Building and Construction Industry Update November 2007

This edition of the Building and Construction Industry Update summarises some recent developments in the building and construction industry in relation to the following:

• Coalition's pre-election policy on workplace relations
• Improvements in productivity due to building industry reforms
• CEPU and Kevin Harkins fined $19,800 for unlawful industrial action in Tasmania
• Building and Construction Industry Improvement Amendment (OHS) Act 2007 (Cth)
• National Code of Practice for Induction for Construction Work

For more information about any of these articles, please contact our Building Industry Reform team.

Coalition’s election policy on workplace relations released

The Federal Coalition has released its pre-election workplace relations policy entitled ‘Employment and Workplace Relations – Targeting Full Employment’. The policy outlines a number of proposed reforms that would impact specifically on the building and construction industry.

Regulating side deals

If re-elected, the Coalition will legislate to prevent ‘illegitimate pressure’ being placed on employers to make unregistered side deals with unions as a precondition of entering into a registered workplace agreement. The Coalition also propose to take steps to ensure that agreements containing ‘prohibited content’ are unenforceable if incorporated in a side deal.

It is not clear from the policy whether the legislation would introduce penalties for including prohibited content in side deals. However, it is likely that the proposed laws would effectively render void any deed, memorandum of understanding or other form of agreement which contains prohibited content.

Right of entry

The Coalition proposes to strengthen right of entry laws so that entry permit holders must advise the Australian Building and Construction Commissioner (ABCC), in addition to notifying the occupier as currently required. It proposes to disqualify union officials who have had their entry permits revoked.

Funding for construction industry reform

The Coalition proposes to commit $7 million over four years to the ABCC to assist compliance with the National Code of Practice for the construction industry and increase site presence.

Financial accountability for specific industry funds

The Coalition proposes to undertake consultation with stakeholders on the pressure being placed by unions and registered organisations on employers to make payments into specific industry funds on behalf of employees for matters such as training. The Coalition’s stated intent is to ensure these funds are properly regulated and funds are not used for improper purposes.

Further information about Labor’s industrial relations policy is available from our Building and Construction Industry Update July 2007.

Improvements in productivity due to building industry reforms

Many building industry employers have seen significant improvements in productivity and performance of their businesses as a result of the reforms in the building and construction industry. Yet many are concerned that should there be a change of government on 24 November 2007, these improvements may be at risk.

There are many avenues open to employers who wish to be proactive and avoid losing these gains. Freehills has developed strategies to assist companies wanting to retain the improved performance.

If you are interested in exploring how this approach might assist your company, please contact John Cooper.

CEPU and Kevin Harkins fined $19,800 for unlawful industrial action in Tasmania

In a recent decision of the Federal Magistrates Court, the CEPU and Harkins were fined $11,000 and $8,800 respectively for a breach of section 38 of the Building and Construction Industry Improvement Act 2005 (BCII Act) for their involvement in a strike of employees in the electrical contracting industry.

This prosecution is significant for reasons including the following:

• the decision signals that the courts are prepared to impose penalties on union officials in their personal capacity for inciting unlawful industrial action, and
• the decision sets out and examines the relevant considerations in assessing whether and to what degree a union and/or union official should be held accountable for unlawful industrial action.

Unlawful industrial action

During negotiations for new enterprise agreements in December 2005 between the CEPU and certain electrical contractors, 81 employees withdrew their labour in a 'snap strike' for 24 hours.

The decision to strike was made during a meeting at the Glenorchy Football Club. Whilst Harkins was present at this meeting as a representative of the CEPU, there was no evidence before the court that he initiated the proposal to strike. Harkins and the CEPU signed an agreed statement of facts admitting that they engaged in unlawful industrial action and the court imposed penalties of $19,800.

Considerations by the court regarding penalties

The nature and extent of the unlawful industrial action

The strike was considered serious despite the fact that it only lasted for one full day because it occurred at a time when negotiations as to remuneration had stalled and it involved a significant number of employees. The strike effectively 'forced' employers into agreement on the issue of pay.

Intention of union official

Harkins was found to have told the workers at the Glenorchy Football Club meeting that ‘only he would suffer the consequence of taking of unlawful industrial action’. The court considered such a statement to negate any suggestion that the contravention was merely inadvertent.

