Download PDFFinal Report of the Royal Commission into the Building and Construction Industry
Reform - National Issues Part 1
Volume Seven Royal Commissioner, The Honourable Teren ce Rhoderic Hudson Cole RFD QC
February 2003
Final Report of the Royal Commission into the Buil ding and Construction Industry- Volume Titles
Volume 1 Summary of Findings and Recommendations
Volume 2 Conduct of the Commission - Principles and Procedures
Volume 3 National Perspective Part 1
Volume 4 National Perspective Part 2
Volume 5 Reform - Establishing Employment Conditions
Volume 6 Reform - Occupational Health and Safety
Volume 7 Reform - Nati onal Iss ues Part 1
Volume 8 Reform - National Issues Part 2
Volume 9 Reform - National Issues Part 3
Volume 1 0 Reform - Funds
Volume 11 Reform - Achieving Cultural Change
Volume 12 State and Territory Overviews
Volume 13 Hearings - New South Wales Part 1
Volu me 14 Hearings - New South Wales Part 2
Volume 15 Hearings -Victoria Part 1
Volume 16 Hearings -Victoria Part 2
Volume 17 Hearings - Queensl an d Part 1
Volume 18 Hearings - Queensland Part 2
Volume 19 Hearings- South Australia, Tasmania, Northern Territory and Australian Capital Territory
Volume 20 Hearings - Western Australia Part 1
Volume 21 Hearings- Western Australia Part 2
Volume 22 Administration
Volume 23 Confidential Volume
ISBN : 0 642 21128 0
© Commonwealth of Australia 2003
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Final Report of the Royal Commission into the Building and Construction Industry
Contents
Abbreviations
Introduction
2
3
Abuses of privacy
The Privacy A ct 1988 (C 'wth)
Head contractors
Site delegates and shop steward s
Industry funds
Unions
Solutions and recommendations
Ambiguities in the Workplace Relations Act 1996 (C'wth)
Introduction
Protected action during the currency of a certifi ed agreement
Codes of Practice for the Building and Construction Industry
Introduction
Genesis of Building and Construction Industry Codes
Key provisions of the National Code
Complementary codes in other jurisdictions
Principles
Implementation and Industry Guidelines
Application
Sanctions
The National Code and the Implementation Guidelines in practice
Conclusions to be drawn from the evidence
Submissions received by the Commission concerning the National Code and the Implementation Guidelines
Solutions and recommendations
5
7
9
11
15
17
2 1
23
29
31
33
47
49
51
55
57
59
63
65
67
69
73
75
79
Reform- National issues Part 1 iii
4
5
6
Appendix A: Deed made between the NSW Government and the CFMEU and -BWIU on 6 March 1994
Appendix 8 : Relevant provisions from the Implementation Guidelines.
Appendix C: Summary of relevant case studies
Demarcation disputes
The problem
The evidence
The current law
Options for reform
Solutions and recommendations
Entry to premises and inspection of records
The problem
The current law
Options for reform
Solutions and recommendations
Freedom of association
Introduction
Nature of the prob lem
Current law
Prior reform attempts
Submissions received by the Commission
Solutions and recommendations
Appendix A: Part XA of the Workplace Relations Act 1996 (C 'wth)
Appendix B: Model freedom of association provisions
iv Final Report of the Royal Commission into the Building and Construction Industry
97
105
123
139
141
147
151
159
165
173
175
179
195
201
233
235
237
249
275
281
287
315
327
Abbreviations
Australian Building and Construction Commission ABCC
Australian Building Construction Employees and
Bu ilders' Labourers' Federation (Queensland Branch) Union of Employees BLFQ
Australian Business Number ABN
Australian Construction Industry Redundancy Trust ACIRT
Australian Constructors Association ACA
Australian Council of Trade Unions ACTU
Australian Industrial Relations Commission AIRC
Australian Industry Group AIG
Australian Procurement and Construction Council APCC
Australian Taxation Office ATO
Australian Workers Union, The AWU
Australian Workers' Union of Employees, Queensland AWUQ
Australian Workplace Agreement AWA
Automotive, Food, Metals, Engineering, Printing and
Kindred Industries Union (referred to as the Australian Manufacturing Workers Union) AMWU
Bu ild, Own and Operate BOO
Build, Own, Operate and Transfer back BOOT
Building & Construction Industry Improvement Act BCI Improvement Act
Building Employees Redundancy Trust BE RT
Building Unions Superannuation Scheme Queensland BUSSQ
Code Monitoring Group CMG
Commonwealth C'wth
Commonwealth Implementation Guidelines the Implementation Gu idelines
Reform- National issues Part 1
Commonwealth Industry Guidelines for the
National Code of Practice for the Construction In dustry
Communications, Electrical, Electronic, Energy, Information,
Postal, Plumbing and Allied Services Union of Australia
Construction & Building Unions Superannuation Fund
Constru ction Industry Development Agency (C'wth)
the Industry Guideli nes
CEPU
Cbus
CIDA
Construction, Forestry, Mining & En ergy, Industrial Union of Employees, Queensland CFMEU 0
Construction, Forestry, Mining and Energy Union
Construction, Forestry, Mining and Energy Union,
Constru ction and General Division, New South Wales
Divisional Branch
Coverforce Top-Up Protection Accident Scheme
Department of Employment and Workplace Relations
Department of Employment, Workplace Relations and Small Business
Department of Fi nance and Administration
Enterprise Bargaini ng Agreement
Federated Engine Drivers' and Firem en 's Association Division
Government business enterprises
Gu idelines to the NPPs released by the Office of the
Federal Privacy Commissioner
Housing Industry Association Limited
Implementation Guidelines and Industry Guidelin es
Lost Time Injuries
Master Builders Association of Western Australia
Master Builders Australia Inc
Natio nal Building and Construction Industry Award
Nati onal Code of Practice for the Construction Industry
National Gallery of Victoria
National Privacy Principles
New South Wales
Occupational health and safety
Occupational health and safety and rehabilitation
2 Final Report of the Royal Commission into the Building and Construction Industry
CFMEU
CFMEU New South Wales
Divisional Branch
CTAS
DEWR
DEWRSB
DOFA
EBA
FED FA
GBEs
NPP Guidelines
HIA
the Guidelines
LTI
MBAWA
MBA Inc
NBC/A
National Code
NGV
NPPs
NSW
OH&S
OH&SR
Office of Employment Advocate
Project Code Monitoring Group
Queensland
Queensland Industrial Relations Commission
rostered day off
Royal Commission into Prod uctivity in the Build ing and
Construction Industry
South Australia
Tasmania
Victoria
Victorian Building Industry Agreement
Western Australia
Western Australian Cricket Association Inc .
Contractors
Blue Circle Southern Cement Li mited
Civil Management Group Pty Ltd
Crown International Holdings Pty Ltd
CSR Emoleum Pty Ltd
Electrolux Home Products Pty Ltd
Kenoss Contractors Pty Ltd
Upstream Petroleum Pty Ltd
Walter Construction Group Ltd
Westfield Design and Construction Pty Ltd
OEA
PCMG
Old
OIR C
ROO
the Gyles Royal Commission
SA
Tas
Vic .
VB IA
WA
WACA
Bl ue Circle
Civil Management Group
Crown
CSR
Electrolu x
Kenoss Contractors
Upstream
Walters
Westfield
Reform - National issues Part 1 3
4 Final Report of the Royal Commission into the Building and Construction Industry
Introduction
In Volumes 7, 8 and 9, entitled Reform- National Issues of this report, I have addressed twenty
three matters of common interest to the building and construction industry throughout
Australia. In addressing these matters I have drawn upon evidence presented at the hearings in
the various states and territories, discussion papers issued by the Commission, submissions
received by the Commission from participants in the industry and reports, studies and other
publications.
2 I have made recommendations about matters which I consider are in need of reform .
Reform- National issues Part 1 5
6 Final Report of the Royal Commission into the Building and Construction Industry
1
Abuses of privacy
Reform - National issues Part 1 7
8 Final Report of the Royal Commission into the Building and Construction Industry
The Privacy Act 1988 (C'wth)
Privacy righ ts in Australia are primarily protected by the Privacy Act 1988 (C'wth) . That Act was
substantially confined in its operation to agencies of the Commonwealth and Territory
Governments until the enactment of the Privacy Amendment (Private Sector) Act 2000 (C 'wth)
in December 2000. That Act substantially amended the Privacy Act 1988 (C 'wth) and extended
its application to many private sector organisations from 21 December 2001.
2 The obligations imposed by the Privacy Act 1988 (C 'wth) on the private sector flow from s 16A,
wh ich provides:
(1) An organisation must not do an act, or engage in a practice, that breaches an
approved privacy code that binds the organisation.
(2) To the extent (if any) that an organisation. is not bound by an approved privacy
code, the organisation must not do an act, or engage in a practice, that breaches
a National Privacy Principle.
(3) This section, approved privacy codes and the National Privacy Principles have
effect in addition to sections 18 and 18A and Part 11/A, and do not derogate from
them.
(4) To avoid doubt, an act done, or practice engaged in, by an organisation without
breaching an approved privacy code or the National Privacy Principles is not
authorised by law (or by this Act) for the purposes of Part II/A merely because it
does not breach the code or the Principles.
Note: If an act or practice is otherwise authorised by law, exceptions to the prohibitions in
the National Privacy Principles and Part II/A may mean that the act or practice does
not breach the Principles or certain provisions of that Part.
3 Schedule 3 to the Act sets out ten 'Nati onal Privacy Principles' (NPPs) . The NPPs define how
'organisati ons' should collect, use, keep secure and disclose 'personal ' or 'sensitive'
information. The NPPs rel ate to the following topics:
â¢
â¢
â¢
â¢
â¢
collection of information;
use and disclosure of information;
data quality;
data security;
openness;
Reform- National issues Part 1 9
⢠.access and correction;
⢠identifiers;
⢠anonymity;
⢠transborder data flows; and
⢠sensitive information.
4 'Personal information ' is defined by s6 of the Act to mean 'information or an opinion (including
information or an opinion forming part of a database), whether true or not, and whether
recorded in a material form or not, about an individual whose identity is apparent, or can be
reasonably ascertained , from the information or opini on' .1 'Sensitive information ' is defined to
mean 'information or an opinion about a person's ethnicity or race, criminal record , or religious,
philosophical, political or sexual inclinations' 2 It expressly includes information or an opinion
about an individual's membership of a trade union 3
5 'Organisation' is defined in s6C of the Privacy Act 1988 (C'wth) to mean an in dividual , a body
corporate, a partnership, an unincorporated association or a trust. Small business operators,
registered political parties, agencies, State or Territory authorities and prescribed instrumentalities of a State or Territory are excluded from the definition of 'organisation ' 4
Broadly speaking, a small business operator is an individual, body corporate, partnership ,
unincorporated association or trust that carries on a business with an annual turnover of less
than $3 000 000. 5
6 In the building and construction industry, personal and sensitive information about employees
and contractors is rou tinely collected and maintained by, among others, contractors, unions and industry funds into which contributions are made on behalf of employees or contractors.
Most major contractors, unions and industry funds will satisfy the definition of an 'organisation'
for the purposes of the Privacy Act 1988 (C'wth).
7 Maintaining the privacy of personal and sensitive information about individuals is an important
social objective. Against that objective must be balanced competing interests such as the free
flow of information and the ability of an organisation to operate efficiently.
8 Head contractors, for example, may quite properly need to obtain and record personal information about employees of subcontractors engaged on their projects in order to manage
those projects and safeguard the interests of the workforce, particularly in the context of
occupational health and safety. Industry funds wi ll need to maintain certain records of person al information in order to operate and administer the requirements of thei r clients. Unions will
need to maintain databases of personal information in order to deal with and service their
membership. The NPPs set out the guidelines which must be adhered to by 'organisations ' in
obtaining and maintaining information of this kind .
9 Evidence was presented to the Commission of practices and conduct that would have been, on its face, contrary to the NPPs. Most of the evid ence, however, related to practices and conduct
occurring before the private sector amendments to the Privacy Act 1988 (C'wth) came into
effect on 21 December 2001. Much of the evi dence presented to the Commission, therefore, while disclosing breaches of privacy in the broad sense, did not constitute unlawful conduct.
I 0 Final Report of the Royal Commission into the Building and Construction Industry
Head contractors
10 Head contractors typically collect personal information about workers involved in their projects
including, for each worker:
⢠personal details including name, address, telephone number and date of birth;
⢠emergency or next of kin contact details;
⢠special medical conditions or requirements;
⢠professional details such as name of employer or Australian Business Number (ABN),
trade or occupation, qualifications, certificates and tickets; and
⢠details of membership of superannuation, redundancy, income protection, top-up
insurance and long service leave funds 6
11 NPP 1.1 provides:
An organisation must not collect personal information unless the information is necessary
for one or more of its functions or activities.
12 The Guidelines to the NPPs released by the Office of the Federal Privacy Commissioner (NPP
Guidelines) state that the collection of personal information will only be necessary, and therefore
permitted by NPP 1.1, where 'an organisation cannot in practice effectively pursue a leg itimate
function or activity without collecting personal information '. The NPP Guidelines state that 'it
would not ordinarily be acceptable for an organisation to collect personal information on the off
chance that it may become necessary for one of its functions or activities in the future'. 7
13 Occupational health and safety legislation imposes a duty upon head contractors to ensure
those working on a project are not exposed to risks to their health or safety. This duty extends
to contractors and employees, whether directly employed or employed by subcontractorsB It
is likely, therefore that obligations imposed by occupational health and safety legislation would
justify the collection by head contractors of information about workers engaged on a project,
such as their personal details, emergency contact details, special medical conditions or needs
and details of qualifications, certificates and tickets.
14 One justification commonly proffered by head contractors and their representatives for
collecting and maintaining details of superannuation, redundancy, income protection, top-up
insurance and long service leave fund details and membership numbers of workers on thei r
projects was to ensure that subcontractors and sub-subcontractors complied with their
statutory obligations and were current with their contributions.
Reform - Na tional issues Part 1 11
15 The evidence presented to the Commission was that head contractors are frequently subject to
industrial pressure from unions to ensure workers are members of particular industry funds and
that subcontractors are current with contributions to those funds . In some cases head
contractors made contributions on behalf of the employees of subcontractors. The industrial
pressure unions are able to exert can be formidable because of the financial impact that results
from any disruption or delay to a project.
16 Head contractors, however, do not have a direct employment relationship with all workers on
site . Except in certain limited circumstances in New South Wales, 9 there is no general statutory
liability imposed on a head contractor where subcontractors or sub-subcontractors fail to
comply with legal obligations to make contributions for employees' superannuation,
redundancy, income protection , top-up insurance and long service leave fund contributions.
17 It is therefore unlikely that the collection of this class of information by a head contractor could
be said in most circumstances to be necessary for one or more of its functions or activities. The
collection and maintenance of such information would be likely to contravene NPP I .I.
18 Personal information about workers is commonly obtained by head contractors by the
administration of site induction formsw
19 NPP I .3 provides:
At or before the time (or, if that is not practicable, as soon as practicable after) an organisation collects personal information about an individual from the individual, the
organisation must take reasonable steps to ensure that the individual is aware or
(a) the identity of the organisation and how to contact it; and
(b) the fact that he or she is able to gain access to the information; and
(c) the purposes for which the information is collected; and
(d) the organisations (or types of organisations) to which the orgamsation usually
discloses information of that kind; and
(e) any law that requires the particular information to be collected; and the main
consequences (if any) for the individual if all or part of the Information is not
provided.
20 NPP 5 provides:
5. 1 An organisation must set out in a document clearly expressed policies on its management of personal information. The organisation must make the document
available to anyone who asks for it.
5.2 On request by a person, an organisation must take reasonable steps to let the
person know, generally, what sort of information it holds, for what purposes, and
how it collects, holds, uses and discloses that information.
21 Most of the induction forms ten dered in evidence before the Commission did not make privacy
disclosures or indicate the avai lability of the organisation's privacy policy. Most of the forms
tendered in evidence, however, related to conduct occurring before the commencement of the
I 2 Final Report of the Royal Commission into the Building and Construction Industry
private sector amendments to the Privacy Act 1988 (C'wth). There may, however, be a need to
promote the requ irements of NPPs 1 .3 and 5 among head contractors.
22 There was also evidence of head contractors requ iring subcontractors to provide personal
information about their workers. 11 The disclosure of information by subcontractors in response
to such requirements may, if the subcontractor is an 'organisation', be contrary to the NPPs .
Some subcontractors will not satisfy the definition of an 'organisation' because their annual
turnover is less then $3 mill ion .12
23 NPPs 1 .4 and 1 .5 provide:
1.4 If it is reasonable and practicable to do so, an organisation must collect personal
information about an individual only from that individual.
1.5 If an organisation collects personal information about an individual from someone
else, it must take reasonable steps to ensure that the in dividual is or has been
made aware of the matters listed in subclause 1. 3 except to the extent that making
the individual aware of the matters would pose a serious threat to the life or health
of any individual.
24 It will ordinarily be reasonable and practicable for head contractors to collect the personal
information they need about workers on a project from the workers themselves during the
induction process . The collection of personal information about workers from subcontractors
would be likely in many cases to contravene NPPs 1 .4 and 1 .5.
25 Head contractors sometimes requested, collected and maintained information about the union
membership status of workers engaged on thei r projects. 13
26 Information about an individual's membership of a trade union is 'sensitive information' for the
purposes of the Privacy Act 1988 (C'wth) .14 NPP 1 0.1 provides:
An organisation must not collect sensitive information about an individual unless:
(a) the individual has consented; or
(b) the collection is reqwred by law; or
(c) the collection is necessary to prevent or lessen a serious and imminent threat to the
life or health of any individual, where the individual whom the information concerns:
(ij is physically or legally incapable of giving consent to the collection; or
{i!) physically cannot communicate consent to the collection; or
(d) if the information is collected in the course of the activities of a non-profit
organisation - the following conditions are satisfied:
(i) the information relates solely to the members of the organisation or to
individuals who have regular contact with it in connection with its activities;
(ii) at or before the time of collecting the information, the organisation
undertakes to the individual whom the information concerns that the
organisation will not disclose the information without the individual's consent;
or
Reform- National issues Part 1 1 3
(e) the collection is necessary for the establishment, exercise or defence of a legal or
equitable claim.
27 Other than where the individuals concerned consented, the collection by head contractors of
information about the union membership of workers would not fall within any of the exceptions
set out in NPP i 0. i. A contractor would be entitled, however, with the consent of an employee,
to collect information about the employee's union membership for the purpose of facilitating the
automatic deduction of union fees from the employee's wages for forwarding to the union.
I 4 Final Report of the Royal Commission into the Building and Construction Industry
Site delegates and shop stewards
28 Information about the union membership of workers on building and construction sites was
often collected by union site delegates or shop stewards. Delegates and stewards are typically
employed by head contractors, but are primarily engaged in union-related duties. This dual role
makes it difficult to determine whether, in respect of particular conduct, the delegate or steward
is acting as an employee of the head contractor, or as a representative of the union.
29 Particular difficulties arise where site delegates and shop stewards conduct inductions. In the
course of conducting an induction, the delegate or steward may quite properly collect personal
information provided by workers on behalf of the head contractor for the purpose, for example,
of enabling the head contractor to discharge its obligations in respect of occupational health
and safety on the site. The evidence was that delegates and stewards routinely use that
information for union purposes, such as to check on the membership status of workers, or that
contributions are up to date.
30 Section 6C(2) of the Privacy Act 1988 (C'wth) provides:
A legal person can have a number of different capacities in which the person does things .
In each of those capacities, the person is taken to be a different organisation.
Example: In addition to his or her personal capacity, an individual may be the trustee of
one or more trusts. In his or her personal capacity, he or she is one organisation. As
trustee of each trust, he or she is a different organisation.
31 NPP 2. 1 provides, in relevant part:
An organisation must not use or disclose personal information about an individual for a
purpose (the secondary purpose) other than the primary purpose of collection unless:
(a) both of the following apply:
(i) the secondary purpose is related to the primary purpose of collection and, if
the personal information is sensitive information, directly related to the
primary purpose of collection;
(il) the individual would reasonably expect the organisation to use or disclose the
information for the secondary purpose; or
(b) the individual has consented to the use or disclosure ...
Reform- National issues Part 1 1 5
32 Having regard to s6C of the Privacy Act 1988 (C'wth) , the use by a site delegate or shop
steward of personal information obtained in the course of carrying out an induction process on
behalf of a head contractor for union-related purposes would be likely to contravene NPP 2.1.
33 NPP 4 provides:
4. 1 An organisation must take reasonable steps to protect the personal information it
holds from misuse and loss and from unauthorised access, modification and
disclosure.
4.2 An organisation must take reasonable steps to destroy or permanently de-identify
personal information if it is no longer needed for any purpose for which the information may be used or disclosed under National Privacy Principle 2.
34 The NPP Guid elines state that NPP 4.1 can be managed by 'adopting procedural and
personnel measures for limiting access to personal information by authorised staff for approved
purposes' .15 The practice whereby head contractors entrust union site delegates or shop
stewards to carry out site inductions and collect personal information about workers may
amou nt to a contravention of NPP 4.1 . At the very least, it is important that head contractors educate all employees who col lect personal information, including union site delegates and
shop stewards, about their obligations under the Privacy Act 1988 (C'wth).
1 6 Final Report of the Royal Commission into the Building and Construction Industry
Industry funds
35 Industry superannuation, redundancy, long service leave, top-up insurance and income
protection funds obviously have to collect and maintain personal information about their
members. Information is generally col lected from membership application forms.
36 Evidence presented to the Commission established that personal information about members
was provided to unions and their delegates from time to time by a number of industry funds,
includi ng the Construction & Building Unions Superannuation Fund (Cbus), the Austral ian
Construction Industry Redundancy Tru st (AC IRT) , the Building Unions Superannuation Scheme
Queensland (BUSS 0 ), the Building Employees Redundancy Trust (BERT) and the Coverforce
Top- Up Protection Accident Scheme (CTAS). 16 The personal information was provided
primarily to assist unions and their delegates to collect arrears in contributions.
37 There was evidence presented to the Commission, for example, that BUSS 0 provided union
delegates on request with a list of the names of its members employed at a particular site with
details of how much had been contributed for each member during a specified period. 17 There
was also evidence that AC IRT, BERT and CTAS disclosed personal information where
individual members were identifiable. 18
38 In a submission to the Commission, Cbus argued that the transient nature of the industry and
recalcitrance of employers in making contributions necessitated a multi-faceted approach to
compliance which included 'the disclosure of certain information to union sponsoring
organizations' .19 Cbus asserted that such disclosures were 'consistent with its obligations to
ensure participating employers observe their obligations to make timely superannuation
contributions'. 2° Cbus said it had not changed its disclosure pol icy as a result of the
introduction of the NPPs, and that it had received advi ce that its po licy and procedures complied with the law2 1
39 Cbus principally provided information to un ions , site delegates and employers through a
compliance lin e phone service and th e use of compliance check forms.
40 The Cbus compliance line policy was:
⢠to provide employers with membership numbers and confirm payment and member
details only if the employer provided a member's fu ll nam e, date of birth and addre ss. 22
The policy prohibited the proactive su pply of details to an employer and specifi cally
prohibited inquiries about a member's account balance;23 and
⢠to provide union representatives with information as to whether a cu rrent payment had
been received from a specific employer or member, the number of weeks the payment
Reform - National issues Part 1 1 7
covered and whether the payment was 'above or below an EBA specific amount or
percentage'. 24 The compliance line was not to supply personal details about any
member's account, specific amounts in regard to any payment or any member's account
balance.25
41 There were 3928 compliance lin e enquiries between 12 August 2002 and 28 August 2002 of
wh ich 2918 were from site delegates. 26
42 Cbus compliance check forms were generally used on major construction sites . The process
involved a site delegate or union representative providing the form to Cbus with the
subcontractor's name and Cbus number. Cbus would then complete the form with details of
the number of members for which payments had been made, the rate of payment and any
previous payments which remained unpaid. Cbus did not provide members' names.27
43 NPP 2.1, discussed earlier in this section, provides among other things that unless disclosure
of personal information is necessary for the primary purpose for which personal information is
collected, it can only be disclosed:
⢠with the consent of the individual; or
⢠where both a secondary purpose of disclosure is related to the primary purpose of
collection and th e individual would reasonably expect the organisation to disclose the
inform ation for the secondary purpose.
44 Cbus asserted the disclosures that it makes 'relate to one of the primary purposes of the Fund:
namely to ensure that member benefits are protected by ensuring employer contributions are
made in compliance with their obligations'. 28
45 It is arguable that industry funds pursuing arrears of contributions from employers by recourse
to head contractors and unions is a secondary pu rpose for the collection and maintenance of
personal information for the purpose of NPP 2.1.
46 The NPP Guidelines state that the test for what an individual would 'reasonably expect' is
'applied from the point of view of what an individual with no special knowledge of the industry
or activity involved would expect' and relates to information 'exchanged in the normal course of business' . 29
47 In the absence of express consent, I doubt whether it could be said that an individual who is a
member of an industry fund would reasonably expect his or her personal details to be
disclosed by the fund to a union or union delegate for the purpose of enabling the union or
delegate to pursue his or her employer for arrears in contributions. To the contrary, it is more
likely that the ordinary member of an in dustry fund would expect the operators of that fund to keep all detail s about the pe rson's membership and contributions confidential from all persons
other than the sponsoring employer.
48 In relation to consent, the NPP Guidelines state, among other matters:
Consent means voluntary agreement to some act, practice or purpose. It has two
elements: knowledge of the matter agreed to, and voluntary agreement. Consent can be
express or implied. Express consent is given explicitly, either orally or in writing. Implied
consent arises where consent may reasonably be inferred in the circumstances from the
I 8 Final Report of the Royal Commission into the Building and Construction Industry
conduct of the individual and the organisation. Consent is invalid if there is extreme pressure or coercion.
49 There was no evidence that industry funds obtained the express consent of members before
disclosing information to unions, union delegates, employers or other third parties . Nor do I
accept that such consent can necessarily be implied from the fact of membership of a fund or
a union, even where the trust deeds of funds, membership booklets or union rules contemplate
the sharing of information. Such provisions are unlikely to have come to the attention of many
members of funds. Not all members of funds are also members of a union. Inferring consent
from an absence of dissent is problematic.
50 This view is consistent with legal advice provided to BUSS Q tendered before the Commission,
which was to the effect that advice in member booklets or member applications that personal
information may be disclosed to union delegates or other th ird parties was insufficient and that
express consent, in the form of a signature by a member or prospective member, was
necessary. 30
51 Much of the evidence before me concerning the disclosure of information by industry funds
related to conduct and practices occurring before the commencement of the private sector
amendments to the Privacy Act 1988 (C'wth) on 21 December 2001. The evidence was that
some industry funds had changed their practices to comply with the introduction of the NPPs.
It nonetheless seems likely that industry funds continue to disclose information to unions and
their delegates in circumstances which contravene or may contravene the NPPs.
Reform- National issues Part 1 19
20 Final Report of the Royal Commission into the Building and Construction Industry
Unions
52 Unions collect and maintain a range of personal information about members, including
personal and professional details. Unions assign membership numbers and maintain
information on membership statu s, the payment of membership dues and other matters.
53 As a matter of course in the building and construction industry, unions, through their site
delegates and shop stewards, collect personal information about individuals ' su perannuation,
redundancy, income protection, top-up insu rance and long service leave fund membership and
contributions, whether or not those individuals are union members. 31 Personal information is
collected for a range of reasons, including to facilitate ch ecks as to whether al l workers on a
site are financial union members.32 The principal means by which information is collected by
unions, site delegates and shop steward s are from head contractor records compiled during
site inductions and from inquiries of industry funds.
54 In accordance with NPP 1 .1, an organisation may on ly collect personal information about
workers where that information is necessary for one of its functions or activities.
55 Unions argued that they collect and maintain personal information about workers on building
and construction projects in order to ensure workers were being correctly remunerated and
that contributions to superannuation, redundancy, income protection, top-u p insu ran ce and
long service leave funds are being made correctly. They point to union rules authorising the
collection of personal information about the currency of contributions to industry fu nds33
56 I accept that checking on an employer's compliance with statutory and award obligations, and
obligations under workplace agreements, in respect of union members, is one of the legitimate
functions and activities of a union. Collection of information to that end would therefore
probably be permitted by NPP 1 .1 .
57 The collection of personal information about non-members, however, could not be justified by
reference to NPP 1 .1 .
58 NPP 1 .4, discussed above, obliges organisations to coll ect personal information about an
individual only from that individual where it is reasonable and practicable to do so .
59 Most personal information about membership and contributions to industry fu nds, and other
matters, can be collected by unions, site delegates and shop stewards from union members
directly. The collection of most personal information about union members from other sources
could not ordinarily be justified by referen ce to NPP 1 .4 .
Reform - National issues Part 1 21
60 In any event, when personal information is obtained by an organisation from other sources,
NPP 1 .5 imposes an obligation on the organisation to take reasonable steps to make privacy
disclosures to ensure that affected individuals are made aware of various matters, except to the
extent that making them aware of the matters would pose a serious threat to the life or health
of any individual. No evidence was presented to suggest that such disclosures are made as a
matter of course by unions in the building and construction industry, where they obtain personal information from industry funds or other sources.
61 Site delegates and shop stewards are typically employees of head contractors. Where a site
delegate or shop steward obtains personal or sensitive information about individuals , that
information may be inadvertently or deliberately disclosed by the site delegate or shop steward
to the head contractor. For reasons already given, such disclosures would be likely in many
cases to contravene NPP 2.1.
62 Unions often disclose details about a subcontractor's arrears in contributions to an industry
fund to a head contractor, as a means of causing the head contractor to exert pressure on the
subcontractor to brin g contributions up to date. Head contractors may act on such disclosures
by, for example, withholding progress payments from a subcontractor.
63 It is arguable that the disclosure by a union of information about a subcontractor's arrears in
contributions to a head contractor relates to the primary purpose for collection of the
information for the purposes of NPP 2. 1.
64 For reasons already given , however, there is considerable doubt as to whether:
⢠individuals could be said to have consented to the disclosure of information about their
membership of industry funds by unions to head contractors; or
⢠individuals could be sa id to reasonably expect unions to disclose personal details in their
possession to head contractors.
65 It is therefore unlikely that such disclosures could be justified by reference to NPP 2.1.
22 Final Report of the Royal Commission into the Building and Construction Industry
Solutions and recommendations
66 Much of the conduct and practices investigated by the Commission involving breaches of
privacy occurred prior to 21 December 2001 when the private sector amendments to the
Privacy Act 1988 (C'wth) commenced operation. Many in dustry participants have taken steps
towards achieving compliance with the new privacy regime.
67 I am nonetheless satisfied that it is likely that practices and conduct which contravene the
Privacy Act 1988 (C'wth) are prevalent within the building and construction industry.
68 The nature of the building and construction industry is such that almost every participant
constantly collects and maintains personal and sensitive information about individuals. Any
given project wi ll be likely to involve a multitude of employers with separate workforces. Efficient
project management and compliance with occupational.health and safety obligations demand
that personal information about others is sometimes disclosed to third parties. The fact that
contributions are made into a range of industry funds on behalf of employees in accordance
with statutory and award obligations, and obligations under workplace agreements, also
requires the collection, maintenance and disclosure of personal information.
69 Part II IAA of the Privacy Act 1988 (C'wth) allows an organisation or group of organisations to
develop and enforce a privacy code approved by the Federal Privacy Commissioner. Privacy
codes enable organisations to tailor the 'NPPs to fit industry specific sensitivities or market
needs '34 and to 'adopt an industry-based complaints handling mechanism '.35 A privacy code
can apply to a specific industry sector36 It must incorporate or set out obligations that are at
least equivalent to the NPPs, 37 identify the organisations bound by the code38 and allow for
voluntary members 39 Members of the public must be given an adequate opportunity to
comment on a draft of the code. 40
70 There would be obvious advantages in developing a privacy code for the building and
construction industry. The development of such a code would facilitate respect for privacy and
assist in achieving cultural change. It would enable the unique features of the building and
construction industry to be taken into account. A complaints handling mechanism suited to the
industry could be developed. All participants in the industry could be consulted on the contents
of the code.
