Introduction

The Building and Construction Industry (Improving Productivity) Act (“the Act”) is a piece of federal legislation aimed to improve workplace relation frameworks to ensure building work is carried out fairly, efficiently and productively, to benefit all building industry participants and the Australian economy as a whole.

When does the code apply to you?

The Code for the Tendering and Performance of Building Work 2016 (“the Code”) applies to Commonwealth funded building projects on or after 2 December 2016. It was implemented to help promote the aims of the Act by providing standards which the Commonwealth expects industry stakeholders to adhere to. These standards are aimed to promote efficiency, reduce delays and costs in construction, and improve workplace relations.

Under section 34 of the Act, the Code may apply to:

(a) Building contractor corporations; or
(b) Building industry participants whose work is in a Territory or Commonwealth place; or
(c) The Commonwealth or a Commonwealth authority; and
(d) Their related entities.

From the moment such a group submits an expression of interest or tender for a Commonwealth funded building project after the 2 December 2016, they become a “code covered entity” and must comply with the Code.

What are your new rights/ obligations under the code?

Under section 11D of the Code, code covered entities are required to:

(a) Ensure that payments which are due and payable are made in a timely manner;
(b) Ensure such payments are not unreasonably withheld;
(c) Report delayed or disputed payments to the Australian Building & Construction Commission (“ABCC”), which will be compulsory as of 1 September 2018.

The Code also provides several requirements for code covered entities to comply with handling a dispute, such as:

(a) The need to have a documented dispute settlement process; and
(b) Ensure disputes are resolved in accordance with said process in a:
(i) Reasonable;
(ii) Timely; and
(iii) Cooperative manner.

In the event of a delayed or disputed payment there is a requirement to report such issues as soon as practicable to the ABCC. While there has been a transitional period aimed to ensure the education of code covered entities with these requirements, from the 1 September 2018 a failure to report these issues will result in a breach of the Code which may result in adverse consequences such as sanctions.

How can you ensure you comply with these new requirements?

To comply with these new requirements the “Security of payment reporting form” (found here) can be submitted to the ABCC via email.

Conclusion

If you are a code covered entity, it is important to be aware of your new obligations in relation to such issues, to avoid sanctions by the ABCC and subsequent loss of business.