employee to perform' before the employee loses the benefit of this exclusion.

        'excluded action' defines 'building industrial action' that will not be 'unlawful' for the purpose of this Bill. It includes:

-         'protected action' under the Workplace Relations Act as modified by Chapter 6 Part 3, and

-         industrial action in relation to individual Australian Workplace Agreements (AWAs) under Part VID Division 8 of the Workplace Relations Act.

Sub-clause 72(2) provides that where an employee seeks to rely on paragraph (1)(g) to argue that they have not engaged in unlawful industrial action, the onus is on the employee to prove that the action was based on a reasonable concern about an imminent risk to health and safety. Such a reversal of the onus of proof is not specifically included for the definition of 'industrial action' in section 4 of the Workplace Relations Act. The Explanatory Memorandum notes that the provision has been included in this Bill 'to prevent persons engaging in industrial action from avoiding responsibility for their actions by relying on spurious health and safety risks'.⁽⁸¹⁾

Sub-clause 72(3) provides that, as for section 4(9) of the Workplace Relations Act, action will still be 'building industrial action' even if

        it relates to only part of an employee's duties, or

         includes a series of actions.

Part 2 Unlawful industrial action

In contrast to Part VIB Division 8 of the Workplace Relations Act which defines 'protected' industrial action, Chapter 6 Part 2 introduces a statutory concept of 'unlawful' industrial action for the building and construction industry.

Clause 74 prohibits a person from engaging in 'unlawful industrial action'. This is a 'Grade A civil penalty provision', meaning that contravention could lead to a penalty of up to $110,000 (for a body corporate) or $22,000 (for an individual).

Under clause 227, court proceedings in relation to 'unlawful industrial action' can be brought by any 'eligible person' (the ABC Commissioner, a person affected by the action, e.g. an employer, or a person prescribed in regulations) in the Federal Magistrates Court, the Federal Court or any Supreme, District or County Court of a State or Territory. Under sub-clause 227(1) a court can impose a penalty, order the defendant to pay compensation to a person who suffers damage because of the action, or make 'any other order that the court considers appropriate'. Subclause 227(4) provides a court with power to grant an injunction restraining unlawful industrial action.

Clause 73 defines 'building industrial action' as 'unlawful' if it is not 'excluded action' (see above), and is industrially-motivated and constitutionally-connected.

        'industrially-motivated' is defined in clause 72 as including one or more of the following:

-         supporting or advancing claims by or against an employer in relation to 'the employment of employees'. This includes action by one group of employees in support of claims by another group against a different employer

-         'advancing industrial objectives of an industrial association', or

-         'disrupting the performance of work'

According to the Explanatory Memorandum:

a mere failure to attend for work may occur for a number of reasons and will not necessarily be considered to be industrial action unless the failure to attend is for one of the reasons, or for reasons including one of the reasons, listed in this definition.⁽⁸²⁾

-         In a change from the exposure draft, the words 'of industrial associations' have been added to 'advancing industrial objectives'. This is 'to make clear that legitimate employee and employer action is not caught' by the definition of industrially-motivated.⁽⁸³⁾

        'constitutionally-connected action' is defined in clause 72 as broadly as possible (see section on 'Constitutional Coverage' above).

Clause 75 allows the ABC Commissioner, or any other person who becomes aware of 'threatened, impending or probable' unlawful industrial action, to apply to a court for an injunction to prevent such action. This provision appears to go further than the equivalent section 170NG in the Workplace Relations Act by specifying that injunctions can be granted in more or less any circumstances, including 'whether or not the defendant intends to engage again, or to continue to engage' in such action and 'whether or not there is an imminent danger of substantial damage to any person' from such action.

Clause 76 provides that an employer must notify the ABC Commissioner within 14 days of becoming aware that employees have ceased 'unlawful industrial action.' This is a 'Grade B civil penalty' provision, which means that failure by an employer to notify the ABCC within the specified time could lead to proceedings by the ABCC against the employer (under clause 227) with a maximum penalty of $11,000 (for a body corporate) or $2,200 (for an individual).

-         This clause complements clause 135 which requires an employer to notify the ABC Commissioner within 72 hours of becoming aware of industrial action, whether lawful or not.

Clause 77 allows the ABC Commissioner to nominate an ABC Inspector to assess damages resulting from unlawful industrial action in contravention of clause 74. Under clause 227, a court can order a person who has contravened clause 74 to pay compensation. A certificate issued by an ABC inspector under clause 77 is prima facie evidence of the loss suffered.

Reaction to Parts 1 and 2

While it supports the measures in Chapter 6, the ACCI is concerned that withdrawal of labour by employees might not be classed as 'building industrial action', therefore falling outside the scope of 'unlawful' industrial action:

'Building industrial action' should be more broadly defined to include action which has the effect on the employer of the withdrawal or limitation of labour for whatever purpose (other than the reasonable OHS purposes outlined in the Bill.) A number of decisions of the AIRC have started to develop a proposition that the withdrawal of labour is not industrial action if it is for the purpose of making a political protest. This is a loophole that is neither the intention of the WRA, the Royal Commission nor this Bill yet it has been inferred into law. Building unions have used such a loophole and can be expected to seek to do so again, based on public comments by the union leadership. ⁽⁸⁴⁾

In addition, the ACCI does not see the need for a definition of 'industrially motivated', stating that this gives 'even more scope for unions to take politically motivated industrial action against employers it only appears to limit the concept of unprotected action. Industrial action should not be permitted if it is not protected action.'⁽⁸⁵⁾

The ACCI is concerned that action by an employer to restructure or reform their business structures and practices could come within the definition of 'unlawful industrial action':

[the part] of the definition of 'industrially motivated' dealing with 'claims by an employer' should be removed. An employer seeking to reform and change work practices (as the objects of the Bill so clearly envisage) or making as a matter of course changes to employment or workplace rules or conditions as part of the well accepted areas of management care and control should not be unwittingly exposed to a suggestion by unions that work practice changes are unprotected industrial action by the employer. The Bill should be amended in all respects to remove this potential.⁽⁸⁶⁾

The ACTU opposes the restrictions on lawful industrial action in Chapter 6 which it says are contrary to Australia's commitments under International Labour Organisation (ILO) Conventions:

The Government's position appears to be that its international legal obligations are met so long as there is some right to strike, no matter how limited. If this was a correct view, a country whose legislation permitted industrial action only, for example, with the express permission of the Government, or only in the first week of February each year, would also be meeting its obligations. This is clearly not the case.⁽⁸⁷⁾

The ACTU states that 'the effect of clause 73 is to place an outright ban on any industrial action which does not come within the very restricted criteria for protection'.⁽⁸⁸⁾ It says that clause 74 would involve the employer, as well as the employees and their union, in legal proceedings 'which would do nothing to resolve the issues in dispute, and could exacerbate them'. The mandatory reporting requirements in clause 75 impose 'an additional regulatory burden on small business to enable the ABCC to pursue matters which may be dealt with and forgotten' and 'is completely unjustified'.⁽⁸⁹⁾

The ACTU is concerned about the power of the ABCC to make an assessment of damages under clause 76:

This assessment could be made irrespective of whether an injunction had been sought to prevent the action, or whether the underlying dispute had been resolved. The assessment would then be used in a claim for damages made on behalf of the employer (although not necessarily with their consent or approval) by the ABCC.⁽⁹⁰⁾

It also notes that the ABC Commissioner can obtain an interim injunction to restrain unlawful industrial action under clause 75 but under clause 253 this need not be accompanied by:

the usual requirement of an undertaking as to damages - that is, if the ABCC was making the application, it would guarantee to compensate the union or its members for relevant losses should the application be finally rejected by the Court.⁽⁹¹⁾

According to the ACTU, this will allow the ABCC to 'act with all care and no responsibility'.⁽⁹²⁾

Part 3 Protected Action

Proposed Division 1 of Part 3 outlines circumstances in which building industrial action will not be protected action for the purposes of the Workplace Relations Act. As the Explanatory Memorandum notes, 'these circumstances are in addition to the requirements for protected action under the [Workplace Relations] Act'.⁽⁹³⁾

Under clauses 78 and 79 industrial action in relation to a building agreement will not be 'protected' if it involves 'extraneous' claims or participants.

Clause 78 provides that 'extraneous claims' are those that do not pertain to 'the employment relationship between the employer and the employees who will be subject to the agreement'. This specifically rules out any interpretation of the Workplace Relations Act (sections 170LI and 170ML) that might allow other matters to be the subject of protected action.

Clause 79 provides that 'extraneous participants' are those who are not 'protected persons'. It appears to be similar in effect to section 170MM of the Workplace Relations Act. Any industrial action engaged in together with any unprotected person or organised by one or more unprotected persons will itself be unprotected. An unprotected person is anyone other than:

-         a negotiating party to the proposed agreement

-         a member of an organisation that is a negotiating party to the proposed agreement and whose employment will be subject to the agreement, or

-          an officer or employee of an organisation that is a negotiating party and who is acting in that capacity.