71 I recommend that such a code be developed. I have recommended elsewhere in my report the
establishment of the Australian Build ing and Construction Commission (ABCC) as a body
empowered to promote adherence to and enforce the law in the building and construction
industry. The ABCC should play a leading role in the development of the privacy code. It should
Reform- National Issues Part 1 23
consult with all key industry participants, including employer organisati ons, union s, in dustry
funds , head contractors, employers and employees. All participants in the industry should be
encouraged to consent to and abide by the privacy code.
72 The proposed code could include a complaint handling procedure to deal with alleged
breaches of privacy in the building and construction industry. Complaint handling procedures
under a code must accord with the principles applied by the Federal Privacy Commissioner
when handling complaints under the Privacy Act 1988 (C'wth) 4 1 The ABCC may be an
appropriate body for the handling of privacy complaints.
Issue
In th e building and construction industry, personal and sensitive information about
employees and contractors is routinely collected and maintained by, among others, contractors, unions and industry funds into which contributions are made on behalf of
employees or contractors. Most major contractors, unions and industry funds will satisfy
the definition of an 'organisation' for the purposes of the Privacy Act 1988 (C'wth).
Maintaining the privacy of personal and sensitive information about individuals is an
important social· objective. Against that objective must be balanced competing interests such as the free flow of information and the ability of an organisation to operate
efficiently.
Head contractors, for example, may quite properly need to obtain and record personal
information about employees of subcontractors engaged on their projects in order to manage those projects and safeguard the interests of the workforce, particularly in the
context of occupational health and safety. Industry funds will need to maintain certain
records of personal information in order to operate and administer the requirements of
their clients . Unions will need to maintain databases of personal information in order to deal with and service their membership. The National Privacy Principles (N PPs) in
Schedule 3 to the Privacy Act 1988 (C'wth) set out the guidelines which must be
adhered to by 'organisations' in obtaining and maintaining information of this kind.
Evidence was presented to the Commission of practices and conduct that would have
been, on its face, contrary to the NPPs. Most of the evidence, however, related to
practices and conduct occurring before the pri vate sector amendments to the Privacy
Act 1988 (C'wth} came into effect on 21 December 2001. Much of the evidence presented to the Commission, therefore, while disclosing breaches of privacy in the broad sense, did not constitute unlawful conduct.
Nonetheless, it is likely that a great deal of conduct currently occurri ng in the building
and construction industry contravenes the Privacy Act 1988 (C'wth). There is a need for all participants in the industry to become better educated about their privacy obligations.
2 4 Final Report of the Royal Commission into the Building and Construction Industry
Recommendation 36
(a) A privacy code be developed for the building and construction industry in
accordance with Part IIIAA of the Privacy Act 1988 (C'wth).
(b) The Australian Building and Construction Commission play a leading role in the
development of the privacy code. It should consult with all key industry
participants, including employer organisations, unions, industry funds, head contractors, employers and employees. All participants in the industry should be encou raged to consent to and abide by the privacy code. The Australian Building
and Construction Commission may be an appropriate body for the handling of privacy complaints made under the proposed code.
Reform - National Issues Part 1 2 5
Notes to Abuses of privacy Privacy Act 1988 (C'wth}, s6.
Privacy Act 1988 (C'wth}, s6.
3
5
6
8
9
Privacy Act 1988 (C'wth}, s6.
Privacy Act 1988 (C'wth), s6C.
Privacy Act 1988 (C'wth), s6D.
For example: Hobart Pnvate Hospital Tender Bundle, exhibit 192, document 049.0784.0286.0004; Site Safety Induction Questionnaire, exhibit 1737, document 067.0664.0157.0001; Subcontractor
Questionnaire, exhibit 1384, document 001.0546.091 0.0006; Induction registration form, exhibit 1771 ,
document 006.0922.0977.0002; Induction attendance record, exhibit 17 41, document 047.0153.0557.0002; ADCO Constructions - Prescribed occupational and induction record , exhibit 1 07 4,
document 084.0615.0186.0021; Grollo site induction registration first aid management form , exhibit 1266,
document 058.0629.0986.0004; Gartrell Statutory Declaration, exhibit 770, annexure 'SG 5', document 003.0573.0431 .0144; Elkington Statutory Declaration, exhibit 940, annexure RE/2, document
006.01 02.0775.0172; Subcontractor legislative pre-site induction requirements checklist, exhibit 667,
document 038.0048.0096.0336; Doric site induction register, exhibit 940, document 014.0168.0310.0034.
Office of the Federal Privacy Commissioner (online), Guidelines to the National Privacy Principles, [accessed
15 January 2003], http://www.privacy.gov.au/publicatlons/nppgl 01.html.
Occupational Health and Safety Act 2000 (NSW), s8(2); Occupational Health and Safety Act 1985 (Vic), s22; Workplace Health and Safety Act 1995 (Old) , ss30-31 ; Occupational Health, Safety and Welfare Act 1986 (SA), s25; Occupational Health, Safety and Welfare Act 1984 (WA), s21; Workplace Health and Safety Act
1995, s9(4); Occupational Health and Safety Act 1989 (ACT), s28; Work Health Act 1986 (NT) , s29.
Industrial Relations Act 1996 (NSW) , s127. That provision provides that a principal may be liable for payment of remuneration to employees who have not been paid for work done in connection with a
business undertaking of the principal contractor. Remuneration includes superannuation and in some cases redundancy fund, income protection fund and long service leave fund contributions where they are
prescribed under an industrial instrument. Head contractors can be liable for wages of the employees of subcontractors in some circumstances in Queensland , but the liability in that State does not extend to other entitlements: Industrial Relations Act 1999 (Old), Chapter 11, Part 2.
10 For example: Hobart Private Hospital Tender Bundle, exhibit 192, document 049.0784.0286.0004; Site Safety Induction Questionnaire, exhibit 1737, document 067.0664.0157.0001; Subcontractor
Questionnaire, exhibit 1384, document 001.0546.091 0.0006; Induction regist ration form, exhibit 1771, document 006.0922.0977.0002; Induction attendance record, exhibit 17 41 , document
047.0153.0557.0002; ADCO Constructions- Prescribed occupational & induction record, exhibit 1074, document 084.0615.0186.0021; Grollo site induction registration first aid management form, exhibit 1266, document 058.0629.0986.0004
11
For example: Gartrell Statutory Declaration, exhibit 770, annexure SG 5, document 003.0573.0431.0144;
Elkington Statutory Declaration, exhibit 940, annexure RE/2, document 006.01 02.0775.0172; Subcontractor legislative pre-site induction requirements checklist, exhibit 667, document
038.0048.0096.0336; Doric site induction register, exhibit 940, document 014.0168.0310.0034. 12 Privacy Act 1988 (C 'wth), ss6C, 6D. 13
For example: Grollo site induction registration first aid management form, exhibit 1266, document 058.0629.0986.0004; Site Safety Induction Questionnaire, exhibit 1737, document 067.0664.0151.0001; Barrios, T7999/3-18, T7999/29-30.
14
Privacy Act 1988 (C'wth), s6. 15 Office of the Federal Privacy Commissioner (online), Guidelines to the National Privacy Principles, [accessed 15 January 2003], http://www.privacy.gov.au/publications/nppgl 01.html.
26 Final Report of the Royal Commission into the Building and Construction Industry
16
For example: Cbus Submissions 2002, exhibit 151 8, document 007.0007.0575.0002 at 0024; Barrios,
T7997 /9 -24 (Cbus), T8004/ 1-12 (ACI RT): Ashman, T1 55371 / 19-45 (BERT): Tender Bundle entitled Privacy
and Collection of Arrears, exhibit 1648, attachment 17, document 010.0894.0339.0008 at 0012 (B USS Q);
Warner Statutory Declaration, exhibit 1165, paragraphs 28-30, document 050.0010.0844.0001 (CTAS):
Bates Statutory Declaration, exhibit 1162, paragraphs 101-1 02, 104 (CTAS).
17 Tender Bundle entitled Privacy and Collection of Arrears, exhibit 1648, attachment 17, document 010.0894 0339.0008 at 0009.
18
For example: Ashman, T15371 /19-45 (BERT) : Tender Bundle entitled Privacy and Collection of Arrears,
exhibit 1648, attachment 17, document 010 0894.0339.0008 at 0012 (BUSS Q); Warner Statutory
Declaration, exhibit 1165, paragraphs 28-30, document 050.0010.0844.0001 (CTAS): Bates Statutory
Declaration , exhibit 1162, paragraphs 101-102, 104 (CTAS).
19 Cbus Submissions 2002, exhibit 151 8, document 007.0007.0575.0002 generally and at 0023. 2° Cbus Submissions 2002, exhibit 1518, document 007 0007.0575.0002 at 0023. 21 Cbus Submissions 2002, exhibit 1518, document 007. 0007.0575.0002 at 0028.
22
Appendix P, Cbus Submissions 2002, exhibit 1518, document 007.0007.0575.0337-0338.
23 Appendix P, Cbus Submissions 2002, exhibit 1518, document 007.0007.0575.0337- 0338. 24 Appendix P, Cbus Submissions 2002 , exhibit 1518, document 007 0007 0575.0337-0338.
25
Appendix P, Cbus Submissions 2002, exhibit 1518, document 007 0007.0575.0337-0338.
26 Cbus Submissions 2002, exhibit 1518, document 007.0007 0575.0002 at 0026. 27 Cbus Submissions 2002, exhibit 1518, document 007 0007 0575 0002 at 0026 - 0027.
28
Cbus Submissions 2002, exhibit 1518, document 007.0007.0575.0002 at 0026- 0027 .
29 Office of the Federal Privacy Commissioner (onl ine) , Guidelines to the National Privacy Principles, [accessed 15 January 2003], http://www.privacy.qov.au/publications/nppql 01.html.
30
Tender Bundle entitled Privacy and Collection of Arrears, exhibit 1648, attachment 17,
document 010.0894.0339.0008
31
For example: Hobart Private Hospital Tender Bundle, exhibit 192, document 049.0784.0286.0004; Site
Safety Induction Questionnaire, exhibit 1737, document 067.0664.0 157.0001 : Subcontractor Questionnai re, exhibit 1384 , document 001.0546.091 0.0006; Induction registration form , exhibit 1771 ,
document 006.0922.0977.0002; Induction attendance record, exhibit 17 41, document
04 7 .01 53.055 7. 0002: ADCO Constructions - Prescribed occupational & induction record, exhibit 1 0 7 4,
document 084.061 5.01 86.0021 : Grollo Site induction registration first aid management form, exhibit 1266,
document 058.0629.0986.0004: Gartrell Statutory Declaration, exhibit 770, Annexure 'SG 5', document
003 0573.0431.0144; Elkington Statutory Declaration, exhibit 940, Annexure RE/2, document
006 0102.0775.0172: Subcontractor legislative pre-site induction requirements checklist, exhibit 667,
document 038.0048.0096.0336; Doric site induction reg ister, exhibit 940, document 014.0168 0310.0034.
32
For example: Warner Statutory Declaration, exhibit 1165, paragraphs 23-25, document
050.0010.0844.0001 .
33
For example: Construction , Forestry, Mining and Energy Union, Construction and General Division Ru les, rule 30 (h)(i).
34
Gu id elines on Privacy Code Development, Office of the Pri vacy Commissioner, September 2001 , p. 17,
[accessed 24 January 2003] http://www.privacy.qov.au/publications/cdg 0 1. pdf . 35 Guidelines on Privacy Code Development, Office of the Privacy Commissioner, September 2001, p. 17, [accessed 24 January 2003] http://www.privacy.qov.au/publications/cdg 01 .pdf .
36 Privacy Act 1988 (C'wth), s18BB(7) . 37 Privacy Act 1988 (C'wth), s18BB(2)(a).
38 Privacy Act 1988 (C 'wth), s 18BB(2)(b). 39 Privacy Act 1988 (C'wth), s18BB(2)(c).
Reform - National issues Part 1 2 7
40 Privacy Act 1988 (C'wth), s18BB(2)(f). 41 Guidelines on Privacy Code Development, Office of the Privacy Commissioner, September 2001, p.14,
[accessed 24 January 2003] http://www.privacy.qov.au/publications/cdg 01.pdf.
28 Final Report of the Royal Commission into the Building and Construction Industry
2
Ambiguities in the Workplace Relations Act 1996 (C 'wth)
Reform- National issues Part 1 29
30 Final Report of the Royal Commission into the Building and Construction Industry
Introduction
During the life of this Royal Commission, a number of Federal Court cases have highlighted
ambiguities or deficiencies in the Workplace Relations Act 1996 (C'wth). The most important of
these cases have related to the scope for industrial action during the term of existing certified
agreements; the legitimacy of the inclusion of bargai ning agent's fees in certified agreements;
and the effectiveness of the Australian Industrial Relations Commission (AIRC) in stopping
unlawful industrial action .
2 My Terms of Reference directed me to examine the operation of the Workplace Relations Act
1996 (C'wth) only in so far as it affects the buil ding and construction industry. Some of the
cases examined in this part of my Report were made in the context of that industry, but some
were not.
3 It is no part of my function to recommend legislative amendments that would operate outside
of the industry with which I have been concerned. However, each of the cases demonstrates
that the Workplace Relations Act 1996 (C 'wth) does not, in its current form , create an
appropriate regulatory environ ment for the building and construction industry. It is therefore
important that those who draft the Building and Construction Industry Improvement Act which
I have proposed take account of the ambiguities and deficiencies that have been detected by
the Federal Court in the Workplace Relations Act 1996 (C'wth), so that the same ambiguities
and deficiencies do not undermine the certainty of rig hts and obligation s that is so important if
the building and construction industry is to operate efficiently and fairly.
4 For that reason, in this section I explain th e respects in which some provisions of the Workplace
Relations Act 1996 (C 'wth) have been fou nd to operate in a way that fails to provide the
requisite certainty of rights an d obligation s.
Reform - National Issues Part 1 31
32 Final Report of the Royal Commission into the Building and Construction Industry
Protected action during the currency of a certified agreement
5 In Emwest Products Pty Ltd v AMWU, 1 Kenny J considered whether protected action may
lawfully be taken by an industrial organisation during the currency of an existing certified
agreement when that industrial action relates to a claim not covered by the existing certified agreement .
6 Emwest Products Pty Ltd's employees were covered by a certified agreement between
Emwest and the Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union
(referred to as the Australian Man ufacturing Workers Union) (AMWU). The provisions of that
agreement did not deal with redundancy. Th e AMWU attempted to reach an agreement with
Emwest Products Pty Ltd in relation to redundancy payments, and threatened to take in dustrial
action against Emwest Products Pty Ltd in support of that claim .
7 Emwest Products Pty Ltd sought relief against the AMWU on the basis that the industrial action
threatened by the AMWU would have occurred during the currency of a certified agreement, in
contravention of s170MN of the Workplace Relations Act 1996 (C'wth) .
8 Section 170MN(1) provides that from the time a certified agreement comes into operation until
its nominal expiry date has passed an employee or a union bound by the agreement must not
engage in industrial action for the purpose of supporting or advancing claims against th e
employer in respect of the employment of employees who are covered by the ag reement. The
section:
is founded on the not unreasonable premise that when parties (usually a union and an
employer) have resolved an industrial dispute by an agreement which is to operate for a
minimum period (until its nominal expiry date) they should be restricted, at least to some
extent, from using industrial action to support further claims during the currency of the
agreement. 2
9 As Kenny J pointed out, the effect of s170MN is limited. Her Honour said:
The prohibition does not extend to industrial action taken for a non-prescribed purpose,
even where there is a relevant certified agreement ... This aspect of the provision's
operation reflects the statutory assumption that when parties make an agreement with
respect to employment, they do so on the basis that they will not resort to industrial
Reform- National Issues Part 1 33
action during the currency of the agreement in respect of the matters upon which they
have reached agreement. 3
1 0 Em west Products Pty Ltd argued that s 170MN should be understood as prohibiting industrial
action in supporting or advancing claims against the employer in respect of 'the employment of
employees [where this] employment is [in some way or other] subject to the agreement ' 4
11 By contrast. the AMWU argued that s170MN only prohibited it from engaging in industrial
action where the subject matter of such action (in this case, redundancy) was dealt with in the
agreement relied on in respect of s170MN 5 On that view, s170MN should be read as
prohibiting industrial action supporting or advancing claims against the employer in respect of 'the employment of employees [where this] employment was [specifically] subject to the
agreement' 6 On that view, s170MN prohibits only the taking of industrial action to advance
claims in respect of matters already agreed upon by the parties to the agreement. 7
12 Kenny J considered that s170MN was ambiguous 8 Ultimately, however, she preferred the
construction advanced by the AMWU 9 One major factor that supported that conclusion was
that Part VIB of the Workplace Relations Act 1996 (C'wth) contemplates that employees may
be subject to more than one certified agreement at any one time. 1 ° Kenny J considered that to
be significant in the resolution of the ambiguity of s170MN, 11 because the making of certified
agreements would not be faci litated in accordance with s170L if:
[E]mployees subject to two certified agreements dealing with different topics and expiring
on different days would be 'hamstrung' by the differing expiry dates and prevented from
taking protected action in relation to one agreement merely because another agreement
dealing with other topics had not yet expired. 12
13 Kenny J rejected the argument that the AMWU's construction of s170MN would defeat its purpose, stating that:
Assum1ng the policy behind s 1 70MN is to encourage parties to adhere to the bargain
they have struck, then the policy would not, in my view, be defeated by permitting the
parties to negotiate effectively in respect of matters that were not the subject of a relevant
certified agreement. The policy is sufficiently protected if s 170MN(1) is construed as
prohibiting parties to a certified agreement from resorting to industnal action to undo the
matters they have agreed upon in the certified agreement, if its nominal expiry date has
not passed If the parties so desired, they could agree that a certified agreement made
by them was Intended to cover the whole field of relevant employment, thereby excluding the possibility of industrial action during the currency of the agreement. 13
14 The Full Federal Court granted the AIG leave to appeal against Kenny J's decision, but that
appeal has not yet been determined. In granting leave, the majority judgment of the Full Court
noted that Kenny J's decision could adversely affect many employers by permitting employees to take, and unions to organise, industrial action in circumstances in which they had previously believed it to be forbidden .14
34 Final Report of the Royal Commission into the Building and Construction Industry
Reform
15 In the building and construction industry, head contractors and clients frequently place great
importance, when awarding contracts, on being satisfied that the successful tenderer has
industrial instruments in place that sh ield it from protected action for the life of the project. That
is because industrial action against even a relatively small subcontractor can cause critical
delays in the completion of a project, and disruption to many other subcontractors.
16 If protected industrial action is possible against employers that have signed enterprise
bargaining agreements, it wi ll be very difficult for clients or head contractors to satisfy
themselves that delays as a result of such action will not occur. The prevalence of pattern
bargaining within the building and construction industry means that it is not desirable to leave it
to the parties to an agreement to specify whether their intention was to cover the whole field of
employment, for the evidence that I have heard in relation to the bargaining process suggests
that such an expression of intention is unlikely to find its way into many certified agreements.
17 If the construction of si?OMN of the Workplace Relations Act 1996 (C'wth) which was
favoured by Kenny J were to be appl ied to the building and construction industry it would have
serious implications. It would also have the potential to undermine one of my central
recommendations for reform. As has already been noted, interdependence of subcontractors
is a characteristic of the commercial sector of the building and construction industry. If
industrial action is taken by or against any one subcontractor, this can have serious
consequences for both the head contractor and subcontractors. Typically, each
subcontractor will have one union-endorsed enterprise bargaining agreement (EBA). When that
ag reement passes its nominal expiry date the potential for protected industrial action in the
course of a bargaining period arises. In the Volume of my Report which deals with Cultural
Change I have recommended, in substance, that in the building and construction industry,
industrial action, other than protected industrial action, should be unlawful. I have also
recommended , in the Volume dealing with the Establishment of Employment Conditions, that
limits should be placed on the extent of protected industrial action. Th ese recommendations
are both, in part, based on a concern that, in this industry, industrial action can cause serious
harm to third parties who have no influence over the negotiating parties. The benefits which wi ll
flow from the adoption of these recommendations would be effectively undermined if it were
possible for bargaining periods to be commenced and protected industrial action taken in
support of terms and conditions additional to those provided for in a current enterprise
agreement. Accordingly, I recommend that an amended version of si 70MN of the Workplace
Relations Act 1996 (C'wth) be incorporated in the Building & Construction Industry
Improvement Act. The revised section would provide that, during the currency of a certified
agreement, any industrial action taken by parties to the enterprise bargaining ag reement in
support of claims for terms and conditions of employment of any of the parties which are not
dealt with in the enterprise bargaining agreement, should not be protected industrial action.
Reform- National issues Part 1 35
Issue
A need has arisen to resolve the ambiguity which the Federal Court, in Em west Products
Pty Ltd v AMWU [2002] FCA 61, has identified in relation to the construction of s1 70MN
of the Workplace Relations Act 1996 (C 'wth) because of the serious effect such
ambiguity could have in the building and construction industry. That ambiguity concerns
the extent to which industrial action taken by parties to a certified ag reement in support
of claims for matters not included in the agreement can constitute protected industrial
action .
Recommendation 37
A provision, modelled on s170MN of the Workplace Relations Act 1996 (C'wth), be
included in the Building and Construction Industry Improvement Act. That provision be
drafted so as to make clear that during the currency of a certified agreement, any industrial action, taken by parties to the agreement in support of claims for terms and
conditions of employment of any of the parties which are not dealt with in the
agreement, is not protected industrial action.
18 In making the above reco mmendation, I shou ld not be taken to express any views in relation to
the proper interpretation of s170MN of the Workplace Relations Act 1996 (C'wth). As Kenny J
acknowledged, that provision is ambiguous. There are reasonable arguments in support of
both of the constructions of that section that were advanced in Emwest.
19 The above recommendation is necessary because of the ambiguity in s170MN . The recommendation is a simple consequence of the fact that the building and construction
industry operates in an environment which requires certain ty, and that certainty is not provided
by s170MN in its cu rrent form.
Bargaining agent's fees
20 In AMWU v Electrolux Home Products Pty Limited, 15 the Fu ll Federal Court considered whether
claims for bargaining agent's fees could be inc luded within certified agreements under the
Workplace Relations Act 1996 (C'wth), and whether protected industrial action could be taken in pursuit of a proposed agreement that included a provision in relation to bargaining agent's
fe es.
21 Between April and September 2001 , Electrolux Home Products Pty Ltd (Eiectrolux) and the
Australian Workers' Union (AWU), Communications , Electrical, Electronic, Energy, Information, Postal , Plu mbing and Allied Services Union of Australia(CEPU) and AMWU (the unions)
conducted negotiations in relati on to a new certified agree ment concerni ng the terms and conditions of employment of employees at El ectrolux. During September 2001, the unions took
ind ustrial action against Electrolux in support of their claims in respect of the proposed
agreement. Among the list of claims was a claim for a bargaining agent's fee of $500 a year to
be payable to the union by each non-union employee of Electrol ux in recognition of the service provided to them by the union in negotiating the enterprise agreement. 16
36 Final Report of the Royal Commission into the Building and Construction Industry
22 Section 170Ll of the Workplace Relations Act 1996 (C'wth) provides that a certified agreement
made under Division 2 of Part VIB must be about matters pertaining to the employer-employee
relationship . Section 170ML provides that protected action can be taken in supporting or
advancing claims in respect of a proposed agreement.
23 Electrolux applied to the Federal Court for relief on the basis that the action taken by the unions
was not, as the unions had clai med, 'protected action'. 17 El ectrolux contended that the
industrial action taken by the uni ons to support the claim for a bargaining agent's fee was not
action in respect of claims that were capable of being the subject of a certified agreement,
because they did not pertain to the relationship between Electrolux and its employees as
required by s 1 ?OLI of the Workplace Relations Act 1996 (C 'wth). Electrolux argued that if any
term of a proposed agreement did not pertain to the employment relationship, the agreement
could not be certified under the Workplace Relations Act 1996 (C'wth) and no protected action
could be taken to su pport or advance claims in respect of that agreement. 18
24 The unions contended that the requirements of ss170Ll and 170ML were met because the
industrial action was for the purpose of supporting and advancing claims in respect of the
proposed agreement generally (rather than just the bargaining agent's fee), and the proposed
agreement as a whole was about matters pertain ing to the relationship between El ectrolux and
its employees. 19
25 Merkel J, at first in stance, found that the claim for a bargaining agent's fee was in substance a
claim to have Electrolux agree to act as the agent of_ the union, and to contract with its
employees (on behalf of the union) in a way that required those employees to pay the
bargaining agent's fee if they were not union members. 20 Merkel J found that in pursuing this
clai m the unions were acting in their own interest, and that the claim did not relate to the
employer-employee relationship. 21
26 Merkel J considered that:
the proposed agreement may properly be characterised as about matters that are within
the [employment] relationship and a matter that is not. While it is arguable that s 1 70LI
only requires that the agreement in question be characterised as one that is
'substantially' or 'primarily' about the requisite matters it would be inappropriate to add
those words absent a clear legislative purpose in favour of that construction. 22
27 Merkel J was not able to 'discern any legislative purpose that a certified agreement can include
a substantive, discrete, and significant matter that does not pertain to the requisite
relationship' 2 3 The result was that industrial action taken for the pu rpose of pursuing a
proposed agreement that included a bargaining agent's fee could not be protected action 24
28 Merkel J's decision was set aside on appeal by the Fu ll Federal Court. 25
29 The Full Federal Court focused upon s170ML(2)(e). That section required the Court to consider
whether the industrial action taken by the unions was taken 'for the purpose of supporting or
advancing claims made in respect of the proposed agreement'.
30 The Full Court concluded that industrial action taken in pursui t of an agreement that contained
a term that did not pertain to the employer-employee relationship could be protected action ,
Reform - National Issues Part 1 3 7
because all that was required was that the industrial action was taken for the purpose of
supporting a 'claim' . The Court said, in relation to si70ML(2)(e):
A claim is a claim. The only essential, for para (e) purposes, is that the claim be genuinely
made 'in respect of the proposed agreement'; however optimistically or even
misguidedly It does not matter whether or not the claim is likely to be conceded by the
employer or whether or not its embodiment in an agreement will give rise to a problem in
obtaimng certification. These are matters for the future.
Provided the claims are genuinely made, it does not matter that others may think them
unrealistic. In the industrial relations area, as in other spheres of life, extravagant claims
are often made. Mostly, an extravagant claim is unsuccessful; but sometimes it is
conceded, perhaps in a modified form.
There are sound policy reasons for reading para (e) literally Fundamental to Part VIB of
the Act is the notion that, within strict and objectively definable limits, organisations,
employees and employers are entitled to engage in industrial warfare. We agree with the comment of North J 1n Australian Paper Limited v Communications, Electrical, Electronic,
Energy, Information, Postal, Plumbing and Allied Services Union of Australia (1998) 81 IR
15 at 18:
'The purpose of this statutory scheme is to allow negotiating parties, both
employer and employee, maximum freedom consistent with a civilised community
to take industrial action in aid of the negotiation of agreements without /ega/liability
for that action.'
If that purpose is to be achieved, a high degree of certainty is essential. If parties are to
make rational and confident decisions about their courses of conduct, they need to know where they stand. It would be inimical to the intended operation of Part VIB to interprets
170ML(2)(e) in such a way as to make the question whether particular industrial action is
'protected action', and therefore immune from legal liability, depend upon a conclusion
concerning a technical matter of law: whether a particular claim, if conceded, would
cause any resultant agreement to fall outsides 170L/(1). As this case demonstrates, that may be a matter about which well-informed people have different views. 26
31 It was accepted by Electrolux that the relevant claims, including the bargaining fee claim, had
been genuinely made by the unions. The Full Court therefore concluded that:
the purpose of the Industrial action clearly fell within the terms of para (e) of s 1 70ML(2);
it does not matter whether or not the Insertion of a provision along the lines of the
bargaining fee claim would give rise to a certification difficulty under s 170L/(1 ). 27
32 While it was not necessary for its decision, the Court went on to express the view that the
presence of a provis ion that does not pertain to the employment relationship will not necessarily take an entire proposed agreement outside the description in s170LI. Instead, it is
necessary to consider whether the proposed agreement as a whole can be categorised as an agreement about matters pertaining to the employment relationship 2S The Fu ll Court held that
'[n]othing in the statutory scheme suggests that a certified agreement that, considered as a whole, answers the description of s170LI(1) may not include a particular term that does not'. 29
38 Final Report of the Royal Commission into the Building and Construction Industry
33 On 1 0 Jan uary 2003 a Full Bench of the AIRC handed down its decision in four appeals, two of
which were appeals against refusals to certify agreements which contained bargaining agent's
fees .30 In the course of ruling on those appeals, the Full Bench observed that 'with great
respect, we do not think that the obiter dicta remarks of the Federal Court in Electrolux No 2
are correct' 3 1 Having set out in some detail a number of objections to the Full Federal Court 's
decision, the Full Bench concluded:
The Full Court ... seems to be saying in respect of agreements, that if characterised
overall the agreement relates to matters pertaining to the relationship of an
employer .. . and persons who at the time of the agreement are employed in the single
business then it follows that the whole agreement can be certified notwithstanding that it
contains provisions which are not matters pertaining to the relationship between an
employer and an employee in the sense described. We cannot conceive that this result
was intended by Parliament. The words of s170L/ in our view seek to achieve that result
in the award stream that provisions must relate to industrial matters and the same applies
in the agreement stream. 32
34 The Full Bench concluded that 'if a provision does not relevantly pertain to the relati onship
between employers and employees as such and is not otherwise in cidental or ancillary to a
clause which does then the agreement cannot be certified '. 33 It concluded that bargaining
agent 's fees clearly do not pertain to the employment relationship , stating:
At best it can be said to relate to the relationship between the unions and the employees concerned, but the existence of that relationship is we think of no relevance to the
employer. An employer may well have an interest in how his/ her employees are
represented in collective bargaining but we fail to see how the payment of a bargaining
agents fee by his/her employees is sufficiently connected to that interest so as to make it
relevant to the relationship of the employer and the employees. Similarly the sharing of
the costs between employees is not a matter relevant to the employer as employer. 34
35 The Full Bench 's decision sits uncomfortably with an earlier decision of another Full Bench in
Communications, Electrical, Electronics, Energy, Information, Postal, Plumbing and Allied
Services of Australia v Woodside Heating and Air Conditioning Pty Ltd where it was held that
'the fact that a [preference] clause is, or may be void is not, in our view, a legitimate basis for
refusing to certify ' an agreement. 35
36 The CEPU has reacted to the decision made by the Full Bench on 1 0 January 2003 by
proposing a redrafted clause which would require the employer to collect the bargaining fee.
This, it is contended, will make the clause one which pertains to the employment relationship.
Lest it does not it is proposed to add some words along the lines that , if the clause does not
pertain to the employment relationship, it is to have no force and effect.
Reform
37 The disagreement between Merkel J, the Full Federal Court, and the AIRC as to the proper
interpretation of s170LI and s170ML of the Workplace Relations Act 1996 (C'wth) demonstrate
the considerable uncertainty that surrounds the operation of those provisions. Whatever the
correct interpretation of those provisions in thei r present form (a question about which I express
Reform- National issues Part 1 39
no opi nion), the result of the decision in the Electrolux case will, in my view, be damaging if it is
permitted to apply within the building and construction industry. Moreover, the state of
un certainty in the law which presently exists is un desirable.
38 If a certified agreement is able to include a particular term that does not pertain the employer
employee relationship , provided that the agreement of whi ch that term forms a part as a whole
pertains to that re lationship ,36 an employer or employee association would be able to include in
its list of claim s any claim at all. That employer or employee association could then engage in
protected industrial action in support of that claim.
39 I heard a deal of evidence about union demands upon head contractors and subcontractors
that did not, or did not obviously, relate to the relationsh ip between employers and their
employees . Much of that evidence related to inappropriate payments or enforced donations
either to unions fu nds or charities. It would be very undesirable if unions were permitted to
make demands of those kinds as part of a series of claims in the course of enterprise
bargaining negotiations, and in that way obtain for those demands the protection of the
Workplace Relations Act 1996 (C'wth). It would involve an unjustifiable extension of the
statutory shield against action in tort or contract to industrial action taken for purposes
co llateral to the purpose intended to be served by the protected action provisions of that Act.
