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Scissors, Paper, ROC – the ABCC and the ROC are here

In recent weeks, the Senate has passed two bills which have already become law. This new legislation establishes and gives powers to the Registered Organisations Commission (ROC) and re-establishes the Australian Building and Construction Commission (ABCC).[1]

Last December the Heydon Royal Commission recommended these measures amidst findings of widespread union misconduct, and establishing the ABCC and the ROC has proved a political minefield over the last year. The proposed revival of these agencies triggered July’s double dissolution of Parliament.

In the case of the ABCC, it seems the scissors have been taken fairly liberally to the legislation as initially proposed, with the result that the agency will not immediately have some of the powers that were anticipated.

What changes does the ABCC bring?

The ABCC takes the place of Fair Work Building and Construction (FWBC) – which replaced the ABCC in 2012 – and will hold stronger powers than FWBC in several areas.

An interesting new statutory requirement arises from a political imperative that the agency be viewed as even handed. The ABCC will be headed by a Commissioner who is required under the legislation to be impartial and perform duties in an apolitical manner.

Changes arising from the Building and Construction Industry (Improving Productivity) Act 2016 (BCI Act) include:

  • an expanded meaning of ‘building work’, enabling the powers of the ABCC to extend further and apply to work not previously covered – such as transport
  • the ability to apply for injunctions against unlawful industrial action, specifically picketing and also overtime bans, employer lock outs and strikes – with higher penalties than currently imposed for unlawful action
  • increased penalties for engaging in coercion or discrimination – such as coercing a person to use a particular contractor or superannuation fund or to make, vary or terminate an enterprise agreement
  • increased powers to obtain information – for both the ABCC and also for officers of the work health and safety regulator, the Federal Safety Commissioner (FSC), outlined further below.

In conducting investigations, the ABCC will have the power to:

  • issue examination notices requiring a person to give information, answer questions and produce documents
  • enter premises, ask a person’s name and address and require the production of documents or records (note: this power belongs to authorised officers of both the ABCC and the FSC).

The BCI Act sets out the process for investigations – including that examination notices must be issued through the Administrative Appeals Tribunal and failure to comply with an examination notice can attract six months imprisonment.

Code for the Tendering and Performance of Building Work 2016

An important development accompanying the BCI Act is the Code for the Tendering and Performance of Building Work 2016 (Code). The Code was issued and commenced on 2 December 2016 and replaces the Building Code 2013 (except where tenders or expressions of interest pre-date the Code coming into effect).

The Code, which is already in force on building sites, applies to companies pursuing Commonwealth funded building work, including privately funded projects. Subcontractors are also required to comply with the Code, but only on Commonwealth funded projects.

The Code restricts certain practices, both directly and by prohibiting clauses in enterprise agreements that permit them.

These prohibitions extend to activities (and clauses providing for them) including:

  • union officials entering building sites other than in compliance with the Fair Work Act 2009
  • limiting freedom of association, such as by requiring the employment of non-working shop stewards and delegates, allowing union representatives to conduct inductions or by requiring membership or support of building associations
  • requiring that building association logos, mottos or indicia be applied to company property and equipment (e.g. flags secured to cranes)
  • clauses requiring union consultation or approval to engage subcontractors or prescribing terms and conditions of subcontractors engagement.

The Code prohibits many other practices, including sham contracting (i.e. treating a worker as a contractor when they are really an employee), collusion between tendering parties and engaging workers who are not Australian citizens or permanent residents unless there is no suitable Australian citizen or permanent resident candidate.

Breaches of the Code must be reported to the ABCC. Builders who are covered by the Code must also have a Workplace Relations Management Plan (WRMP) approved by the ABCC as part of the tender process for Commonwealth funded projects. A WRMP is a document explaining how the builder intends to comply with the Code, including by explaining their systems and processes and also setting out their policies relating to the management of drug and alcohol use (which entities covered by the Code are required to have).

Some elements of the Code did not proceed as initially proposed. Specifically, the requirement that existing enterprise agreements be Code compliant will not come into effect immediately, instead builders will have until 29 November 2018 to ensure their agreements comply. Enterprise agreements made from 2 December 2016 must comply with the Code in order to be eligible to be awarded Commonwealth funded work.

What changes does the ROC bring?

Regulation of registered organisations is currently overseen by the General Manager of the Fair Work Commission (FWC).

The ROC – which will sit within the Office of the Fair Work Ombudsman – will retain all powers of the FWC as well as new and improved powers, mainly around disclosure, auditing and investigations.

Changes to disclosure requirements

Officers of registered organisations will be subject to much more rigorous disclosure requirements in areas such as remuneration, material personal interests and payments they receive. They will also be required to undertake training about these duties.