The conduct of senior union management

The court found that the majority of the senior management at the relevant CEPU branch were unaware of the plan to strike. However, as Harkins was a member of the senior management team (Assistant Secretary), his conduct was imputed to the CEPU and therefore both Harkins and the CEPU were held liable.

The court stated that the consequence of Harkins’ conduct was that he would be subject to a penalty calculated at 40 per cent of the maximum, whilst the CEPU would be subject to a penalty of 10 per cent of the maximum.

The union’s history of unlawful industrial action

The court only had regard to breaches of the BCII Act in considering the union’s history of unlawful industrial action. As the CEPU had no prior breaches of the BCII Act and this action was the first of its kind in Tasmania, the court concluded that the strike was an isolated case of industrial action driven principally by Harkins and the attendees at the Glenorchy Football Club meeting.

Union cooperation with the ABCC

Harkins and the CEPU cooperated by signing an agreed statement of facts and consenting to their respective penalties. Accordingly, the court determined that this cooperation warranted a penalty discount.

Financial position of the union and/or union official

The court inferred both parties had capacity to pay for the penalties to which they agreed. There was no evidence before the court of either party’s financial position.

The need for deterrence

The court noted that the penalties imposed should reflect that the actions were serious and wilfully deliberate.

Underlying purpose of the BCII Act

The court found that Harkins’ and the CEPU’s breaches of the BCII Act seriously undermined the role of the BCII Act to improve the workplace relations and bargaining frameworks in the building and construction industries.

Implications

This decision suggests a trend on the part of the Courts towards imposing heavier penalties on union officials for relatively minor involvement in unlawful industrial action.

In our Building and Construction Industry Update July 2007, we examined two other recent cases involving the participation of the Construction, Forestry, Mining and Energy Union (CFMEU) and the Australian Workers’ Union (AWU) in unlawful industrial action. The CFMEU successfully appealed the penalties imposed on it by the court on the basis that it actively ‘discouraged’ the strike in question. The court had found at first instance that the union (through its organisers and site steward) had arranged and attended three meetings which resulted in the withdrawal of labour.

In contrast, however, the AWU and its officials were fined for failing to prevent a two day strike involving 192 employees during an industrial dispute in Western Australia. The AWU was fined $40,000 for breaches of the BCII Act and the Workplace Relations Act 1996 (Cth), and each official was fined $4,000. The court noted the sensitive timing of the dispute with respect to a mining project, and found that the union action was designed to ‘bring pressure’ on the employer.

Both the AWU decision and this case illustrate the court’s preparedness to impose harsher penalties on union officials involved in unlawful industrial action, as well as give an indication of the factors that the courts will consider when imposing such penalties.

This article was written by Karli Evans (Solicitor) and Deborah Bell, Articled Clerk, of the Melbourne Employee Relations group.

Building and Construction Industry Improvement Amendment (OHS) Act 2007 (Cth)

Under the Building and Construction Industry Improvement Act 2005 (Cth) (BCII Act), an accreditation scheme was introduced to be administered by the Federal Safety Commissioner, Tom Fisher (Commissioner), under which only head contractors who had effective OHS management policies and systems in place could contract directly to undertake building work for the Australian Government.

The Building and Construction Industry Improvement Amendment (OHS) Act 2007 (Cth) (BCII Amendment Act), assented to on 24 September 2007, will extend the accreditation scheme to cover situations where building work is indirectly funded by the Commonwealth or a Commonwealth authority.

The BCII Amendment Act mandates that any contractor wishing to:

• carry out building work financed directly or indirectly by the government, or
• enter into a pre-construction agreements funded directly or indirectly by the government

must be accredited under the BCII Act scheme. The amendments now make it clear that at the time of funding, the government must take appropriate steps to ensure that the builder is accredited. The amended scheme also clarifies that the accreditation requirements override any Commonwealth provision to the extent of any inconsistency, and permits the Commissioner to disclose information on the scheme to the Minister.

