Labour Market Testing

Section 11F of the Building Code 2016 (the Code) imposes new requirements on employers when they seek to employ persons to undertake building work who are not Australian citizens or Australian permanent residents. This section of the Code requires a series of tests and activities to be applied during such recruitment. This is commonly referred to as ‘labour-market testing’.

Requirements of section 11F

When undertaking recruitment activities employers covered by the Code need to ensure:

  1. The position is first advertised in Australia; and

  2. the advertising was targeted in such a way that a significant proportion of suitably qualified Australian citizens and Australian permanent residents would be likely to be informed about the position; and

  3. any skills or experience requirements set out in the advertising were appropriate to the position; and

  4. the employer demonstrates that no Australian citizen or Australian permanent resident is suitable for the job.

Application of section 11F

The requirements of section 11F of the Building Code only apply to:

  • Code covered entities (that is entities that have tendered for or expressed interest in Commonwealth funded building work on or after 2 December 2016); and

  • The engagement of any non-Australian citizen or non-permanent resident to undertake building work on any project, regardless of funding, from the time the company becomes a 2016 code covered entity (not prior/existing employees).

Examples of occupations included in labour market testing

The requirements apply to all persons proposed to be employed to undertake building work. This may include:

  • Skilled tradespersons;

  • Unskilled tradespersons and labourers;

  • Managers including Project Managers, Site Managers & Foreman;

  • Engineers and other specialty occupations; and

  • Project Directors, Superintendents and other higher management if their role includes undertaking building work i.e. if they are making decisions or contributing to a particular project.

Examples of occupations excluded from labour market testing

  • Clerical and IT staff located at the head office of a company;

  • Corporate management not undertaking building work;

  • Front end bid teams; and

  • Other head office staff not undertaking building work.

Monitoring compliance

The ABCC will seek evidence from employers to demonstrate compliance with labour market testing requirements where non-Australian citizens or permanent residents have been engaged since the company became a code covered entity.

This evidence may include but is not limited to:

  • Advertisements;

  • Job applications;

  • Documents from recruitment processes including reasons for not appointing any Australian citizen or permanent resident that applied for the position; and

  • Employment contracts.

Breaching Section 11F

If the ABCC Commissioner is satisfied that a code covered entity has failed to comply with the Code the ABCC Commissioner may refer the matter to the Minister with a recommendation that a sanction should be imposed. The Minster may impose an exclusion sanction on the code covered entity or issue a formal warning that a further failure may result in the imposition of an exclusion sanction. An exclusion sanction means a period during which a code covered entity is not permitted to tender for, or be awarded, Commonwealth funded building work.


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