Under clause 80, industrial action taken prior to the expiry date of a building certified agreement will not be protected action. This clause attempts to override the Federal Court's decision in Emwest ⁽⁹⁴⁾ that a union may take industrial action during the course of a certified agreement in relation to a matter not included in the agreement.

Clause 81 provides for an automatic 21-day cooling-off period after two weeks of industrial action. Building industrial action is not 'protected' if it occurs during this period. No earlier than the end of the cooling-off period, an application can be made to the AIRC for a certificate authorising industrial action for a further period of 14 days. The AIRC must take into account the list of matters in sub-clause 81(3) in deciding whether to issue a certificate. This process can be repeated, with further cooling-off periods and applications to the AIRC to authorise additional protected action.

Clause 83 provides that subsections 170MP(1) and (2) of the Workplace Relations Act do not apply to building industrial action. These provisions stipulate that industrial action is not protected unless the organisation or employees taking action have genuinely tried to reach agreement. The Explanatory Memorandum notes that this requirement is instead imposed under clause 97.

Sub-clauses 83 (2) and (3) provide that employees and organisations are not engaging in protected action unless they have complied with an order or direction of the AIRC about negotiations.

Secret Ballots

Under the existing provisions of the Workplace Relations Act, the AIRC can (but is not required to) order a secret ballot to help prevent or settle an industrial dispute, or to ascertain whether a majority of employees are in favour of a proposed certified agreement (section 135).

Section 136 of the Workplace Relations Act allows members of an organisation to apply to the AIRC for the holding of a secret ballot at a particular workplace when those members are requested or directed by their organisation to engage in industrial action.

Where the AIRC has ordered such a ballot, industrial action is not 'protected' unless this has occurred (section 170MQ).

A proposal to require a secret ballot before employees take protected industrial action was included in the Workplace Relations Legislation Amendment (More Jobs, Better Pay) Bill 1999, defeated in the Senate on 29 November 1999.

The Government decided to reintroduce schedules of the 'More Jobs Better Pay' Bill as separate Bills. Debate on the Workplace Relations Amendment (Secret Ballots for Protected Action) Bill 2000 was adjourned in the Senate on 7 August 2000, thus the Bill failed to pass the Senate.

The Workplace Relations Amendment (Secret Ballots for Protected Action) Bill 2002 was defeated in the Senate on 25 September 2002. This Bill was reintroduced in November 2002 and defeated again in the Senate on 24 March 2003. It is therefore a 'double dissolution trigger' and can be put before a joint sitting of Parliament following a double dissolution election.

Clause 82 provides that building industrial action is not 'protected' unless it is authorised in advance by a secret ballot with the exception of action by employees under section 170ML(2)(f) of the Workplace Relations Act (i.e. in response to a lockout by an employer).

Proposed Division 2 of Part 3 contains some 50 clauses setting out the requirements for secret ballots that must occur before any building industrial action is 'protected' action. It is almost identical to item 25 of the Workplace Relations Amendment (Secret Ballots for Protected Action) Bill 2002 which proposed a new Division 8A for Part VIB of the Workplace Relations Act.

Subdivision A General

Clause 85 establishes the object of the new Division: to provide access for employees to a 'fair and democratic' secret ballot, in order to determine whether protected industrial action should be taken.

Subdivision B - Application for order for protected action ballot to be held

Under clause 87 an application for a protected action ballot can only be made once a bargaining period has commenced. The application cannot be made more than 30 days before the nominal expiry date of an existing building agreement. Either a union or a group of employees can make an application depending which group initiated the bargaining period under section 170MI of the Workplace Relations Act.

Sub-clause 87(5) provides that employees cannot apply to the AIRC for a ballot order unless the application has the support of a 'prescribed number' of employees. If there is less than 80 employees, 2 employees would be required to support a ballot proposal. For workforces of between 80 and 5,000, the support of at least 5 per cent of the employees is needed. For workplaces with more than 5000 employees, at least 250 employees must support the application. Under sub-clause 89 (2), unionised workforces must obtain a resolution from their committee of management.

Sub-clause 87(6) provides that where employees have initiated a bargaining period for a non union agreement and industrial action is proposed, they may appoint an agent to represent them to avoid disclosing their identity to their employer.

Under clause 88 applications for a secret ballot would be required to include the following information:

        the question or questions to put to the relevant employees in the ballot, including the nature of the proposed industrial action

        details of the types of employees who are to be balloted, and

        any details required by regulations.

Clause 89 requires the applicant to provide certain material to the AIRC with the ballot application, including:

        a copy of the notice initiating the bargaining period and the particulars accompanying that notice

        a declaration by the applicant that the industrial action to which the application relates is not for the purpose of advancing or supporting claims to include an 'objectionable provision' (as defined in clause 7: see above), and

        if the applicant is an organisation of employees, a written notice showing that the application has been duly authorised in accordance with the organisation's rules.

Clause 90 requires the applicant to give a copy of the application to the relevant employer within 24 hours of the application being lodged with the AIRC.

Subdivision C Determination of application and order for ballot to be held

Clause 93 provides that the AIRC must act as quickly as practicable and, as far as reasonably possible, determine an application for a ballot order within 2 working days of the application being made.

Sub-clause 93(2) provides that paragraph 111(1)(g) of the Workplace Relations Act is not to apply to ballot proceedings in relation to building industrial action. This means the AIRC cannot dismiss or refrain from hearing an application if it is trivial, relates to a matter already being dealt with by a State authority, or if proceedings are not in the public interest.

Clause 96 allows the AIRC to order a single ballot if it receives different applications relating to the same place of work.

Clause 97 provides that the AIRC cannot order a secret ballot to be held unless it is satisfied that during the bargaining period the applicant 'genuinely tried to reach agreement' with employer and is continuing to do so.

Clause 99 sets out the information required in a ballot order made by the AIRC including, amongst other things, the voting method, the timetable for the ballot and the names of the person authorised by the Commission to conduct the ballot.

Sub-clause 99(2) requires a postal ballot as the voting method unless the AIRC is satisfied that the other voting method proposed in the application is more efficient. If an 'attendance ballot' is specified, this must be held during the employees' meal times or other breaks, or outside their hours of employment (sub-clause 99(4))

Clause 100 allows the President of the AIRC to develop guidelines concerning timetables for the conduct of secret ballots.

Under clause 101 the AIRC can order the applicant and/or the employer to provide the a list of employees who might be eligible to vote in a proposed ballot.

Clause 103 provides that a person is only eligible to vote in a ballot if they:

        were employed by the relevant employer on the day the ballot order was made; and

        would be subject to the proposed agreement in respect of which the relevant bargaining period was initiated.

If the applicant for the ballot order is a building employee organisation, the person must be a member of the organisation on the day the ballot order is made to be eligible to vote.

A person who is party to a current Australian Workplace Agreement is not eligible to vote.

Subdivision D Conduct and results of protected action ballot

Clause 110 requires the ballot paper to be in the prescribed form and contain various information, including a statement that the voter's vote is secret and that the voter is free to choose whether or not to support the proposed industrial action.

Clause 113 requires the 'authorised ballot agent' to provide a written report to the Industrial Registrar as soon as practicable after the end of voting, detailing any irregularities or complaints in relation to the ballot, including any complaints made to the 'authorised independent adviser' (see clause 117 below).

Under clause 114 building industrial action will not be 'protected' unless:

        the action was the subject of a ballot conducted in accordance with the provisions of proposed Division 2 of Part 3;

        at least 40% of persons on the roll of voters (or a lower percentage if the AIRC authorises this under sub-clause 99(5)) voted in the ballot

        more than 50% of the votes cast in the ballot approved the industrial action, and

        the action began within a 30 day period after the later of the date of declaration of the ballot or the nominal expiry date of the existing agreement (or the last such date if there is more than one agreement). The AIRC can extend this 30 day period once by up to 30 days if both the employer and applicant for the ballot order jointly apply for such an extension.

Under clause 115 the Industrial Registrar must publish the result of the ballot.

Subdivision E Authorised ballot agents and authorised independent advisers

Under clause 116 the AIRC may name either the Australian Electoral Commission or another person as the 'authorised ballot agent'.

Under clause 117 the AIRC may name a person nominated by the applicant for the ballot as the 'authorised independent adviser'. Such a person must be capable of giving the authorised ballot agent advice that is 'directed towards ensuring that the ballot will be fair and democratic'.

Subdivision F Funding of ballots

Clause 118 provides that the applicant is liable for the cost of holding the ballot. If the applicant complies with the procedures in clause 119, the Commonwealth will be liable to pay 80% of the reasonable ballot costs.