40 In Recommendation 14, relating to Bargaining fees in Volume 5, Reform - Establishing
Employment Conditions, I recommend that the Build ing and Construction Industry
Improvement Act include a provision to the effect that, in order for an application to be made to
certify an agreement, the agreement mu st be in writing and contain, only terms and conditions
that pertain to the relationship between an employer which is a constitutional corporation, the Commonwealth or a Territory and all persons who, at any time when the agreement is in
operation, are employed in a single business or part of a single business, of the employer and
whose employment is subject to the agreement, or terms and conditions that are incidental
thereto. A request that an employee or employer pay, directly or ind irectly, to a third party a fee
should be deemed not to be a term relating to the relations hip between the employer and its
em ployee, or incidental thereto. A reform of that nature will make it plain that the legislative purpose of the relevant provisions is that a claim for a certified agreement cannot include a
clai m in relation to a substantive, di screte, and significant matter that does not pertain to the employment relationship.
41 Such a reform will not answer the point made by the Full Fede ral Court that , for the scheme of
the Act to operate properly, parties who intend to engage in industrial action must be able to make 'rational and confident decisions' as to whether or not that industrial action would be
protected. As the Full Court pointed out, parties would be unable to make such decisions if the
Act is interpreted in such a way as 'to make the question whether particular industrial action is "protected action ", and therefore immune from legal liabi lity, depend upon a conclusion concerning a tec hnical matter of law'. 37
42 In order to deal with that problem, it is necessary to provide a mechanism by which parties may
quickly obtain an authoritative determination as to whether any particular claim that has been
made upon them in the course of enterprise bargaining negotiations pertains to the employer- employee relationship. Where, during enterprise bargaining, an issue arises between
40 Final Report of the Royal Commission into the Building and Construction Industry
the parties as to whether or not a particular matter pertains to the employer-employee
relationship a procedure should be available whereby an application can be made to th e
Federal Court for a declaration resolving the dispute. While the proceeding is pending in th e
Federal Court no industrial action should be permitted in support of the relevant claim. This will
not prevent protected industrial action being taken in support of other claims or of an
agreement being reached on other claims . Where agreement has been reached on other
claims before the Federal Court has determined the application, the agreement can be
presented to the AIRC for certification. If the Federal Court subsequently rules that the relev ant
claim pertains to the employer-employee relationship it could be pursued and be included, if
accepted , in the agreement by way of variation. Alternatively, the parties could await the Court's
decision and apply to the AIRC to backdate the operation of the clauses providing for monetary
benefits to the date on which agreement was reached on those matters.
Issue
Where, during enterprise bargaining, an issue arises as to whether a particular matter
pertains to the employer-employee relationship, questions arise as to how best
authoritatively to resolve the dispute and whether protected industrial action can be
taken in support of such a disputed claim.
Recommendation 38
The Building and Construction Industry Improvement Act:
(a) provide for applications for declarations to be made to the Federal Court to
determine whether particular matters do or do not pertain to the
employer-employee relationship for the purposes of s170LI of the Workplace
Relations Act 1996 (C'wth) or any equivalent provision which is included in the
Building and Construction Industry Improvement Act; and
(b) contain a provision to the effect that industrial action cannot be protected action if
it is:
(i) taken in support of a proposed agreement that contains any claim that has
been declared by the Federal Court not to pertain to the employer-employee
relationship; or
(ii) taken in support of a claim at a time at which an application has been made
to the Fed eral Court seeking a declaration that the particular claim does not
pertain to the employer-employee relationship and that application has not
been finally determined.
Deficiencies in the operation of s127 of the Workplace Relations Act 1996 (C'wth)
43 Transfield Construction Pty Ltd v AMWU38 illustrates the deficiencies in s127 of the Workplace
Relations Act 1996 (C 'wth) as a mechanism to prevent unlawful industrial action.
Reform - National issues Part 1 4 1
44 The case concerned an off-shore gas processing faci lity at Newmerella, Victoria (the Plant).
Basin Oil Pty Ltd was responsible for overseeing the construction, commissioning and
operation of the Plant, while Transfield Construction Pty Ltd was engaged by Basin Oil Pty Ltd to design and construct the Plant. 39
45 Basin Oil Pty Ltd engaged Upstream Petroleum Pty Ltd (Upstream) to commission, operate
and maintain the Pl ant once its construction was complete. Upstream engaged, and intended
to continue to engage, its employees at the Plant under Australian Workplace Agreements (A WAs) . A WAs were opposed by certain unions, which lodged notices of initiation of bargaining
periods on Upstream in August and September 2002 40
46 From 2 October 2002, a picket line was maintained at the entrance to the Plant which
prevented Transfield Construction Pty Ltd's workers from attending to perform work as
required by Transfield Construction Pty Ltd 41 Transfield Construction Pty Ltd and Bas in Oil Pty
Ltd claimed that the un ions, their organisers and employees of Transfield Construction Pty Ltd
and its subcontractors had taken industrial action at the Plant in order to pressure them to
persuade Upstream to cease employing workers under AWAs . The unions and union
organ isers denied that claim, and argued that the picket was a community protest at the threat
to local jobs and against the failure of the pipeline to pipe gas to Orbost 42
47 Transfield Construction Pty Ltd and Basin Oi l Pty Ltd applied to the AIRC for an order under
s127 of the Workplace Relations Act 1996 (C'wth) to stop the industrial action. The hearing
before the AIRC took two days. In substance, th e AIRC rejected the claim that the picket was
a community protest and found that Transfield Construction Pty Ltd 's employees and employees of its contractors had engaged in in dustri al action . It found that the union organisers
who had attended the picket li ne had acted on behalf of their respective unions and organised
or arranged th e picket line. Furthermore, the AIRC was satisfied that the picket was associated
with the industrial campaign by the unions to secure a certified agreement with Upstream, and was therefore industrial action that might be restrained under s127(1) of the Act 43
48 On 11 October 2002, th e AIRC made an order under s127. The order was expressed to be binding on Tran sfield, the unions, three of their organisers, and employees of Transfield and its
contractors who were members of the unions and were employed at or in relation to the construction of the Plant 44
49 Notwithstanding the AIRC's orders, '[t]he unions did not take any steps to request their
members to return to work, to wi thdraw any authorisation, direction or encouragement they
had given in respect of the picket line or otherwise to bring about the cessation of the industrial action' 45
50 On 6 November 2002, the AIRC made a further prder under s127 of the Act aimed at bringing
about the cessation of th e in dustrial action. This order obliged employees of Transfield and its subcontractors to cross any picket line howsoever named or described which was located at
or adjacent to the entrance of the plant in order that they make themselves available for work
and perform such work as requi red unless physically obstructed by persons from crossing such picket lin e. The unions and their organisers were ordered immediately to cease and desist from the authorisation, direction, incitement, persuasion or encouragement of any of the
employees to engage in the industrial action, and to take all steps necessary and available
42 Final Report of the Royal Commission into the Building and Construction Industry
under their ru les to ensure that the employees complied with the order. Such steps were
required to include advising their members employed by Transfi eld or its contractors, both
oral ly and in writing , that the picket was not authorised by the union and that participation in
such a picket was not encouraged by the union 46
51 Notwithstanding the new s127(1) order, the unions and the union organ isers did not take any
steps to bring about the cessation of the industrial action 47
52 Transfield and Basin Oil each commenced proceedings in the Federal Court seeki ng injunctions
under s127(6) and the recovery of penalties under s178 of the Workplace Relations Act 1996
(C'wth), as well as interim relief under s127(7).
53 Merkel J was satisfied that a strong prima facie case had been made out that the unions had
engaged in conduct that constituted a contravention of the s127 orders made by the AIRC 48
His Honour held that the evidence presented a compelling prima facie case that the picket at
the plant was established, authorised and maintained by the union organisers as part of th e
industrial action being undertaken by them jointly on behalf of the unions in an endeavour to
cause Upstream to renou nce the AWAs it was proposing to use fo r its employees at th e
Plant 49 His Honour was satisfied on a prima facie basis that each of the two orders made by the AIRC had been contravened by the unions an d their organisers 50 Hi s Honour also foun d
that the balance of convenience was strongly in favour of the grant of the interim relief sought
by Transfield Construction Pty Ltd and Basin Oi l Pty Ltd. 51
54 His Honour therefore issued injunctions directed to the unions. He determ ined that it was not
desirable or appropriate to make orders against the organisers at that stage (the particular
organisers concerned had not attended the site since the second AIRC order) 52 His Honour
nevertheless held it was appropriate to reserve liberty to apply on short notice in the event that
circumstances changed noting that if un ion organisers or any other persons intentionally
engaged in conduct that sought to nullify the injunctions granted against the unions, and
thereby obstruct the course of justice, the Court would have an undoubted junsdiction to commit for contempt. 53
55 Notwithstanding Merkel J's order, it was reported on 22 November 200254 and 29 November
200255 that the picket at the Plant was continuing .
56 That a picket, found at least on a prima facie basis by both the AIRC and the Federal Court to
have the effect of unlawfully preventin g the performance of work, could be instituted on 2
October 2002 and remain in place on 29 November 2002 notwithstanding two orders of th e
AIRC under s127(1) and an order of the Federal Court under s127(7) demonstrates the difficulty
in using s127 of the Workplace Relations Act 1996 (C'wth) to achieve a prompt cessation of
unlawful industrial action. Reform is necessary to restore the rule of law.
57 That reform could be achieved by introducing mechanisms into the Act which equip the
Australian Building and Construction Commission (ABCC) to monitor compliance with any
order made by the Federal Court under s 127(6) or (7) and to make application to the Federal
Court at short notice for a variation of any such order and, if necessary, to bring proceedings in
contempt for breach for any such order.
Reform - National issues Part 1 43
Issue
Unions ignore orders of the Australian Industrial Relations Commission , and the Federal Court, with impunity. Section 127 of the Workplace Relations Act 1996 (C'wth) has proved to be ineffectual in preventing unlawful industrial action taking place in the
building and construction industry.
Recommendation 39
The Building and Construction Industry Improvement Act contain a provision modelled on sl27 of the Workplace Relations Act 1996 (C'wth) with the addition of subsections to
the following effect:
(a) insert a new subsection (127(8)) to require any person in the building and
construction industry who applies for and obtains an order from the Federal Court under sl27(6) or (7) of the Workplace Relations Act 1996 (C 'wth) to notify the Australian Building and Construction Commission of the fact of the order having been granted, and its terms, within 24 hours of any such order being granted; and
(b) insert a new subsection (127(9)) to empower the Australian Building and
Construction Commission to apply to the Federal Court on no less than 24 hours notice for an order varying any injunction granted under sl27(6) or (7) or for an order that any person be charged with contempt of court for breaching any order made by the Federal Court under sl27(6) or (7) or for any other consequential relief.
44 Final Report of the Royal Commission into the Building and Construction Industry
Notes to Ambiguities in the Workplace Relations Act 1996 (C 'wth)
Emwest Products Pty Ltd v AMWU [2002] FCA 61.
Australian Industry Group v AMWU [2002] FCAFC 386, per Goldberg and Finkelstein JJ, paragraphs 67-68.
Emwest Products Pty Ltd v AMWU [2002] FCA 61, paragraph 42.
Emwest Products Pty Ltd v AMWU [2002] FCA 61, paragraph 45.
Emwest Products Pty Ltd v AMWU [2002] FCA 61, paragraph 22.
Emwest Products Pty Ltd v AMWU [2002] FCA 61, paragraph 43.
Emwest Products Pty Ltd v AMWU [2002] FCA 61, paragraph 43.
8 Emwest Products Pty Ltd v AMWU [2002] FCA 61, paragraphs 43 and 52.
In reaching that view, Kenny J placed some rel iance on Kilpatrick Green Pty Ltd v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia [1998] FCA 559. 10
Workplace Relations Act 1996 (C'wth), s170LY(1 )(b).
11
Emwest Products Pty Ltd v AMWU [2002] FCA 61, at paragraph 49. 12 Emwest Products Pty Ltd v AMWU [2002] FCA 61, paragraph 53. 13 Emwest Products Pty Ltd v AMWU [2002] FCA 61, paragraph 55. 14
Australian Industry Group v AMWU [2002] FCAFC 386, per Goldberg and Finkelstein JJ, paragraph 71. 15 AMWU v Electrolux Home Products Pty Limited [2002] FCAFC 199, reversing Electrolux Home Products Pty Ltd v AWU [2001] FCA 1600.
16 Electrolux Home Products Pty Ltd v AWU [2001] FCA 1600, paragraphs 1, 2, 4. 17 Electrolux Home Products Pty Ltd v AWU [2 001] FCA 1600, parag raph 2. 18
Electrolux Home Products Pty Ltd v AWU [2001] FCA 1600, paragraph 15. 19 Electrolux Home Products Pty Ltd v AWU [2001] FCA 1600, paragraphs 17-18.
20 Electrolux Home Products Pty Ltd v AWU [2001] FCA 1600, paragraphs 39- 40. 21 Electrolux Home Products Pty Ltd v AWU [2001] FCA 1600, paragraph 46. 22 Electrolux Home Products Pty Ltd v AWU [2001] FCA 1600, paragraph 51 (emphasis original). 23 Electrolux Home Products Pty Ltd v AWU [2001] FCA 1600, paragraph 52. 24
Electrolux Home Products Pty Ltd v AWU [2001] FCA 1600, paragraph 55. 25 AMWU v Electrolux Home Products Pty Ltd [2002] FCAFC 199. 26
AMWU v Electrolux Home Products Pty Ltd [2002] FCAFC 199, paragraphs 89-93. 27 AMWU v Electrolux Home Products Pty Ltd [2002] FCAFC 199, paragraph 96.
28
AMWU v Electrolux Home Products Pty Ltd [2002] FCAFC 199, paragraph 99. 29 AMWU v Electrolux Home Products Pty Ltd [2 002] FCAFC 199, paragraph 100. 30
Appeals C2002/4313, C2002/4489, C2002/4742 and C2002/4862. 31 PR926554, paragraph 22. 32 PR926554, paragraph 28. 33
PR926554, paragraph 35. 34 PR926554, paragraph 43.
35 (1997) 741R 10 at 12.
36
AMWU v Electrolux Home Products Pty Ltd [2 002] FCAFC 199, paragraph 100. 37 AMWU v Electrolux Home Products Pty Ltd [2002] FCAFC 199, paragraphs 89-93. 38
[2002] FCA 1413.
Reform - National issues Part 1 45
39 Transfield Construction Pty Ltd v AMWU [2002] FCA 1413, paragraph 2.
40 Transfield Construction Pty Ltd v AMWU [2002] FCA 1413, paragraph 3 . 41 Transfield Construction Pty Ltd v AMWU [2002] FCA 1413, paragraph 3.
42 Transfield Construction Pty Ltd v AMWU [2002] FCA 1413, paragraph 4.
43 Transfield Construction Pty Ltd v AMWU [2002] FCA 1413, paragraph 9. 44 Transfield Construction Pty Ltd v AMWU (2002] FCA 1413, paragraphs 5-6.
45 Transfield Construction Pty Ltd v AMWU [2002] FCA 1413, paragraph 10. 46 Transfield Construction Pty Ltd v AMWU (2002] FCA 1413, paragraph 11. 47 Transfield Construction Pty Ltd v AMWU [2002] FCA 1413, paragraph 13. 48 Trans field Construction Pty Ltd v AMWU [2002] FCA 1413, paragraph 38.
49 Transfield Construction Pty Ltd v AMWU [2002] FCA 1413, paragraph 39. 50 Transfield Construction Pty Ltd v AMWU [2002] FCA 1413, paragraph 42.
5 1 Transfie/d Construction Pty Ltd v AMWU (2002] FCA 1413, paragraph 47.
52 Transfield Construction Pty Ltd v AMWU [2002] FCA 1413, paragraphs 50-51.
53 Transfield Construction Pty Ltd v AMWU [2002] FCA 1413, paragraph 51 .
54 Thomson Legal & Regulatory Ltd, CPO 2002, Workforce Newsletter, Issue 1378, 22 November,
http://www.cpd.com.au
55 Thomson Legal & Regulatory Ltd, CPO 2002, Workforce Newsletter, Issue 1379, 29 November, http://www.cpd.com.au
46 Final Report of the Royal Commission into the Building and Construction Industry
3
Codes of Practice for the Building and Construction Industry
Reform - National Issues Part 1 4 7
48 Final Report of the Royal Commission into the Building and Construction Industry
In troduction
As is explained in the National Perspective Volu me, Australian Govern ments have a significant
role to play in regulating and reforming the bui lding and construction industry. That role may
take the form of having legislation enacted and then administered. However, this is not the only
available method of regulation, or, indeed, reform.
2 Because governments provide significant fu nds for building and construction activity, including
on the occasions when they are the clients directly commissioning the work, they have the
capacity through thei r purchasing power to influence the behaviour of participants in thi s
industry. The leading example of this approach is the National Code of Practice for the
Construction Industry (N ational Code), and the Commonwealth Implementation Guidelines (the
Implementation Guidelines) made under that National Code.
3 As is explained below, the National Code was introduced as part of the 1996-7 reforms aimed
at implementing the objectives of the Workplace Relations Act 1996 (C 'wth).
It contains a series of 'Core' and 'National' Principles, all of wh ich have been and are accepted
by all State and Territory governments. The Construction, Forestry, Mining and Energy Union
(CFMEU) also accepts the Core Principles. That general acceptance does not, however,
extend to the Implementation Guidel in es, aspects of which attract strong opposition from at
least one State government, and the CFMEU.
4 As will appear, the evidence before the Commission in relation to the Alice Springs to Darwin
Railway project suggests that the Nat ional Code and Implementation Guidelines, when applied
strictly, work with beneficial results . The evidence, however, also establishes that the Code and
Gu idelines are not being applied strictly and consistently on all Commonwealth projects. Thus:
(a) Government departments have acted inconsistently because there are inadequate
measures to permit proper monitoring of application of the National Code and the
achieving of its objectives;
(b) there is no effective monitoring body;
(c) no sanction has ever been imposed under the National Code.
(d) there has been a concentration on contractual outcomes rather than the implementation
of the objectives of the National Code; and
(e) the Commonwealth has sought to pass compliance ob li gati ons contractually on to head
contractors without supporting the contractor seeking to implement it.
Reform - National issues Part 1 49
5 This part of my report considers the role of Building Codes and related guidelines in achieving
industry reform, and , in particular:
(a) the genesis of codes in the building and construction industry,
(b) the critical terms of the National Code and the Implementation Guidelines,
(c) the operation of those documents in practice, as revealed by the evidence and
submissions I have received ,
(d) criticism of the documents; and
(e) my recommendation s. 1
6 In substance, I conclude that , with the chang es I recomm end in this chapter, the National Code
and Guidelines state appropriate and necessary principles and standards of conduct for the
Australian building an d construction industry.
7 Th e Commonwealth must, by its leadership, act to invigorate their application . It should do this
by insisting that any person who contracts to work on a building site owned, operated, or
fun ded, wholly or partly, by the Commonwealth, complies with the Code and Guidelines, not
on ly in relation to that project, but generally.
8 That is, the Commonwealth should ag ree only to do business with those who comply with the
National Code and Guidelines gen erally. There should be a national system of pre -qualification based initially on self-assessment and self-certification by way of statutory declaration , to th is
end.
50 Final Report of the Royal Commission into the Building and Construction Industry
Genesis of Building and Construction Industry Codes
Western Australia
9 An early version of a Code was that contained in the former Building Industry (Code of
Conduct) Act 1986 (WA). This statute was enacted at a time when the Builders ' Labourers
Federation was being deregistered federally, and also in New South Wales and Victoria.
10 Section 4 of the Building Industry (Code of Conduct) Act 1986 (WA) provided for promulgation
of a Code of Conduct specifying conduct that the Builders ' Labourers Federation should or
should not engage in , in the interests of good industrial relations in the building and
construction industry. 2 Section 5 of the Building Industry (Code of Conduct) Act 1986 (WA)
provided that the un ion was to comply with the promulgated Code of Conduct, and th at
breaches of the code of conduct would be dealt with under the Criminal Code of Western
Australia.3 There were a number of provisions requiring regular reports as to the union's
compliance with the Code of Conduct. 4 The Building Industry (Code of Conduct) Act 1986 (WA) provided that if the relevant Minister considered there was substantial non-compliance by
the union with the Code, then deregistration proceedings could be begun 5 In the event no
such action was taken .
New South Wales and South Australia
11 In New South Wales, the Royal Commission into Productivity in the Bui lding and Construction
Industry (the Gyles Royal Commission) gave impetus to the concept of a Code of Practice for
the bui lding industry in that State.
12 Fol lowing that report, in 1992 the New South Wales Government decided to effect reforms to
the building and construction industry by ensuring that the construction industry operated
within the law, and by utilising the Government's substantial purchasing power to stimulate
reform within the industry6 by relying on 'positive client activism', rather than regulation 7
13 The New South Wales Government issued its first Code of Practice for the Building and
Construction Industry in 1992 8 A further Code of Practice was issued in New South Wales in
July 19969 The nature of these codes was accurately summarised in the Australian Industry
Group (AIG) Submission:
Reform- National Issues Part 1 51
Essentially it set down the standards that the Government, as a client of the industry,
expected of its service providers. The expectation was that by attempting to lift
performance standards in one market, it would make a positive contribution to improving
standards in non-government sections of the market.
It is important to realise that it relied on positive client activism to influence behaviour in
the market- not regulation.
It was also clear that by the second edition of the Code in July 1996, the New South
Wales Government had broadened the scope of the Code to encompass a range of
issues - not just industrial relations. These included tendering practices, occupational
health and safety, training and skill formation, security of payment, contract management
and project planning. Detailed implementation guidelines and the Capital Project
Procurement Manual complemented the Code. 10
14 The Gyles Royal Commission recommended the deregistration of the Construction, Forestry,
Mining and Energy Union, Construction and General Division, New South Wales Divis ional
Branch (C FMEU New South Wales Divisional Branch). This did not occur. Rather, by Deed
made 16 March 199411 , in return for the New South Wales Government not pursuing
deregistration proceedings against it, the union gave undertakings as to its future industrial
behaviour, and in relation to occupational health and safety, workplace reform, best practice,
continuous improvement and the standards of personal propriety of union officials. Union
signatories to the deed were Mr John Sutton and Mr Andrew Ferg uson.
15 In significant respects, the union undertakings contained in the Deed are to the same effect as critical aspects of the Commonwealth Implementation Guidelines, for example:
(a) the union 'wi ll continue to comply with the provisions of all awards and agreements to
which the union is a party, and will comply with all orders, formal directions and decisions
of any court or tribun al of competent jurisdiction ';
(b) 'the union will continue to comply with the dispute settlement procedures contained in
the awards and agreements to which the union is a party'; 12
(c) in relation to occupational health and safety, there is an undertaking by the union that it
wi ll comply with WorkCover Authority inspectors' directions (this of course refers to New
South Wales, but the principle is of application, it seems to me, throughout Australia) and
will permit work to occur throughout those parts of the site not directly affected by the
occupational health and safety hazard; 13
{d) as to freedom of association, the union 'will continue not to compel any employer to hire
an individual nominated by the union'; 14
(e) the union 'will not require any contractor, subcontractor or employer to employ a non
working delegate on a construction site'; 15 and
(n the union does not support and will not promote stoppages of work by workers where
they are not affected by a particular issue or problem. 16
16 All of those undertakings are still in force, at least in New South Wales. They express appropriate principles and standards of conduct for all unions in the industry.
52 Final Report of the Royal Commission into the Building and Construction Industry
17 In view of the importance of this Deed, a copy is annexed to this part of the report. The Deed
also attached a Code of Conduct and Behaviour for officers of the CFMEU New South Wales
Divisional Branch·. This, too, is a significant document and it is attached.
18 South Australia promulgated a Code and Guidelines in 1995.11 The South Australian and New
South Wales Codes thus pre-dated the National Code.
The National Construction Code
19 Following the enactment of the Workplace Relations Act 1996 (C'wth), the National Code of
Practice for the Construction Industry was introduced on 22 September 1997.18 Australian
Labour Relations Ministers had approved the industrial relations aspects of the Code on
30 May 1997, and Australian Construction Ministers had approved the general construction
aspects of the Code in June 1997. 19
20 The National Code built upon the construction industry reform process that followed th e
establishment of the Construction Industry Development Agency (C'wth) (C IDA) in 1990. Th e
Commonwealth Government had established CIDA 'to achieve improvements in the industry's
efficiency, effectiveness and international competitiveness'. 20
21 As the South Australian Implementation Guidel ines 1995 state:
The Commonwealth Government identified the potential to achieve productivity gains of
up to 20% These gains, if achieved, could increase export opportunities for construction
services, especially in Asian markets. The gains will also result in significant savings for
the industry's clients and encourage investment in public and commercial infrastructure.
The national industry reform strategy led to the creation of CIDA and the recognition that
significant cultural change was needed. CIDA had a three year lifespan, to 30 June 1995,
in which to initiate change processes. It recognised that the industry needed to change
not only work practices, but also aspects of management, relationships and other
procedures within the industry.
A key strategy was to identify those activities and procedures that represent best
practice and encourage their adoption. 2 1
22 Spurred on by the work of CIDA, the Nationa Code was jointly developed by the
Commonwealth , States and Territories. The Code was written by the Australian Procurement
and Construction Council (APCC) , the national body for policy advice on procurement and
construction industry matters 22 Unions, such as the CFMEU, were not involved in the drafting
of the Code23 The failure to consult with unions, whi le naming unions as 'parties' to the Code,
has resulted in the CFM EU regarding itself as not being bound by the Code. 24
23 Following the development of the National Code, there was an attempt by the Commonwealth
to have the National Building and Construction Industry Committee endorse the Code as
appropriate for adoption by the private sector. The Committee declined to do so. 25
24 The Commonwealth Implementation Guidelines (the Implementation Guidelines) for the Code
were released in May 1998. 26 Section 6 of the Implementation Guidelines sets out the
Commonwealth's policies on industrial relations and occupational health and safety27 The
Reform- National issues Part 1 53
remaini ng Code principles are not the subject of specific attention and guidance within the
Implementation Guidelines.
25 The Commonwealth Ind ustry Gui delines for the National Code of Practice for the Construction
Industry (the Industry Guidelines) were published by the then Department of Employment,
Workplace Relations and Small Business (DEWRSB) in March 199828 They are the means by
which the Commonwealth's industrial relations and workplace health and safety requirements
are incorporated into service provider contracts 2 9 As such , they largely repeat Section 6 of the
Commonwealth Implementation Guidelines.
54 Final Report of the Royal Commission into the Building and Construction Industry
Key provisions of the National Code
26 In the introduction to the Code, there is a recital of the importance of the building and
construction industry to the Australian economy3 0 It continues:
As major clients of the industry, governments are providing leadership in effecting major
improvements in the way business is conducted, encouraging changes in industry
production processes to raise productivity, and other actions that will help develop an
industry which achieves internationally-competitive standards.
27 The Code expresses principles ag reed by the Commonwealth, State and Territory
governments that 'should underpin the future developl!lent of the construction industry in
Australia '.31
28 The Code acknowledged that State and Territory governments might maintain or develop
codes relevant to their particular jurisdictions provided that additional codes are consistent with
the National Construction Code 32 The National Construction Code was intended to provide a
minimum level of acceptable conduct and process.
29 The Code emphasises the need to maintain the highest ethical standards in all construction
related activities. 33 The core principles of the Code aim to ensure that the industry:
⢠is client focused and respects the rights of clients;
⢠builds relationships on a foundation of trust;
⢠observes the highest ethical principles in tendering;
⢠maintains a positive commitment to continuous improvement and best practice;
⢠supports broadly-based workplace reform;
⢠maintains high standards in occupational health, safety and rehabilitation and in
environmental management;
⢠encourages responsible industrial relations leading to economically sustainable
arrangements. 34
30 No State or Territory Government has submitted to me that these core principles do not have
their support. The CFMEU Submission stated that ' .. . the core principles of the National Code
Reform - Na tiona/lssues Part 1 55
of Practice are worthy of support from all parties involved in the building and construction
industry' 35
31 As a statement of principles, the intent of the Code cannot be realised without effective
supporting guidance. In the absence of guidance on matters such as 'stringent criteria to
identify, encourage and reward better performers'; 'commitment to best practice'; and 'active
management of occupational health and safety and rehabilitation (OHS&R) issues', there is a
ri sk of inconsistent application, difficulties in assessing performance and, at the client level,
dissipation of commitment. To a limited extent, the two sets of Commonwealth guidelines seek
to provide that detailed guidance.
56 Final Report of the Royal Commission into the Building and Construction Industry
Complementary codes in other' jurisdictions
32 All jurisdictions, except the Australian Capital Territory, have promulgated their own Codes.
The Codes presently existing in the various States and Territories are as follows:
⢠New South Wales: Code of Practice for the Construction Industry (Ju ly 1996). 36 Thi s
Code is supplemented by the Implementation Guidelines (Ju ly 1996)37 and the Industrial
Relations Management Guidelines (Decem ber 1999) 38 In April 2002, the New South
Wales Government issued an exposure draft for a new Code of Practice for the Construction lndustry3 9
⢠Victoria: Code of Practice for the Building and Con$truction Industry (March 1999)40
⢠Queensland : Code of Practice for the Building and Construction Industry (August 2000) 4 1 The Code contemplates guidelines but these have not yet been promulgated .
⢠Western Australia: Code of Practice for the Building and Construction Industry in Western
Australia (January 2002) 42
⢠South Australia: Code of Practice for the South Australian Building and Construction
Industry (July 1995) 43 Th ere are Implementation Guidelines (Parts 1 and 2)
(November 1995). 44
⢠Tasmania: Tasmanian Code of Practice (December 1998)45 This administrative order
adopted the National Construction Code with a Tasmanian annexure.
⢠Australian Capital Territory: Th e National Code applies. 46
⢠Northern Territory: The Northern Territory Procurement Code (June 2000) 47 Thi s
incorporates the National Code with some adaptations.
33 Although the system of codes is an example of co-operative federalism , the National Code is
the central code within the industry. Thi s is because:
(a) it has been adopted in terms by the Commonwealth Government, and the Governments
of South Australia, Tasman ia, the Australian Capital Territory and the Northern Territory;
(b) it has been endorsed and in part adopted on its own projects by the Victorian
Government. Clause 2 of the Victorian Code provides :
Reform- National issues Part 1 57
The National Code of Practice for the Construction Industry has been endorsed by
the Victorian Government ...
The Industrial Relations elements of the National Code shall apply to all Victonan
and Commonwealth Government construction projects.
The principles established in the National Code are consistent with those in this
Code and both Codes should be read conjointly. The provisions of the Victorian
Code shall prevail to the extent of any inconsistency.
All parties involved in building and construction work that is covered by this Code
must act 1n accordance with the principles and standards of behaviour expected
under the National Code.
The Victorian Government will work closely with the Commonwealth and other
State and Territory Governments in monitoring the effectiveness of the National
Code;48
(c) the New South Wales and Western Australian Codes do not, in terms, adopt the National
Construction Code, but they complement it and build upon it;
(d) while the submission received from the Queensland Government in response to the
Commission 's Discussion Paper Ei ght49 (which concerned Codes) stated, first, that the
National Code and Guidelines are inconsistent with Queensland Government policy, and
that accordingly 'there is no intention of applying the National Construction Code', and,
second, that it has developed its own Code of Practice which, among other things,
'unlike the National Construction Code, [place s] no limitations on the use of project agreements ... ', 50 in all other respects the Queensland Government remains a supporter
of the National Code; and
(e) except for the Queensland Government, no government of any State or Territory has
proclaimed a Code expressly inconsistent with the National Code, although there are
variations to su it the priorities and circumstances relevant to particular jurisdictions, as the National Code contemplates 5 1
34 The Victorian Code reserves the right to vary the application of the Code for certain projects, in
which case rel evan t parties are informed of the nature of such variations 52 Public
announcements on behalf of the Victorian Government indicate that it does not intend to apply
aspects of the National Code, and certainly not the Implementation Guidelines , to the redevelopment of the Melbourne Cricket Ground.