The changes in the ROC Act mean officers will be required to make these disclosures under the Fair Work Registered Organisations Act 2009 (FWRO Act) itself, whereas presently the FWRO Act only requires that registered organisations mandate such disclosures in their rules – leaving the responsibility to the organisations alone.

Changes to auditing requirements

Newly added requirements for auditors are much more stringent than previously, such as:

  • auditors must apply to the FWC for registration
  • auditors must meet certain educational requirements
  • an auditor must not play a ‘significant role’ in auditing a reporting unit for more than five consecutive financial years, or five of seven consecutive financial years, except where the FWC allows.

Officers and employees who are reckless or intentionally dishonest, and do not exercise their powers in good faith or for a proper purpose also risk committing a criminal offence, and could face five years imprisonment.

Investigations – including whistle-blower protection

The ROC will be able to exercise stronger investigative powers than the FWC currently can, including new powers to:

  • have warrants granted to seize documents
  • use seized documents as evidence
  • compel certain information to be provided where a required document is not produced.

The investigation process, and the rights of interviewees, have also been set out in much greater detail and the protections afforded to whistle-blowers are much more rigorous.

Some of the above amendments have already taken effect, such as the FWBC starting rebranding as the ABCC. Time will tell whether these and the changes to come (when they commence) will prove an effective remedy for what the Heydon Royal Commission identified as a world with room for ‘louts, thugs, bullies, thieves’.

Update 18 April 2017: Employment Minister Michaelia Cash announced Mark Bielecki will commence as the Registered Organisation Commissioner from 1 May 2017. No news yet as to when the ROC will be operational.

AUTHORS
ROSS JACKSON 5cm 300ppi B&W jpg 2006 Ross Jackson | Partner 
T +61 3 9258 3526
E ross.jackson@maddocks.com.au
 nereda-thomas Nereda Thomas | Special Counsel
T +61 3 9258 3317
E nereda.thomas@maddocks.com.au
Adrienne Huggins 5cm 300ppi BW JPEG 2015 Adrienne Huggins | Lawyer
T +61 3 9258 3531
E adrienne.huggins@maddocks.com.au

[1] Fair Work (Registered Organisations) Amendment Act 2016 (ROC Act); Building and Construction Industry (Improving Productivity) Act 2016 (BCI Act).

In recent weeks, the Senate has passed two bills which have already become law. This new legislation establishes and gives powers to the Registered Organisations Commission (ROC) and re-establishes the Australian Building and Construction Commission (ABCC).[1]

Last December the Heydon Royal Commission recommended these measures amidst findings of widespread union misconduct, and establishing the ABCC and the ROC has proved a political minefield over the last year. The proposed revival of these agencies triggered July’s double dissolution of Parliament.

In the case of the ABCC, it seems the scissors have been taken fairly liberally to the legislation as initially proposed, with the result that the agency will not immediately have some of the powers that were anticipated.

What changes does the ABCC bring?

The ABCC takes the place of Fair Work Building and Construction (FWBC) – which replaced the ABCC in 2012 – and will hold stronger powers than FWBC in several areas.

An interesting new statutory requirement arises from a political imperative that the agency be viewed as even handed. The ABCC will be headed by a Commissioner who is required under the legislation to be impartial and perform duties in an apolitical manner.

Changes arising from the Building and Construction Industry (Improving Productivity) Act 2016 (BCI Act) include:

  • an expanded meaning of ‘building work’, enabling the powers of the ABCC to extend further and apply to work not previously covered – such as transport
  • the ability to apply for injunctions against unlawful industrial action, specifically picketing and also overtime bans, employer lock outs and strikes – with higher penalties than currently imposed for unlawful action
  • increased penalties for engaging in coercion or discrimination – such as coercing a person to use a particular contractor or superannuation fund or to make, vary or terminate an enterprise agreement
  • increased powers to obtain information – for both the ABCC and also for officers of the work health and safety regulator, the Federal Safety Commissioner (FSC), outlined further below.

In conducting investigations, the ABCC will have the power to:

  • issue examination notices requiring a person to give information, answer questions and produce documents
  • enter premises, ask a person’s name and address and require the production of documents or records (note: this power belongs to authorised officers of both the ABCC and the FSC).

The BCI Act sets out the process for investigations – including that examination notices must be issued through the Administrative Appeals Tribunal and failure to comply with an examination notice can attract six months imprisonment.

Code for the Tendering and Performance of Building Work 2016

An important development accompanying the BCI Act is the Code for the Tendering and Performance of Building Work 2016 (Code). The Code was issued and commenced on 2 December 2016 and replaces the Building Code 2013 (except where tenders or expressions of interest pre-date the Code coming into effect).