Subdivision G Miscellaneous

Clause 120 provides that the AIRC must not disclose information that would identify a person involved with the ballot process (i.e. who was represented by an agent, supported an application for a ballot, appeared on the roll of voters, or was 'party to an AWA').

Clause 121 provides a penalty of imprisonment for 12 months for any individual who discloses the identity of anyone involved with the ballot process for identifying a person involved with the ballot process.

Clause 122 provides an indemnity from legal action for anyone who takes 'protected action' believing in good faith that a ballot had been validly conducted if this later turns out not to be the case, unless the action involves personal injury, or damage to or unlawful taking of property.

Clauses 123 and 124 are designed to protect the integrity of the conduct of ballots and ballot results, by limiting the circumstances in which ballot orders, the conduct of ballots and ballot results may be challenged.

Clause 125 provides for a penalty of 60 penalty units ($6,600) if the authorised ballot agent does not ensure that the ballot documents are kept for one year after completion of the ballot.

Clause 127 provides that the power of the AIRC under section 134 of the Workplace Relations Act to inspect workplaces applies in relation to the organisation and conduct of secret ballots under proposed Division 2 of Part 3.

Clause 128 removes the discretion of the AIRC to order secret ballots under sections 135 and 136 of the Workplace Relations Act in relation to building industrial action. The Explanatory Memorandum explains that this ensures 'that a decision of employees or a union to apply for a protected action ballot could not be pre-empted by the AIRC'.⁽⁹⁵⁾

Clause 129 modifies the operation of section 170MO of the Workplace Relations Act relation to building industrial action by allowing the AIRC, if satisfied that there are exceptional circumstances that justify it, to extend the period of written notice required following a protected action ballot from the usual three working days to up to seven working days.

Subclause 129(3) provides that subsection 170MO(6) of the Workplace Relations Act which allows notification of industrial action before the start of a bargaining period does not apply in relation to building industrial action. The Explanatory Memorandum notes that combined with the secret ballot provisions in the Bill, 'it will no longer be possible for notice of such action to be given until the action has been authorised by a ballot'.⁽⁹⁶⁾

The Explanatory Memorandum notes further that:

A protected action ballot would not be required for an employer to undertake a protected action lockout of employees, nor would a ballot be required for a union and employees to respond to such a lockout. In either of these situations, notice by an employer or by a union or employees could be given once the bargaining period has commenced.⁽⁹⁷⁾

Clause 130 provides that breaches of AIRC orders made under proposed Division 2 of Part 3 will be dealt with under the civil penalty provisions of the Bill and not under section 178 of the Workplace Relations Act covering penalties for breaches of AIRC awards and orders.

Reaction to Part 3

The ACCI supports in principle the concept in clause 81 of a cooling off period after the 35th day of protected action. But in its view clause 81 provides too much discretion to the AIRC to grant a certificate for a further 14 day period of protected industrial action:

In this industry it cannot be expected that a union taking protected action will 'cool off' without the issuing of a certificate (and even then it may defy the certificate). Too much discretion in the proceedings to issue a certificate will result in 35 days becoming a longer period and will also reduce the likelihood that the industrial action will cease after 35 days which is after all what the provision is intended to achieve.⁽⁹⁸⁾

According to the AIG, however, the cooling off provisions 'strike an appropriate balance between enabling negotiating parties to pursue their industrial rights and protecting the public interest'.⁽⁹⁹⁾

The AIG believes that the proposed secret ballot process 'is fair and democratic'. However it says that the proposed penalty for disclosing the identity of the persons referred to in clauses 120 and 121 is 'excessive'. In addition, the AIG believes the penalty:

should only apply to Registry officials or authorised ballot agents in a consistent manner to the approach adopted in s.170WHB of the Workplace Relations Act re. the disclosure of confidential information about AWAs.⁽¹⁰⁰⁾

The ACTU does not support proposed Part 3.

The ACTU says that the effect of clause 80 (industrial action taken prior to the expiry date of a building certified agreement will not be protected action) is that no industrial action could occur 'even where postponement of bargaining on that issue had been contemplated by the parties prior to the making of the agreement'. It says that 'in this way the proposal would act as an unnecessary fetter on the parties' freedom to bargain and to negotiate site-specific arrangements for particular types of projects'.⁽¹⁰¹⁾

In relation to clause 81 ('cooling off period') the ACTU says that the proposed process 'is tortuous and litigious' and 'counter productive'. Noting that long periods of industrial action are rare in the construction industry, the ACTU believes that:

the effect of this provision, should it be passed, would be to encourage unions and their members to take more sustained action, rather than ceasing work for a day and recommencing negotiations. In the final analysis, the likely outcome is longer bargaining disputes, with greater economic damage to employers and employees alike.⁽¹⁰²⁾

In relation to the proposed requirement in clause 82 for compulsory secret ballots before building industrial action can be 'protected', the ACTU says that it supports the right of union members to vote on whether or not to take industrial action. It believes such votes are generally taken in the building and construction industry. But it notes that 'no such vote of shareholders is taken, or proposed, in relation to employer industrial action'.⁽¹⁰³⁾

The ACTU notes that secret pre-strike ballots are already available under the Workplace Relations Act when requested by employees. Secret ballots can also be ordered by the AIRC to help resolve disputes and to determine whether an agreement has been genuinely made. The ACTU also observed that in Western Australia, which had legislated for compulsory secret pre-strike ballots, there were no applications for a ballot between 1 January 1998, when the legislation came into effect, and its repeal in 2002.⁽¹⁰⁴⁾

In relation to the process for for obtaining and implementing an order for a secret ballot in proposed Division 2 of Part 3, the ACTU believes this would add 'time-consuming complexity to the taking of protected industrial action.' In its view, 'the process would be of such complexity that it would nullify any practical right to take protected action'.⁽¹⁰⁵⁾ According to the ACTU, employers and others wishing to delay the action will be able to argue about the validity of the bargaining period and whether or not the union involved had genuinely tried to reach agreement. In addition there would be procedural issues, such as who should conduct the ballot, the roll and the timetable which could be used for delay. The ACTU notes that

with the potential of appeals it is impossible to predict how long the period between the application for a ballot and its commencement would take, but weeks and even months is a certainty. To this must be added a period of around three weeks for the Electoral Commission or the private ballot agent to actually conduct a postal ballot, followed by three days notice (or more, if so ordered by the Commission) to the employer before the action can take place.⁽¹⁰⁶⁾

The ACTU submission lists some more specific objections to the proposed secret ballot process, including the need to describe the type of proposed action in the application to the AIRC (clause 88), the need for a quorum of 40% of members before a vote is valid (clause 114), and the proposal to reimburse unions for only 80% of the costs of the ballot, which the ACTU says 'is totally unacceptable' (clauses 118,199).⁽¹⁰⁷⁾

Part 4 Miscellaneous

Similar to section 127 of the Workplace Relations Act, under clause 134 the AIRC may order building industrial action to cease or to not occur. The AIRC may make such an order of its own motion or on the application of:

-         the ABC Commissioner

-         a party to the industrial dispute

-         a person directly affected by the building industrial action (eg. an employer), or

-         an organisation to which a party to the dispute belongs.

Subclause 134(4) allows the AIRC to make an interim order to stop or prevent industrial action. There is no equivalent in section 127 of the Workplace Relations Act. Under section 127(7), the Federal Court to grant an interim injunction, but this is only after the AIRC has made a final order.

As the Explanatory Memorandum notes, under subclause 134(4) the AIRC can make an interim order with respect to industrial action which may subsequently be determined to be protected action. As with section 127, however, under sub-clause 134(11) neither an interim nor final order is available if the AIRC has already formed the view that the action would be 'protected' (noting the more restricted range of 'protected' industrial action under the Bill compared to the Workplace Relations Act.)

Subclause 134(4) sets out the circumstances in which the AIRC can issue an interim order. Subclause 134(6) lists factors the AIRC must have regard to when considering whether to issue an interim order, including whether proper notice has been given of the action and whether it is part of a sequence of related industrial action. Subclause 134(7) instructs the AIRC to have regard to 'the undesirability of building industrial action that is not protected action' and to consider whether the action is occurring despite a certified agreement still being current. There is no equivalent of these three subclauses in section 127 of the Workplace Relations Act.

        In a change from the exposure draft, subclause 134(8) provides that if an order can be made by the AIRC under clause 134 in relation to building industrial action, then the AIRC cannot make an order under section 127 of the Workplace Relations Act.

Subclause 134(12) allows the Federal Court, as under section 127 of the Workplace Relations Act, to grant an injunction or interim injunction where a person or organisation fails to comply, or is proposing not to comply, with an order of the AIRC. In contrast to section 127, however, the Federal Court will also be able to issue an injunction or interim injunction in relation to building industrial action where a person or organisation fails to comply or proposes not to comply with an interim order of the AIRC.

