The Queensland Government has recently released draft amendments to its General Conditions of Contract (the Contract) which relate to building and construction work procurement.

The draft amendments cover how the government would contractually require a contractor to apply the Best Practice Principles (BPP) and supporting document the Best Practice Industry Conditions (BPIC).

On 26 May 2021, the ABCC published advice to industry regarding the Centenary Bridge Upgrade Project request for tender documents. That advice highlighted a number of risks contractors face in tendering for projects to which the BPP and BPIC apply. That advice can be found here.

The ABCC has assessed the Contract in its current form and provides the following advice to contractors.

General

The Contract in its current form, does not breach the law or the Code for the Tendering and Procurement of Building Work 2016 (Code). However, consistent with the ABCC’s previous advice, contractors must be mindful that some of the clauses within the Contract pose legal risks if not implemented in a manner consistent with the law. The following areas are of particular concern.

Cascading Requirements

The Contract requires the head contractor to include terms in its own contracts with subcontractors relating to the BPP and BPIC.

Of particular note, clause 9.2.2 requires the Contractor to:

  • Include the BPPs in tender documents when selecting a subcontractor;
  • Provide an Administrator[1] with proposed tender documents and have those documents be satisfactory to the Administrator. The Contract permits the Administrator to make comment on, and issue directions in relation to the documents and the Contractor is bound to have regard to those;
  • Provide subcontractors with a copy of the BPIC and provide ‘examples’ of what constitutes ‘best practice’ conduct in relation to the BPPs. Although the clause stipulates that these examples are not considered ‘comprehensive, compulsory or exhaustive’;
  • Require subcontractors to demonstrate how they propose to address each of the BPPs;
    • Including demonstrating, as part of the tender, how the subcontractor’s terms and conditions for the subcontractor’s personnel compare to the BPIC.
  • Include evaluation of the subcontractors terms and conditions of employment for personnel, against the BPICs;
  • Submit evaluations to the Administrator; and
  • Consult the Administrator for the approval of a subcontract. In doing so the Administrator may consider the proposed subcontractors commitment in respect of the BPICs.

In considering the proposed Contract, tenderers must comply with their obligations under the Fair Work Act 2009 (FW Act), the Building and Construction Industry (Improving Productivity) Act 2016 (BCIIP Act) and the Code.

BCIIP Act

It is unlawful for a person:

  • to coerce or apply undue pressure on another person to make, vary or terminate an enterprise agreement (section 54, BCIIP Act)

  • to take action against a building employer because they are covered or not covered (or proposed to be covered/not covered) by a Commonwealth industrial instrument (section 55, BCIIP Act)

FW Act

It is unlawful for a person:

  • to take adverse action against another person because they have a workplace right or seek to exercise a workplace right (section 340, FW Act)

  • to threaten, organise or take action with intent to coerce the other person to exercise, or not exercise a workplace right, or exercise the workplace right in a particular way (section 343, FW Act) 
  • (if an employer) to exert undue influence or undue pressure on an employee in relation to a decision by the employee to agree to or to terminate, an individual flexibility arrangement (s 344, FW Act)
  • (if an employer) to induce an employee to become, not become, remain or cease to be an offer or member of an industrial association (including a union) (section 350, FW Act) and
  • to discriminate against an employer because they are covered or not covered by a particular type of workplace instrument or an enterprise agreement that does not cover an employee organisation (section 354, FW Act). 

Code

It is a breach of the Code for a Code covered entity:

  • to bargain in relation to an agreement, or make or implement an agreement if that agreement provides for terms, conditions or benefits of employment (of the employer’s employees or their subcontractors employees) or that restricts or limits the type of engagement that may be used to engage subcontractors (section 10, Code).

This prohibition applies where the agreement will not be registered, lodged or otherwise approved under the FW Act.[2]

  • to exert undue influence or undue pressure on a contractor, subcontractor or consultant to make above entitlement payments in respect of building work (section 12, Code)
  • to monitor the industrial instruments of its subcontractors (section 11(3)(k)/11(4), Code)
  • to engage in conduct likely to have the effect of prescribing the terms and conditions on which subcontractors are engaged (including the terms and conditions of employees of a subcontractor) (section 11(3)(f)/11(4), Code). 

In considering the Contract and in particular Clause 9, the successful tenderer must ensure they do not agree to contractual terms which would contravene the law when implemented.