58 Final Report of the Royal Commission into the Building and Construction Industry
Principles
35 The National Code enunciates certain principles. They are as follows:
1. Clients have the right to choose with whom they do business and to determine and
communicate the standards of performance and behaviour they expect from all
industry participants. 53
2 Business relationships must be built upon the essential qualities of trust,
co-operation, equity and honesty. These qualities must be reflected at all links in the contract chain. 54
3. Principles of ethical behaviour must be adhered to by all parties, at all times, and at
all levels. Tendering processes must be conducted with commitment, honesty and
fairness. Anti-competitive behaviour or any ·other practice which denies other
participants legitimate business opportunities are unacceptable. These practices
are inconsistent with the establishment and maintenance of ethical business
practices which must underlie good working relationships between a client and a
service provider and between services providers. 55
4. A positive commitment to best practice is required of all industry participants. This
commitment will be demonstrated by evidence of continuous improvement;
excellent business practices and relationships; effective organisational systems
and standards; exceptional people management policies and practices; and,
superior time, cost and quality outcomes. 56
5. Industry participants are encouraged to adopt a broad-based agenda to improve productivity through the development of workplace and management practices
that are flexible and responsive to the business demands of the enterprise and its
clients' requirements. An Enterprise with this focus will achieve a workplace culture
that is recognized for value, quality, innovation and competitiveness and will be a preferred partner for clients' projects 5 7
6. OHS&R [Occupational Health Safety & Rehabilitation] obligations must be actively
addressed by all industry participants. Unequivocal commitment to OHS&R
management must be demonstrated in systems that address responsibilities,
policies, procedures and performance standards to be met by all parties involved in
a project and are directly linked to quality OHS&R outcomes. 58
Reform- Nationallssues Part 1 59
7. . . . industrial relations pnnciples embodied in this Code are to apply to the
construction projects. 59
8. ... the highest ethical standards must be observed throughout the contract chain.
This specifically includes ensuring the timely progress of the processing,
management and finalisation of claims, payments, retentions and securities due
under the contract for all parties. 60
36 There are similar principles enunciated in the New South Wales, Queensland and Western
Australian Codes. 51
37 The seventh national principle expresses an agreement concerning industrial relations
principles to apply to construction projects throughout Australia. Within the Code, the following
industrial relations principles are material to the Terms of Reference of the Commission :
Awards and legal obligations relating to employment
All parties must comply with the provisions of applicable:
⢠Awards and workplace arrangements which have been certified, registered or
otherwise approved under the relevant industrial relations legislation; and
⢠legislative requirements.
Workplace arrangements
Workplace arrangements which reflect the needs of the enterprise are important
elements in achieving continuous improvement and best practice .. . A party must not,
directly or indirectly, pressure or coerce another party to enter into, or to vary or to
terminate a workplace arrangement. Nor may they pressure or coerce them about the parties to and/or contents or form of their workplace arrangements. This does not
prevent action sanctioned by relevant industrial relations legislation.
Over award payments
'Over award payment' is defined to mean any payment and/or benefit above that is set
out in the relevant award, registered agreement and/or legislation. This includes payments provided for in workplace arrangements.
Decisions on over award payments, including superannuation, redundancy, and workers'
compensation insurance, shall be made by the individual employer to suit the needs of
the enterprise. No employer may be compelled to pay benefits above that prescribed til the relevant workers compensation legislation.
A party must not, directly or indirectly, coerce or pressure another party to make over
award payments. No employer may be compelled to contribute to any particular
redundancy or superannuation fund, or similar body unless there is an award or legal requirement to do so. This does not prevent actions sanctioned by relevant industrial relations legislation.
60 Final Report of the Royal Commission into the Building and Construction Industry
Project agreements
Project agreements w1ll only be appropriate for major contracts. Accordingly project
agreements incorporating site-wide payments, conditions or benefits may be negotiated
where the strategy has first been authorised by the Principal.
The integrity of individual enterprise agreements must be maintained. This means project
agreements cannot override the workplace arrangements of individual contractors,
subcontractors, consultants and suppliers, nor may they provide conditions which by
their nature have effect beyond duration of the project, such as, for example, redundancy pay and superannuation contributions ...
There shall be no flow on of the provisions of project agreements.
Such agreements should be developed, where possible, in consultation with the
subcontractors working on the project. The agreements shall be certified
Freedom of association
All parties have the right to freedom of association. This means that parties are free to join
or not to join industrial associations of their choice, and that they are not to be
discriminated against or victimised on the grounds of membership or non-membership of
an industrial association. A person cannot be forced to pay a fee to an organisation if not
a member.
Dispute settlement
All parties are required to make every effort to resolve grievances or disputes with their
employees and applicable unions at the enterprise level, in accordance with the
procedure outlined in the relevant award or workplace arrangements.
Strike pay
No payments shall be made to employees for time spent in industrial action, unless
payment is legally required or properly authorised by an Industrial Tribunal (where this is
permitted by relevant Industrial legislation). 52
38 I later consider the continued appropriateness of these key provisions.
Reform - National issues Part 1 61
62 Final Report of the Royal Commission into the Building and Construction Industry
Implementation and Industry Guidelines
39 In February 1998, the then DEWRSB and the Department of Finance and Administration
(DOFA) published Commonwealth Implementation Guidelines for the National Code of Practice
for the Construction lndustry63
40 The Implementation Guidelines are described as:
⢠being intended to assist Commonwealth agencies to interpret and implement aspects of
the Code in relation to construction projects undertaken on their behalf; and
⢠explaining the processes which the Commonwealth Government has set up to monitor
and report on the Code, and determine whether a sanction should be imposed for a
breach of the Code 64
41 The Industry Guidelines were designed to assist Commonwealth agencies as clients in their
dealings wi th industry partners and provide a clear statement of government policy and th e
legislative principles underpinning the Code 65 Compliance with the terms of the Industry
Guidelines together with the Code is to be a condition of tender and a contractual requirement
where there is Commonwealth funding 66 The Industry Guidelines are expressed to 'set out the
industrial relations and administrative requirements of those parties with whom the government
wishes to do business', and enable tenderers to incorporate in their tenders the methods by
which they will comply with the Code and Industry Guidelines 67
42 In contrast, the Implementation Guidelines are designed to assist Commonwealth agencies to
interpret an d implement aspects of the Code in relation to construction projects undertaken on
thei r behalf. 68
43 The principal difference between the two guidelines is that the Implementation Guidelines
contain provisions concerning compliance, monitoring and imposition of sanctions. Both sets
of Guidelines concentrate on amplifying the industrial relations obligations applicable on Code projects.
44 The industrial relations and occupational health and safety components of the Commonwealth
Implementation Guidelines for the National Code are in substantially sim ilar terms to the
Commonwealth Industry Guidelines for the National Code. There are however some minor
differences, principally in the sections which deal with project agreements (the fourth principle)
and industrial impacts (the eighth principle). These differences appear to reflect the fact that the
Reform - National Issues Part 1 63
Implementation Guidelines are designed for use by Commonwealth clients , whereas the
Industry Guidelines are designed for use both by clients and contractors ..
45 The relevant portion of the Implementation Guidelines as they presently exist are reproduced at
Appendix B.
46 In re lation to the industrial relations principle, the Implementation Guidelines are much more
specific and detailed than the Code.
64 Final Report of the Royal Commission into the Building and Construction Industry
Application
47 The Code applies to the building and construction industry. This is widely defined to include:
all organised activities concerned with demolition, building, landscaping, maintenance,
civil engineering, process engineering, mining and heavy engineering. 69
48 The Code states that adoption of the Code ' ... expresses a commitment to deal only with
organisations and personnel in the construction industry whose standards and behaviour
conform wi th principles expressed in the Code. In particular, coercion in any form is
prohibited'. 70
49 There are similar provisions in the New South Wales Code, 71 the Queensland Code,72 and the
Western Australian Codel 3 The Code has simi lar application in South Australia, Tasmania, the
Northern Territory and the ACT by virtue of application of tbe Commonwealth Code.
50 The National Code defines 'party' to include: 'clients, principal contractors, subcontractors,
suppliers, consultants, employees, unions - their officials, employees and members and
industry associations whilst undertaking a representative role ' .74 A similar definition is found in
the Victorian Code, 75 the Queensland Code/6 and the Western Australian Coden There is no
similar definition in the New South Wales Code, although it is clear that employer and industry
associations, and unions, are intended to be bound by the Codel8 The Commission 's
Discussion Paper stated that the term 'party' is apt to mislead when used to describe the
relationship between unions and the Code, as there is no contractual or legislative nexu s
between the unions and government in this regard .
51 The Commonwealth's direct funding in the building and construction industry principally relates
to office buildings, residential buildings for Australia Defence Force personnel and
telecommunications facilities . Precise figures of the amounts funded are not available, but the
total amounts are plainly substantial.
52 The Commonwealth also provides the States with specific purpose grants under s96 of th e
Constituti on by way of funding assistance for roads . Since 197 4 the Commonwealth has
funded the National Highway program and also funds other roads of national importance.79
The Commonwealth also provides funding for roads for local councils - to improve local
government road infrastructure, and funding to the States for black spot prevention. This
funding is approximately $2.5 billion per annum 80
53 The Minister for Transport and Regional Services has made it a condition of Commonwealth
assistance that State road authorities ensure successful tenderers comply with the Code, or a
Reform - National Issues Part 1 65
State code which is consistent with the principles of the Code. Road authority Chief Executive
Officers are required to certify annually that this condition has been compli ed with 6 1
54 Further, in the year 2000, $1 bil lion was appropriated to the Federation Fund. The Fund
provided significant infrastructure construction and restoration grants - including for the Al ice
Springs to Darwin Railway project 62
55 The Code states principles agreed by all Australian governments. The Implementation
Gu ideli nes explain how those principles are to be applied by Commonwealth agencies.
56 The Industry Guidelines provide that all parties invited to express interest in any Commonwealth
construction project must be informed of the application of the National Construction Code to
the project. Thus, any advertisements that call for expressions of interest, requests for tenders
or submissions, must incorporate the fol lowing statement:
The National Code of Practice for the Construction Industry applies to this project. 83
57 The Implementation Guidelines state that:
Compliance with the code and the Industry guidelines . . should be made a condition of
tender. The code and the industry guidelines should be included as an attachment to
tender documents ... Tenderers should also be advised that compliance with the code
and the industry guidelines is to extend to all subcontractors, consultants and suppliers
who may be engaged by the tenderer on the project. 84
58 Code contracts are to incorporate a req uirement for the contractor to comply with all aspects
of the Code and the Industry Guidelines, and for all subcontractors, suppliers and consultants
associated with the project to comply in turn 6 5 A model clause is provided 66
59 Apart from being a statement of government policy with which departments and agencies amenable to ministerial direction are bound to comply, 87 both the Code and the Implementation Guidelines are
referred to in the Commonwealth Procu rem ent Guidelines.88 They are not, however, part of
Commonwealth Procurement Guidelines proper. The Commonwealth Procurement Guidelines derive
th eir force from the Financial Management and Accountability Regulations 199 7 (C'wth) B9
60 The Additi onal Legislation, Policies and Resources section of the Commonwealth Procurement Guidel ines90 provide:91
The Commonwealth has adopted the National Code of Practice for the Construction
Industry for mandatory application to all construction and building work undertaken for
Commonwealth purposes. The Commonwealth Implementation Guidelines help
Commonwealth Agencies interpret and implement aspects of the code concerning construction projects undertaken on their behalf The applicability of the code is regularly
reviewed with relevant projects being included for Commonwealth compliance, such as
any construction project funded from the Commonwealth Federation Fund. Officials conducting procurement should check with the Department of Finance and
Administration or the Department of Emplovment, Workplace Relations and Small
Business on the current requirement for compliance with the Commonwealth Implementation Guidelines. 92
61 Th e Code and Guidelines, given their importance, are not given adequate prominence in the
Commonwealth Procurement Gu idelines . I address this elsewhere.
66 Final Report of the Royal Commission into the Building and Construction Industry
Sanctions
62 The Implementation Gui delines establish a Code Monitoring Group (CMG). The CMG is
required to deal with Code breaches which come to its attention (whether from client agencies,
Departments, Ministers or other parties), determine whether the breach is established and then
consider appropriate sanctions .93
63 The CMG comprises Commonwealth public servants .94 They undertake their CMG duties as
required; otherwise they are occupied by their prim ary duties, which are unrelated to the Code.
It is not clear what importance is attached to the work of the CMG by the departments from
wh ich the CMG members are taken. Certain ly the CMG does not appear to be a prominent
body. The CFMEU, for example, did not know the identity of its members, and had not been
approached by it. Th e CFMEU accordingly considered that it had received no opportunity to
put its views to the CMG regarding Code breaches by contractors95
64 The National Code provides that breaches by parties can be regarded as a relevant factor
when awarding contracts. The Implementation Gui del in es make clear that thi s would only be
so when the CMG has ad vi sed th at a sanction has been applied, an d would only apply
according to the terms, and in respect of the period, of the sanction %
65 The possible sanctions include, but are not limited to:
⢠the reporting of a breach to an appropriate statutory body or law enforcement agency;
⢠red uction in the tendering opportunities for government work;
⢠referral of a breach to the appropriate in dustry association for action consistent with the
industry codes of practice;
⢠publication of details of the breach and identification of the party responsible;
⢠a formal warning that continued non-compliance wi ll lead to more severe sanctions;
and/or
⢠preclusion from tendering for any government work for a specified period 9 7
66 Where a party is excluded from a specific .business opportunity on any of these grounds, the
client must inform the party of the reason , in writing, at the earliest opportunity. 98
67 Th e National Code lists the possible sanctions under the heading 'Compliance Principles' 9 9 In
doing so, the Code recognises that appropriate sanctions should be developed by
Commonwealth, State and Territory Governments consistent with their particular bu siness
Reform - Na tional issues Part 1 67
activities and ap pli cable laws. The Implementation Guidelines contain only the Commonwealth
Governm ent's sanctions.
68 The sanctions in the Implementation Guidelines 100 are expressed in much the same terms.
69 No sanctions have ever been imposed under the National Code by the CMG. 101
70 In view of the evidence which I have recei ved, it is plain that the Code and Guidelines are not
bein g rigorously enforced.
68 Final Report of the Royal Commission into the Building and Construction Industry
The National Code and the Implementation Guidelines in practice
71 I received evidence and a number of submissions concerning the operation of the National
Code and Implementation Guidelines on projects. A summary of the evidence and the issues
raised in three of those matters is contained in Appendix C to this chapter.
72 The Al ice Springs to Darwin Railway case study is a significant, current example of how th e
Code and Guidelines, when implemented and monitored effectively and with determination ,
resul ts in projects being built on time, on budget, and to the satisfaction of employees. I now
summarise the salient features of the evidence in that casâ¬l study
The Alice Springs to Darwin Railway project
73 The Alice Springs to Darwin Railway project involves the construction of 1420 km of standard
gauge railway line between Alice Spring s and Darwin. 102 By any standards, it is a major
construction project. A Grant Deed, under which the Commonwealth's fun ding for the project
is made available, was made on 18 October 2000. 103 The Commonwealth, pursuant to the
Grant Deed, provided a grant of $165 million to assist the project. 104
7 4 AD rail is the unincorporated joint venture responsible for the design and construction of the
railway. ADrai l's contract was awarded on 20 April 2001 and the contractual date for
completion is 31 March 2004. At the time of the Royal Commission Hearings in Darwin the
number of workers employed on the project was 1273. 105 ADrail was laying 1.8 kilometres of track each dayw 6
75 ADrail is contractually bound by the provisions of the Code and Guidelines as follows .107
⢠Clause 13.2 of the Commonwealth's Grant Deed provided for the application to the
project of the Code, the Implementation Guidelines and the Industry Guide li nes .
⢠Clause 13.3 provided for the establi shment of a unique PCMG to monitor performance of
the obligations to comply with the Code and the relevant guidelines. This group
comprises a representative of the Commonwealth, a representative of the Australasian
Rail Corporation and an independent Chair, appointed by the Commonwealthws Th e
Office of the Employment Advocate (OEA) provides two advisors to the group.109
Reform- Nationallssues Part 1 69
⢠The Grant Deed includes provision for the adoption of model Code compliant clauses to
be included in all contracts and subcontracts in respect of the project. 110
76 There are a number of signifi cant Code related aspects to th is project.
The Australian Council of Trade Unions Council's position on
the Code and Guidelines
77 For a number of months between June and November 2000, ADrail sought to negotiate a
greenfields agreement through the Australian Council of Trade Unions (ACTU), covering the civil
constru ction elements of the project, but could not reach agreement. 111 In this context it is
significant that the National Construction Code and the Implementation Guidelines were
regarded as unnecessary by the ACTU, but were not considered matters whose applicability
would preclude ACTU agreement. 112 Th e ACTU's apparent acquiescence in the application,
particularly of the Implementation Guidelines, stands in contrast to the opposition to the
application of the Implementation Guidelines by, for example, the CFMEU (which is of course
an affiliate of the ACTU) . Thus, it has been suggested that such matters as giving
Commonwealth officers rights of entry to premises an d access to records under the
Implementation Guidelines were regarded by the Victorian Government as so likely to provoke
an industrial battle with Victorian uni ons that the Victorian Government turned down a
Commonwealth grant of over $85 million to re-develop the Melbourne Cricket Ground .
The variety of industrial arrangements applicable on site
78 A variety of industrial arrangements apply to the contractors working on the project. Some
employ workers on the proj ect pursuant to a certified agreement made under s170LK or
s 1 70LL of the Workplace Relations Act 1996 (C 'wth) .113 Others have workforces employed
pursuant to Australian Workplace Agreements (AWAs). 11 4
The active role of the Project Code Monitoring Group
79 The Project Code Monitoring Group (PCMG) closely monitored the application of the Code and
Guidelines and acted of its own init iative rather than reactively in that regard . So, for example:
⢠The PCMG held its inaugural meeting on 16 May 2001 .115
⢠During the period 16 May 2001 to 5 July 200 1, the OEA (which advised and acted for the
PCMG) made 29 contacts with various organisations concerning the application of the
Code to the project. Primarily, these contacts were direct site or contractor visits with
ADrail, subcontractors, government departments and industry associations in the Northern Territory. 116 During these visits, concern was raised as to the extent to which
the Code was being applied throughout the tender and contract process, with particular
attention upon the construction of Sleeper Plants in both Katherine and Tennant Creek.
Th e OEA considered that details contai ned in documents provided by ADrail (purchase
orders , consultancy ag reemen ts, minor works and major works contracts) fell short of the
requiremen ts imposed by the Deed . 117 ADrail gave an undertaking to reconsider this area of their contracts and advise th e OEA of the outcome. 11 8 The OEA advised Austrak in
writi ng , and verb ally, that the Code applied to the construction of the Sleeper Plants. 119
70 Final Report of the Royal Commission into the Building and Construction Industry
⢠During the period of 6 July 2001 to 10 September 2001, the OEA made 37 contacts with
various organisations concerning the application of the Code to the project. 120 The
OEA's second report to the PCMG noted that the issues raised in the previous report with
ADrail's contractual documentation had been 'resolved to a degree', but that there had
been difficulty in receiving a response from Austrak as to the app lication of and
compliance with the Code and model clauses. It was noted, however, that there was no
evidence to suggest that any form of non-compliant behaviour was in fact occurring
during the construction of the Sleeper Pl ants. 121
⢠Between 11 September and 8 November 2001, the OEA made 25 contacts with various
organisations concerning the application of the Code to the project. 122 The OEA's thi rd
report to the PCMG noted that Austrak had confirmed that the model clauses regarding
Code compliance had been included in its contractual arrangements with Barclay
Mowlem .123
⢠During the period 8 November 2001 to 3 June 2002, the OEA made 49 contacts with
various organisations concerning the application of the Code to the project. 124
80 Mr Warwick Mace, the Industrial Relations Manager for ADrail, gave evidence that ADrail had
had no problems applying the Code and Guidelines to the project. For example, ADrail applies
a protocol requiring strict compliance with the Workplace Relations Act 1996 (C'wth) provisions
in respect of the exercise of a right of entry.125
81 Importantly for present purposes, Mace stated that he believed that the Code and Guidelines
had played a considerable part in the industrial success of the project to date. 126
82 That success is remarkable. The project is on ti me and on budget. No time at all had been lost
from industrial disputes. At the date of the Royal Commission hearings in Darwin, there had
only been four Lost Time Injuries (LT I) for the project. After having worked 2.3 million man
hours, the LTI ratio for the project is at 1 :3. The building industry ave rage is 13. 12 7 I
acknowledge that a further significant factor was that the Northern Territory has a very low
incidence of time lost in industrial disputes in any event.
83 This case study illustrates that the National Code of Practice fo r the Construction Industry and
the Commonwealth Implementation Guidelines for the Code, when effectively implemented
and monitored, res ults in projects being built on time, on budget, with safety and to the
satisfaction of employees.
84 Apart from the considerable effects of the PCMG (whose initiative contrasts markedly with the
CMG), Adrail's strict insistence on its legal rights appears to have been an important aspect in
ensuring that the principles of the Code and Guidelines were applied .
Reform - National issues Part 1 71
7 2 Final Report of the Royal Commission into the Building and Construction Industry
Conclusions to be drawn from the evidence
85 The evidence before the Co mmission from the case study just mentioned and those case
studies which are contained in the relevant State and Territory Volumes and which are relevantly
summarised in Appendix C to th is Volume, establishes the following propositions:
⢠the CMG as it currently operates, is ineffective in ensuring strict compliance with the
Code and Guidelines;
⢠in contrast, th e Project Cod e Monitori ng Group established for the Darwin to Ali ce
Springs Railway is a highly successfu l group which has done much to ensure that the
Code and Guidelines were and are complied Thus far, that project has had an
outstandingly successful in dustrial relation s record with no time at al l lost due to industrial
disputation;
⢠there is a tendency for the interests of Governments as regulators and their interests as clients to come into co nflict. The evidence generally is that when that occurs, the
interests of Governments as clients and, in particular, their interests in timely completion
of projects, prevail over the requirement to comply with the Code and Guidelines. Th is is a matter I address below ; an d
⢠the Federation Square case study (summarised in Appendix C) provides an example
where the Commonwealth, in its capacity as a provider of substantial funds for
construction of a project, was alleged, th rough its officers , to have attempted to breach
ss170NC and 298Y of the Workplace Relations Act 7 996 (C'wth) insofar as it was
insisting on compliance with the terms of the Code on the Federation Square as a
condition of continued fund ing . This example demonstrates that there needs to be a
legislative chan ge to ensure that in sistence on compliance with the Code cannot be
argued to be inconsistent with the terms of the Workplace Relations Act 7996 (C 'wth).
Reform- National issues Part 1 73
7 4 Final Report of the Royal Commission into the Building and Construction Industry
Submissions received by the Commission concerning the National Code and the Implementation Guidelines
Master Builders Australia Inc and others
86 Master Builders Australia Inc (M BA Inc) in its submission in response to Discussion Paper Eight,
argued that the burden of compliance with the Code and Guidelines falls only upon contractors
and subcontractors. It argued that the Code does not apply to unions. It submitted that unions,
sometimes unscrupulously, use the Code to further their industrial aims, for example by making
vexatious complaints about non-compliance with the Code or Guidelines , or by obtaining
access to records , which records would not otherwise have been created but for the need to
comply with the Code and Guidelines.
87 MBA Inc argued that the Commonwealth Government and in particular those government
officials who administer the National Code, have no understanding of the reasons for the Code,
nor how different the conduct prescribed by, particularly, the Implementation Guidelines, is,
from the usual experience on building sites around Australia, and thus the additional expense,
and loss of time, caused to those (particularly head contractors) which seek to ensure that the
behaviour set out in the Implementation Guidelines obtains on building sites.
88 An example of a lack of Commonwealth understanding given by MBA Inc is the circumstance
where the Commonwealth threatens to impose liquidated damages on a head contractor
which is doing no more than seeking conscientiously to apply the National Code and
Implementation Guidelines on a Commonwealth-funded project.
89 MBA Inc considers that current legal regulation of the industry, and its application, 'has
entrenched attitudes so deeply that industry redemption by self-regulation is an impossible
dream' and that 'pursuing this dream via a code of practice model would be a worthless
model, based on experience to date'. 12s
90 The AIG and Au stralian Constructors Association (ACA) regard the CMG as having been
'largely ineffective' .129 I agree.
Reform- National issues Part 1 7 5
The Commonwealth Government
91 The Commonwealth's assessment of its experience of the National Code in its own jurisdiction
is set out in its submission .130 Overall, the Commonwealth does not consider that the operation
of the Code has been effective. Its submission states:
The Commonwealth has gained the following impressions of the effectiveness of the
Code on its own projects or on projects to which it has contributed funding:
⢠support for the Code from the industry has been limited. There has been a negative
reception from unions;
⢠awareness of the Code amongst Commonwealth Departments and agencies
needs to be improve(d);
⢠oversight and monitoring of the Code and its implementation are bureaucratic and
overly focussed on contractual issues rather than changing the behaviour of
industry parties on site. 13 1
92 Th e Commonwealth also considers that the application of the National Code on Commonwealth and State Government projects has meant that much of the private sector of
the construction industry has not been exposed to the workplace reform agenda contained in
the Code, resLJiting in the Code having had lim ited impact on improving standards of behaviour
in the industry. 132
The Housing Industry Association
93 The Housing Industry Association Limited (HIA) submitted that 'a national and uniform code
when complemented by an effective enforcement regime which could include incorporating the
code in legislation, and establishing bodies such as a Building Industry Taskforce [comprises] ..
an appropriate veh icle for regulating the conduct of Industry parties' .133 It submits that the
issue of a uniform National Code of practice for the building and construction industry should
be referred to the Council of Australian Governments with a view to agreement being reached at that level. 134 HIA also suggest the creation of tax concessions to cover the costs of voluntary
compliance with the Nat ional Code on private sector projects. 135
94 The HIA considers that Codes will not be effective as a means of regulating workplace relations
outcomes unless they are supported by an effective regime of compliance and enforcement;
there should therefore be sanctions within the Code, enforceable through the legal system, when it can be estab li shed that the conduct of an association or its officers has led to a breach of the Code of Practice. 136
95 The HIA also supports the introduction of quantifiable performance criteria as an important tool
in monitoring the effectiveness of the Codes of Practice 137 however the MBA Inc is 'very
concerned' with this suggestion, and considers that all this would do is add on extra costs, and so provide the opportunity to apply commercial pressure to contractors. 138
96 HIA submitted that possible features of such a regi me could include:
(a) excluding those found to have breached the Code from government work for a defined
period;
7 6 Final Report of the Royal Commission into the Building and Construction Industry
(b) giving a Taskforce the responsib ility of referring breaches of the National Construction
Code to a body such as the CMG and other appropriate authorities, in addition to the
ability to conduct their own investigations;
(c) the establishment of a Building Industry Tribunal; and
(d) exclusion of employer and employee associations whose repeated conduct has been
found to breach the Code from government committees and dealings for a certain period. 139
97 HIA considers that the absence of any such sanctions has weakened the Code. 140
The CFMEU
98 The CFMEU Submission asserts that the attempted enforcement of the Implementation
Guidelines by the OEA is beyond power. It refers to proceedings the CFMEU has initiated in
that regard some years ago . There is presently no final judgment of any court that the OEA's
involvement in policing the Code is beyond power. Unless and until that occurs the OEA's
activities are entitled to the benefit of the presumptions of regularity and validity. Nevertheless,
the power to enforce the Code and Guidelines, which I recommend be undertaken by the
Australian Building and Construction Commission (ABCC), should be made explicit.
99 As to the CFMEU 's more general complaints against the OEA, I have concluded elsewhere that
there is an active campaign, particularly by officials of the CFMEU in Victoria, to interfere with
the activities of the OEA. For example, as Mr Martin Kingham, Branch Secretary of the
Construction, Forestry, Mining and En ergy Union, Construction and General Division, Victorian
Build ing Unions Divisi onal Branch conceded in evidence, in Victoria there is a general pol icy of
advising workers to stop work when the OEA comes on to the site, and generally of obstructing
its activities. 141 In addition, MrJohn Sutton, Divisional Secretary, Construction, Forestry, Mining
and Energy Union, Construction and General Division, was aware of situations where the
membership spontaneously decided to take such action. 142
1 00 This behaviour by certain CFM EU officials should not be confused with any legitimate challenge
in the courts to the powers of the OEA. In the end, the opposition to this part of the
Implementation Guidelines from the CFMEU is no more than a criticism of the very existence of
the OEA. I reject that criticism, wh ile acknowledging that the ABCC shou ld take the OEA's
place in the building and construction industry.
101 Next, the CFMEU submission, noting the acknowledgment in the Discussion Paper that th e
term 'party' is a misnomer when used to describe the relationship between unions and the
Code, which presently has no contractual or legislative nexus with them , 143 stated that:
(a) 'unions do not "do business'" with governments (in a commercial sense), and do
not 'work on' government construction projects';
(b) 'unions do not choose the projects where their members are employed, and do not
enter into contractual arrangements with governments in order to represent their
members'; and
Reform- National issues Part 1 77
(c) unions were never consulted in the formulation of the National Code and have
never been invited to endorse or sign up to the Code.144
1 02 Accordingly, the CFMEU argues that it is difficult to understand how unions can be bound by,
or be parties to, the Code and the Implementation Guidelines in a formal manner. 145 I generally
agree with this submission .
1 03 What is the consequence? It might be argued that the Code and Guidelines simply cannot be
expected to operate effectively when a sign ificant industry participant (although not a
contractual party) is not bound by them. On balance, I reject this argument.
104 As I explain elsewhere in this Report, most industrial action (bar protected action, justified
occupational health and safety based action, and action taken with the employer's consent) is
unlawful .
1 05 In the reform volume Achieving Cultural Change, I propose a new statutory norm, which
clarifies what is unlawful industrial action, largely codifying the law of industrial action in the
building and construction industry but simplifying its application and enforcement. Cl ients,
contractors and subcontractors who strictly apply the Code and Gu idelines, and who are met with unlawful union or union inspired industrial action, will be able to ensure the Code and
Guidelines are strictly enforced by utilising the new statutory norm against the union , its
officers, agents and members. Accordingly there is no necessity for the union to be
contractually bound to observe the Code or Guidelines for the principles and standards in
those documents to be generally observed in the industry, including by the unions. After all, the
Code merely states proper standards of conduct consistent with the Workplace Relations Act
1996 (C'wth) by which the unions are bound.
7 8 Final Report of the Royal Commission into the Building and Construction Industry
Solutions and recommendations
The National Code and the Implementation Guidelines should endure
1 06 I make the following points.
107 First, the Code was designed to establish a set of principles for, and standards of behaviour in ,
the construction industry. The private sector was encouraged to adopt the Code voluntarily
(and declined to do so) but where public moneys were involved, the Code was intended to be compulsory. On projects where the Commonwealth is the client, the Implementation and
Industry Guidelines were also intended to be compulsory, although the client agency has some
scope to modify the application of both documents.
108 Second, although there is a measure of self-regulation by industry involved, the rationale of
the Code and Guidelines, where both apply, was the use by the Commonwealth Government
of its purchasing power to change industry behaviour to promote efficiency and productivity
and to ensure compliance with the spirit as wel l as the letter of the Workplace Relations Act 1996 (C'wth) . In principle, this is both sensible and appropriate.
1 09 Third, an advantage of codes and guidelines which are not contained in legislation or otherwise
given legislative force , is that they do not require parliamentary approval, and can thus be more
flexible both in their application, and in their making and amendment when compared to
legislation.
11 0 Fourth, the present Code has the approval of, and has been adopted by, all Governments,
(although in no case in a legislative form) . In an industry where intergovernmental agreement
can be hard to come by, that is an advantage wh ich should be capitalised upon .
111 The problem with the Code and Guidelines has been the failure strictly to enforce them
appropriately, or, perhaps, at all. Thus, as noted earlier:
⢠the Commonwealth has fai led adequately to apply the Code when circumstances
demanded it;
⢠Government departments have acted inconsistently because there are inadequate
measures to permit proper monitoring of application of the Code and the achieving of its
objectives;
⢠there is no effective monitoring body;
⢠no sanction has ever been imposed under the National Code;
Reform- National issues Part 1 79
⢠there has been a concentration on contractual outcomes rather than the implementation
of the objectives of the Code; and
⢠th e Commonwealth has sought to pass compliance obligations contractually on to head
contractors without supporting the contractor seeking to implement it.
112 With the changes I recommend in this chapter, the National Code and Guidelines state
appropriate and necessary principles and standards of conduct for the Australian building and
construction in dustry.
11 3 Where the Commonwealth is the client (and of course it will also then be providing the funds),
one encounters the current 'core' operation of the Code and Guidelines. If the Commonwealth
does not act to enforce the Code and Guidelines according to their terms in these
circumstances, it is unreasonable for the Commonwealth to seek to impose the Code and
Guidelines on private parties. The Commonwealth must therefore , by its leadership, act to
invigorate their application.