National Code of Practice for Induction for Construction Work

On the 13 July 2007, the National Code of Practice for Induction for Construction Work (Code) was declared by Mr Bill Scales, Chairman of the Australian Safety and Compensation Council (ASCC). The Code forms part of the material supporting the National Standard for Construction Work. One of the aims of the Code is to reduce the regulatory burden on employers by replacing each state system with a single national approach to induction training.

OHS obligations generally

Currently the Commonwealth, state and territory Occupational Health and Safety (OHS) legislation imposes duties on employers and persons with control of workplaces to take all reasonably practicable steps to provide and maintain a safe working environment for employees and other persons. This duty includes the need to provide necessary training, instruction, information and supervision to the employees to ensure they can perform their work safely.

OHS obligations imposed on persons controlling a construction project or construction work, and persons carrying out construction work

The National Standard for Construction Work provides that persons with control of a construction site/project and persons carrying out construction work must ensure that everyone working on the construction site has undertaken OHS induction training.

How does the Code affect OHS obligations?

The Code provides information about the instructions and types of training that persons in control of a construction site/project and persons carrying out construction work need to provide to persons working on the construction site.

The Code focuses on three types of OHS induction training. These are:

1. general induction
2. site induction 
3. task-specific induction

It is important that records of each type of induction training are kept as evidence that the training was provided. These records should include the names of the participants, their signature acknowledging that the training was obtained, the training content, who conducted the training and who provided the training. The Code provides that any person in control of construction work or the construction project should keep the records during and for a further three years after the employment or construction project has ceased. This is good practice for all employers.

• General induction to provide a basic knowledge of OHS rights, obligations, risks and injury prevention should be provided to all persons carrying out construction work, persons who have access to operational construction sites unaccompanied or unsupervised by an inducted person, and persons who regularly enter operational construction sites.
  
  Induction should be completed before a person commences construction work, with retraining after long absences from the industry.
  
• Site induction to familiarise participants with the specific OHS issues and work practices of that site should be completed before a person commences work on each new site or whenever there are changes to the construction site that might affect health and safety.
  
  The person carrying out the construction work is responsible for ensuring that all persons entering the site have undergone site induction, including in relation to the principal contractor’s rules and procedures for OHS and emergency management, supervisory and reporting arrangements, familiarisation with site health and safety representatives, and other issues specific to the site.
  
• Task-specific induction on hazards, risks, control measures and relevant laws should be provided to persons undertaking 'high risk construction work' (as defined in the Code).
  
  The person in control of construction work should undertake a risk assessment to determine whether persons carrying out other construction activities also need to undertake task specific training.
  
  Of course, induction training alone will not be enough to discharge all legal obligations in relation to OHS—persons in control of a construction site/project and persons carrying out construction work will also need to provide regular information, instruction, training and supervision.

Is the Code binding?

The ASCC is not a regulatory authority and does not make or enforce laws. It was established to assist in the harmonisation of OHS laws nationally. The Code produced is of an advisory nature providing guidance about how to meet required safety outcomes. To date, neither the Commonwealth nor any state or territory government has enacted legislation making the Code mandatory, and Comcare has not yet approved the Code. The ASCC expects that the Code will be suitable for adoption by Commonwealth, state and territory governments.

At present the Code should be considered as guidance material to employers on how to meet their obligations under the Occupational Health and Safety Act 1991 (Cth).

However, guidance material plays an important role in determining whether duties under OHS legislation have been met. To comply with their duties, employers and other duty holders must do what is reasonably practicable to ensure health and safety. What is considered to be ‘reasonably practicable’ will be informed by the state of ‘industry knowledge’. Guidance material, such as the Code, can provide a court with a written record of  industry knowledge and practice.

Hence, while the Code is not binding, it might be the case that if the guidelines provided in the Code are not followed, and suitable alternate steps are not taken, a court may find that that person has not met their OHS duties.

This article was written by Lucy Wu, Paralegal of the Melbourne Employee Relations group.

For more information about any of these articles, please contact our Building Industry Reform team.

Name : John Cooper
Title : Partner
Office : Melbourne
Phone : +61 3 9288 1542
Fax : +61 3 9288 1567
Email : john.cooper@freehills.com

Name : Jane Hodder
Title : Partner
Office : Melbourne
Phone : +61 3 9288 1692
Fax : +61 3 9288 1567
Email : jane.hodder@freehills.com