An application under subclause 134(12) for an injunction or interim injunction can be made by the ABC Commissioner or a person or organisation affected by an order or interim order of the AIRC under clause 134.

Under subclause 134(14), even if the ABC Commissioner was not involved in the original proceedings in which the Federal Court grants an injunction, he or she can apply for a variation of the injunction or ask the court to take action in respect of a breach of the injunction.

Clause 135 provides that an employer must notify the ABC Commissioner within 72 hours of becoming aware of 'notifiable industrial action', i.e. action that is 'industrially-motivated' and 'constitutionally-connected'. This is a 'Grade B civil penalty' provision, which means that failure by an employer to notify the ABCC within the specified time could lead to proceedings by the ABCC against the employer (under clause 227) with a maximum penalty of $11,000 (for a body corporate) or $2,200 (for an individual).

Clause 136 prohibits employers from making payments and employees from accepting payments in relation to any periods of building industrial action that are industrially-motivated and constitutionally-connected. There is a penalty of $110,000 (for a body corporate) or $22,000 (for an individual).

Under clause 137 an employer must notify the ABCC in writing within 72 hours of becoming aware of any claim for 'strike pay.' This is a 'Grade A civil penalty provision'. Failure by an employer to notify the ABCC within the specified time could lead to proceedings by the ABCC with a maximum penalty of $110,000 (for a body corporate) or $22,000 (for an individual).

Clause 138 provides that notice of industrial action in relation to a proposed building agreement can only be given once. In other words, under this Bill it will only be possible to take protected industrial action once in relation to a proposed building agreement. The Explanatory Memorandum notes that this clause is required to give effect to clause 81 which prescribes mandatory cooling-off periods in relation industrial action in respect of a proposed agreement.⁽¹⁰⁸⁾

Clause 139 allows a person to take legal action in tort (eg for damage suffered by their business) in respect of certain building industrial action by unions without first seeking a certificate from the AIRC under section 166A of the Workplace Relations Act. The industrial action in question involves 'secondary boycotts' in contravention of the Trade Practices Act 1974. The Explanatory Memorandum notes that 'where the conduct is protected action under the WR Act (as modified by this Bill), the immunity under section 170MT of the WR Act will continue to apply.'⁽¹⁰⁹⁾

Clause 140 prohibits the Federal Court from issuing an 'interlocutory injunction' to prevent proceedings under State or Territory law in respect of building industrial action. An 'interlocutory' or 'intermediate' injunction is ordered where the applicant shows it is likely to suffer damage if the conduct in question is not stopped while the issue is resolved.⁽¹¹⁰⁾

        In a change from the exposure draft, the restriction on the Federal Court issuing a final injunction to restrain legal proceedings has been removed.

Reaction to Part 4

The ACCI generally supports the provisions in clause 134. However the ACCI has difficulty with subclauses 134(6)(and (7) concerning factors the AIRC 'must have regard to' when deciding whether to issue an order preventing building industrial action. According to the ACCI, these provisions:

seem to imply that the extent of loss, damage or inconvenience from unlawful action is relevant to whether orders against unlawful action will be made. This is not appropriate. Unlawful action is unlawful as such, and the capacity to obtain interim or final orders against such action should not require proof of degrees of damage [Subclause 134(7)] is particularly concerning in this regard, as it extends this qualifying sentiment to final orders, not just interim orders.⁽¹¹¹⁾

The AIG notes that while it is appropriate that a high maximum penalty apply to the offence of paying strike pay (clause 136), 'a much lower penalty should apply for failing to give the ABC Commissioner notification of any claims within what is a very short timeframe' (clause 137). AIG therefore proposes that the offence in clause 137 of failing to notify the ABC Commissioner within 72 hours of a claim for strike pay should attract a 'Grade B civil penalty' only.

Key Issues

Chapter 7 Freedom of Association

Chapter 7 strengthens 'freedom of association' laws for the building industry, prompted by the Cole Royal Commission's report that it had 'heard a great deal of evidence of conduct which had as its object undermining freedom of association in the building and construction industry.'⁽¹¹²⁾

Concept of Freedom of Association

The concept of 'freedom of association' embodied in and protected by both the Workplace Relations Act and the current Bill concerns the right of individuals to belong or not to belong to a union, employer organisation or other industrial association. Creighton and Stewart contrast this with the understanding of 'freedom of association' as it appears in International Labour Organisation instruments. That understanding is exclusively concerned with the right of employees to organise autonomously and effectively, not with the right of individuals not to belong to an association.⁽¹¹³⁾

On the face of it, these two concepts are not incompatible. For example, the protection against discrimination and prejudice provided by s 298K of the Workplace Relations Act, which is similar in form to clause 154 of the current Bill, protects union members as well as non-union members. For practical purposes, this is the provision that will protect union members from discrimination, thereby protecting freedom of association in the ILO sense.⁽¹¹⁴⁾

However, the two concepts can conflict when protection of individuals' rights not to belong to or not to follow the orders of an association involves legislative restrictions on the rights of associations to act autonomously and devise their own rules. Such a conflict might be seen in clause 160 of the Bill, which limits actions that may be taken by an association against its members for, among other things, failure to participate in industrial action. On one hand this can be seen as protection of that individual member's right to determine their own level of involvement in industrial action. One the other hand, it can be seen as a restriction on the collective rights of the members to maintain internal discipline.

Increased penalties for breaches of freedom of association provisions

The substantive provisions of proposed chapter 7 (clauses 151 154, 156 166) are 'Grade A civil penalty provisions'. This means that fines may be ordered for contraventions of those provisions of up to $110,000 for bodies corporate and $22,000 for individuals.⁽¹¹⁵⁾ This is a significant increase on penalties which currently apply for similar breaches under the Workplace Relations Act: $10,000 for bodies corporate and $2,000 for individuals.⁽¹¹⁶⁾

Other remedies available under Part XA of the Workplace Relations Act remain in the Bill, such as compensation and injunctive relief.

Part 1 Preliminary

Clause 141 outlines the objects of the proposed chapter. Reflecting the perception that existing legislation has not effectively protected freedom of association, these objects contain two new additions to the objects listed in Part XA of the Workplace Relations Act: to provide 'effective relief' to people who are prevented from exercising their rights and to provide 'effective remedies to penalise and deter' behaviour that prevents others from exercising their rights.

Clause 142 contains definitions. Most significant among these is the expanded definition of 'industrial action'. This is similar to the definition of 'industrial action' provided in proposed chapter 6 and discussed above.

Part 2 Conduct to which this part applies

Proposed Part 2 outlines conduct which is to be subject to the substantive provisions of the proposed chapter. The aim has been to cast the net as widely as possible so that all conduct that impedes freedom of association within the building industry is caught, regardless of whether the participants' other employment rights and obligations are regulated by Commonwealth or State legislation.⁽¹¹⁷⁾ To do this a range of constitutional powers have been relied upon, most notably the corporations power⁽¹¹⁸⁾ through clause 147.

Part 3 - General prohibitions relating to freedom of association

As recommended by the Cole Royal Commission⁽¹¹⁹⁾, the Bill introduces a small number of general prohibitions relating to freedom of association. The Commission recommended these to provide a clear and understandable statement of the rights and obligations of building industry participants to encourage greater compliance, especially with respect to the most common forms of behaviour that undermines freedom of association.⁽¹²⁰⁾ These provisions all attract a 'Grade A civil penalty'.

The general prohibitions are:

        a prohibition on coercion of a building industry participant to become or not become or remain or cease to be a member or officer of an employer group, union or other association (clause 151);

        a prohibition on making false and misleading statements about membership of associations: that is, a statement that a person must or must not become or remain a member or officer; a statement that a person must disclose their membership status; or, a statement that only members or officers can receive the benefit of an award, agreement or other industrial instrument (clause 152); and

        a prohibition on industrial action relating to membership: that is, taking industrial action because another person is or is not (or proposes to be or proposes not to be) a member or officer of an association (clause 153). [Note that this provision is affected by an expanded definition of 'industrial action' as discussed above under Chapter 6.]

It is difficult to gauge the practical effect these general prohibitions will have on conduct in the industry. Clause 152 captures behaviour (making false and misleading statements about membership) that may not be captured by other provisions of the proposed chapter or the existing provisions of the Workplace Relations Act's Part XA. However, clauses 151 and 153 deal with behaviour that will be covered in most cases by other provisions of the proposed chapter. An overarching recommendation of the Cole Royal Commission and the Government's reform of the building industry through this Bill is to effect cultural change, especially with respect to freedom of association, and the general prohibitions might be best understood in that light. They create easily read provisions without the technical complexity of other provisions and should be readily understood by industry participants. On the other hand, the Minister explained the general prohibitions as 'addressing specific gaps' in the current regime⁽¹²¹⁾. The insertion of generally-expressed prohibitions may assist in prosecution for breaches where the elements of more detailed provisions cannot be satisfied.