11 4 It should do this by in sisting that any person who contracts to work on a building site owned,
operated, or funded, wholly or partly, by the Commonwealth, complies with the Code and
Guidelines, not only in relation to that project, but generally.
11 5 That is, the Commonwealth should ag ree on ly to do business with th ose who comply with the
National Code and Guidelines on all their projects. There should be a national system of
prequalification based initially on self-assessment an d self-certification by way of statutory
declaration , to this end. The system of pre-tender qualification recommended in the Occupational Health and Safety Volume of the Report is an appropriate model. However it is
important, for reason s explai ned in that Vo lume, that OH&S pre-tender qualifications be treated separately.
11 6 Th is principle must extend to circumstances where Commonwealth funds are used to build or
construct, for example, construction of national highways. The Commonwealth has a direct
interest in having th e Code and Guidelines apply in this circumstance. The Commonwealth
should therefore make it a requirement of any deed with a state government or any other body
or person receiving Commonwealth funds for such a project that the Code and Guidelines , including the enforcement mechanisms provided under the Implementation Guidelines, apply
to the project. This requ irement should be made to extend to the construction of any road for
which Commonwealth funding is granted.
117 To avoid doubt, the Implementation Guidelines should make clear that the application of the
Code to 'a ll construction and bui lding work undertaken for Co mmonwealth purposes' includes
any such work that is funded or partially funded by the Commonwealth .
80 Final Report of the Royal Commission into the Building and Construction Industry
Issue
The National Code of Practice for the Construction Industry {the National Code), and the
Commonwealth Implementation Guidelines {the Implementation Guidelines) which
operate under it, were introduced as reforms aimed at complementing the objectives of
the Workplace Relations Act 1996 (C 'wth).
They apply on projects operated or funded by the Commonwealth. They are an example
of Government using its purchasing power to change industry behaviour to promote
efficiency and productivity, and to ensure compliance with the spirit as well as the letter
of the Workplace Relations Act 1996 (C'wth). In contrast to legislation , codes are more
flexible in their application, making and amendment.
There are complementary State and Territory Codes, but the National Code is the central
code within the building and construction industry.
The core principles within the National Code command universal support from Australian
Governments, and from the Construction, Forestry, Mining and Energy Union. That
common agreement is rare in this industry and should be capitalised upon.
The National Code and the Implementation Guidelines have not always been applied
strictly and appropriately by the Commonwealth . The Alice Springs to Darwin Railway
project is a notable example of the significant benefits of absence of industrial disputes,
improved occupational health and safety outcomes and · improved productivity which
resu lt from a strict and appropriate application of both the National Code and the
Implementation Guidelines.
Subject to the changes I recommend in the chapter on Codes of Practice for the
Building and Construction Industry contained in Volume 7, Reform- National Issues Part
1, of this report, the National Code and the Implementation Guidelines will state
appropriate and necessary principles and standards of conduct for the Australian
bui lding and construction industry generally, not just on projects owned, operated or
funded by the Commonwealth. The Commonwealth should, by its leadership, act to
invigorate these and extend their application.
Recommendation 40
The National Code and the Implementation Guidelines apply to all projects to which the
Commonwealth directly or indirectly provides funds for construction .
Recommendation 41
It be a requirement that any person who contracts to work on a building site owned,
operated, or funded, wholly or partly, by the Commonwealth, comply with the National
Code and the Implementation Guidelines, not only in relation to that project, but
generally. That is, the Commonwealth should agree only to do business with those who
comply with the National Code and the Implementation Guidelines on both publicly and
privately funded projects.
Reform - National issues Part 1 81
Recommendation 42
There be a national system of prequalification based initially on self-assessment and self
certification by way of statutory declaration, to this end. The system of pre-tender
qualification recommended in Volume 6, Reform - Occupational Health and Safety, of
this report is an appropriate model. (However it is important, for reasons explained in
that volume, that occupational health and safety pre-tender qualifications be treated
separately.)
Give greater prominence to National Code and Implementation Guidelines obligations
118 It is undesirable that the substantive portions of the core document dealing with the
Commonwealth's Procurement Policy make no reference to the existence of, let alone the need
to comply with , the National Code and the Implementation Guidelines.
119 Accordingly, the obligation of Commonwealth agencies to comply with the National Code and
the Implementation Guidelines in all of its building and construction procurement should be
clearly stated in the substantive section of the Procurement Guidelines, in order to demonstrate
to all those concerned with Commonwealth procurement the primacy of the Code and
Guidelines in relation to the procurement of building and construction .
Issue
It is undesirable that the substantive portions of the principal document dealing with the
Commonwealth Procurement Policy make no reference to the existence of, or the
requirement to comply with, the National Code and th e Implementation Guidelines.
Recommendation 43
The obligation of all Commonwealth departments and agencies to comply with the National Code and the Implementation Guidelines in all building and construction
procurement activities be emphasised by prominently stating that obligation in the
substantive section of the Procurement Guidelines, and making that obligation clear to
al l those Commonwealth departments and agencies which are bound by them.
The Government's interest as regulator must prevail over its interests as a client
120 If the application of the National Code is to be an effective agent in achieving cultural change
through use of Commonwealth purchasing power, the Commonwealth's interest as a client in
the short term in relation to such matters as prompt completion of a project should be subordinated to the Commonwealth's interest as a government in promoting the operation of
the National Code and Implementation Guidelines on its own projects.
82 Final Report of the Royal Commission into the Building and Construction Industry
121 At a minimum, this will require Commonwealth officers to as sist contractors and
subcontractors in applying the National Code and Implem entation Guidelines in a rigorous
fashion. It is likely that when this strategy is first used there will be a concerted campaign by at
least some unions to oppose operation of the National Code and the Implementation
Guidelines. Further, the private sector has declined to adopt the National Code voluntarily.
122 If the guiding principle for the Commonwealth is its interest as a government in ensuring
compliance with the National Code and Implementation Guidelines, thus establishing structural
positions in which productivity may be unlocked, rather than its short term interest as a client:
(a) where there is a direct and quantifiable loss to the Commonwealth, the contractors or
subcontractors, arising from unlawful industrial action in consequence of the insistence
by the Commonwealth on compliance with the National Code and Implem entation
Guidelines, the loss should be recovered from whoever caused that loss to be incurred
(this is a matter dealt with further in the Volume of the Report concerning Achieving
Cultural Change); and
(b) provided that there is a shouldering of the industrial risk in these ways, I see no need for
any tax concession to be avai lable to contractors or subcontractors . Any costs of
compliance with the National Code will be included in all tenders if the Commonwealth
consistently requires compliance with the National Code by all contractors.
Issue
Adherence to the National Code is necessary to establish structural positions in which
productivity may be unlocked by contractors.
The Commonwealth's interest as a client in the short term in relation to matters such as
prompt completion of a project may need to be subordinated to the Commonwealth's
interest as a government in promoting the operation of the National Code and the
Implementation Guidelines on its own projects. It will be necessary for Commonwealth
officers to assist contractors and subcontractors in applying the National Code and the
Implementation Guidelines in a rigorous fashion. Opposition to strict application of the
Natio nal Code is likely as the private sector has declined voluntarily to adopt the National
Code and the unions are opposed to its implementation.
Recommendation 44
Where there is a direct and quantifiable loss to the Commonwealth, contractors or
subcontractors, arising from unlawful industrial action in consequence of the insistence
by the Commonwealth on compliance with the National Code and the Implementation
Guidelines, the loss should be recovered from whoever caused that loss to be incurred
(this is a matter dealt with further in Volume 11, Reform- Achieving Cultural Change, of
this report) .
Reform- National issues Part 1 83
The Implementation Guidelines should be reviewed
123 Analysis of the Commonwealth's reasons for its dissatisfaction with the National Code's
effectiveness indicates that the difficulties stem largely from its own approach to
implementation, rather than any inherent problem with the National Construction Code itself.
124 The operation of the National Code is not predicated on industry support on
government-funded projects. Rather, the National Code anticipates that each government will
develop 'appropriate sanctions, consistent with their business activities and the laws applicable
in their respective jurisdictions to encourage compliance with the principles', and that each 'will
establi sh effective compliance and enforcement mechanisms' .146 Such sanctions are not part
of the National Code; in the case of the Commonwealth, the sanction provisions are set out in
the Commonwealth's Implementation Guidelines.
125 Under the Implementation Guidelines, the DOFA is responsible for advising agencies about the
broader construction-related aspects of the National Code, and the DEWRSB is responsible for
advising them about the Code's industrial relations and OH&S elements. 147 It must follow that if
the awareness of the National Code among Commonwealth Departments and agencies needs
to be improved, then these two responsible departments need to address that matter.
126 The Implementation Guidelines detail the arrangements for the oversight and monitoring of the
National Code and its implementation . If, as the Commonwealth submits (and as I accept) they
are 'bureaucratic and overly focussed on contractual issues rather than changing the behaviour
of industry parties on site', then that behaviour can only be attributed to either or both the
approach taken by the responsible agencies, and to the terms of the Implementation
Guidelines which establish the framework within which they administer their responsibilities .
127 The Implementation Guidelines take a narrow approach to giving effect to the principles set out
in the National Code. Overall, they provide no guidance about the Commonwealth's specific
expectations in relation to performance standards, best practice, and continuous
improvement. Indeed, apart from the foreword endorsed by Ministers and the points at which
the Implementation Guidelines repeat the National Code, these notions are barely mentioned.
128 As the Implementation Guidelines now stand, departments and agencies are allowed to pass
the responsibility for compliance with the Code to service providers. In the absence of any
expression of client expectations about performance standards, indicators and measures
beyond statutory compliance, service providers wi ll, understandably, be likely to adopt the path of least resistance and aim only to meet their statutory obligations.
129 Only the industrial relations and occupational health and safety principles of the National Code are the subject of any specific guidance under the Implementation Guidelines. It should also be
said that the guidance in relation to occupational health and safety is underdeveloped. It is
unclear why they deal on ly with these two principles, and not the remaining six Code principles.
In particular, there is no guidance given about what the Commonwealth thinks best practice might be; or about what is to be 'tested and measured'; or about 'standards of performance
and behaviour'; or about virtually any other element of the National Code calling for 'support by practices and initiatives'.
84 Final Report of the Royal Commission into the Building and Construction Industry
130 Despite providing detailed guidance on only one of the eight Code principles, the
Implementation Guidelines state that the Code is to be applied 'to the maximum extent
possible' 148 and obl iges clients to ensure that contracts oblige service providers 'to comply with all aspects of the code' .149
131 Given the nature of the Nati onal Code as a statement of principles cast in the expectation of
jurisdiction-specific practices and initiatives, the lack of guidance in the Implementation
Guidelines, and the lack of any review or assessment mechanism, there is little with which to
comply in respect of the remaining Code principles . In the absence of meaningful and
measurable compliance requirements, it follows that there is also no meaningful manner in
which either the Commonwealth as a whole , or individual client agencies in relation to particular
projects, can test compliance.
132 The Implementation Guidelines should accordingly be reworked to spell out the
Commonwealth 's expectations about all aspects of the Code.
133 A further flaw in the Commonwealth's framework for the implementation of the National Code
is that there is no continuing means of assessing achievement against the Code's objectives. In
particular, reporting obligations are confined to breaches of the National Code that are brought
to the attention of the relevant parties. 150 There is no requ irement that clients actually satisfy
themselves that the National Code and Industry Guidelines are being applied on a project.
134 The Industry Guidelines limit the reporting obligations of contractors to breaches of the Code.
The obligation expressed in the preface to the industry Guidelines is that:
... contractors, subcontractors, consultants and suppliers should report suspected
breaches of the Code to clients, the Code Monitoring Group or the Office of the Employment Advocate. 151
135 The Industry Guidelines also requ ire reports to be made in the limited circumstances (given the
scope of the entire Code) of an alleged or suspected breach of freedom of association , and in
the event of a dispute involving ind ustrial relations, or OH&S, which is likely to have a material
effect on a project. 152
136 Although it is implicit that a breach of the Implementation Guidelines is a breach of the Code,
there is no express expectation (or obl ig ation) in the Industry Guidelines that contractors,
subcontractors, consultants or suppliers will report breaches of those Guidelines, as distinct
from breaches of the National Code, except in the limited circumstances discussed above.
137 Apart from the requ irements outlined above, the only primary reporting obligations stem from
the Implementation Guidelines.
138 The Implementation Guidelines state that they ' .. detail the extra-agency processes which the
Government has set up to monitor and report on the code' .153 The essential features of the
reporting framework are:
⢠the client deals with any 'code-related problem ' brought to its attention; 154
⢠a client 'should ' inform the CMG of all breaches of the code (as distinct from code-related
problems); 155 and
Reform- National issues Part 1 85
⢠the CMG decides on 'a course of action appropriate' to the breach. 156
139 The reporting arrangements do not enable the Commonwealth to:
⢠obtain regular reports on the implementation of the Code on its projects;
⢠assess and revise performance benchmarks so as to bring about continuous
improvement;
⢠establ ish a cross -portfoli o view of performance in the implementation of the Code, and to
thereby establish and promulgate best practice on its projects; or
⢠review the Implementation Guidelines and the Industry Guidelines in the light of practice
and outcomes on its projects.
140 I therefore recommend that the CMG be revitalised by the Commonwealth Government, using
the PCMG on the Alice Springs to Darwin Railway as a model. Accordingly, I recommend that
the ABCC has a presence on the revital ised CMG and has the capacity to investigate breaches
of the Code and Guidelines and make recommendations to the CMG.
141 The ABCC's involvement with the new CMG will not undermine its independence as it can
report equally on breaches of the National Code and the Implementation Guidelines by
Commonwealth departments and agencies, as by any other party bound by these instruments.
Issue
The Implementation Guidelines refer to the eight principles set out in the National Code.
Only one of thes8 principles, namely, industrial relations, contains detailed guidance as
to what the Commonwealth expects.
The Implementation Guidelines need to be reviewed and revitalised so as to give greater
guidance on how the principles in the National Code may be implemented. There are
inadequate mechanisms in the National Code and the Implementation Guidelines for
monitoring the operation of the National Code and the Implementation Guidelines in particular cases, or generally.
Responsibility for implementation of the National Code and the Implementation
Guidelines within the Commonwealth is shared between the Department of Finance and
Adm inistration and the Department of Employment and Workplace Relation s. Improved
accountability would resu lt if one agency were appointed as the lead agency within the Commonwealth in relation to the National Code and the Implementation Guidelines.
That agency should be the Department of Er,nployment and Workplace Relations which
should monitor the performance of the Department of Finance and Administration in
meeting its responsibilities under the Implementation Guidelines. In relation to the occupational health and safety aspects of the National Code and the Implementation
Guidelines, the Department should work with the Commissioner for Health and Safety in the Building and Construction Industry.
86 Final Report of the Royal Commission into the Building and Construction Industry
Recommendation 45
(a) The Deparfment of Employment and Workplace Relations (DEWR) be the lead
agency within the Commonwealth in relation to the National Code and the
Implementation Guidelines.
(b) The Department of Finance and Administration (DOFA) report to DEWR, and the
Australian Building and Construction Commission on the exercise of DOFA's responsibilities under the Implementation Guidelines .
(c) DEWR advise agencies and other interested parties about their respective
responsibilities under the National Code and the Implementation Guidelines.
(d) The responsibilities of DEWR include the development of, and subsequent
promulgation of, Implementation Guidelines providin g guidance to agencies and
other interested parties about the 'broader construction related aspects of the Code', which should include the National Code prin ciples (in cluding occupati onal health and safety) not already the subject of specific gu idance in the present Implementation Guidelines.
(e) DEWR be provided with specific resources for the purpose of providing advice to
agencies and other interested parties about the areas of the National Code for which it is given responsibili ty. DEWR sho uld promote the Natio nal Code's
principles and have capacity to respond to enquiries from agencies and other interested parties.
Recommendation 46
The Commonwealth review its arrangements for the oversight and monitoring of the National
Code and its implementation, with a view to devising review mechanisms that seek to:
(a) identify and evaluate best practice in relation to each of the National Code's principles;
(b) promote practices so identified;
(c) audit projects against the Implementation Guidelines (as developed in accordance
with my previous recommendation to deal with all eight Code pri nciples) to establish to what extent these principles are successfully applied;
(d) maintain an ongoing and periodic dialogue with stakeholders in significant
government projects regarding the Nation al Code, and any difficu lties which have arisen in its application. The role of the Project Code Monitoring Group used on the Alice Springs to Darwin Railway may be an appropriate model for all significant government projects; and
(e) involve the relevant government client in the above processes as an active
stakeholder to ensu re that the desired outcomes of the National Code are delivered , rather than permit the client to use the standard clauses provided in the Implementation Guidelines to pass downstream to its contractor(s) the obligation of ensuring compliance with the National Code.
Reform- Nationallssues Part 1 8 7
Recommendation 47
The Australian Building and Construction Commission have a presence on the
revitalised Code Monitoring Group and have the capacity to investigate breaches of the
National Code and the Implementation Guidelines and make recommendations to the
Code Monitoring Group.
Recommendation 48
The Department of Employment and Workplace Relations take a lead role in sponsoring
a periodic, cross-portfolio review of the Commonwealth's performance in implementing
the National Code, with a view to:
(a) identifying any systemic breaches, or other issues of concern;
(b) identifying best practice as a basis for reviewing and revising performance
benchmarks so as to bring about continuous improvement; and
(c) continually reviewing the appropriateness of the Implementation Guidelines and
Industry Guidelines in the light of practices and outcomes on its projects.
Recommendation 49
Parties bound by the National Code be required to report breaches of the National
Code, as well as breaches of the Implementation Guidelines, to the Australian Building
and Construction Commission.
Publicising non-compliance with the National Code
142 The ABCC, DEWR , or DOFA, as appropriate, need to be authori sed to publicise
non-compliance with the Code and the Implementation Guidelines by Commonwealth
departments and authorities. The model should be the Ombudsman Act 1976 (C'wth), in the
sense that, where the relevant body establi shes that an authority or department is not complying with the Code or Guidelines:
(a) it should bring that deficiency to the attention of the department, if necessary to the
departmental head, for rectification;
(b) if rectification to the satisfaction of the relevant body does not occur, the relevan t body
should have the capacity to send a report directly to the Minister; and
(c) if rectification still does not occur, the relevant body needs the capacity to publicise
non-compliance by tabling details in Parli ament.
143 In this way, there wi ll be a powerful incentive for departments to comply with and require compliance by others with the Code and Guidelines.
88 Final Report of the Royal Commission into the Building and Construction Industry
Issue
The Department of Employment and Workplace Rel ations and the Code Monitoring
Group established by the Commonwealth adopt more active means of ensuring that
contractors comply with the National Code on Commonwealth projects.
Recommendation 50
The Australian Building and Construction Commission and the Department of
Employment and Workplace Relations, on the recommendation of the Code Monitoring
Group, be authorised to publicise non-compliance with the National Code and the
Implementation Guidelines by contractors and Commonwealth departments and
authorities, using the model of the Ombudsman Act 1976 (C'wth).
Amendments to particular provisions in the National Code and the Implementation Guidelines
144 There are areas where the Code and Guidelines can be improved, or at least there are specific
criticisms of particular aspects of those documents, which need to be addressed. These are
the subject of the following portion of this chapter.
Project Agreements
145 The National Construction Code and the Implementation Guidelines make clear that project
agreements will only be appropriate:
⢠for major projects;
⢠where the strategy has first been authorised by the principal;
⢠where the integrity of individual agreements is maintained ;
⢠where there are no flow-on effects of project agreement provisions;
⢠where the project agreement is developed, where possible, in consultation with the
subcontractors working on the project; and
⢠where the agreement is certified or otherwise approved under relevant industrial
legislation.
146 In Volume 5, Reform -Establishing Employment Conditions of this report, I make the following
recommendations concerning project agreements:
The Building and Construction Industry Improvement Act should provide that:
(a) the only form of project agreement which can have force and effect in the building
and construction industry is an agreement made under ss170LC or 170LL of the
Workplace Relations Act 1996 (C'wth) and certified, pursuant to that Act. by the
Australian Industrial Relat ions Commission;
Re form- National Issues Part 1 89
(b) where a project ag reement has been made and application for it to be certified has
not been made to the Australian Industrial Rel ations Commission within 21 days,
that agreement is deemed to be void, unl awful and unenforceable either directly or
by incorporation in another agreement; and
(c) where the Australian Industrial Relations Commission has refused to certify a
project agreement, that agreement is deemed to be void, unlawful and
unenforceable either directly or by incorporation in anoth er agreement.
14 7 It can be seen that there is some inconsistency between the Code principles and the proposed
term s of the Bu ildi ng and Construction Industry Improvement Act, in that the Code requires the
consent of the client to the project ag reement being entered into whereas the proposed
statutory regime contemplates on ly reg istered project agreements having the approval of the
Full Bench of the Commission. The Code and Gu idelines ought therefore to be amended to be
made consistent with the provisions of the Building and Construction Industry Improvement
Act concerning approval of project agreements. Th is can be done once th e precise terms of
the new statute are known.
Issue
The National Code and the Implementation Guidelines deal with Project Agreements in a
manner which is potentially inconsistent with the recommendations in Volume 5, Reform
-Establishing Employment Conditions, of this report.
Recommendation 51
The National Code and the Implementation Guidelines be amended to ensure that they
are consistent with the term s of the Build ing and Construction Industry Improvement Act
once the precise terms of the new statute are known .
Compliance with orders of courts and tribunals
148 The Implementation Guidelines dealing with this principle should also make plain that the
requi rement to comply with applicable oblig ations arising from awards, certified agreements,
other industrial agreements approved under relevant indu st rial legislatio n, and legislative
requirements extends to include the obligation to comply with orders and directions of tribunals
and Courts. Th e Deed between th e New South Wales Government and the CFMEU already so provides.
90 Final Report of the Royal Commission in to the Building and Construction Industry
Issue
The Implementation Guidelines require parties to comply with applicable obligations
arising from awards, certified agreements, other industrial agreements approved under
relevant industrial legislation, and leg islative requirements. There are other relevant
sources of legal obligations, namely orders and directions of courts and tribunals .
Recommendation 52
The Implementation Guidelines, when dealing with the requirement to comply with
applicable obligations arising from awards, certified agreements, other industrial
agreements approved under relevant industrial legislation, and legislative requirements,
also specify an obligation to comply with orders and directions of courts and tribunals .
Freedom of association
149 The fifth industrial relations principle contained in the National Code seeks to enshrine the right
of all parties to join or not join industrial associations of their choice without being discriminated
against. The National Code specifically provides that: 'A person cannot be forced to pay a fee
to an organisation if not a member'.
150 The Implementation Guidelines provide extensive guidance on this principle generally, but do
not deal specifically with the requirement that a person not be forced to pay a fee to an
organisation if not a member.
151 The following items should be added to the list of examples given of practices inconsistent with
the National Code:
⢠The existence, whether in a certified agreement or otherwise, of any requirement for any
person or enterprise to pay a fee to an industrial organisation of which he or she is not a
member, including, but not limited to, any requirement that a person pay a 'bargaining
fee' however described, to an industrial association in respect of services provided by it
in respect of any workplace arrangement that might regulate that person's employment
or employment by that enterprise.
⢠The imposition, or attempted imposition by a union , of a requirement for any contractor,
subcontractor or employer to employ a non-working shop steward or job delegate, or
other person, on a construction site .
⢠An attempt by a union to compel or the compelling of any contractor, subcontractor or
employer to hire a particular individual nominated by the union.
152 The last two matters are currently in the Deed between the New South Wales Government and the CFMEU. The imposition of non-working shop stewards, which is particularly prevalent in
Victoria, regularly results in substantial and unnecessary cost to the client and contractor and
delay to completion of the project. It reduces productivity.
Reform- National issues Part 1 9 1
153 The freedom of association provisions in the Code, are objected to by the CFMEU. Its
submission stated: 157
The freedom of association provisions of the Code are being implemented in such a way
as to prevent a range of conduct that promotes unions, but is not in breach of Part XA of
the WR Act. The freedom of association provisions of the Guidelines go well beyond the
provisions of the Code, and are designed to weaken unions, including the CFMEU, rather
than to protect freedom of association.
154 The Implementation Guidelines curren tly prohibit particular activities, namely:
⢠Provision by employers to unions of the names of new staff or job applicants.
⢠Supplying the names of contractors or subcontractors to unions.
⢠No ticket, no start signs, or other notices, posters, helmets, stickers, etc. that imply
that union membership is anything other than a matter of individual choice.
⢠Show card days etc.
⢠Permitting unions to dictate which employees shall be employed on a particular
project.
⢠Pressuring subcontractors to join employer associations.
⢠The use of site delegates to undertake or administer site induction processes (this
should be undertaken by site management).
⢠The use of induction forms requiring the employee to identify their union status.
155 The Implementation Guidelines conti nue:
⢠Employers must not co-operate with or act to facilitate these practices.
⢠Employers will be held responsible under the Code if they are found to have done
so.
⢠Parties must report any alleged or suspected breaches of the freedom of
association provisions of the Code and/or the Act, of which they are aware, to the
Office of the Employment Advocate.
156 All of the proscribed practices mentioned occur on many major building sites around Australia.
Each of these measu res is intended to identify, and has the effect of identifying, building
workers who are not union members . Consequential pressure can be and frequently is applied to persons who are not union members, or their employers, to have union memberships taken
out. Th at press ure restricts freedom of choice, and freedom of association. Th e unions do not
have any legitimate interest in those practices other than to seek to gain more members by application of pressure
92 Final Report of the Royal Commission into the Building and Construction Industry
157 I therefore reject the submission that those provisions in the Implementation Guidelines are not
apt to protect freedom of associati on. They are both appropriate and necessary if there is to be
true freedom of association . I also reject the notion that the provisions inhibit the lawful activities
of unions. In the CFMEU's deed with the New South Wales Government, which remains in
force, 158 the union undertakes (in relation to New South Wales building sites) that it 'will not
pursue or seek to enforce any mechanism implying that compulsory unionism applies on any
construction site ... contrary to estab li shed legal rights'. Quite apart from that, the
Implementation Guidelines do not restrict legitimate union activity.
158 The Queensland Government also notes, correctly, that the Code leaves open to the States
and Territories the option of creating their own complementary codes or guidelines. I note
however that the terms of any State Codes or guidelines must be consistent with the National
Code. The Queensland Code, in so far as it places no limitations on the use of project
agreements and no re strictions on the capacity of parties to determine the most suitable
industrial arrangements to meet their need, 159 may be inconsistent with the terms of the
National Code.
Issue
The industrial relations principle contained in the National Code seeks to enshrine the
notion of Freedom of Association. It lists examples of pr?ctices which undermine the
principle, such as 'no ticket- no start' signs, 'show card days', and providing the names
of new or potential employees to unions. The principle of freedom of association may be
undermined in ways other than those contained on the current list of examples.
Recommendation 53
The following items be added to the list of examples given of practices inconsistent with
the National Code:
(a) the existence, whether in a certified agreement or otherwise, of any requirement
for any person or enterprise to pay a fee to a registered organisation of which he or
she is not a member, including, but not limited to, any requirement that a person
pay a 'bargaining fee' however described, to an industrial association in respect of
services provided by it in respect of any workplace arrangement that might
regulate that person's employment or employment by that enterprise;
(b) the imposition, or attempted imposition, by a union of a requirement for any
contractor, subcontractor or employer to employ a non -working shop steward or
job delegate, or other person, on a construction site; and
(c) any attempt by a union to compel any contractor, subcontractor or employer to
hire an individual nominated by the union.
Reform - National Issues Part 1 93
Entry and inspection
159 Entry and inspecti on is dealt with by the Implementation Guidelines as an adjunct of the
freedom of associati on principle. The evidence received demonstrates that, in the
overwhelming majority of cases , the entry and inspection provisions contained in the Act, and
in various State legislation, are simply ignored.
160 Th e scope for entry and inspection by a un ion official to be misused on a building or
construction site, where typically more than one, and sometimes many, employers are located
at the one time, is substantial. It is appropriate in such circumstances for the Implementation
Guidelines to seek to ensure that such rights are not misused. A provision to effect this should
be inserted in the Implementation Guidelines in the following terms:
No union official is to seek, and no principal, contractor, subcontractor, consultant or
employee is to grant, admission to a site where building or construction activity that is
subject to this Code is being carried on, other than in strict compliance with the
procedures governing entry and inspection under the Workplace Relations Act 1996
(C 'wth) or the Building & Construction Industry Improvement Act, or under relevant State
legislation.
Any principal, contractor, subcontractor, consultant or employee who is aware of a union
official having entered such a site otherwise than in accordance with one such procedure
must refer the matter to the ABCC for consideration.
Issue
The scope for entry and inspection by a union official to be misused on a building or
construction site, where typically more than one, and sometimes many, employers are
located at the one time, is substantial . It is appropriate in such ci rcumstances for the
Implementation Guidelines to ensure that su ch rights are not misused.
Recommendation 54
A provision be inserted in the Implementation Guidelines in the fo llowing terms:
(a) no uni on official is to seek, and no pri ncipal, contractor, subcontractor, consultant
or employee is to grant, admission to a site where building or construction activity
that is subject to the National Code is bein g carried on, other than in strict compliance with the procedures governing entry and inspection under the
Workplace Relations Act 1996 (C'wth), the Building and Construction Industry
Improvement Act or un der relevant State legislation; and
(b) any principal, contractor, subcontractor, consultant or employee who is aware of a
union official having entered such a site otherwise than in accordance with any
such procedure must refer the matter to the Australian Building and Construction Commission for consideration.
94 Final Report of the Royal Commission into the Building and Construction Industry
Occupational health and safety and rehabilitation
161 The Implementation Guidelines detail certain obligations of contractors arising under the
National Code's occupational health and safety principle, but do not provide sufficient guidance
for their implementation. No obl igations in respect of this principle are placed on unions by the
Implementation Guidelines.
162 Occupational health and safety is th e subject of a separate volume of my report. The National
Code and the Implementation Guidelines should be amended to reflect and complement the
reforms recommended in that volume.
Reform- National issues Part 1 95
96 Final Report of the Royal Commission into the Building and Construction Industry
Appendix A: Deed made between the NSW Government and the CFMEU and BWIU on 6 March 1994
THIS DEED made this 16th day of March, 1994
BETWEEN The Honourable (Mrs) KERRY CHI KAROVSKI, MP for and on behalf of THE STATE OF
NEW SOUTH WALES ("the Government") And the CONSTRUCTI ON FORESTRY MINING AND
ENERGY UNION, BUILDING UNIONS DIVISION, NEW SOUTH WALES DIVISIONAL BRANCH and
the BUILDING WORKERS' INDUSTRIAL UNION OF AUSTRALIA NEW SOUTH WALES BRANCH
(both referred to as "the Union")
WHEREAS:
1. The Government and the Union have determined the following objectives:
1.1 To normalise relations between the Government and the Union;
1.2 To address Government concerns with the conduct of the Union in the Construction Industry in
NSW as reported by the Royal Commission into Productivity in the Building Industry;
1.3 To establish guidelines for, and commitments and undertakings by, the Union and the
Government;
1.4 To establish an alternative to de registration proceedings being pursued by the Government;
1.5 To establish a monitoring mechanism to deal with breaches of the Deed.
AND WHEREAS:
2. The Government and the Union note the following circumstances:
2.1 The Union and the Government recognise that there are various aspects of the Bu il ding and
Construction Industry in need of reform and are committed to major reform of the industry. It is
recognised that the industry must be competitive if it is to thrive and create jobs.
Reform- National issues Part 1 9 7
2.2 The undertakings and commitments contained in this Deed in no way are to be taken as an
admission of improper conduct by the Union.
2.3 The Union notes that the Royal Commission into Productivity in the Building Industry
concl uded that during the 1980's the Union had been a party to unacceptable industrial
relations conduct, and that the Government has accepted that conclusion. The Union
acknowledges that during the period covered by the Royal Commission, certain workers,
members, clients, employers and a small number of union officials engaged in inappropriate
conduct. A number of internal positive initiatives have since resolved these past difficulties. The
Uni on also notes that the final report of the Royal Commission also found that there was no
evidence of the Union eng aging in widespread or serious corruption, and that there was
"no evidence of systematic violence or physical intimidation by unions or unionists".
2.4 The Government believes that the past conduct of the Union constitutes grounds for de
registrat ion . However, the Government's primary concern is with the future conduct of the
Union and the state of the industry. According ly, the Government has decided not to pursue de
registration proceedings on the condition that the Union complies with the undertakings
contained in this Deed.