The Code, which is already in force on building sites, applies to companies pursuing Commonwealth funded building work, including privately funded projects. Subcontractors are also required to comply with the Code, but only on Commonwealth funded projects.

The Code restricts certain practices, both directly and by prohibiting clauses in enterprise agreements that permit them.

These prohibitions extend to activities (and clauses providing for them) including:

  • union officials entering building sites other than in compliance with the Fair Work Act 2009
  • limiting freedom of association, such as by requiring the employment of non-working shop stewards and delegates, allowing union representatives to conduct inductions or by requiring membership or support of building associations
  • requiring that building association logos, mottos or indicia be applied to company property and equipment (e.g. flags secured to cranes)
  • clauses requiring union consultation or approval to engage subcontractors or prescribing terms and conditions of subcontractors engagement.

The Code prohibits many other practices, including sham contracting (i.e. treating a worker as a contractor when they are really an employee), collusion between tendering parties and engaging workers who are not Australian citizens or permanent residents unless there is no suitable Australian citizen or permanent resident candidate.

Breaches of the Code must be reported to the ABCC. Builders who are covered by the Code must also have a Workplace Relations Management Plan (WRMP) approved by the ABCC as part of the tender process for Commonwealth funded projects. A WRMP is a document explaining how the builder intends to comply with the Code, including by explaining their systems and processes and also setting out their policies relating to the management of drug and alcohol use (which entities covered by the Code are required to have).

Some elements of the Code did not proceed as initially proposed. Specifically, the requirement that existing enterprise agreements be Code compliant will not come into effect immediately, instead builders will have until 29 November 2018 to ensure their agreements comply. Enterprise agreements made from 2 December 2016 must comply with the Code in order to be eligible to be awarded Commonwealth funded work.

What changes does the ROC bring?

Regulation of registered organisations is currently overseen by the General Manager of the Fair Work Commission (FWC).

The ROC – which will sit within the Office of the Fair Work Ombudsman – will retain all powers of the FWC as well as new and improved powers, mainly around disclosure, auditing and investigations.

Changes to disclosure requirements

Officers of registered organisations will be subject to much more rigorous disclosure requirements in areas such as remuneration, material personal interests and payments they receive. They will also be required to undertake training about these duties.

The changes in the ROC Act mean officers will be required to make these disclosures under the Fair Work Registered Organisations Act 2009 (FWRO Act) itself, whereas presently the FWRO Act only requires that registered organisations mandate such disclosures in their rules – leaving the responsibility to the organisations alone.

Changes to auditing requirements

Newly added requirements for auditors are much more stringent than previously, such as:

  • auditors must apply to the FWC for registration
  • auditors must meet certain educational requirements
  • an auditor must not play a ‘significant role’ in auditing a reporting unit for more than five consecutive financial years, or five of seven consecutive financial years, except where the FWC allows.

Officers and employees who are reckless or intentionally dishonest, and do not exercise their powers in good faith or for a proper purpose also risk committing a criminal offence, and could face five years imprisonment.

Investigations – including whistle-blower protection

The ROC will be able to exercise stronger investigative powers than the FWC currently can, including new powers to:

  • have warrants granted to seize documents
  • use seized documents as evidence
  • compel certain information to be provided where a required document is not produced.

The investigation process, and the rights of interviewees, have also been set out in much greater detail and the protections afforded to whistle-blowers are much more rigorous.

Some of the above amendments have already taken effect, such as the FWBC starting rebranding as the ABCC. Time will tell whether these and the changes to come (when they commence) will prove an effective remedy for what the Heydon Royal Commission identified as a world with room for ‘louts, thugs, bullies, thieves’.

Update 18 April 2017: Employment Minister Michaelia Cash announced Mark Bielecki will commence as the Registered Organisation Commissioner from 1 May 2017. No news yet as to when the ROC will be operational.

AUTHORS
ROSS JACKSON 5cm 300ppi B&W jpg 2006 Ross Jackson | Partner 
T +61 3 9258 3526
E ross.jackson@maddocks.com.au
 nereda-thomas Nereda Thomas | Special Counsel
T +61 3 9258 3317
E nereda.thomas@maddocks.com.au
Adrienne Huggins 5cm 300ppi BW JPEG 2015 Adrienne Huggins | Lawyer
T +61 3 9258 3531
E adrienne.huggins@maddocks.com.au

[1] Fair Work (Registered Organisations) Amendment Act 2016 (ROC Act); Building and Construction Industry (Improving Productivity) Act 2016 (BCI Act).