Part 4 Conduct by building employers etc

Proposed part 4 is similar in form and operation to ss 298K 298M of the Workplace Relations Act. In general terms, clause 154 prohibits employers from harming the employment or discriminating against an employee or prospective employee, or threatening to do so, for a 'prohibited reason'. A similar prohibition applies for people engaging the services of independent contractors. Clause 155 lists the prohibited reasons. The prohibited reasons remain substantively similar to those listed in s 298L of the Workplace Relations Act, which in turn remained similar to long established 'prohibited reasons' for employment discrimination in Australian employment law.

Clause 156 prohibits employers or persons engaging contractors from offering inducements by way of promise or threat to employees or contractors to become or remain or not become or cease being a member or officer of an association. This differs from the Workplace Relations Act equivalent provision, s 298M, which only prohibits inducements to cease being a member or officer of an association. This reflects a recommendation of the Cole Royal Commission⁽¹²²⁾ and a perception that some employers in the building industry are inducing their employees to become union members.

Part 5 Conduct by Building employees, etc

There is no significant difference between clause 157 and the equivalent s 298 of the Workplace Relations Act.

Part 6 Conduct by Building associations, etc

Proposed part 6 governs conduct by building unions, employer groups and other associations with respect to freedom of association. It contains some differences to the current equivalent provisions of the Workplace Relations Act (ss 298P 298SBA):

        Clause 158, which deals with conduct by associations against employers, adds prohibitions on industrial action (or threats of industrial action) intended to coerce an employer to remain a member or officer of an association [paragraph (b)] or to pay a fee to an association [paragraph (e)] to the equivalent provisions of the Workplace Relations Act.

        Clauses 159, 160 and 161 deal with conduct by associations against employees, members and independent contractors respectively. These clauses operate by prohibiting prejudicial action by associations against employees, members and contractors when it is done for prohibited reasons. For the most part, these clauses remain similar to their equivalents in the Workplace Relations Act (ss 298Q, 298R and 298S). However, additional prohibited reasons have been added:

-         payment or non-payment of fees of any type to an association (except for members)

-         membership or non-membership of an association

-         holding office in an association

-         non-involvement in industrial action

-         that the person has made, or intends to make, an inquiry or complaint to a regulatory body (such as the ABCC), or

-         that the person is involved, or intends to be involved, in industrial law proceedings, including as a witness.

        Clause 162 prohibits associations from advising, inciting or coercing a person to take action in relation to a third person that would involve a contravention of clause 154(2) (unlawful discrimination against independent contractors). This provision has no equivalent in the Workplace Relations Act and reflects the Government's response to findings of the Cole Royal Commission of instances of intimidation of contractors by building unions to enforce 'closed shop' arrangements.

The remaining clauses of the proposed part 6 remain substantively the same as their Workplace Relations Act equivalents.

Part 7 False and misleading representations about bargaining services fees, etc

Proposed part 7 remains substantively the same as its Workplace Relations Act equivalent, s 298C.

Part 8 Relationship between this Chapter and other laws

Proposed part 8 sets out the legal relationship between this Chapter and State and Territory laws and the Workplace Relations Act. In particular, it provides that no action may be brought under the Part XA of the Workplace Relations Act for conduct for which an action would lie under this Bill. This ensures that the stricter provisions and penalties of this Bill would apply to the building and construction industry.

Part 9 Miscellaneous

Clause 170 provides a reverse onus of proof, i.e. it provides that conduct alleged to be in contravention of freedom of association provisions has occurred for a prohibited reason or with prohibited intent. This is similar to s 298V of the Workplace Relations Act, except that clause 170 provides that the reverse onus of proof is not to apply where an interim injunction is sought.

Reverse onus provisions existed in both the former Industrial Relations Act⁽¹²³⁾, and in the Conciliation and Arbitration Act 1904.⁽¹²⁴⁾ As the CCH Labour Law Reporter notes:

the intention behind the reversal of the burden of proof is to prevent employers withholding evidence such as statements or communications from managers or supervisors. It also recognises that employees would have a difficult task proving victimisation.⁽¹²⁵⁾

However, the reverse onus of proof provisions in the Bill are linked to substantially higher penalties than under the Workplace Relations Act. The main advantage for employers is that this will make it easier to have substantial financial penalties imposed on unions for breach of freedom of association provisions. In contrast, unions and employees are more likely to seek reinstatement or compensation from employers for breach of such provisions.

Response

According to the ACTU, Australian labour law does not meet the requirements of the ILO Freedom of Association and Protection of the Right to Organize Convention 1948 or the Right to Organise and Collective Bargaining Convention 1949. The ACTU believes that the provisions in the Bill take Australia 'even further away from a position of conformity with those international instruments to which Australia is a signatory'.⁽¹²⁶⁾ The AIG supports the proposed chapter. The ACCI was generally supportive with some reservations about the Exposure Draft which appear to have been accommodated in the final Bill. However, the ACCI did argue that clause 170 should be expanded so that the reverse onus of proof does not apply to any injunctions, not simply interim injunctions.

Key Issues

Chapter 8 Discrimination, coercion and unfair contracts

Proposed chapter 8 establishes various civil penalty provisions relating to discrimination and coercion in respect of industrial relations issues in the building industry. Penalties of $110 000 for bodies corporate and $22 000 for individuals apply to each. It also provides that unfair contracts may be declared void by the Federal Magistrates Court.

Coercion in relation to employment and engagement of contractors

Clause 172 addresses concerns raised by the Cole Royal Commission of a culture in the building industry of union coercion of employers on staffing and contracting issues. In particular, the Royal Commission reported:

This practice assumes three main forms:

(a) unions demanding that contractors, particularly head contractors, employ nominated workers in strategic positions, such as shop stewards, site delegates, induction officers, safety officers and crane drivers;

(b) unions demanding that contractors employ or reinstate particular workers in ordinary labouring or other positions, even where the contractor has no need for the services of those workers; and

(c) unions demanding that contractors engage specific union-nominated subcontractors; typically, subcontractors who have signed union-endorsed enterprise bargaining agreements.⁽¹²⁷⁾

Australian industrial law has previously recognised that unions may have a legitimate interest in these issues. In Re: Cram; Ex parte NSW Colliery Proprietors Association Ltd⁽¹²⁸⁾ the High Court unanimously rejected an earlier notion that issues involving the hiring and firing of staff constituted 'managerial prerogative' outside the scope of industrial tribunals or union interference. That case involved a dispute in which an employer refused to employ eight people in spite of union demands. The High Court held:

No doubt our traditional system of industrial conciliation and arbitration has itself contributed to a growing recognition that management and labour have a mutual interest in many aspects of the operation of a business enterprise. Many management decisions, once viewed as the sole prerogative of management, are now correctly seen as directly affecting the relationship of employer and employee and constituting an 'industrial matter'.

A dispute about the level of manning is a good example. It has a direct impact on the work to be done by employees; it affects the volume of work to be performed by each employee and the conditions in which he performs his work. So also with the mode of recruitment of the workforce. The competence and reliability of the workforce has a direct impact on the conditions of work, notably as they relate to occupational health and observance of safety standards. Employees, as well as management, have a legitimate interest in both these matters. ⁽¹²⁹⁾

The Cole Royal Commission recognised that union 'encouragement' of employers on issues of this type is not 'intrinsically wrong', but that it had received evidence involving unions that 'had crossed the line between encouragement and coercion'.⁽¹³⁰⁾

Accordingly, clause 172 prohibits action, or the threat of action, taken by one person 'with intent to coerce' a second person to employ or not employ, engage or not engage, allocate or designate responsibilities, or not allocate or designate responsibilities, to a particular employee or contractor.

This may be seen as an attempt to provide some day-to-day protection of managerial prerogatives. Whether it leaves scope for legitimate 'encouragement' by unions on these issues will depend on how 'threaten' and 'intent to coerce' are read by Courts.⁽¹³¹⁾ It is not difficult to imagine scenarios in which words of encouragement are seen as coercive threats; indeed the line between these might involve a high degree of nuance and contextual understanding. It should be noted that, in contrast to the freedom of association provisions, the intention to coerce must be proven by the complainant.

Due to constitutional limitations, clause 172 only applies to conduct by organisations or constitutional corporations, affecting constitutional corporations or occurring in a Territory or Commonwealth place.

Coercion to make, vary or terminate certified agreements

Clause 173 prohibits action, threat or inaction intended to coerce a person to make, vary, terminate or extend the expiry date of a certified agreement, other than protected action. It also forbids action taken by an employer intended to coerce an employee not to request union involvement in the bargaining process. It is similar to s 170NC of the Workplace Relations Act, but adds a prohibition on applying, or attempting to apply, undue pressure to the prohibition on actions intended to coerce.