2.5 The Government notes the find ings of the Royal Commission in respect to improper conduct by certain employers in the industry during the 1980's and is committed to ensuring that
employers comply with their legal obligations, including those regarding their employees.
2.6 The undertakings and commitments in this Deed are not to be taken as removi ng or restricting
any legal rights and obligati ons created by State or Federal law.
2. 7 The Union reserves the right to continu e to engage in legitimate trade union activities such as
ensuring that the obligations contained in awards, ag reements and relevant State and Federal
in dustrial legislation are adh ered to .
NOW THIS DEED WITNESSES:
UNDERTAKINGS - UNION
3. General
3.1 The Uni on will continue to operate within the law and will co operate with Government,
employers and employer associations in the reform processes to achieve new and improved
standards of industrial and workplace relations for the Construction Industry.
3.2 The Union has previously independently adopted its own Code of Conduct for officials ,
annexed to this Deed , and wil l require that all officials abide oy that Code as well as the undertakings contained in this Deed .
3.3 The Uni on wi ll , as expediti ously as possible, but no later than three (3) months from the date of signin g of th is Deed, lodge with the NSW and Australian Industrial Registrars an alteration of
ru les to extend the definition of "g ross misbehaviour" to include, a wilful failure to comply with a
lawful direction of th e Committee of Management of the Union to comply with any of the undertakings contained in this Deed.
98 Final Report of the Royal Commission into the Building and Construction Industry
3.4 If and when the Union becomes aware of a failure by any of its members to comply with any of
the undertakings contained in this Deed it will take all reasonable efforts to requ ire compliance.
Should a member, wilfully breach the undertakings the Union will charge that member with
"gross misbehaviour" under its rules and deal with that charge in accordance with the Union
rules and the rules of natural justice.
3.5 The Union agrees to comply with the terms of the NSW Government Code of Practice for the
Construction Industry (October 1 992), where it has application. Where the Code applies the
Union will not directly or indirectly compel any employer to breach the terms of the Code. It is
noted that the Government seeks that the NSW Code of Practice extend to private sector
projects.
3.6 The Union will continue to comply with the provisions of all awards and agreements to which
the Union is a party and will comply with all orders, formal directions and decisions of any court
or tribunal of competent jurisd iction .
3. 7 The Union will continue to comply with the dispute settlement procedures contained in the awards and agreements to which the Union is a party.
3.8 The Union will not resort to industrial action in support of payment for lost time in relation to a
period during which members are or were engaged in industrial action. Any claims for payment
of lost time will be processed in accordance with either section 219 of the Industrial Relations
Act, 1991 (NSW) or section 124 of the Industrial Relations Act, 1988 (Cwth) as appropriate, or
the terms of any applicable agreement.
3.9 The Union will not pursue or seek to enforce any mechanism implying that compulsory
unionism applies on any construction site in New South Wales, contrary to established legal
rights. Th e Union reserves the right to promote unionism through proper and lawful means.
3.10 The Uni on is opposed to, and will not engage in or support, victimisation [in clu di ng as defined
the Industrial Relations Act 1991, (NSW)], threats, and intimidation against any person(s) in
respect to whether a worker is or is not a union member. Victimisation does not include the
Union persuading , encouraging, or convincing workers in a proper manner to join and/or
maintain financial membership of the Union.
3.11 The Union will continue to comply with the victimisation provisions of the Industrial Relations
Act 1991, (NSW).
3.12 The Union will continue not to engage in conduct towards its members, or those eligible to be
members, which is an offence under State and Federal industrial legislation.
3.13 The Union will abide by the right of entry provisions contained in State and Federal industrial
legislation, awards and agreements to which the union is respondent.
4. Occupational Health & Safety
4.1 The Union is committed to promoting the highest standards of health and safety in the
Construction Industry. The Union is committed to its own compliance and the compliance of its
members, to the rights and obligations under the Occupational Health and Safety (O HS) Act
Reform - National issues Part 1 99
1983 (and Regu lations) as well as the relevant procedures in awards and agreements to which
the Union is a party.
4.2 The Union is committed to a responsible approach to the management of safety, and will co
operate with the Government and employers in the trialing and implementation of agreed
occupational health, safety and rehabilitation management systems and plans.
4.3 The Union and its members will comply with determinations by WorkCover Authority inspectors
made under the OHS Act 1983 and associated legislation. Where conditions involving a
reasonable and genuine risk of death or injury prevail the Union reserves, on behalf of its
members, the right to refuse to work under these conditions.
4.4 The Union undertakes that, where an alleged unsafe condition exists on a construction site, it
will allow work to continue in all areas to which there is safe access and which are not affected
by that condition and will not lim it the right of any employer to transfer workers to other
construction sites in a manner consistent with award and legislative provisions.
4.5 The Union undertakes that where safety rectification work has been satisfactorily completed in
an area of a construction site, work will immediately resume in that area.
4.6 The Union undertakes that where work has ceased due to the identification of an unsafe working condition, the Union will refrain from making a return to work conditional upon any
matter other than the rectification of the said unsafe condition.
4.7 The Union undertakes that where safety rectification work is required in an area of a
construction site, the Union will co operate to ensure that such rectification work will immediately commence in that area.
4.8 The Union wi ll continue to exercise its rights in respect to the enforcem ent of safety standards and legislations through the mechanisms contained in the OH&S Act.
5. Workplace Reform, Best Practice and Continuous Improvement
5.1 The Union will co operate with the Government, employers, employer association s,
contractors, and subcontractors in workplace reform , the aim of which is to bring about both
significant and lasting cultural change in order to improve productivity, employer/employee relationships and competitiveness in the Construction Industry.
5.2 The Union recognises that enterprise based agreements negotiated with individual employers are to encompass commitments to workplace reform, best practice and improved productivity.
Further, that those agreements must provide for outcomes that are relevant and appropriate to the particular employer's operation and workers concerned.
5.3 The Union continues to be committed to the of restrictive practices undermining the efficiency of the industry and is committed to structural efficiency principles such as broad skill ing and broadbanding within appropriate training and safety frameworks.
5.4 The Union will continue not to compel any employer to hire an individual nominated by the
Union, but will play a positive and appropriate role in assisting members to find employment when the Union is aware of job vacancies.
I 00 Final Report of the Roya l Commission into the Building and Construction Industry
5.5 The Union ag rees with the indust rial tribunals that len gth of service can be an important
consideration in determining retrench ments. Th e Union accepts the prin ciple that length of
service should not necessarily be the exclusive consideration, but one of a range of factors
considered including the skill s and efficiency of workers, the required skills avai lable within the
existing workforce, and changes in the operational direction of the business.
5.6 The Union will not seek to impose arbitrary or automatic "employee takeover" in cases where
an employer has ceased business. The Uni on recognises that there are commercial factors th at
need due consideration in any particular circumstance. The Union will however continue to
pursue for members alternative employment opportunities where they have been abandoned
by their employer.
5.7 The Union undertakes that where an employer ceases business leaving outstanding
entitlements owing to its workers it wi ll not seek to compel any other person to pay the said
entitlements, unless they are legally obliged to do so. The Union reserves its rig ht to pursue
legitimate claims to ensure that workers are paid for work done and outstanding entitlements.
5.8 The Union wi ll not seek to flow on justifiable specifi c claims for one class of workers to another
class of workers to which the benefit is not justifiable or appropriate.
5.9 The Union does not support and will not promote stoppages of work by workers where they
are not affected by a particular issue or problem.
5.10 The Union recognises the righ t of any employer to transfer at any time its workers between any
construction sites, subject to any relevant award , agreement or legislative provision.
5.11 The Union w ill not support the practice of "one in, all in" in relation to overtime, but will continue
to support the fair and non discriminatory allocation of overtime.
5.12 The Union will not require that various specialist personnel be present and paid wherever
overtime is worked , even though there is no useful or productive work for them to do and they
are not required for health and safety rea sons.
5.13 The Union wi ll not require that workers receive a full day's pay following the completion of
certain limited set tasks unless such arrangements are provided for by the relevant award or
agreement.
5.14 The Union will ensure through agree ment(s) and the app lication of award(s) that down time due
to inclement weather is minimised and that members wi ll co operate with their employer in
doing whatever can be done to continue producti ve wo rk.
5.15 The Union does not support and will discourage the practice of bannin g work the weekend
before a rostered day off (R OO).
5. 16 The current award provision on RDOs provides for certain flexibilities. The Union will not
unreasonably refuse to substitute RDOs in accordance with the award procedure. The Uni on
agrees that further flexibilities, such as banking and staggering of RDOs, are an appropriate
component for agreements reached between the Union and individual employers.
Reform - National issues Part 1 1 0 1
5.17 Th e Union will not impose restrictions on any business' right to sublet work. The Union reserves
the _ right to advocate and pursue through restructuring the broadening of subcontract
packages and compliance with legal requ irements (i.e. no sham sub contract arrangements).
5. 18 The Union will not require any contractor, sub contractor or employer to employ a non working
delegate on a construction site.
UNDERTAKINGS - GOVERNMENT
6. General
6.1 On the signing of this Deed, the Government wil: resume normal relations with the Union.
Priority wi ll be given to the re establishment of the Industry Committee of the WorkCover
Authority to ensure maximum industry co operation in addressing workplace safety.
6.2 On the signing of this Deed, the Government will not pursue de registration proceedings
agai nst the Union , provided that the Union complies with the terms of this Deed.
6.3 The Government recognises that it is vital to the industry to ensure adequate numbers of
apprentices and other skilled workers are employed and trained. The Government undertakes to
consu lt with the Union on how best to ensure that the future skill needs of the industry are met.
6.4 The Govern ment recognises that there are certain problems associated with "security of
payment". On this basis, it will consult w ith the Union and other industry parties to develop
appropriate mechanisms to safeguard workers' wages and entitlements.
6.5 The Government acknowledges the legitimate rights of unions in the Construction Industry and
the rig ht of union officers and members to conduct lawful acti vities free of victimisation.
7. Workplace Reform, Best Practice and Continuous Improvement
7. 1 A Monitoring Committee (Committee) will be established to monitor compliance with this Deed.
This Committee wil l consist of two representatives of the Government, one of the Labor
Council of NSW, one of the Nationai/NSW Union, and an independent "eminent person"
ag reed to by the parties to thi s Deed. Committee procedures w ill be prepared by the parties to
this Deed in consultation with the "eminent person".
7.2 The purpose of the Committee is to enable the Government or the Union to raise any concerns
with regard to possible non compliance w ith th e terms of this Deed or with the operation of the terms of the Deed with a view to resolving the issue.
7.3 The Committee will initially be established 7or a period of twelve (12) months to monitor the
Deed, and will meet at least once every two (2) months during that period . If the Government or
the Union has concerns with non compliance, they are to be raised as soon as practical with the Monitoring Committee.
7.4 The Committee wil l be provided with administrative support, as required, from the NSW
Department of Industrial Relations, Employment, Training and Further Education.
I 02 Final Report of the Royal Commission into the Building and Construction Industry
7.5 The Committee process should not be a substitute for industrial matters being dealt with in the
ordinary course of events through the dispute settlement mechanisms in awards, agreements
and industrial legislation.
8. Definitions
In th is Deed:
8.1 "industrial action " has the same meaning as defined in section 4(1) of the Industrial Relations
Act 1991 (NSW).
8.2 "agreement(s)" means registered or certified agreement(s) under the Industrial Relations Act
1991 (NSW) or the Industrial Rel ations Act 1988 (Cwth) as amended.
8. 3 "employer(s)" means an employer(s) of workers in the Construction Industry in the State of New
South Wales .
8.4 "Construction Industry" means the activities performed in the State of New South Wales in
connection with the erection, repair, renovation, maintenance, ornamentation or demolition of
buildings or structures.
8.5 "worker(s)" means work performed by person(s) in the Construction Industry who:
8.5. 1 Come within the conditions of eligibility (Rule 2 - Constitution) of the Construction, Forestry,
Mining and Energy Union, Bui lding Unions Division, an organisation regi stered under the
Industrial Relations Act 1988 (Cwth); and/or
8.5.2 Come within the conditions of eligibility (Rule 2 - Constitution) of th e Buildi ng Workers Industrial
Union of Australia, NSW Branch, an organisation registered under the Industrial Relations Act
1991 (NSW).
CODE OF CONDUCT AND BEHAVIOUR FOR OFFICERS OF THE
CFMEU (BWIU DIVISION) NSW BRANCH
The following Code of Conduct shall be applicable in respect of the duties, obligations and
behaviour of officers of the union:
1. The requests and directives of the Executive Officers of the union (Secretary, President,
Assistant Secretary) must be implemented.
2. If a person has a difference wi th a request or directive as outli ned in 1 above he/she may have
the matter promptly reconsidered by the appropriate Executive Officer. If he/she is not satisfied
the matter may be reconsidered by the Branch Management Committee. Such final
reconsideration will not re lease the Officer from any obligation to comply with Clause 1. of this
Code.
3. An Officer shall not work for any other person, body or corporati on for profit or reward during
their term of office or employment with the union without the approval of the Branch
Management Committee, as provided in the Rules. Also no Officer shall receive any gift or
consideration from any employer or supplier of materials in the industry. They are not to obtain
build ing materials or products free of charge or at a rate less than that which wou ld apply to the
trade, ie trade discount.
Reform - National Issues Part 1 1 03
4. No Officer shall assist or arrange for a member of his/her family to be employed by a building
empJoyer except by agreement with the State Secretary. No person is to use their position for
in dividual advantage or gain.
5. No Officer engaged by the union shall converse in an abusive or derogatory manner towards
any person towards whom he/she may come into contact, irrespective of provocation.
Similarly, racist or sexist remarks are recognised as objectionable.
6. It is expected of officers to publicly defend other fellow officers including Branch Management
Committee members and State Councillors fro m verbal criticism and personal attack.
7. It is required that agreed policies of the union will at all times be publicly promoted and upheld ,
irrespective of personal views .
8. All agreements entered into by the union must be adhered to and honoured.
9. No literature other than union and other agreed literature is to be distributed by officers of the
union unless authorised by an Executive Officer.
1 0. Al l officers are required to be suitably attired and presented at all times.
11 . Th e needs of members and the organisation must be properly and punctually serviced at all
ti mes. Any requirements in respect of accountability must be adhered to. If an Officer is unable
to attend work as required he/she must notify the appropriate Executive Officer and make the
necessary arrangements fo r another Officer to attend any meetings, commission hearings etc
th at they had responsibility to attend during their period of absence.
12. It is recognised that excessive drinking and/or drug taking is incompatible with effective
performance as a fu ll time Officer of the union. Under no circu mstance should any person drink
alcohol etc during working hours unless it is at an authorised fun ction/activity.
13. No arbitrary fines or monetary penalti es are to be imposed on any builder or subcontractor under any circumstance.
14. It is expected that Officers of the union shall assist in developing an environment fee from
sexual harassment and racial discrimination of any kind, implied or overt.
15. All Officers are responsible for the safe care and service of union property, eg vehicles etc.
Note : Failure to comply with the above requirements will lead to appropriate action being
implemented in the interest of fellow Officers and the good of the organisation .
1 04 Final Report of the Royal Commission into the Building and Construction Industry
Appendix B: Relevant provisions from the Implementation Guidelines.
Section 1
Introduction
The National Code of Practice for the Construction Industry (the code) was developed jointly by the
Australian Procurement and Construction Council and the Departments of Labour Advisory
Committee. The code has been endorsed and adopted by Commonwealth, State and Territory
Governments through the Procurement and Construction -Ministers' Council and the Labour
Ministers' Council.
These guidelines are intended to assist Commonwealth agencies to interpret and implement aspects
of the code in relation to construction projects undertaken on their behalf.
The Implementation Guidelines also detail the extra-agency processes which the Government has
set up to:
(a) monitor and report on the code; and
(b) determine whether a sanction should be imposed on a party for a breach of the code.
These measures include a Code Monitoring Group (CMG), which has oversight of code
implementation and compl ian ce matters, including the consideration of further action on issues
referred to it by Commonwealth departments and agencies ..
Section 2
Application and scope
The code is to be applied to the maximum practicable extent to all construction and bui ldin g work
undertaken for Commonwealth purposes. Th e following sections elaborate on the types of activities
covered by the code.
Reform- National Issues Part 1 i 05
2.1 To apply to all budget funded construction
The -code applies to all construction activity undertaken by or on behalf of departments,
agencies and budget funded statutory authorities subject to the Financial Management and
Accountability Act 1997. This includes building, construction, and material supply contracts
and consultants commi ssions_
2.2 Pre commitment lease projects
Commonwealth agencies negotiating pre commitment lease arrangements with a private
sector developer must make the application of the code to the project by the developer a
condition of their agreement to lease.
2.3 Build Own Operate Transfer/Build Own Operate
The code must also be applied to Build, Own, Operate, Transfer (BOOT) and Build, Own,
Operate (BOO) projects in itiated by a Commonwealth agency for the delivery of
Commonwealth agency for the delivery of Commonwealth functions or services. In many cases a Commonwealth entity will be the subsequent tenant of such projects, and can request code
compliance in accordance with section 2.2.
2.4 Facilities built for the delivery of Commonwealth funded services
The Commonwealth encourages the adoption of the co de within the private sector. This
in cludes the construction of facilities or installati ons operated by the private sector as part of
service delivery packages for the Commonwealth .
2.5 Recommended for adoption by all statutory authorities and government business enterprises
Responsible ministers have been required to recommend adoption of the code by all off budget statutory authorities and government business enterprises (GBEs) within their portfolios. Where
GBEs or statutory authorities adopt the code, al l code matters including enforcement are the
responsibility of th at organ isation. Implementation of the code should be in accordance with
these guidelines and, where necessary additional guidance should be sought from the CMG.
Section 3
Date of effect
All contracts, tendering processes, expressions of interest or market testing proposals entered into
after 22 September 1997 must r::omply with all elements of the code. (Note that application of the industrial relations elements commenced with effect from 1 July 1997.)
I 06 Final Report of the Royal Commission into the Building and Construction Industry
Section 4
Documentation
4.1 All parties to be advised of requirement to comply
All parties invited to express interest in a Commonwealth construction project should be
informed of the application of the code to the project. Advertisements calling for expressions of
interest, requests for tenders , submissions, invitations to join Common Use Arrangements etc,
should incorporate the following statement:
The National Code of Practice for the Construction Industry applies to this project.
4.2 Tender documents to incorporate code and requirement to comply
Compliance with the code and the Industry guidelines for the industrial relations and
occupational health and safety components of the National Code of Practice for the
Construction Industry (the industry guidelines), which are based on section 6 of these
guidelines, should be made a condition of tender. The code and the industry guidelines should
be included as an attachment to tender documents, and should be made available on request
to all interested parties. Tenderers should also be advised that compliance with the code and
the industry guidelines is to extend to all subcontractors, consultants and suppliers who may
be engaged by the tenderer on the project. Copies of the industry guidelines are available from
the Department of Workplace Relations and Small Business (see section 8 for contact details).
4.3 Agreement to comply with the code - alternative methods of confirmation and
acceptance
A tenderer may be advised that submission of a bid will be taken as an agreement by that party
to comply with the code and the industry guidelines in relation to the project. Alternatively, the
tenderer may be required to submit an undertaking of compliance as part of the tender
submission. The method adopted will depend on the agency's business practices and
preferred tendering/contracting arrangements.
4.4 Exclusion of parties from tendering opportunities
The code provides that breaches by parties can be regarded as a relevant factor when
awarding contracts. In general, this would only apply in situations where the CMG advises that
a sanction has been applied, and would only apply in the terms and for the period that the
sanction applies. All tenderers should be advised of th is condition in the tendering documentation.
Information concerning the exclusion of parties from tendering opportunities can be obtained from the Secretariat of the CMG (see section 7 for further detail s) .
If a party is excluded from a specific business opportunity on these grounds, the c lient shou ld
inform them of the reason, in writing, at the earl iest opportunity.
Reform- National issues Part 1 1 0 7
4.5 Contract documents and project management procedures to incorporate
requirement to comply
While the form of wording will vary according to the contract form and the type of service
supplied, the contract should incorporate the req uirement for the contractor to comply with all
aspects of the code and the industry guidelines, and for all subcontractors , suppliers and
consultants associated with the project to comply in turn.
Clauses to achieve this may be incorporated into general or special conditions of contract,
associated statements of compliance, statutory declarations required of contractors or project
procedures as appropriate.
Model clauses, prepared by the Attorney General's Legal Practi ce, are included in these
guidelines at Appendix A.
Section 5
Responsibilities of parties
5.1 Departments and agencies
Departments and agencies, acti ng as clients of the construction industry, are ex pected to apply the code in the same manner as any other Government policy. The client is responsible for:
⢠ensuring that sanctions applied under th e code are enforced, including the exclusion of
identified parties from work opportunities in accordance with decisions advised by the CMG;
⢠informing parties developing proposals, expressing in terest, tendering or undertaking
work in re lati on to a Commonwealth construction project, of th eir responsibility to comply with the code and the industry guidelines;
⢠obtaining commitments that the code and the industry guidelines will be complied with , in the form specified in section 4.3;
⢠undertaking initial action to address code issues which may arise in relation to a project. 'Initial acti on' is further defined in section 7. 1; and
⢠notifying the CMG of all allegations of breaches of the code within 28 days and referring matters wh ich require further action to the Secretariat of the CMG .
Clients are expected to cooperate with requests for information concerning code related
matters made on behalf of the CMG or investigative bodies to which complaints have been referred.
5.2 Contractors, subcontractors, consultants, and employees
Contractors, subcontractors, consultants, and al l employees undertaking work on the project must:
⢠comply with the code and the industry guidelines;
'1 08 Final Report of the Royal Commission into the Building and Construction Industry
⢠require compliance with the code and the industry guidelines from all subcontractors and
suppliers. All contracts should specifically require code and industry guideline compliance.
Contractors, subcontractors, consultants or employees should also report a suspected breach
of the code to the client, the CMG or the Office of the Employment Advocate (O EA).
5.3 Secretariat of the Code Monitoring Group
The Secretariat of the CMG instituted by these guidelines is formed by the Policy Unit,
Domestic Property Group in the DOFA, and the Industry Advisory Branch of DWRSB.
The Secretariat is responsible for:
⢠informing and advising agencies and departments about the code and related issues,
including the imposition of sanctions;
⢠receiving reports from agencies about the code, especially in relation to alleged
breaches, and maintaining a register of information concerning alleged and prove breaches and sanctions;
⢠referring matters for investigation by appropriate bodies;
⢠servicing meetings of the CMG ;
⢠reporting to the Government on code matters, through the Minister for Finance and
Administration and the Minister for Workpla,ce Relations and Small Business;
⢠preparing the Commonwealth contributions for the standing Ministerial Councils agenda items monitoring the code; and
⢠liaising with other jurisdictions at officer level about code matters.
The functions of the CMG are dealt with separately in section 7.2.
5.4 DOFA
DOFA has the following code related responsibilities:
⢠advising agencies and other interested parties about the broader construction related
aspects of the code; and
⢠monitoring compliance with the non industnal relations aspects of the code on behalf of
the Commonwealth .
5.5 Workplace Relations and Small Business Portfolio
The Department of Workplace Relations and Small Business has the following code related
responsibilities:
⢠advising agencies and other interested parties about the industrial relations and OH&S
sections of the code; and
⢠monitoring and promoting compliance with the industrial relations aspects of the code on
behalf of the Commonwealth.
Reform - National issues Part 1 i 09
The OEA wil l have primary responsibility for investigating alleged breaches of the industrial
re lations provisions of the code, in conjunction, where necessary, with DWRSB. The OEA will
report the results of its investigations to the CMG for handling in accordance with section 7.2 of
these guidelines.
Section 6
Industrial relations and occupational health and safety components
6.1 Awards and legal obligations relating to employment
All parties must comply with the provisions of applicable:
(a) awards and workplace arrangements which have been certi fi ed, registered or otherwise
approved under the relevant industrial relations legislation; and
(b) legislative requirements.
Awards set out minimum conditions of employment and employers are obliged to comply with
awards unl ess they have entered into certified agreements (CAs) or Australian workplace
agreements (A WAs) that displace or vary the terms of awards. Certified agreements and A WAs
are also legal_ ly enforceable and must be complied with by the parties to such agreements. This
includes CAs, AWAs, and enterprise agreements approved under State legislation. It should be
noted that State-registered project ag reements cannot override federal awards (or AWAs or
CAs). The code does not require compliance with unregistered 'industry agreements'.
Parties must comply with any obligations arising from legislation, such as the Workplace
Relation s Act I 996 (the Act) and all other relevant laws governing employment conditions such as annual holidays, long service leave, workers compensation, rehabilitation, superannuation,
taxation, industrial and commercial training .
Any situations that arise where award or legislative obligations have not been met are to be
dealt with by Government agencies through existing compliance procedures and through the compli ance principles of the code.
6.2 Workplace arrangements
Workplace arrangements which reflect the needs of the enterprise are important elements in achieving continu ous improvement and best practice.
The content of the workplace arrangements are a matter for the parties to those arrangements, subject to them meeting legislative requirements. However they may encompass:
(a) improved OHS and r8habilitation practices;
(b) training and skill formation strategies;
(c) multi skilling; and
(d) flexible work practices, for example in relation to working time.
11 Q Final Report of the Royal Commission into the Building and Construction Industry
A party must not, directly or in di rectly, pressure or coerce another party to enter in to , or to vary
or to terminate a workplace arrangement. Nor may they press ure or coerce them about the
parties to and/or the contents or the form of their workplace arrangements. This does not
prevent action sanctioned by relevant industrial relations legislation.
The Federal Government's workplace relation s policies emphasise the importance of
relationships at the workplace and enterprise, with primary responsibility for industrial relati ons
resting with employers and empl oyees at the enterprise and workplace level. The
Government's legislation provides a framework for cooperative workplace relations and
enables employers and employees to choose the most appropriate form of agreement for their
particu lar circumstances .
The Act provides for more effective choice and flexibility for parties in reaching workpl ace
agreements-AWAs and CAs are avai lab le and are designed to enable employers and
employees at the workplace to take responsibility for their own workplace arrangements and
relations.
Parties should ensure that implementation of the code supports a direct relationship between
employees and employers and contractors/subcontractors, with a reduced ro le fo r third party
intervention in workplace arrangements.
Under the Act a party must not take or threaten to take any industrial action or other action , or
refrain or threaten to refrain from taking any action with the intent to coerce another person to
agree, or not to agree to the making, varying or extending .of an agreement. An employer must
not coerce or attempt to coerce, an employee not to request the invo lve ment of an industri al
organisation in negotiations over a CA.
The code prohibits head contractors or clients requiring (either through the tendering process
or otherwise) that su bcontractors or supp li ers have particular workplace arrangements in
place, whether that be in the form of a CA, A WAs , or a State enterprise agreement. It is up to
each employer to negotiate with their employees (and their employees ' representatives , where
that is the employees' wish) what form of workplace arrangement, if any, should apply. It is up
to employers and their employees to decide whether to have a CA (and if so what kind) , A WAs,
a State enterprise agreement, or to work under the terms of the relevan t award (supplemented
possibly by overaward payments).
Except where a project agreement has been agreed to by the client in accordance with the
code, a party must not requi re another party to agree to pay certain rates as a conditi on for the
allocation of work or the giving of a tender.
6.3 Overaward payments
'Overaward payment' is defined to mean any payment and/or benefit above that set out in the
relevant award, reg istered agreement and/or legislation . This includes payments provided for in
workplace arrangements.
Decisions on overaward payments, including superannuation, redundancy and workers
compensation insurance, shall be made by the individual employer to suit the needs of the
Reform - National issues Part 1 111
enterprise. No employer may be compelled to pay benefits above that prescribed in the
reiE;)vant workers compensation leg islation.
A party must not. directly or in directly, coerce or pressure another party to make overaward
payments. No employer may be compelled to contribute to any particular redundancy or
superannuation fund , or similar body unless there is an award or legal requirement to do so.
Thi s does not prevent action sanctioned by relevant indu strial relations legislation.
The code prohibits direct or indirect coercion being applied by a contractor to another
contractor, subcontractor, consu ltant and/or supplier to make overaward payments. This
means that no contractor, subcontractor, consu ltant or supplier is allowed to enter into any
agreement or issue a contract or subcontract or 'industrial instruction ' that directly or indirectly
binds or otherwise pressures or coerces another contractor, subcontractor, consultant and/or
supplier into making overaward payments.
Payments to industry superannuation, red undancy and sick leave funds which provide for
contributions in excess of award and legislative requirements are matters to be decided by each employer. No party may coerce or attempt to coerce another party into making such
vo luntary contributions into such schemes including schemes which provide top up payments
over and above th e provisions contained in awards, agreements or legislation.
The code does not prohibit employers, employees, or unions from taking 'protected ' industrial
action in accordance with the applicable legislation in pursu it of new workplace arrangements.
Where there is a project agreement which provides for special payments, conditions and/or benefits to be applied on a site -wide basis , the contractor, subcontractor, consultant or
supplier may be required to comply with the terms of the project agreement where the terms of
the project agreement have been advised at the tender stage .
6.4 Project agreements
Project agreements will only be appropriate for major contracts. Accordingly project
agreements incorporating site-wide payments, conditions or benefits may be negotiated where the strategy has first been authorised by the principal.
The integrity of individual en terprise agreements must be maintained. Th is means project agreements cannot override the workplace arrangements of individual contractors,
su bcontractors, consultants and suppliers, nor may they provide conditions which by their
nature have effect beyond the duration of the project. such as , for example, redundancy pay and superannuation contributions. While there may be provisions in a relevant workplace arrangement that enables the parties to the arrangement to encompass provisions in a project
agreement, there shall be no double countir1g of 'overaward ' payments .
There shall be no flow on of the provisions of project agreements.
Such agreements should be developed, where possible, in consultation wi th the su bcontractors working on the project. The agreements shall be certified or otherwise
approved under the relevant industrial relations legislation.
112 Final Report of the Royal Commission into the Building and Construction Industry
The code is based on the pri macy of enterprise-level determination of pay and conditions.
Nevertheless the code does recognise that there may be some situations where project
agreements may be appropriate but only under strict conditions-the most important of which
is the agreement of the principal (that is, the client). Clients may- consistent with the code
adopt a policy of not agreeing to project agreements.
It is very important that Commonwealth clients do not agree to project agreements unless there
is a clear and demonstrable benefit to the Commonwealth in doing so. Th is is most likely to
take the form of improved time and/or cost performance compared to what might reasonably
be expected in the absence of a project agreement.
The principal is to be accountable for decisions to approve project agreements and must state
their reasons for doing so in writing to the relevant portfolio minister.
Decisions to approve project agreements must be defensible on objective and detailed
grounds and clearly demonstrate a benefit to the project, such as improved completion
schedules that would not otherwise have been achievable on a best practice basis.
Project agreements must be reviewable against performance benchmarks over the
construction period and be able to be terminated or varied if those benchmarks are not met.
Project agreements will only be appropriate for major contracts, as defined by the principal
from time to time and will not be permitted on projects worth less than $25 million except in
exceptional cases.
In this context, 'principal' means the Government agency responsible for the project, initiative
or scheme, regardless of the Government agency not being the nominated principal in the
construction contract. For example, in a BOOT project there will not be a construction contract
with the initiating Government agency. However, there will be a contract and/or a concession
agreement between the agency and the proponent of the BOOT project. The Government
agency wil l retain the right, in consultation with the relevant proponent, through the concession
agreement to authorise the negotiation of a project agreement.
Where a contractor or group of contractors wish to negotiate a project agreement to regulate
special payments, conditions and/or benefits for more than one contractor, the strategy must
first be discussed with, and authorised by, the principal before work commences. Whenever
practical, subcontractors should be involved in th e process of developing a project agreement
prior to it being finalised.
Given the workplace focus of the agreement system, the capacity for multi-employer
agreements to be made requ ires the consent of all employers and the majority of the
employees to be covered and involves testing by the Australian Industrial Relations
Commission or relevant State industrial tribunals.
While project agreements may of course cover matters other than pay and conditions, in
regard to the latter they should generally only provide for project-specific productivity
payments, which should be tied to the achievement of identified performance targets. Th ey
should not cover other types of 'benefits' such as superannuation or redundancy contributions,
workers compensation insurance, '24 hour cover' etc. These are all matters that should be
covered in enterprise or workplace agreements, if at all.