For example, the terms of the Contract oblige the successful tenderer to assess subcontractors’ terms and conditions of employment against the BPIC.

In fulfilling this requirement it would be unlawful for the successful tenderer to coerce or apply undue influence on a subcontractor to make a new or vary an existing enterprise agreement.

It would be unlawful for the successful tenderer to discriminate against a subcontractor because their employees are covered or not covered (or it is proposed that their employees will, or will not, be covered) by a particular type of workplace instrument (section 354, FW Act). It would also be unlawful for the Queensland Government to be involved in such conduct for example through an appointed Administrator (section 550, FW Act).

The Code prohibits the successful tenderer from applying undue influence or pressure on a subcontractor to exceed the terms and conditions of their lawful agreements (see section 12(2)).

The terms of the Contract require that when when selecting a subcontractor, the head contractor must include the BPP in its subcontract tender documents, provide subcontractors with the BPIC and require subcontractors to demonstrate how they propose to address each of the BPPs; including how the subcontractor’s terms and conditions for the subcontractor’s personnel compare to the BPIC.  

This conduct, when taken together, will contravene section 11(3)(f) (read together with section 11(4)) of the Code if it is likely to have the effect of prescribing the terms and conditions of employees of a subcontractor. 

Records and Access to Records

The Contract contains requirements relating to Records and Access to Records. Clause 14.12 requires the Contractor to keep accurate and complete records of its tender, tenders it has received, execution of work, compliance with its tender commitments and others. It also requires the Contractor to ensure that every subcontractor does the same.

These requirements include an obligation to keep records that demonstrate compliance with their (the Contractor or subcontractors) commitments to the BPP and BPIC including ‘payroll records, management records and time recordings…’. Clause 14.12 goes further to allow the Principal (or its agent) to audit the Contractor, with respect to their compliance with Clause 9 (Subcontracting requirements). The Clause requires the Contractor to facilitate such an audit, for example by providing records for inspection and arranging for access to workplaces.

Sections 11(3)(k) and 11(4) of the Code prohibit code covered entities from monitoring or auditing the enterprise agreements of its subcontractors.

However, Clause 14.12 does not require the Contractor to audit its subcontractors directly. The contemplated audit would be undertaken by the Principal (Queensland government) or their agent (referred to as ‘Administrator’). Neither the Queensland government nor its contract Administrator are Code covered entities. Accordingly, no breach of section 11(3)(k) and 11(4) of the Code will arise in this scenario. Nevertheless code covered entities should continue to be mindful of their obligations when complying with any audit undertaken to ensure their involvement does not constitute the monitoring of an agreement.

If the Queensland government audits either a head contractor or a subcontractor under these contractual powers, it must not coerce that contractor to vary or terminate an enterprise agreement, and it must not discriminate against that contractor because the contractor’s employees are covered or not covered (or it is proposed that their employees will, or will not, be covered) by a particular type of workplace instrument. This includes discrimination in relation to future projects. In this context note that clause 44 confers various rights on the Administrator to take action against the contractor for failing to comply with a number of obligations under the Contract, including the obligations imposed by clause 14.2. Those rights include the right to terminate the Contract  

Further action by the ABCC

If head contractors or subcontractors have concerns about the manner in which the BPP are being applied to you, or the manner in which you are being audited under contract, please let us know. The ABCC has a statutory responsibility to investigate suspected contraventions of the FW Act and the BCIIP Act by building industry participants, which includes the Queensland government.

The ABCC will closely monitor the implementation of the BPP and BPIC on Queensland projects and would like to hear from any contractors with concerns about the manner in which they are being applied. We will examine individual circumstances and assess whether to take further action on a case by case basis. 

The ABCC will continue to issue guidance to industry regarding the risks of breaching the law associated with the implementation of the BPICs, as necessary, and will use the full range of our compliance powers to ensure all building industry participants comply with their lawful obligations.

Contact us

We encourage stakeholders to contact the ABCC with any other questions or concerns they have regarding their obligations under FW Act, BCIIP Act or the Code. We thank you for your continued engagement on this issue.

You can also find more information on our website at www.abcc.gov.au or by contacting the ABCC hotline on 1800 003 338.


[1] The Administrator is defined to be an entity or individual specified in Annexure A. Annexure A is not included in this version of the Contract. 

[2] For completeness, section 10(1) doesn’t apply to an agreement that is a common law agreement made between an employer and an individual employee or to an individual flexibility agreement