Undue pressure is a qualitatively different test to action intended to coerce as it does not require an assessment of the respondent's state of mind. The concept of undue pressure has previously been used in the Workplace Relations Act as a factor in determining if a contract is unfair or unjust⁽¹³²⁾. The concept is also used in the Trade Practices Act 1974 in explanation of unconscionable conduct.⁽¹³³⁾ According to the Laws of Australia Pressure connotes something direct and coercive, such as threats, physical or economic, involving compulsion, or at least a reduction in freedom of choice. ⁽¹³⁴⁾ On this reading, the difference between the two tests is the relevance of the respondent's intention. Whereas action intended to coerce looks at the matter from the perspective of the respondent, undue pressure examines the point of view of the complainant would a complainant have felt pressured in the circumstances? In practice, this should widen the scope of the provisions, making prosecutions easier by reducing the elements a complainant must prove.

Discrimination against an employer in relation to industrial instruments

Clause 174 prohibits discrimination against an employer on the basis that its employees are covered, or proposed to be covered, by a particular type of industrial instrument (ie award, certified agreement, AWA) or an instrument made with a particular person. According the Explanatory Memorandum, this provision is intended to prohibit conduct of the following types:

• a head contractor refusing to give work to a subcontractor because the subcontractor's employees are covered by a non-union agreement
• a head contractor refusing to give work to a subcontractor on the basis that the subcontractor's agreement is or is not made with a particular organisation of employees
• a union disrupting the operations of an employer (other than through protected action) on the basis that the employer's employees are covered by a State rather than Federal agreement.⁽¹³⁵⁾

This clause can be seen as an attempt to fill a perceived gap in s 170NC of the Workplace Relations Act (see discussion of clause 173 above). The Cole Royal Commission felt that that provision was inadequate to cover all situations in which particular certified agreements are 'enforced' on building sites, that is those situations in which discrimination rather than coercion are used.⁽¹³⁶⁾

Note that the provision does not apply to conduct intended to encourage another person to adopt eligible conditions in an industrial instrument. Eligible conditions are defined in clause 4 of the Bill as conditions relating to times or days when work is to be performed, inclement weather procedures and any other matters which may be prescribed by regulations. This exception recognises that head contractors require some level of managerial control over these issues and may therefore require industrial instruments to incorporate, or at least not conflict with, relevant site-wide policies.⁽¹³⁷⁾

Note also that, for constitutional reasons, this provision will only apply to discrimination on grounds of federal awards, certified agreements or AWAs, where either party is a constitutional corporation or where the conduct occurs in a Territory or Commonwealth place.

The AIG has criticised this provision on the basis that the definition of discrimination is too broad and will capture legitimate discrimination by head contractors on issues other than eligible conditions:

A head contractor may wish to give preference when awarding a contract (all other aspects being equal) to a sub-contractor whose enterprise agreement enables casuals to be employed to cope with work fluctuations, or permits staff to carry out a wide range of different tasks, etc. It is appropriate that head contractors retain their right to select sub-contractors with agreements that contain provisions which are suited to the needs of the project.⁽¹³⁸⁾

        It should be noted that Bill has been amended from the Exposure Draft on which the AIG was commenting. The original provision prohibited discrimination 'on the ground that an employer's employees are covered by or proposed to be covered by an industrial instrument that contains particular kinds of provisions'. This has been replaced with a less restrictive prohibition on discrimination on the grounds that an instrument was made with a particular person. Also, the Bill allows the extension of the list of eligible conditions through regulation, which may allow some of the AIG's concerns to be accommodated.

Coercion in relation to superannuation

Clause 175 prohibits threats, actions or inactions intended to coerce employees or employers to contribute to particular superannuation funds. This follows the Cole Royal Commission's finding of 'evidence of industrial and commercial pressure being brought to bear on employers in the building and construction industry to compel contributions to superannuation funds or schemes favoured by unions.'⁽¹³⁹⁾ This prohibition does not apply in the context of protected action.

The AIG does not support this provision on the basis that it may be interpreted as providing complete freedom of choice to employees regarding their superannuation fund.⁽¹⁴⁰⁾

Unfair contracts with building contractors

Clause 176 provides that, for the building industry, applications under ss 127A, 127B and 127C to have unfair or unjust contracts of service set aside or varied may be made to the Federal Magistrates Court as well as the Federal Court. This may have the effect of increasing access to Courts on this issue by reducing legal costs and the length of time between complaint and adjudication. This clause coincides with the Government's general policy to promote the use and jurisdiction of the Federal Magistrates Court.

Key Issues

Chapter 9 Union right of entry

Proposed chapter 9 establishes a significantly more restrictive regime governing the rights of entry and inspection of workplaces by unions. This follows the report of the Cole Royal Commission that:

The evidence presented at the public hearings of the Commission disclosed widespread disregard in the building and construction industry of obligations concerning entry to premises and inspection of employment records in New South Wales, Victoria, Queensland, Western Australia, Tasmania and the Australian Capital Territory. Overwhelmingly, the evidence presented to the Commission was that industrial disruption on building and construction sites followed upon union officers and employees entering sites pursuant to the exercise or purported exercise of a statutory entitlement. Industrial disruption was almost always the result of intervention in workplace relations by union officers. That intervention was often uninvited and sometimes unwanted by the affected employees.⁽¹⁴¹⁾

The rights of union officials to enter workplaces to inspect conditions, standards and documents or talk to employees for purposes of information gathering or recruitment are currently governed by Part IX of the Workplace Relations Act. The Bill makes the following key changes to that regime as it would apply to the building industry:

        One national regime: The bill attempts to govern unions registered under both Commonwealth and State laws. Currently, rights of entry and inspection differ under Commonwealth and various State laws. Using the Commonwealth's corporations power and power over Territories and Commonwealth places, the Bill attempts to bring unions registered under a State law under the same regime, even where entry is sought to inspect compliance with a State law, award or agreement (through clauses 178,⁽¹⁴²⁾ 188(2), 197(2)-(3), and 204). Clause 294, in particular, excludes the operation of State laws which may give more liberal rights to entry, with the exception of occupational, health and safety laws. Note these provisions will only apply to State unions where the employer is a constitutional corporation, is in a territory or is on a Commonwealth place.

        Conditional permits: Under the Workplace Relations Act, union officials must have a permit issued by the Industrial Registrar before they may exercise the rights of entry and inspection. Clause 181 allows the Industrial Registrar to impose conditions on a union official's permit that limit the circumstances in which the permit has effect. The Bill provides an example that a permit could be conditional upon being exercised at certain times of the day. However, clause 181 is open-ended so the Industrial Registrar could impose any type of condition they wish. The registrar is to have regard to the factors listed under clause 182 in deciding whether to impose any conditions.

        Introduction of 'fit and proper person' test: clause 182 allows the Industrial Registrar deny a permit if the union official applicant is not a 'fit and proper person'. In determining this issue, the Industrial Registrar must have regard to factors listed in sub-clause (2), such as the official's criminal history, industrial law history, appropriate training on their rights and responsibilities and whether they have been denied a permit or had a permit revoked in the past. The ACTU argues that this requirement is unnecessary and will result in long delays in the issuing of permits.

        Revocation, suspension and banning of officials: Under the current law, the Industrial Registrar may revoke a permit if he or she is satisfied that official has intentionally obstructed an employer or employee or otherwise acted improperly. The Bill significantly expands the circumstances and processes for revocation and suspension of permits:

-         Clause 184 provides that the ABCC, or other person prescribed by regulations, may apply to the Industrial Registrar to take action. On such an application, the Industrial Registrar may revoke, suspend or impose conditions on a permit having regard to the matters listed in sub-clause 182(2)

-         Further, the Industrial Registrar must suspend an official for a minimum disqualification period if the official has made a misrepresentation concerning their right of entry (see clause 207), been ordered to pay a penalty for a contravention of the proposed chapter, given an entry notice for frivolous or vexatious reasons, has had their right of entry cancelled, suspended or revoked under a State law, or they have otherwise acted improperly. The minimum disqualification period is 3 months for a first suspension, 12 months for a second and 5 years for a third or subsequent suspension

-         Clause 185 allows the AIRC to revoke, suspend, ban for a specified period or impose restrictive conditions on an official or a union if it is satisfied that the official or union has abused the rights conferred by the proposed chapter.

        Involvement of ABCC: As mentioned above the ABCC may apply to the Industrial Registrar to have an official's permit revoked, suspended or restricted by conditions. Clauses 190 and 200 require that the union give notice to the ABCC, as well as the relevant employer, at least 24 hours notice but not more than 14 days before attending a workplace. This will allow the ABCC to monitor the exercise of entry rights. Together, the requirement to notify the ABCC and the right of the ABCC to apply for disciplinary measures give the new body a significant role in policing the use of entry rights regardless of whether or not employers make complaints.