Reform - National issues Part 1 I I 3
The integrity of workplace arrangements including CAs and AWAs must be maintained.
A project agreement does not override a CA or an AWA. The project agreement must not
req uire employers with their own work place ag reements in place to make payments and/or
provide other benefits which would resu lt in 'double dipping ' by other parties, for example
where a project agreement provides for a project/productivity allowance, the subcontractor
must be ab le to absorb any enterp ri se productivity allowance against the project allowance.
Parties must not use any term, condition or benefit in the project agreement as a precedent on
any other project or for any other purpose.
It should be noted that State-registered project agreements should maintain the integrity of
workplace arrangements including CAs and A WAs.
In deciding whether to approve the use of a project agreement, the principal should consider:
(a) the degree of commitment demonstrated by the parties to the proposed agreement to
improving productivity and workplace and industrial relations;
(b) past performance and the parties' history of maintaining and abiding by agreements;
(c) the manner in which the proposed project agreement wil l interact with workplace
arrangements including CAs and AWAs already in place or in the process of being
negotiated, endorsed or certified; an d
(d) whether there is anything in the proposed agreement which is inconsistent with the code,
awards or other legislation.
Project ag reements shall be certified and/or registered under relevant legislation. In particular,
project ag ree ments covering several employers should be certified under the multiple-business
provisions of th e Act (s. I 70LC) and this shoul d be made a condition of approval by the client.
6.5 Freedom of association and right of entry
All parties have the right to freedom of association. This means that parties are free to join or
not to join industrial associations of their choice and that they are not to be discriminated
against or victimised on the grounds of membership or non membership of an industrial association . A person cannot be forced to pay a fee to an organisation if not a member.
Among the fundamental principles underpinning the Federal Government's industrial relations policy are :
(a) the prin ciple of freedom of choice ;
(b) the principle of freedom of association, the choice to be or not to be in a union or
employer association, and the choic8 of which union or employer organisation; and
(c) the principle that all Australians be treated equally before the law.
Greater choice will encourage the development of registered organisations that are more competitive, providing a higher level of service to members. Organisations must be representative of, and accountable to their members and able to operate effectively.
Membership of al l organisations must be voluntary. Compulsory unionism, 'no ticket no start',
and preference clauses are not acceptable and are unlawful. Parties are protected from
11 4 Final Report of the Royal Commission into the Building and Construction Industry
coercion (whether direct or indirect) to join or not to join an organisation or to cease to be a
member of an organisation . Provisions in federal awards and CAs which provide for preference in employment are null and void and unenforceable.
Employment discrimination against, or victimisation of, a party (or threatened discrimination or
victimisation) is unlawful, where that occurs on the grounds of:
(a) the party's membership or non-membership of a registered organ isation or an
association applyi ng for registration; or
(b) a party seeking to exercise rights under legi slation, awards or agreements, or seeking the
assistance of any person or body to seek the observance of the party's rights under
legislation , awards or agreements, and/or the party's participation in industrial proceedings.
Contractors must adopt policies to ensure that all those working on projects covered by the
code have their right to choose whether or not to join a union or employer association properly
respected. In particular, the following practices are inconsistent with the code:
(a) provision by employers to unions of the names of new staff or job applicants
(b) supplyin g the names of contractors or subcontractors to unions
(c) 'no ticket, no start' signs, or other notices, posters, helmets, stickers etc that imply that
union membership is anything other than a matter for individual choice
(d) 'show card ' days etc
(e) permitting unions to dictate which employees shall be employed on a particular project
(D pressuring subcontractors to join employer associations
(g) the use of site delegates to undertake or administer site induction processes (this should
be undertaken by site management)
(h) the use of induction forms requ iring the employee to identify their union status.
Employers must not cooperate with or act to facilitate these practices. Employers will be held
responsible under the code if they are found to have done so .
Parties must report any alleged or suspected breaches of the freedom of association provisions
of the code and/or the Act, of which they are aware, to the Office of the Employment Advocate.
6.5. 1 Right of entry
Parties must also observe legislative provisions relating to the rights of parties to enter
workplaces. If an industrial organisation or a representative of an organisation wishes to enter a
workplace they must abide by relevant legislation and may only enter for the reasons envisaged
under such legislation. For example, under federal laws, unions do not have an automatic right
of entry to workplaces. Representatives of unions may only enter a workpl ace for two reasons:
to investigate a suspected breach of award or agreement, or to speak to parties at the
workplace.
Reform- National issues Part 1 11 5
In both of these cases unions must have a permit from an industrial registrar and give the
relevant employer, and not simply the project manager, 24 hours notice. The employer must be
bound by a federal award or workplace agreement to which the union is a party. In the case of
a suspected breach the employees must be members of the union concerned and where the
union simply wants to talk, the employees must be members of a union or be eligible to join the
union.
If a union suspects a breach, and provided the conditions are met, representatives may enter a
workplace during working hours and inspect any pay or time sheets relevant to the breach, and
speak to employees. Union representatives cannot inspect an AWA. If a union simply wants to
talk to members, or potential members, it can do so, provided the employees agree and the
meeting takes place during a meal or other break. If a union has no members at a workplace, it
has no right to investigate a breach of an award or agreement.
Employers, unions and employer associations must observe and comply with all provisions of
relevant industrial and workplace relations legislation and the appropriate occupational health
and safety legislation . Construction sites often involve a mixture of employees bound by
national and/or State awards and agreements. Parties should ensure that they comply with all
the terms of such legislation, awards and agreements.
6.6 Dispute settlement
All parties are required to make every effort to resolve grievances or disputes with their employees and applicable unions at the enterprise level , in accordance with the procedure
outlined in the relevant award or workplace arrangements.
Grievances and/or matters under dispute are to be dealt with at the workplace between the appropriate level of management and employees and/or union representatives. Awards and
agreements should contain arrangements providing graduated steps for discussion of disputes
involving higher levels of authority to which the matter in dispute can be referred if it can not be resolved.
Reasonab le time limits should be allowed for each stage of relevant dispute settlement processes. All parties are required to comply with industrial tribunal decisions, subject to
appropriate appeal rights. While dispute settlement procedures are being followed the parties are to ensure that:
(a) industrial action does not take place;
(b) the circumstances that existed prior to the dispute prevail; and
(c) work is to continue as normal withou; detriment to any of the parties.
Where a dispute relates to occupational health and safety issues, the procedures contained in the relevant State or Territory occupational health and safety legislation should be observed .
I I 6 Final Report of the Royal Commission into the Building and Construction Industry
6.7 Strike pay
No payment shall be made to employees for time spent engaged in industrial action, unless
payment is legally required or properly authorised by an industrial tribunal (where this is
permitted by relevant industrial legislation).
Legislative provisions relating to industrial action provide a fair balance between the rights of
employers, employees, representative organisations and the general community. Consistent
with accepted principles of collective bargaining , industrial action is permitted under the federal
workplace relations legislation in relation to bargaining for a CA or an AWA. Industrial action
other than genuine bargaining for agreements is not compatib le with the system and is not
lawful .
It is unlawful for an employer to pay strike pay. Similarly, it is unlawful for a union or its
representatives to take industrial action to pursue strike pay or for an employee or other party
to accept strike pay. The Act prohibits contractors, subcontractors, consultants and suppliers
from paying employees for any period during which they were engaged in any form of industrial
action including strikes, stop work meetings not authorised by the employer, bans and
restrictions or limitations on work.
A person who refuses to do certain work is not engaged in industrial action where the refusal is
based on a reasonable concern that the work poses an imminent risk to the person's health or
safety. In such circumstances, the person must, however, perform other safe and appropriate
work, if directed to do so .
6. 8 Industrial impacts
The client of the principal contractor shall be advised during the progress of the work, and at
the earliest opportunity, of any industrial relations or OHS&R matter which may have an impact
on the construction program, the principal contract, other related contracts or project costs.
Any disputes or disagreements relating to workplace or in dustrial relations and/or occupational
health and safety matters, which can impact on the construction program and/or the contract,
project costs or other related contracts, must be reported to the principal at the earliest
opportunity. To ensure the principal is appropriately advised , project managers are to be
encouraged to establish an effective and clear reporting structure for construction projects.
Such reporting structures should enable Government agencies to:
(a) identify at an early stage any disputes or disagreements and, in particular, determine
whether these have arisen through the failure to apply the code by any of the parties to
the dispute; and
(b) assist with better managing their overall work programs.
Any actual or threatened industrial action flowing from implementation of the code is to be
reported by the relevant Government agency to the CMG. Government agencies are strongly
encouraged to establish internally coordinated arrangements which will ensure effective
communication with the CMG.
Re form - National issues Part 1 11 7
6.9 Workplace reform
Industry participants are encouraged to adopt a broad -based agenda to improve productivity
through the development of workplace and management practices that are flexible and
responsive to the business demands of the enterprise and its clients ' requirements.
An enterprise with this focus will achieve a workplace culture that is recognised for value,
quality, innovation and competitiveness and will be a preferred partner for clients ' projects.
Workplace reform is a key component of Federal and State Governments' reform strategies for
the bu ilding and construction industry. Contractors, subcontractors, consultants and suppliers
are encouraged to pursue and implement workplace reform strategies appropriate to the
nature, size and capacity of the individual workplace.
Workplace reform is by nature a dynamic and evolving change process and requires the
commitm ent of employers and employees. Workplace reform covers innovations and
complementary approaches to workplace behaviour, including :
(a) workplace relations and work practices
(b) management practice
(c) training and skill formation
(d) quality management
(e) occupational health and safety and re habi litation (O HS&R).
Workplace reform has the potential to stren gthen the bui lding and construction industry's
viabi lity through workplace and productivity improvements. Such improvements can foster
positive changes for individual workplaces, including:
(a) lower production costs
(b) reduced waste and time lost
(c) better quality products and services
(d) a more flexib le and adaptive workforce
(e) improved motivation, morale and commitment
(D higher standards in occupational health and safety and rehabilitation performance
(g) improved remuneration and/or worki ng conditions for the workforce.
The code seeks to provide an environ ment conducive to the pursuit of workplace reform strategies. The parties shall not seek to negotiate arrangements that restrict the efficient
performance of work and contain provisions that restrict productivity improvement. Such practices could inclu de last-on first-off arrangements, ratios of employees and 'one-in-all-in ' procedures for overtime.
i i 8 Final Report of the Royal Commission into the Building and Construction Industry
6.10 Occupational health, safety & rehabilitation
OHS&R obligations must be actively addressed by all industry participants. Unequivocal
commitment to OHS&R management must be demonstrated in systems that address
responsibilities, policies, procedures and performance standards to be met by all parties
involved in a project and are directly linked to quality OHS&R ou tcomes.
Federal and State Governments have given the highest priority to improving the management
of occupational health, safety and reh abil itation in the construction industry.
All contractors must meet their OHS&R obligations under relevant laws when working on
government projects and sites. The principal contractor must establish a site-specific OHS&R
management plan before work commen ces.
A comprehensive OHS&R management plan aim s for prevention and eliminating hazards that
cause injuries and illnesses at the workplace.
A comprehensive OHS&R management plan will include:
(a) explicit management commitment
(b) employee involvement
(c) rigorous work practices analysis
(d) proactive worksite analysis that anticipates and assigns roles and responsibilities and
defines efficient procedures wh ile on site
(e) hazard identification, prevention and control
(n induction and task training (g) appropriate case management and reh abilitation
(h) efficient maintenance of records.
It is essential that an OHS&R management system is fu lly documented and clearly
com mu nicated to people in an enterpri se. It should systematically cover the ways a
contractor's own people are expected to work safely, the way the contractor will ensure others
work safely and the ways they intend to improve their practices over time. This will also entail
defining roles , duties and responsibilities so that everyone knows what they have to do, when
and in what circumstances.
Improvi ng the industry's OHS&R performance requires positive measures that aim for
prevention rather than correcting things when they go wrong. Th is initiative is directed at
making OHS&R management an integral part of the organisational culture of companies and enterprises.
Re form - National Issues Part 1 11 9
Section 7
Compliance and monitoring provisions for the code
7.1 The client's role
Th e intention of the code is to encou rag e cooperation, best practice and ethical behaviour by
all parties involved in a construction project. The Commonwealth's approach to implementation
is also intended to ensure that client agencies have the support necessary to be able to
effectively apply the code without detriment to their principal focus on successful project
management.
The clie nt's role is to apply the code. The client ensures that the code is formally applied to the
project through inclusion in documentation and by obtaining an undertaking of compliance
from the successfu l tenderer. The client is also responsible for initial actions taken to address
code issues which might arise in relation to a project.
If a code-related problem is brought to their attention clients might wish to respond with actions
designed to encourage the modification or cessati on of non -compliant behaviour. It would be
open to a cl ient to write to a party to req uest clarificat ion of behaviour which is considered to
have breached the code, or to write requesting that the behaviour cease or be modified. In some cases clients may simply wish to advise relevant parties that the matter has been
referred to the CMG for further action .
Clients should, however, inform the CMG of all breaches of the code, and refer serious code
breaches for furth er action by the CMG.
7.2 Whole of government compliance and sanction principles and procedures
The CMG deals with code issues, including breaches, which have come to its attention from
client ag encies or departments, by ministers or by other parties.
The CMG will consist of a representative from each of the Department of Finance and
Administration , the Department of Workplace Relations and Small Business and the Offi ce of
the Employment Advocate. Representatives will also be drawn from agencies having current or continuing construction programs. The CMG includes standing representati on from the
Department of Defence, recognising that department's sign ificant and continuing in te rest in
construction matters. The current membership of the CMG is at Appendix B.
Once an agency or another party has advised the CMG Secretariat or DWRSB of an alleged breach, a course of action appropriate to the referral will be taken. This may include:
(a) referral of the matter for action by the cl ient agency responsib le for the project;
(b) referral of the matter for investigati on by an appropriate agency, prior to con siderat ion by
the CMG ; or
(c) direct co nsideration of the matter by the CMG.
120 Final Report of the Royal Commission into the Building and Construction Industry
The CMG will be guided by administrative law principles including the right of parties to be
aware of allegations of breaches of the code and to be given th e right to respond to such
al legations.
Steps which the CMG could take include:
(a) reporting th e alleged breach to an appropriate statutory body or law enforcement
agency. Where appropriate, the party alleged to have committed the breach would be
advised of this step. For instance, an alleg ed breach of the freedom of association
provisions should be referred to the Office of the Employment Advocate for investigation.
Th is does not preclude the possibility of such matters being taken direct to the OEA by
affected parties;
(b) issuing a formal warning that continued non -compliance, where a breach is clearly
established to have occurred, will lead to more severe sanctions;
(c) referring the alleged breach to the appropriate industry association for action consistent
with industry codes of practice. Where appropriate, the party alleged to have committed
the breach would be advised of such a step.
Where whole of government action which may have serious commercial impacts is being
considered, the party alleged to have committed the breach would be offered the opportunity
to show cause why such a sanction should not be imposed. Such sanctions could include:
(a) reduction in the number of tendering opportunities that are given, for example by
excluding the non-complying party from tendering for Commonwealth work above a
certain value;
(b) preclusion from tendering for any Commonwealth work for a specified period; and/or
(c) publication of details of the breach and the identification of the party committing the
breach.
Given the potentially serious nature of such sanctions, and their likely infrequency, the CMG
would carefully consider their implications on a case by case basis. This may require
consultation with relevant ministers in reaching decisions on the imposition of severe sanctions.
The CMG would inform the party affected by the sanction, an d advise the relevant min isters as
appropriate. The CMG would also advise agencies and departments through the promulgation
of a list of imposed sanctions.
7.3 Complaints concerning agency breaches of the code
The code imposes oblig ations on all parties, and it is possible that the cli ent agency or its
representatives may breach, or be alleged to have breached, the code. In such circumstances
the complaint should be dealt with, in the first in stance, by the normal internal complaints
mechanism of the subject department, and through the other avenues avai lable for the review
of Commonwealth departments' performance, such as the Ombudsman. Howeve r, this does
not prevent complaints from being lodged directly with the CMG or the Office of the Employment Advocate.
Reform - National issues Part 1 1 21
While it is not possib le for sanctions, as such, to be imposed on a department, agency or its
employees, the following actions may be taken:
(a) if reported breaches are attributable to an agency's policies, practices or procedures,
appropriate changes may be made;
(b) if the breach has resulted from the actions of an individual, in contravention of established
policies, practices and procedures, consideration should be given to appropriate action
consistent with the Public Service Act.
Ministers responsible for the code may draw the breach to the attention of the portfolio minister
responsible for the project on which the breach has occurred.
If the breach has been committed by a party contracted to represent the agency, consideration
may also be given to imposing sanctions on that party, such as reduced business opportunities
or exclusion from further work for a specified period.
7.4 Appeals and complaints concerning sanctions applied under the code
Exi sti ng avenues for the review of adm in istrative decisions can be used to process complaints
arising from the code. Access to the Administrative Appeals Tribunal or to a review under the
Administrative Decisions (Judicial Review) Act are not available. However, parties would have access to the Ombudsman.
122 Final Report of the Royal Commission into the Building and Construction Industry
Appendix C: Summary of relevant case studies
Robertson Barracks
In its Darwin hearing s, the Commission considered com plian ce with the Code in relation to
construction of Robertson Barracks. Robertson Barracks is the home of the Australian Army's First
Brigade. The barracks were constructed between 1993 and 2000. Two hun dred and fifty buildin gs
were bui lt at a cost of over $400 millio n. 160 During the construction of th e barracks the Code and the
Implementation Guidelines came into existence. In an initial audit of the tender documents and
process, the OEA founds that the tender documents did not fully comply with the Code or
Commonwealth Implementation Guidelines for the Code. The OEA made recommendations about
necessary amendments, which were adopted. Thereafter, there was stri ct compl iance with the Code
and Guidelines. 161 As with the Darwin to Al ice Springs Rai lway, the proactiveness of the OEA 162 and
the fairl y benign industrial relations atmosphere in the Northern Territory, 163 were two significant
factors leadi ng to this result.
The OEA advised Hansen Yuncken that it was important that in tendering for any Commonwealth
construction project, the company avoided pressuring subcontractors to ascertain whether they had
relevant certified ag reements or not. 164
Contemporaneously, the OEA expressed its con cern to both Hansen Yun cken and Connell Wagn er
in reiation to the tender projects for part of the Army Presence in the North Stage Two.165 The original
tender documents did not comply with the Code in the following respects:
(a) there was no mention in the tender documentation that the Code and Gu idelines applied;
(b) the documents themselves did not have the Code or Guidelines attached. In consequence
tenderers would not have realised that compliance with the Code and Guidelines was a
condition of tender, and that policing that compliance with the Code and Guidelin es was an
obligation imposed on them and subcontractors; and
(c) tenderers would not have realised that failure to comply with the Code could lead to sanctions being imposed under it. 166
Finally, subcontracts commonly used on site did not ackn owledge the Code but required
subcontractors to comply with obligations imposed by any agreement between the CFMEU and the
head contractor.167 In thi s way the head contractor effectively required subcontractors to pay certain
Reform- National issues Part 1 123
rates set out in agreements to which subcontractors were not parties, rather than respecting the
integrity <:md priority of the subcontractors' own workplace arrangements. This was contrary to the
Code and the Implementation Guidelines.
In the resu lt, the tender documen tation was altered.168
There were a considerable number of OEA educative visits to Robertson Barracks and the OEA
eventually regarded the project as substantially complying with the Code.169
In the following year the OEA conducted a seminar on the operation of the Code in the Northern
Territory. Key Darwin head contractors and subcontractors attended. The summary of the perceptions of concern raised by those who attended the seminars is part of exhibit 1441 .170 Whi le
the comments in di cated general acceptance of the principles underlying the Code, there was
concern expressed about lack of clarity as to what needed to be reported under the Code, and the
legal implications for a head contractor which failed to act on a possible breach of the Code when the
head contractor may have lacked contractual power to do so.
As Mr Davidson , the Project Manager for Conn ell Wagner at Robertson Barracks, said in his
statement, 171 the biggest risk perceived by major contractors 'was that they were required under the
National Code of Practice to carry accountability for making sure that everyone down-stream
conformed to' the Code. He considered this was a tough obligation on contractors and involved a
si gnificant cost financial ly and in resources. 172
Davidson said 'the contractors fo und it very difficult to accept that they shou ld be, as it implied in the
documents, held directly responsible for ensuring that there was a continuity of obligation all the way down the supply chain to the suppliers ' .173
Federation Square
Federation Square is a substantial development which houses both commercial and government
occupants on a prominent 3.8 hectare site in the Melbourne CBD.174
The project is a joint venture of the Victorian Government and Melbourne City Council. 175 The project
included the constru ction of the Australian Centre fo r the Moving Image for the construction of which the Co mmonweal th proposed to make a grant of $50 million from the Federation Fund .176
The Memorandum of Un derstanding between the Victorian and Commonwealth Governments
relating to this grant required compliance by the Victorian Government with the Commonwealth
Code and the Victorian Code (the latter incorporating the industrial relations req uirements of the
former), but made no mention of compliance with the Commonwealth's Implementation Guidelines. 177
Multiplex Ltd was the head contractor on the project. 178 As is explained elsewhere in the Report the
principal building unions successfully took unlawful industrial action against Multiplex in order to coerce Multiplex into entering into a specific project agreement for the project which, in particular, contained provision for a 36 hour week. 179
That project agreement required subcontractors to Multiplex Ltd to enter into separate project agreements with the relevant unions, in similar terms to the terms of the project agreement. 1BO
12 4 Final Report of the Royal Commission into the Building and Construction Industry
The coercion by the unions to have Multiplex sign the project agreement amounted to a breach of the
Code .
Furthermore, while a substanti al project of this type could be entered into consistently with th e Code
and the Implementation guidelines, this could only be done consistently with the Code if the integ rity
of in dividual enterprise agreements was maintained , 181 that is , that the agreement (contrary to the
fact) did not override the workplace arrangements of individual contractors, subcontractors,
consultants and suppliers.
The Code also required that any project ag reements should, if possible, be developed in consultation
with subcontractors working on the project. That did not occur.182
The Code required that such agreements should be certified under the relevant industrial relations
legislation, 183 in this case, s170LC of the Workplace Relations Act 1996 (C'wth), as multi-employer
agreements. 184 Such agreements can only be certified by a Full Bench, 185 and then only when
certification is in the public interest. 185
Quite deliberately, this did not occur. The reasons for not seeki ng a multi-employer ag ree ment under
s170 LC included the circumstance that the Commonwealth Government has the capacity to
intervene at any hearing before the Full Bench [under s44 of the Workplace Relations Act (C'wth)], 187
a possibility not available before a single Commissioner. 188
The Implementation Guidelines state the importance of Commonwealth clients not ag reein g to
project agreements unless there is a clear and demonstrable benefit to the Commonwealth in doing
so. 189 They note that such benefits are most likely to take the form of improved time and or cost
performance compared to what might reasonably be expected in the absence of a project
agreement. 190
The Commonwealth sought to have the Implementation Gu id eli nes applied to the project. That was
resisted by the Victorian Government. A principal reason for this resistance according to a Victorian
Government representative, Mr Roennfeldt, was that, in his view the Implementation Guidelines gave
power to a committee formed within the Commonwealth bureaucracy (the CMG) to in spect books of
the contractors and anything else related to the project, over and above those given to the
Employment Advocate. He was concerned that incorporation of the Implementation Guidelines
would give rights to the Employment Advocate, who had, in his view, no particular in terest in the
outcome of the project compared to the Victorian Government which was seeking to ac hieve
completion of the project on time and within budget. 191 This is an example of the Victorian
Government's perception that its dual interests as signatories to the Code an d as a commercially
mi nded client, were in conflict.
In fact, there was no 'clear and demonstrable benefit' in ag reeing to this particular project agreement
becau se it substanti ally increased pay and conditions, particu larly by agreeing in effect to a 36 hour
week, but did not either in theory or in practice enhance productivity or limit industrial disputation. 192
In fact, the loss of time and increasing cost due to unlawful industrial action was very substanti al as
is explained elsewhere in this report.
The CFMEU brought two sets of legal proceedings in relation to Federation Square and the Code in
the Federal Court of Australia. In proceedings No V259 of 1999, brought against the Employment
Advocate, the union alleged that, in essence, the Advocate was seein g to coerce parties to th e
Reform- National issues Part 1 i 25
proposed Federation Square Productivity Agreement not to seek certification of that agreement. The
coercion was said to take the form of ut il ising or threatening to utilise the Code. An interlocutory
injunction was granted against the Advocate, although the proceedings were later discontinued. 193
Further proceedings, which remain on foot, were brought against the Commonwealth , the
Commonwealth Workplace Relations and Finance Ministers, and the Employment Advocate in
proceedi ngs V4 17 of 1999. These sought a declaration that the Commonwealth Code and
Implementation Guidelines were an agreement or arrangement between the Commonwealth and the
two named Ministers. It was contended they were void because they required or permitted (or had
the effect of requiring or permitting) conduct that would contravene si70NC, in that they involved the
threat of action with an intent to coerce building employers to agree (or not to agree) to make, vary or termi nate certified ag reements: see si70NC(I) and s298Y of the Workplace Relations Act 1996
(C'wth). The proceedings have not yet been determined.
Lavarack Barracks
Lavarack Barracks in Townsville, Queensland, has the largest population of any Army Base in
Australia. It was almost entirely rebuilt during the 1990s. There were four stages in the
redevelopment. Stage two was approved in mid-1998, with a budget of $139 mill ion , and work
began on the project late- 1999. 194 Thiess was engaged as the managing contractor. 195 The Code
and the Implementation Guidelines applied to the project. 196
A fu ndamental premise of the Code and Guidelines is that the terms and conditions of employment
on the site are worked out at the enterprise level. Furthermore, there is to be no project ag reement
except for major projects, and then only when the Commonwealth gives permission to do so. 197 Section 170LC certification is required.
The Implementati on Guidelines provide that superannuation an d redundancy contributions are
matters that should be covered in enterprise or workplace agreements if at all . 198 The Queensland Statement of Intent, which was and is not a registered agreement, requires employers to make
weekly contributions to named superannuation and redundancy schemes on behalf of each of their
employees. 199
From the beginning of Stage two of the project there was explicit union pressure to make such
payments in relation to Stage two. The unions contended that such payments were 'standard' an d
thus required to be made. 200 The CFMEU said that it wanted to use Lavarack as a test case in
relation to the Code 201 The managing contractor, Thiess , was not itself opposed to a project agreement but it recognised that it needed Commonwealth approval to enter into a prOject agreement. 202
The initial response of the Commonwealth, through the Department of Defence, was that a project
agreement was unacceptable203 A substantial nationwide union campaign against Thiess , then ensued putting Thiess under considerable pressure and also resulting in considerable delays on the Lavarack Barracks site itself. 204
The expressed union view was that the Code was only a policy with no legal force, and that its experience throughout Australia was that generally there was a 'way around ' the Code.2os
1 26 Final Report of the Royal Commission into the Building and Construction Industry
The threat was also made that Lavarack Barracks would become a political battle ground over this
issue, to the detriment of Thiess and th e project itself. 206
Thiess therefore sought to argue that there was a demonstrable benefit to the Commonwea lth in
having a project ag reement, even though this might resul t in increased costs of up to $3.62 million 2 07
Defence decided to authorise Thiess to negotiate a project agreement, provided it otherwise
complied with the Code and the Implementation Gu ide li nes . Defence also advised that in general 'the
Queensland Statement of Intent is not an appropriate basis for negotiating a project ag reement'. Th is
was , and was said to be, because of the inconsistencies between the Statement of Intent, and the
Code and the Implementation Guideli nes .208
Up to this point there had been consistent advice from DEWRSB that there could be no payments to
superannuation or redundancy funds provided for in any project agreement in any circumstances 209
Th iess was dealing with one of the principal authors of the Implementation Guidelines from DEWRSB
but managed to convince him that the Code only prevented a project agreement from nominating a
particular fund or a particular amount of superannuation or redundancy fund payments. Furthermore,
the DEWRSB representative in fact suggested a device to circumvent the operation of the Code and
Guidelines, namely that the subcontractors be encouraged into adopting the Queensland Statement
of Intent which, when it became a certified agreement applicable to the subcontractors, would
requ ire the subcontractors to pay superannuation and redundancy in accordance with law.210 This
solution involved encouraging the subcontractors to regulate their affairs at industry level, which was
of course even further from regulation at an enterprise level , as contemplated by the National Code,
than was regulation at a project level. In this way the intent of the Code and th e Implementation
Guidelines was circumvented. The advice was inappropriate.
Before the dispute regarding the negotiation of a project agreement for the Lavarack Barracks was
re solved, the Department of Defence delayed giving its approval for a project agreement for some
time , until it was satisfied, as the National Code required it to be, that the proposed project
agreement would provide demonstrable benefits to the Commonwealth . The Department of Defence
did not consider, when deciding whether the proposed project agreement would have demonstrable
benefits for the Commonwealth, whether such a project agreement was necessary to enable Th iess
to manage industrial relations for the project, even though this was the primary reason why Thiess
sought such an ag reement. 211 It is notable that th e National Code and Gu ide li nes , which are based
upon the primacy of enterprise level bargaining, prevented the enterprises involved in the project from
choosing to enter into a project agreement unless a benefit to the Commonwealth could be
established, even if, in the circumstances, project leve l arrangements would otherwise be
appropriate. This highlights a real question as to whether the 'demonstrable benefit to the
Commonwealth' criterion created by the Implementation Guidelines is appropriate.212 This matter is
discussed in further detail below.
The Lavarack Barracks inquiry by the Commission received evidence from a member of the Code
Monitoring Group who was the Defence representative on the group and a key decision maker in
Defence in relation to the Lavarack Barracks redeve lopment, and the DEWRSB advisor to Defence
on this matter, who was also Secretary to the Code Monitoring Group, and had a principal role in
drafting the Implementation Guidelines. Neither the CMG ,or the OEA at the sui t of the CMG ever
considered whether the way in which the disputes at th e Barracks in relat ion to the project
Reform - National issues Part 1 1 2 7
agreement was settled, was consistent with the Code. This was despite the fact that the union 's
demand. that Th iess depart from the Code was known to both Defence and DEWRSB to be a
recurrent feature of the dispute, and despite the fact that Thiess was openly putting pressure on the
subcontractors for them to make the redundancy and superannuation payments, which the Code
prohibited. 213
In fact the CMG has in its history never found a breach of the Code to have occurred and has never
imposed sanctions under the Code. 214 The Lavarack Barracks matter demonstrates that the CMG is
not functioning as it should as the designated mechanism for monitoring and enforcing compliance
with the Code and the Implementation Guidelines.
1 28 Final Report of the Royal Commission into the Building and Construction Industry
Notes to Codes of Practice for the Building and Construction Industry
In August 2002, I released Discussion Paper Eight- Codes of Practice for the Building and Construction
Industry. I have since received a number of substantial submissions responding to the issues raised in the D1scussion Paper. Those responding included the Commonwealth of Australia, the Government of Queensland, the CFMEU, the Civil Contractors Federation, the Housing Industry Association, Master Builders Australia, the Australian Industry Group and the Australian Contractors Association. All responses
have been considered. A number of the case studies presented by Counsel Assisting the Commission have
involved consideration of Codes, principally the National Code, and the Implementation Guidelines and
Industry Guidelines made under that National Code.
Response by Chamber of Commerce and Industry WA to Discussion Paper Eight, exhibit 1419, August 2002, document 045.0060.0189.0003 at 0005.
Response by Chamber and Commerce and Industry WA to Discussion Paper Eight, exhibit 1419, document 045.0060.0189.0003 at 0005.
For example, Sections 6 and 8.
Section g.
Construction Policy Steering Committee1996, New South Wales Implementation Guidelines for the Code of Practice and Code of Tendering , July 1996, exhibit 558, foreword, document 028.0807.0903 .0048 at 0059. Aspects of the Government's building industry strategy include law enforcement, corruption prevention, workplace reform, occupational health and safety and industrial relations initiatives .
Australian Industry Group and Australian Constructors Federation , Joint response by the Australian Industry Group and Australian Constructors Association to discussion paper 8, 30 August 2002, exhibit 1327, document 007.0572.0254.0049 at 0050.
See Construction Policy Steering Committee 1996, New South Wales Code of Practice for the Construction Industry, July 1996, exhibit 558, document 028.0807.0903.0001 at 0009.
