A summary of the Building Code 2016 and where to find further information

WHAT IS THE BUILDING CODE 2016?

  • The Australian Government provides funding for a variety of building projects throughout Australia.
  • The Code for the Tendering and Performance of Building Work 2016 (the Code) was established to ensure projects are carried out fairly, efficiently and productively.
  • The Code sets out the standards the Australian Government expects contractors to comply with in undertaking building work.
  • If you want to be involved in building work funded by the Commonwealth Government then you must comply with the Code.

WHEN DO YOU NEED TO COMPLY WITH CODE?

  • The Code only applies if you are providing ‘building work’.
  • You become subject to the Code from the first time you submit an expression of interest (EOI) or tender for Commonwealth funded building work on or after 2 December 2016. In other words, you become a ‘code covered entity’. This is important because code covered entities have legal obligations under the Code.
  • Once you become subject to the Code you will need to comply with the Code on all new Commonwealth funded projects as well as new projects that do not include any Commonwealth funding (private projects). 
  • You will be required to ensure subcontractor compliance on Commonwealth funded building work (as defined), but not on private projects.
  • If you have any related entities they also become subject to the Code, including on projects that are not funded by the Australian Government.

WHAT HAPPENS IF YOU DO NOT COMPLY WITH THE CODE?

  • The ABCC is responsible for ensuring that code covered entities comply with the Code.
  • We do this by inspecting and auditing projects to check on-site compliance with the Code.
  • We also conduct off-site audits where we analyse a range of documents that we will request from you.
  • If you fail to comply with the Code, you may be excluded from tendering for projects that receive Australian Government funding. In the first instance though, we will generally work with you to help you understand why you are not compliant and what you can do to ensure you comply with the Code in the future.

The following table sets out the substantive requirements of the Code in summary form. This list can assist code covered entities to locate more information on particular Code topics.

Section of the Code Topic Summary Code requirements Further information on the ABCC website
8 Tender, EOI and contractual
requirements for engaging
subcontractors

If you’re a code covered entity on building work funded by the Australian Government you must meet certain requirements of the Code when engaging a subcontractor on that project. This includes minimum requirements when issuing any EOI or tender and when contracting for building work.

As a code covered entity, it is also your responsibility to ensure that any subcontractor you engage for Commonwealth funded building work complies with the requirements of the Code while performing that work.

Engaging subcontractors
9 Compliance with laws, decisions,
directions and orders
A code covered entity is required to comply with a number of laws. It is important to know what these laws are, because failure to comply may result in a breach of the Code. These laws include designated building laws, competition and consumer laws, work health and safety laws, migration laws and compliance notices.  Compliance with Laws
10 Requirements regarding
unregistered written agreements
and other agreements
A code covered entity must not make an agreement, implement an agreement
or bargain in relation to an agreement in respect of building work that will not be
registered, lodged or otherwise approved under the Fair Work Act 2009 (FW Act).
This is subject to some exceptions. 
Unregistered written agreements and other agreements
11 Enterprise agreements and
prohibited conduct
A code covered entity must not be covered by an enterprise agreement in respect of building work, which includes prohibited content. Further, a code covered entity must not engage in conduct, or implement a procedure or practice (howsoever described) in respect of building work, that if it were included in an enterprise agreement, would be prohibited by the Code. Prohibited conduct
11B Sham contracting A code covered entity must not engage, or propose to engage, an individual to perform building work under a contract for services (i.e. as an independent contractor) where the true character of the engagement or proposed engagement is that of employment. Sham contracting
11C Collusive tendering A code covered entity must not engage in collusive tendering practices. Collusive
tendering is when two or more competitors cooperate to undermine the competitive tendering process in order to gain an unfair advantage.
Collusive tendering
11D Compliance with security of payment
legislation

A code covered entity must comply with the security of payment obligations in the Code on all building work awarded to them from the time they become a code covered entity, including on private projects. In general terms, ‘security of payment’ refers to a building contractor’s right to receive payments that are due as outlined in their contract.

Disputed or delayed progress payments must be reported. This page describes what is reportable, when and how it should be reported, and what the ABCC can do to assist. 

Security of payment
11E Requirement for a documented
dispute settlement process
A code covered entity must have a documented dispute settlement process that details how disputes will be resolved and a referral process for determination. Code covered entities must comply with the process and any determination. Disputed payments
11F Mandatory steps prior to engaging
non-citizens and non-residents
A code covered entity must ensure that no person that is not an Australian citizen or permanent resident is employed to undertake building work for the code covered entity unless a number of requirements are met.  Requirements for Engaging non-citizens and non-residents
12 You must not force someone else to make above entitlement payments A code covered entity must abide with several requirements regarding above entitlements payments. ‘Above-entitlement payments’ refers to any payment or benefit that is above the amount or value of a payment or benefit required to be paid under a Commonwealth industrial instrument or industrial law within the meaning outlined in the FW Act.  Above entitlement payments
13 Freedom of Association

A code covered entity must adopt and implement policies and practices that protect freedom of association. Freedom of Association is the right to join or not join a union.

It can be unlawful for workers to be pressured to make a decision about joining, not joining or leaving a union. The Code provides an extensive list of examples that are expressly deemed to breach freedom of association principles. 

Freedom of Association
14 Requirements for entry into the workplace A code covered entity must comply with all right of entry laws that apply to them. For example, the FW Act provides that a person must not refuse or unduly delay entry onto a premise by a permit holder who is entitled to enter premises in accordance with the FW Act. A code covered entity must also, so far as reasonably practicable, ensure that entry by an officer of a building association is for a legislative purpose and the officer strictly complies will all applicable legislative
requirements including permit and notice requirements. 
Right of Entry
15 Dispute settlement  A code covered entity must ensure that an enterprise agreement that covers the entity in respect of building work includes a term for settling disputes in accordance with the FW Act; and if it provides for arbitration of a dispute or other binding outcome, the code covered entity must ensure that the term requires any decision of the arbiter to be consistent with the Code. Enterprise Agreements
16&17 Reporting and notification
requirements under the Code
A code covered entity has various reporting/notification requirements placed
on them by the Code. These include code breaches, industrial action, secondary
boycott demands and security of payment disputes/delayed payments. 
Reporting
16A Managing drug and alcohol
in the workplace
A code covered entity must ensure there is an approach to managing drug and alcohol issues in the workplace to help ensure that no person attending the site to perform building work does so under the influence of alcohol or other drugs. On projects where a WRMP is required, there are certain requirements that this approach to managing drug and alcohol issues must meet.  Drug and Alcohol Testing
32
Schedule 2
Schedule 4
WRMP requirements  for
Commonwealth funded building
projects over a certain value
Commonwealth funded projects of a certain value must have a Workplace Relations Management Plan (WRMP). Within the WRMP, there are also specific requirements for head contractors, including in relation to drug and alcohol testing. 

Drug and Alcohol Testing

Workplace Relations Management Plans

Need more information? 

Contact us directly for more information or advice about your individual circumstances:

Factsheet