        New restrictions on exercise of inspection rights: Proposed part 4 which governs the rights of union officials to enter premises for the purpose of investigating suspected breaches of industrial laws, awards or certified agreements imposes new limitations on those rights:

-         Clause 188 restricts the right of entry to instances where the suspected breach relates to or affects the work of the union's members, not non-members

-         Clause 189 restricts the right of officials to inspect employment records to the records of members of their union only, not the records of non-members. If the union requires access to non-members records they must apply to the AIRC, which must be satisfied that the non-members records are relevant to the suspected breach before ordering that those records be made available

-         Clause 190 requires union officials to provide an entry notice not less than 24 hours and not more than 14 days before the entry. The entry notice must state which premises will be entered, which union the official is from and any other information required by the regulations (clause 179). Unions can apply for an exemption from this requirement from the Industrial Registrar which will be granted if the Registrar is satisfied that there are reasonable grounds to believe records would be destroyed or concealed if advance notice is given (clause 191)

-         Clause 192 requires union officials, during site inspections, to obey the reasonable requests of the occupier or employer in relation to where interviews with employees are to be conducted and the particular route the official should take to get to that area. The ACTU is concerned that a practical effect of this requirement is that employers arrange for employees to talk to their union officials where they may be observed, at least on entering and leaving the designated interview place. Note that clause 206 provides that where an employer or occupier has made an unreasonable request the AIRC may make whatever orders are necessary to ensure that the union's rights of entry can be exercised. The clause also notes that unreasonable requests may invoke the civil penalty provision of 'hindering or obstructing' the union's right of entry

-         Wherever a dispute over right of entry arises, clause 196 places the onus on the union to show that reasonable grounds for a suspicion of a breach existed. In cases where an employer or the ABCC has complained about the exercise of entry rights, this will involve a reversal of the usual burden of proof in civil matters which requires the party bringing the action to prove the elements.

        New restrictions on exercise of rights to hold discussions with employees: Similarly, the Bill imposes new restrictions on the rights of union officials to enter premises to hold discussions with employees. As with the exercise of inspection rights, the union must provide an entry notice no less than 24 hours and no more than 14 days before the entry (clause 200) and the official must comply with the reasonable request of the employer or occupier regarding where discussions are to take place and the route taken to that place (clause 202). In addition, entry for the purposes of recruitment may not occur less than 6 months after the last such entry (clause 200).

        Increased penalties for contraventions: As with other parts of the Bill, the civil penalties for contravention of the proposed chapter are significantly increased in comparison to the Workplace Relations Act from a maximum of $10,000 for bodies corporate and $2,000 for individuals to $110,000 for bodies corporate and $22,000 for individuals.

        Prohibition on misrepresentations about right of entry: Conduct that is intended give a false impression about rights under the proposed chapter is prohibited under clause 207. For example, it is prohibited for a union official to mislead an employer as to the extent of his or her entry rights. It is also prohibited to engage in conduct reckless as to whether that conduct will lead to such a false impression being formed. This is a 'Grade A' civil penalty offence attracting a penalty of up to $110,000 for bodies corporate and $22,000 for individuals.

Reactions

The ACTU has opposed the Bill's right of entry provisions, arguing that they:

seem designed to make it virtually impossible for unions to properly carry out their responsibilities to represent members, give potential members an opportunity to discuss and consider the benefits of unionism and to ensure that awards and agreements are complied with.⁽¹⁴³⁾

The ACTU has expressed particular concern over:

        the rights granted to employers and occupiers over the exercise of entry rights, including the right to prescribe where union officials may hold discussions with members

        additional delays to the processing of applications for permits as a result of new requirements, and

        the limitation that recruitment visits occur no more than once every six months which effectively 'rules out' workplace recruitment by preventing follow-up visits.

The AIG supports theses provisions of the Bill on the basis that it provides an 'appropriate balance' between the important role of unions in workplaces and the rights of employers to be protected from misuse of union rights.⁽¹⁴⁴⁾

The ACCI supports the proposed chapter in general. However, the ACCI opposes the exclusion for entry rights under State occupational health and safety laws on the basis that this may open a loophole for exploitation.⁽¹⁴⁵⁾

Key Issues

Chapter 10 Accountability of Organisations

Proposed chapter 10 contains various provisions imposing certain restrictions and reporting requirements on registered building organisations (unions, employer associations, etc). Broadly speaking, these relate to member finances, donations, compliance with court orders and disqualification of officials.

Member finances

The provisions relating to member finance require that:

        consent for membership fee deductions from money held by an organisation on a member's behalf be renewed by that member in writing every 12 months (clause 210), and

        organisations provide an annual statement to the Industrial Registrar and the ABCC detailing any money they hold on behalf of their members (clause 211).

Donations

Provisions relating to donations to and from building organisations are intended to address the Cole Royal Commission's finding that donations are often made in the building industry to secure industrial peace, either in response to explicit or implicit demands from an organisation.⁽¹⁴⁶⁾ The provisions require detailed reporting and ABCC monitoring, in particular requiring that:

        organisations provide an annual statement to the Industrial Registrar and the ABCC detailing any donations they received greater than $500. The statement must set out for each such donation the amount received, the date of the donation, the name and address of the donor and the reason for the donation. The Industrial Registrar is to provide a report of these statements to the ABCC and the Minister, including an analysis of whether the statements comply with requirements (clause 212)

        organisations provide to the ABCC written notice of any solicitations they make for donations of over $500 from building clients, employers or contractors (clause 213)

        the Industrial Registrar make additional financial reporting guidelines applying only to building organisations (on top of such requirements under the Workplace Relations Act). These are to include requirements that organisations disclose commissions or other benefits that they or their officers, employees or subsidiaries receive (clause 214)

        building organisations provide operating reports for any entity (such as a trust or company) which they have control or influence over or a financial interest in. This requirement is in addition to the requirement of the Workplace Relations Act that organisations provide operating reports on their own activities (sub-clause 214(5)).

The ACTU opposes these provisions. It points out that the donation reporting requirements are stricter that those applying to political parties. The ACTU argues that any threat or bribery disguised as donation is already punishable under existing law.⁽¹⁴⁷⁾

The ACCI and AIG are generally supportive of these provisions.⁽¹⁴⁸⁾

Compliance with court orders

The Bill provides new and strict means to ensure that building organisations comply with courts ordered injunctions and awards of damages. In particular:

        the ABCC can apply to the Industrial Registrar to have a building organisation deregistered where it has failed to pay an award of damages for unlawful conduct under the Bill (eg for taking unprotected industrial action) (clause 215)

        the Federal Court may 'trace' transactions by building organisations that are designed to avoid a judgment debt, for example, by placing assets in the name of another person. The Court may order that the person who received assets in those circumstances be required to pay up to the amount of the judgment debt to the judgment creditor. This provision does not apply where such a person received the assets in good faith and did not suspect and had no reasonable grounds for suspecting that it had received them to avoid a judgment debt (clause 218)

        the Federal Court may order the deregistration of a building organisation where it, or a substantial number or a section of its members, has failed to comply with an injunction made under the Bill (clause 216).

The ACTU is opposed to the additional ground for deregistration of industrial associations. It argues that injunctions requiring an end to industrial action may be granted where, for example, industrial action had been taken that did not qualify as 'protected action' under the Bill but nevertheless met the criteria for legitimate exercise of the right to strike under international law. In such instances, deregistration for failure to comply would be draconian.⁽¹⁴⁹⁾

The AIG supports these provisions, noting that the process ensures that the AIRC and courts will exercise discretion as to whether an offending association is deregistered.⁽¹⁵⁰⁾ The ACCI supports the provision in principle but believes the provision should be amended to ensure that a single failure to comply with an injunction cannot lead to deregistration (especially given that the Bill provides increases to other penalties)⁽¹⁵¹⁾.

Disqualification of union officials

Under clause 217 the Federal Court may, on application of the ABCC, disqualify a person from holding an office in a building organisation for a set period if the person:

        has contravened a civil penalty provision of this Bill or the Workplace Relations Act, or

        has been disqualified from holding such an office under a State law.

The ACTU notes that the International Labour Organisation's Freedom of Association Committee has repeatedly held that national laws should not prohibit people from holding union office on the basis of prior criminal convictions, even where those convictions involve fraud or dishonesty.⁽¹⁵²⁾ In this context, disqualification for civil breaches might be considered disproportionate.

The AIG supports the provision, noting that a court considering disqualification would have to consider all the circumstances of the case and disqualification would not be automatic.⁽¹⁵³⁾

Key Issues

Chapter 11 Demarcation Orders

Proposed Chapter 11 provides additional power for the AIRC to resolve disputes between unions over the right to cover particular workers (demarcation disputes) in the building industry. The Cole Royal Commission found that, although demarcation disputes have previously been a problem in the building industry, they have been less frequent in recent years. Nonetheless, the Royal Commissioner found that demarcation disputes do still occur and 'have a prejudicial impact on the industry' and that 'the currently available procedures for resolving demarcation disputes do not provide an adequate or coherent response to the multiple problems which arise when such disputes occur.'⁽¹⁵⁴⁾

The proposed chapter builds on the provisions of Chapter 4 of Schedule 1B of the Workplace Relations Act. The key differences to that regime are that proposed Chapter 11:

         extends the right to seek AIRC determination of a demarcation dispute to any person who may be adversely affected by the dispute (Clause 219). Currently only organisations, employers or the Minister may apply to the AIRC for demarcation orders

         dispenses with the need for conciliation to be attempted before an AIRC determination (Clause 220), and

        applies a 'Grade A civil penalty' to failure to comply with an AIRC demarcation order (Clause 223).

Key Issues

Chapter 12 (Part 1) Enforcement⁽¹⁵⁵⁾

Proposed Chapter 12 Part 1 outlines the effect and operation of the civil penalty provisions prescribed throughout the Bill. The key effect of the proposed chapter is a significant increase in the range of penalties for contraventions of the Act. It reflects the Government's goal of increasing compliance with the law, following the Cole Royal Commission's finding of 'lawlessness' throughout the building industry.⁽¹⁵⁶⁾

The proposed chapter establishes one enforcement regime to govern all contraventions of civil penalty provisions. The Workplace Relations Act, by comparison, has separate regimes governing different divisions.

Increased civil penalties and other remedies

Clause 227 provides for increased civil penalties. Contraventions of 'Grade A civil penalty provisions' may attract a penalty of up to 1,000 penalty units for bodies corporate ($110,000) and 200 penalty units ($22,000) for individuals. 'Grade B civil penalty provisions' attract up to 100 penalty units ($11,000) for bodies corporate and 20 units ($2,200) for individuals. By contrast, the Workplace Relations Act tends to provide maximum pecuniary penalties of $10,000 for bodies corporate and $2,000 for individuals.⁽¹⁵⁷⁾

Clause 227 also provides that the court may order compensation be paid to any person who has suffered damage as a result of a contravention. This extends the right to seek compensation over contraventions to third parties who may not be directly involved in the dispute or conduct that gave rise to the contravention. The Workplace Relations Act tends to limit the right to compensation to direct parties, such as employees, employers or industrial associations.

Further, clause 227 gives the court the power to make any orders it considers appropriate. Presumably this includes orders requiring re-instatement of an employee or granting an injunction to prevent a threatened action.

Parties that may apply for penalty orders

Consistent with the expansion of the class of people who may recover compensation for contraventions of civil penalty provisions, clause 227 expands the class of people who may apply to a court for penalty orders or remedies to include any person affected by the contravention. The ABC Commissioner will also have the right to seek penalty orders as part of his or her enforcement role.

Involvement in a contravention

Sub-clause 226(2) provides that a person 'who is involved in a contravention of a civil penalty provision' is deemed to have contravened that provision. To be 'involved in' a contravention is broadly defined to include:

        aiding, abetting, counselling or procuring the contravention

        inducing the contravention 'whether by threats or promises or otherwise'

        being 'directly or indirectly' knowingly concerned in or party to the contravention, or

        conspiring with others to effect the contravention.

Interaction between civil penalties and criminal law

Given that several of the civil penalty provisions of the Bill relate to conduct that might also involve criminal offences, such as threat, clauses 228 and 229 describe the interaction of these provisions with criminal prosecution of the same conduct.⁽¹⁵⁸⁾

Sub-clause 228(1) prevents a person from receiving a double penalty by preventing courts from imposing a penalty for conduct for which that person has already been convicted of an offence. Note, however, that by virtue of sub-clause 228(3) this protection does not work in the other direction: someone may be tried for a criminal offence despite already having had a civil penalty imposed against them for the same conduct.

Sub-clause 228(2) requires that proceedings for a penalty order be stayed if criminal proceedings are on foot relating to the same conduct. The civil proceedings may be resumed if the person is not convicted of the criminal offence.

Clause 229 provides that evidence of information given or documents produced by a defendant in proceedings for a civil penalty may not be admitted in a subsequent criminal trial against that defendant relating to the same conduct. This provision seems intended to provide protection from self-incrimination in the course of civil proceedings: that is, to ensure that evidence that a defendant gives in the civil proceedings cannot be used against them in subsequent criminal proceedings. However, it is arguable that the provision could also be used to prevent a defendant from reusing evidence of their innocence in a subsequent criminal trial. Certainly, the interpretation of the provision in the Explanatory Memorandum would have this effect.⁽¹⁵⁹⁾

The issue may depend on the interpretation of 'evidence of information'. There is no concern if 'evidence of information' is understood to mean evidence of the record of the proceedings or evidence of oral statements provided to the ABCC or other investigators in the course of civil proceedings. However, a problem may arise if 'evidence of information' is taken to mean evidence of information provided by the defendant outside the context of civil proceedings. For example, if it is alleged that the defendant verbally threatened another person, evidence of the information provided by the defendant (that is the conversation that took place between the defendant and the other person) may be critical to the case. In this example, it is unclear that the defendant may give evidence of that conversation in both proceedings. This would be a harsh, presumably unintended, consequence of the provision.

Reaction

The ACTU and AIG have not made significant comments on the provisions of proposed Chapter 12 Part 1. However, the ACTU has expressed concern about the role of the ABCC, which it predicts will act in a 'partisan and political way', in prosecuting civil penalty provision contraventions that may lead to large fines.⁽¹⁶⁰⁾ The ACCI has indicated general support for the provisions.

Key Issues

[Chapter 12 Part 2 Compliance is considered earlier together with Chapter 2 (ABCC) and Chapter 4 (Federal Safety Commissioner)]

Chapter 13 Miscellaneous

Proposed chapter 13 contains various provisions, mostly of a technical or consequential nature. We highlight two of the key provisions.

Conduct of building associations

Clause 247 provides that 'conduct of a building association' for the purposes of determining liability of the association includes:

-         conduct by the committee of management, officers or agents of the association

-         conduct by a member or group of members where that conduct was authorised by the association's rules, by the committee of management or by an officer or agent of the association, or

-         conduct by a member who deals with an employer on behalf of other members.

Further, officer is defined as 'a delegate or representative of the association' or 'an employee of the association.' This is broader than the definition provided in s 4 of the Workplace Relations Act, which requires officers to hold an office, broadly meaning that they exercise independent participation in the association's management, rule and policy setting processes.⁽¹⁶¹⁾

The clause provides that associations will not be held liable for conduct by members where reasonable steps have been taken by the association's leadership to prevent the conduct. However, this does not apply to conduct by officers⁽¹⁶²⁾.

Capacity, state or mind etc of person being coerced

Clause 248 applies to provisions in the Bill referring to coercion, undue pressure, encouragement, advice or incitement of another person to do a particular thing. It provides that the ability, willingness or eligibility of the other person to do that thing is irrelevant in determining whether the coercion, undue pressure etc occurred.

This clause appears to be a response to an issue raised by the Cole Royal Commission in relation to the operation of the freedom of association provisions of the Workplace Relations Act, in particular the interpretation of those provisions by Gray J in Employment Advocate v Williamson.⁽¹⁶³⁾ In that case, Gray J held that an industrial association could only be found to have unlawfully 'advised, encouraged or incited' an employer to discriminate against an employee on the basis of union membership⁽¹⁶⁴⁾ where that employer was actually in a position to discriminate. Gray J suggested that

Words that might be entirely outside s 298P(3) in one set of circumstances might fall squarely within it in another. A demand that an employer not employ non-union labour may be of no effect when the employer is not contemplating engaging further employees, but of a very different effect when the employer is engaged in the process of hiring additional employees.⁽¹⁶⁵⁾

By making the ability, willingness or eligibility of the employer irrelevant to the prohibition, clause 248 negates Gray J's interpretation.

In doing so, it might be considered unduly restrictive of freedom of speech. Gray J pointed out that prohibitions on encouragement, advice and incitement are, by nature, restrictive of free speech. He thought the requirement that such encouragement actually have a possibility of being effective was Parliament's method of limiting this restriction.⁽¹⁶⁶⁾ For example, in the absence of that requirement, it might be unlawful for a unionist to advocate union membership or to express an opinion in favour of an entirely unionised workplace. Based on Gray J's view, where there is no possibility that the person to whom that opinion is expressed will act (or even be able to act) to discriminate against non-union members, it would be repressive to make that expression unlawful. In certain circumstances, this will be the effect of clause 248.

Key Issues

Endnotes