Construction Policy Steering Committee 1996, New South Wales Code of Practice for the Construction Industry, July 1996, exhibit 558, document 028.0807.0903 0001 at 0001 and 0009. 10 Australian Industry Group and Australian Constructors Federation, Joint response by the Australian Industry
Group and Australian Constructors Association to discussion paper 8, 30 August 2002, exhibit 1327, document 007 0572 0254 0049-0050 11 Seidler Statement, exhibit 568, attachment 17, document 002.0467.0323.0002 at 0004. 12
Seidler Statement, exhibit 568, clause 3.7, document 002.0467.0323.0002 at 0006. 13 Setdler Statement, exhibit 568, clause 4, document 002.0467.0323.0002 at 0007. 14
Seidler Statement, exhibit 568, clause 5.4, document 002.0467.0323.0002 at 0008. 15 Seidler Statement. exhibit 568, clause 5.18, document 002.0467.0323.0002 at 0009. 16
Seidler Statement, exhibit 568, clause 5.9, document 002.0467.0323.0002 at 0008. 17 Construction Industry Advisory Council and the Department for Building Management 1995, Code of Practice for the South Australian Building and Construction Industry, exhibit 1342, Overview
Industry Documents, document 082.0337 .0129.0001-{)017. Code of Practice for the South Australian Building and Construction Industry: Implementation Guidelines, exhibit 1342, Overview -Industry Documents , document 082.0337.0129.0018. 18
Australian Procurement and Construction Council and the Department of Labour Advisory Committee 1997, National Code of Practice for the Construction Industry, exhibit 2A, document 007.0137.0535.0059-0073. 19 Commonwealth of Australia 2002, Submission to the Royal Commission into the Building and Construction
Industry, August, Phase Two, exhibit 494, paragraph 5.22, document 100.0721.0253.0002 at 0066. 20 Government of South Australia 1995 - 1996, Code of Practice for the South Australian Building and Construction Industry: Implementation Guidelines, exhibit 1342, Overview -Industry Documents, document
082.0337 0129.0018 at 0025.
Reform - National issues Part 1 1 29
21
Government of South Australia 1995- 1996, Code of Practice for the South Australian Bwlding and Construction Industry: Implementation Guidelines, exhibit 1342 Overview -Industry Documents, document 082 0337 0129.0018 at 0025.
22 Australian Procurement and Construction Council 1997 and the Department of Labour Advisory Committee 1997, National Code of Practice for the Construction Industry 199 7, exhibit 2A, document 007 0137.0535 0059 at 0060.
23
Statement of John Sutton to the Commission, exhibit 701, appendix E, paragraph 6, document 098.Q119.0116 0086
24 Sutton, T9078/3. 25 Commonwealth of Austral ia 2002, Submission to the Royal Commission into the Building and Construction Industry, August, Phase Two, exhibit 494, paragraph 5.28, document 100.0721 .0253.0002 at 0066.
26 Commonwealth of Australia 2002, Submission to the Royal Commission ;nto the Building and Construction Industry, August, Phase Two, exhibit 494, paragraph 5.29, document 100.0721.0253.0002 at 0067.
27
Department of Workplace Relations and Small Business and Department of Finance and Administration , Commonwealth Implementation Guidelines for the National Code of Practice for the Construction Industry, exhibit 976, document 095 0781.0422.0222 at 0234. 28
Department of Employment, Workplace Relations and Small Business 1998, Commonwealth Industry Guidelines for the National Code of Practice for the Construction Industry, March 1998, exhibit 2A, document 007.0137.0535.0074.
29
Department of Employment, Workplace Relations and Small Business 1998, Commonwealth Industry Guidelines for the National Code of Practice for the Construction Industry, March 1998, exhibit 2A, document 007.0137.0535.0074.
30 Australian Procurement and Construction Council and the Department of Labour Advisory Committee 1997, National Code of Practice for the Construction Industry 1997, exhibit 2A, document 007.0137.0535.0059 at 0062. 31
Australian Procurement and Construction Council and the Department of Labour Advisory Committee 1997, National Code of Practice for the Construction Industry 1997, exhibit 2A, document 007.0137.0535.0059 at 0062.
32
Australian Procurement and Construction Council and the Department of Labour Advisory Committee 1997, National Code of Practice for the Construction Industry 1997, exh ibit 2A, document 007.0137.0535.0059 at 0063.
33
Australian Procurement and Construction Council and the Department of Labour Advisory Committee 1997, National Code of Practice for the Construction Industry 1997, exhibit 2A, document 007 0137.0535.0059 at 0062. 34
Australian Procurement and Construction Council and the Department of Labour Advisory Committee 1997, National Code of Practice for the Construction Industry 1997, exhibit 2A, document 007.0137.0535.0059 at 0062 .
35
Construction Forestry Mining and Energy Union, Construction and General Division , Federal Office 2002, 3 September 2002, Response by Construction Forestry Mining and Energy Union, Construction and General Division, Federal Office to discussion paper 8, exhibit 1326, document 007.0572.0254.0044. 36
New South Wales Constructim Policy Steering Committee 1996, New South Wales Code of Practice for the Construction Industry, July 1996, exhibit 558, document 028.0807.0903.0001 . 37 New South Wales Construction Policy Steering Committee 1996, New South Wales Implementation
Gwdelines for the Code of Practice and Code of Tendering, July 1996, exhibit 558, document 028 0807.0903.0048
38
New South Wales Department of Public Works and Services 1999, New South Wales Industrial Relations Management Guidel;nes, exhibit 558, document 027.0826.0709.0280.
1 30 Final Report of the Royal Commission into the Building and Construction Industry
39 New South Wales Government 2002, Code of Practice for the Construction Industry: Exposure Draft, Ap ri l 2002, onl ine www. cpsc .nsw.qov.au/codesreview/Code-of-Practice.v2. pdf [accessed 21 May 2002].
40 Department of Infrastructure 1999, Victoria Code of Practice for the Building and Construction Industry, March 1999, exhibit 2A, document 007 0137.0535 0084 . 41 Queensland Code of Practice for the Building and Construction Industry, August 2000, exhibit 18, tab 26,
document 088.0492.0773.0003. See Queensland Government Submission, (Crown Law), exhibit 1325, page 2, document 007 0572.0254 0036 at 0037. 42 Government of Western Australia , Western Australia Code of Practice for the Building and Construction
Industry, January 2002, exhibit 241, document 026.0983.0673.0126. See Response by the Chamber of
Commerce and Industry WA to Discussion Paper 8, exhibit 1419, document 046.0302.0043.0003 at 0008. 43 Government of South Australia, Code of Practice for the South Australian Building and Construction Industry, July 1995, exhibit 1342, document 082.0337 0129 0001. 44
Government of South Australia 1995, Code of Practice for the South Australian Building and Construction Industry, Implementation Guidelines, November 1995, parts 1 and 2, exhibit 1342, Overview- Documents, tabs 1 and 2, document 082.0337.0129.0018- 0043 45
Tasmanian Government, Information for the Royal Commission into the Building and Construction Industry, exhibit 179, document 016.0409.0260 0002 at 0004. 46 Australian Procurement and Construction Council and the Department of Labour Advisory Committee 1997,
National Code of Practice for the Construction Industry 1997, exhibit 2A, document 007.0137.0535.0059. 47 Department of Industries and Business 2002, Northern Territory Procurement Code, June 2002, exhibit 1427, document 033.0621.0146.0161. 48 Victorian Department of Infrastructure 1999, Code of Practice for the Building and Construction Industry,
March 1999, exhibit 2A, document 007.0137 0535.0084 at 0095 .. 49 Crown Law Queensland 2002, Response by Crown La w, Queensland Government to Discussion Paper 8, 4 September 2002, exhibit 1325, document 007.0572 0254.0036 at 0037. 5° Crown Law Queensland 2002, Response by Crown Law, Queensland Government to Discussion Paper 8,
4 September 2002, exhibit 1325, document 007.0572.0254.0036 at 0037. 51 Vi ctorian Department of Infrastructure 1999, Code of Practice for the Building and Construction Industry,
March 1999, exhibit 2A, clause 1.3.3, document 007.0137.0535.0084 at 0094.
52
Victorian Department of Infrastructure 1999, Code of Practice for the Building and Construction Industry, March 1999, exhibit 2A, clause 1.3.3, document 007.0137 0535.0084 at 0094. 53 Australian Procurement and Construction Council and the Department of Labour Advisory Committee 1997,
National Code of Practice for the Construction Industry, exhibit 2A, paragraph 1, document 007.0137.0535.0059 at 0064. 54 Australian Procurement and Construction Council and the Department of Labour Advisory Committee 1997,
National Code of Practice for the Construction Industry, exhibit 2A, paragraph 5, document 007.0137 0535.0059 at 0064. 55 Australian Procurement and Construction Council and the Department of Labour Advisory Committee 1997,
National Code of Practice for the Construction Industry, exhibit 2A, paragraph 1 , document 007 0137 0535 0059 at 0065. 56 Australian Procurement and Construction Council and the Department of Labour Advisory Committee 1997,
National Code of Practice for the Construction In dustry, exhibit 2A, paragraph 6; document 007.0137 0535.0059 at 0066. 57 Australian Procurement and Construction Council and the Department of Labour Advisory Committee 1997,
National Code of Practice for the Construction Industry, exhibit 2A, paragraph 2, document 007.0137.0535.0059 at 0067.
Reform - National Issues Part 1 1 31
58 Australian Procurement and Construction Council and the Department of Labour Advisory Committee 1997, Nation?.! Code of Practice for the Construction Industry, exhibit 2A, paragraph 5, document 007 .0137.0535.0059 at 0067.
59 Australian Procurement and Construction Council and the Department of Labour Advisory Committee 1 997, National Code of Practice for the Construction Industry, exhibit 2A, paragraph 3, document 007 0137.0535.0059 at 0068.
60 Australian Procurement and Construction Council and the Department of Labour Advisory Committee 1 997, National Code of Practice for the Construction Industry, exhibit 2A, paragraph 3, document 007.0137.0535.0059 at 0070.
61
See New South Wales Government 1 996, New South Wales Code of Practice for the Construction Industry, July 1996, exh ibit 558, document 028.0807.0903.0001; Queensland Government 2000, Code of Practice for the Building and Construction Industry, exhibit 18, document 088.0492.0773.0003. Government of Western Australia 2002, Code of Practice of the Building and Construction Industry in Western Australia, exhibit 241 , document 026.0983 0673 0126.
62 Australian Procurement and Construction Council and the Department of Labour Advisory Committee 1997, National Code of Practice for the Construction Industry, exhibit 2A, document 007.0137.0535.0059 at 0069-0070.
63 Department of Workplace Relations and Small Business and Department of Finance and Administration 1 998, Commonwealth Implementation Guidelines for the National Code of Practice for the Construction Industry, exhibit 976, Section 1, document 095.0781 .0422 .0222 at 0227.
64 Department of Workplace Relations and Small Business and Department of Finance and Administration 1998, Commonwealth Implementation Guidelines for the National Code of Practice for the Construction Industry, exhibit 976, section 1, Introduction, document 095.0781 .0422.0222 at 0227.
65 Department of Workplace Relations and Small Business and Department of Finance and Administration 1 998, Commonwealth Industry Guidelines , exhibit 2A, document 007.01 3 7. 0535.00 7 4.
66 Department of Workplace Relations and Small Business and Department of Finance and Administration 1 998, Commonwealth Industry Guidelines, exhibit 2A, document 00 I. 01 3 7. 0535.00 7 4. 67 Department of Workplace Relations and Small Business and Department of Finance and Administration
1998, Commonwealth Industry Guidelines, exhibit 2A, document 007.0137.0535.007 4. 68 Department of Workplace Relations and Small Business and the Department of Finance and Administration 1998, Commonwealth Implementation Guidelines for the National Code of Practice for the Construction Industry, exhibit 976, document 095 0781.0422 .0222 at 0227 . 69
Australian Procurement and Construction Counci l and the Department of Labour Advisory Committee 1 997 , National Code of Practice for the Construction Industry, exhibit 2A, document 007.0137.0535.0059 at 0063. 70
Australian Procurement and Construction Council and the Department of Labour Advisory Committee 1997, National Code of Practice for the Construction Industry, exhibit 2A, document 007.0137.0535.0059 at 0063. 7 1
New South Wales Government 1996, Code of Practice for the Construction Industry, July 1996, exhibit 558, clause 3, document 028.0807.0903.0001 at 0013. 72 Queensland Government 2000, Queensland Code of Practice for the Building and Construction Industry,
exhibit 18, clauses 1.2, 1.3 and 1.4, document 088.0492.0773.0003 at 0009-0010. 73 Government of Western Australia 2002, Code of Practice of the Building and Construction Industry in Western Australia, January 2002, exhibit 241, clause 3, document 026.0983.0673.0126. 74
Australian Procurement and Construction Council and the Department of Labour Advisory Committee 1997, National Code of Practice for the Construction Industry, exhibit 2A, tab 2, document 007.0137.0535.0059 at 0063.
I 32 Final Report of the Royal Commission into the Building and Construction Industry
75
Victorian Department of Infrastructure 1999, Code of Practice for the Building and Construction Industry, March 1999, exhibit 2A, clause 2; document 007.0137.0535.0095.
76
Queensland Government 2000, Queensland Code of Practice for the Building and Construction Industry, exhibit 18, clauses 1.2, 1.3 and 1.4, document 088.0492.0773 0003 at 0009-0010.
77
Government of Western Australia 2002, Code of Practice of the Building and Construction Industry in
Western Australia, exhibit 241, clause 3.0 and 3.3, document 026.0983.0673.0126 at 0132. 78 New South Wales Government 1996, Code of Practice for the Construction Industry, July 1996, exhibit 558,
folder 3, clauses 1, 1.1, 1.2, 1.4, 2.1, 2.2, 2.3 and 2.4, document 028 0807.0903.0001 at 0005-0013.
79
Commonwealth of Australia 2002, Submission to the Royal Commission into the Building and Construction Industry, August, Phase Two, exhibit 494, paragraph 5E.1, document 100.0721.0253.0002 at 0085. 8 ° Commonwealth of Australia 2002, Submission to the Royal Commission into the Building and Construction
Industry, August, Phase Two, exhibit 494, paragraphs 5E.1-5E.2, document 100.0721.0253.0002 at 0085-0086.
81
Commonwealth of Australia 2002, Submission to the Royal Commission into the Building and Construction
Industry, August, Phase Two, exhibit 494, paragraph 5E.5, document 100.0721.0253.0002 at 0085. 82 Prime Minister's answer to question upon notice no 77, on 12 November 1998, Hansard, 11 May 1999,
p. 5058; Deed of Conditions of Grant from the Commonwealth to Australasia Ra ilway Corporation, exhibit
1438, document 022 .0243.0215 0020 at 0027.
83
Department of Workplace Relations and Small Business & the Department of Finance and Administration 1998, Commonwealth Implementation Guidelines for the National Code of Practice for the Construction
Industry, exhibit 976, section 4.1, document 095.0781.0422.0222 at 0230.
84
Department of Workplace Relations and Small Business and Department of Finance and Administration
1998, Commonwealth Implementation Guidelines for the National C,ode of Practice for the Construction
Industry, exhibit 976, section 4.2, document 095.0781.0422.0222 at 0230. 85 Department of Workplace Relations and Small Business and the Department of Finance and Administration
1998, Commonwealth Implementation Guidelines for the National Code of Practice for the Construction
Industry, exhibit, 976, clause 5.2, document 095.0781 .0422.0222 at 0232. 86 Department of Workplace Relations and Small Business & the Department of Finance and Administration
1998, Commonwealth Implementation Guidelines for the National Code of Practice for the Construction
Industry, exhibit 976, appendix A, document 095 0781.0922.0222 at 0249-252. 87 Subject to any legislative provision to the contrary.
88
Regulation 9(1) of the Financial Management and Accountability Regulations 1997 (C'wth) relevantly
provides that an approver must not approve a proposal to spend public money ' ... unless the approver is
satisfied after making such enquiries as are reasonable, that the proposed expenditure: (a) is in accordance
with the policies of the Commonwealth ... ' Apart from a single reference to the Code in the 'Additional
Legislation, Policies and Resources' section attached to the Procurement Guidelines, the closest the
Procurement Guidelines themselves come to ment1oning the Code is the statement that: 'Government policies, such as ... industrial relations ... are a part of the framework within which agencies need to achieve
value for money. Agencies and their officials have an obl igation to conduce procurement in accordance with
the relevant Government Policy in the way they do business'.
89
Issued under Regulation 7(1) of those regulations, the Procurement Guidelines ' ... apply to the procurement
of all property and services , and by outlining the fundamental policies and principles that underpin
procurement, they articulate the expectations that exist on officials, or agents conducting procurement on
behalf of the Commonwealth, in the design, conduct and management of all aspects of Government procurement'. Department of Finance and Administration, Commonwealth Procurement Guidelines and
Best Practice Guidance, February 2002, exhibit 2058, section 1, document 029.0728.0301 .0001 at 0003. 90 Department of Finance and Administration, Commonwealth Procurement Guidelines and Best Practice
Guidance, February 2002, exhibit 2058, document 029 0728.0301 .0001 at 0013-0017 ._
Reform- National issues Part 1 1 33
91
Officials involved in procurement of property or services must 'have regard to' the Procurement Guidelines,
and record reasons where action is taken that is not consistent with them.
Financial Management and Accountability Regulations 1997, regulation 8(2).
92 Department of Finance and Administration, Commonwealth Procurement Guidelines and Best Practice Guidance, February 2002, exhibit 2058, document 029.0728.0301.0001 at 0014.
93 Department of Workplace Relations and Small Business and Department of Finance and Administration 1998, Commonwealth Implementation Guidelines for the National Code of Practice for the Construction
Industry, exhibit 976, section 7.2 , document 095.0781.0422.0222 at 0245-0246.
94 Department of Workplace Relations and Small Business & the Department of Finance and Administration 1998, Commonwealth Implementation Guidelines for the National Code of Practice for the Construction
Industry, exhibit 976, appendix B, document 095.0781.0422.0222 at 0253. The CMG consists of representatives from the: Department of Workplace Relations and Small Business (DWRSB) (which chairs
the CMG); Department of Finance and Administratio n (DoFA); Department of Defence; Department of
Communications, Information Technology and the Arts; Office of the Employment Advocate (OEA);
Au stralia Post and Commonwealth Scientific and Industrial Research Organisation (CS IRO).
95 Sutton Statement, exhibit 701, appendix E, paragraph 2, document 098.0019.0116.0086 at 0089. See also the Response by the Construction Forestry Mining Energy Union, Construction and General Division,
Federal Office to discussion paper 8, exhibit 1326, document 007.0572. 0254.0044 at 0046.
96 Department of Workplace Relations and Small Business & the Department of Finance and Administration 1998, Commonwealth Implementation Guidelines for the National Code of Practice for the Construction
Industry, exhibit, 976, section 4.4, 095.0781 0422 0222 at 0230.
97 Australian Procurement and Construction Council and Department of Labour and Advisory Committee, National Code of Practice for the Construction Industry, exhibit 2A, tab 2, document 007. 0137.0535.0059 at 0071.
98 Department of Workplace Relations and Small Business and the Department of Finance and Administration 1998, Commonwealth Implementation Guidelines for the National Code of Practice for the Construction
Industry, exhibit, 976, clause 4.4, document 095.0781 .0422.0222 at 0231.
99 Australian Procurement and Construction Counci l and Department of Labour and Advisory Committee, National Code of Practice for the Construction Industry, exhibit 2A, document 007.0137.0535.0059 at 0071. 100 Department of Workplace Relations and Small Business & the Department of Finance and Administration
1998, Commonwealth Implementation Guidelines for the National Code of Practice for the Construction Industry, exhibit 976, section 7, document 095.0781.0422.0222 at 0245. 101 Baird, T11232/20-31 . 102
Mace Statement, exhibit 1439, paragraph 1, document 082.0460.0613.0001. 103 Alice Springs to Darwin Railway Tender Bundle, exhibit 1438, document 022.0243.0215.0053 at 0056.
104 Alice Springs to Darwin Railway Tender Bundle, exhibit 1438, document 022 0243.0215.0053 at 0057.
105 Mace Statement, exhibit 1439, paragraph 5, document 082.0460.0613.0001. 106 Mace, T14190/45- 14191/2. 107 Mace Statement, exhibit 1439, paragraph 19, document 082.0460.0613.0001.
108 Al ice Springs to Darwin Railway Tender Bundle, exhibit 1438, document 022 .0243.0215.0053 at 0066.
109 Hunter, T14199/14.
11 0 Ali ce Springs to Darwin Railway Tender Bundle, exhibit 1438, document 022.0243.0215.0053 at 0083-0084.
111 Mace, T14191 / 25-33.
112 Mace, T141 92/32-41 .
113 Mace Statement, exhibit 1439, paragraphs 9 and 17, document 082.0460.0613.0001 .
114 Mace Statement, exhibit 1439, paragraphs 13 and 14, document 082.0460.0613.0001 .
i 34 Final Report of the Royal Commission into the Building and Construction Industry
115 Alice Springs to Darwin Railway Tender Bundle, exhibit 1438, document 065.0404.01 03.0257 . 116 Alice Springs to Darwin Rai lway Tender Bundle, exhibit 1438, document 065.0356 .0503.0052 at 0053. 117 Alice Springs to Darwin Railway Tender Bundle, exhibit 1438, document 065.0356.0503.0052 at 0058.
118 Alice Springs to Darwin Railway Tender Bundle, exhibit 1438, document 065.0356.0503.0052 at 0058.
119 Alice Springs to Darwin Railway Tender Bundle, exhibit 1438, document 065.0356.0503.0052 at 0058. 120 Alice Springs to Darwin Railway Tender Bundle, exhibit 1438, document 091 .0819.0236.02 13 at 0214.
121
Al1ce Springs to Darwin Railway Tender Bundle , exhibit 1438, document 091.081 9.0236.0213 at 0215.
122 Alice Springs to Darwin Railway Tender Bundle, exhibit 1438, document 041.0669.0042.0397 at 0398.
123 Alice Springs to Darwin Railway Tender Bundle, exhibit 1438, document 041.0669.0042.0397 at 0398.
124 Alice Springs to Darwin Railway Tender Bundle, exhibit 1438, document 060.0934.0775.0020 at 0021 .
125 Mace, T14193/37-41 .
126 Mace, T14193/ 2-3; 14193/15-24. 127 Mace Statement, exhibit 1439, paragraph 29, document 082.0460.0613.0001.
128 MBA Submission, exhibit 1477, document 086.0886.0702.0003 at 0007 . 129 Joint AIG/ACA Submission, exh ibit 1327 , document 007. 0572 .0254.0049 at 0051 .
13 ° Commonwealth of Australia 2002, Submission to the Royal Commission into the Building and Construction Industry, August , Phase Two, exhibit 494, Chapter 5, document 100.0721.0253.0002 at 0063- 0086. 131
Commonwealth of Australia 2002, Submission to the Royal Commission into the Building and Construction Industry, August, Phase Two, exhibit 494, paragraph 5.33, document 100.0721 .0253.0002 at 0067-0068. 132 Commonwealth of Australia 2002, Submission to the Royal Commission into the Bwlding and Construction
Industry, August, Phase Two, exhibit 494, paragraph 5.34, document 100.0721 .0253.0002 at 0068.
133 Housing Industry Association, HIA Response to the Royal Commission Discussion Paper 8, exhibit 1369, document 078.0279.0247.0020 at 0028. 134
Housing Industry Association, HIA Response to the Royal Commission Discussion Paper 8, exhibit 1369, document 078.0279.0247.0020 at 0028. 135 Housing Industry Associat ion , HIA Response to the Royal Commission Discussion Paper 8, exhibit 1369,
document 078.0279.0247.0020 at 0028. 136 Housing Industry Association, HIA Response to the Royal Commission Discussion Paper 8, exhibit 1369, document 078.0279.0247.0020 at 0029. 137
Housing Industry Association, HIA Response to the Royal Commission Discussion Paper 8, exhibit 1369, document 078.0279.0247 .0020 at 0029.
138 MBA Submission, exhibit 1477, document 086.0886.0702.0003 at 0008. 139 Housing Industry Association, HIA Response to the Royal Commission Discussion Paper 8, exhibit 1369,
document 078.0279.024 7.0020 at 0030. 140 Housing Industry Association, HIA Response to the Royal Commission Discussion Paper 8, exhibit 1369,
document 078.0279.0247.0020 at 0030. 141 Kingham, T296/ 26-298/49. 14
2 Sutton, T9075/20-35.
143 Construction Forestry Mining Energy Union, Construction and Genera l Division , Federal Office 2002, Response of Construction Forestry Mining Energy Union, Construction and General Division, Federal Office 2002 to Discussion Paper 8, exhibit 1326, document 007.0572.0254.0044 at 0045. 144
Construction Forestry Mining Energy Union , Construction and General Division, Federal Office 2002, Response of Construction Forestry Mining Energy Union, Construction and Genera l Division, Federal Office 2002 to Discussion PaperS, exhibit 1326, document 007. 0572.0254.0044 at 0045.
Reform - National issues Part 1 135
145 Construction Forestry Mining Energy Ur:ion, Construction and General Dtvision, Federal Office 2002, Response of Construction Forestry Mining Energy Union, Construction and General Division, Federal Office 2002 to Discussion Paper 8, exhibit 1326, document 007.0572.0254.0044 at 0045.
146 Australian Procurement and Construction Council and the Department of Labour Advisory Committee 1997, National Code of Practice for the Construction Industry, exhibit 2A, tab 2, document 007.0137.0535.0059 at 0071. 147
Commonwealth Implementation Guidelines for the Natrona! Code of Practice for the Construction Industry, exhibit 976, parts 5.4 and 5.5, document 095.0781.0422 0233.
148 Commonwealth Implementation Guidelines for the National Code of Practice for the Construction Industry, exh ibit 976, Section 2, document 095.0781.0422 0222 at 0228.
149 Commonwealth Implementation Guidelines for the National Code of Practice for the Construction Industry, exhibit 976, Section 4.5, document 095.0781.0422.0222 at 0231.
15 ° For example, contractors, subcontractors, consultants and employees should 'report a suspected breach of the Code to the client, the CMG or the office of the Employment Advocate.' Commonwealth Implementation Guidelines for the National Code of Practice for the Construction Industry, exhibit 976, Sections 5.1 , 5.2,
document 095.0781 0422.0222 at 0232.
151
Department of Workplace Relations and Small Business, Commonwealth Industry Guidelines, exhibit 2A, document 007 0137 0535.007 4.
152 Commonwealth Industry Guidelines, exhibit 2A, part 5, document 007.0137.0535.0074 at 0074 and 0081. 153 Commonwealth Implementation Guidelines, exhibit 976, document 095.0781.0422.0222 at 0227.
154 Commonwealth Implementation Guidelines, exhibit 976, document 095.0781.0422 0222 at 0245. 155 Commonwealth Implementation Guidelines, exhibit 976, paragraph 7.1, document 095.0781.0422.0222
at 0245.
156 Commonwealth Implementation Guidelines, exhibit 976, paragraph 7.2, documents 095.0781 .0422.0245-0246.
157 Response by Construction Forestry Mining Energy Union, Construction General Division, Federal Office to Discussion Paper 8, exhibit 1326, page 1, document 007.0572.0254.0044. 158
Deed between New South Wales Government and CFMEU, exhibit 568, document 002.0467.0323.0006. 159 Submission of the Queensland Government (Crown Law) regarding Discussion Paper 8, exhibit 1325, document 007.9572 .0254.0036 at 0037 . 160
Robertson Barracks Case Study, Final Report of the Royal Commission into the Build1ng and Construction Industry, Volume 19, Hearings, South Australia, Tasmania, Northern Territory and ACT, paragraph 1. 161 Robertson Barracks Case Study, Final Report ofthe Royal Commission 1nto the Build1ng and Construction
Industry, Volume 19, Hearings, South Australia, Tasmania, Northern Territory and ACT, paragraph 2. 162 Robertson Barracks Case Study, Final Report of the Royal Commission into the Building and Construction Industry, Volume 19, Hearings, South Australia, Tasmania, Northern Territory and ACT, paragraph 9, 11. 163
In 1999 the national average for the number of working days lost per 1000 employees was 381: Statistical
Compendium, page 59. In the Northern Territory the figure was just four days lost per 1000 employees: Royal Commission into the Building and Construction Industry (RCBCI) (2002), Discussion Paper Two Statistical Compendium for the Building and Construction Industry, May, RCBCI, Melbourne, p. 59. Dick Guit, the Northern Territory Construction Manager for Barclay Mowlem, one of the largest builders with a presence in the Northern Territory cannot recall a strike on one of Barclay Mowlem's project in the Northern Territory: Guit Statement, exhibit 1436, document 078.0590.0921.0002 at 0004. After 2.3 million man hours
have been worked on the Alice Springs to Darwin Railway, there has been no time lost due to any industrial meetings, bans, limitations or stoppages; Mace Statement, exhibit 1439, paragraph 29, document 082.0460.0613.0001; Gallagher T14098/20-40.
1 6 4
Robertson Barracks Tender Bundle, exhibit 1441, document 085.0282.0098.0024 at 0025.
i 36 Final Report of the Royal Commission into the Building and Construction Industry
165 Robertson Barracks Tender Bundle, exh ibit 1441, document 085.0282.0098.0024 at 0025; Robertson Barracks Tender Bundle, exhibit 1441, document 085.0282.0098.0031. 166 Robertson Barracks Tender Bundle, exhibit 1441, document 085.0282.0098.0031. 167
Robertson Barracks Tender Bundle, exhibit 1441, document 085.0282.0098.0033. 168 Robertson Barracks Tender Bundle, exhibit 1441, document 085.0282.0098.0033; Robertson Barracks Tender Bundle, exhibit 1441, document 085.0282.0098 0024 at 0025. Robertson Barracks Tender Bundle,
exhibit 1441, document 085.0282.0098.0031. 169 See attachment to Hunter Statement, exhibit 1440, document 002.0310.0557.0030. 170
Robertson Barracks Tender Bundle, exhibit 1441, document 085.0282.0098.0039. 171 Davidson Statement, exhibit 1422, paragraph 48, document 053.0977.0266.0001 at 0007 . 172
Davidson Statement, exhibit 1442, paragraphs 48-49, document 053.0977.0266.0001 at 0007.
173 Davidson, T14205/ 1-5.
174 The Federation Square Project Case Study, Final Report of the Royal Commission into the Building and
Construction Industry, Hearings -Victoria Part 2, paragraph 1. 175 The Federation Square Project Case Study, Final Report of the Royal Commission into the Building and Construction Industry, Hearings- Victoria Part 2, paragraph 1. 176
The Federation Square Project Case Study, Final Report of the Royal Commission into the Building and Construction Industry, Hearings - Victoria Part 2, paragraphs 1 and 4. 177 The Federation Square Project Case Study, Final Report of the Royal Commission into the Building and
Construction Industry, Hearings - Victoria Part 2, paragraph 66. 178 The Federation Square Project Case Study, Final Report qf the Royal Commission into the Building and Construction Industry, Hearings- Victoria Part 2, paragraph 6. 179
The Federation Square Project Case Study, Final Report of the Royal Commission into the Building and Construction Industry, Hearings - Victoria Part 2, paragraphs 11 - 54.
180 The Federation Square Project Case Study, Final Report of the Royal Commission into the Building and Construction Industry, Hearings -Victoria Part 2, paragraphs 61-62. 181
Exhibit 2A, document 007.0137.0535.0069. 182 The Federation Square Project Case Study, Final Report of the Royal Commission into the Building and Construction Industry, Hearings- Victoria Part 2, paragraph 65. 18
3 Exhibit 2A, document 007 .0137.0535.0069.
184 The Federation Square Project Case Study, Final Report of the Royal Commission into the Building and Construction Industry, Hearings- Victoria Part 2, paragraph 63 . 185 Exhibit 2A, document 007 .0137.0535.0069. 186
Exhibit 2A, document 007.0137.0535.0069. 187 Workplace Relations Act 1996 (C'wth}, s44. 188
The Federation Square Project Case Study, Final Report of the Royal Commission into the Building and Construction Industry, Hearings -Victoria Part 1, paragraph 63. 189 Commonwealth Implementation Guidelines for the National Code of Practice for the Construction Industry,
exhibit 976, Section 4, pages 10-13. 19 ° Commonwealth Implementation Guidelines for the National Code of Practice for the Construction Industry, exhibit 976, Section 4. 191
The Federation Square Project Case Study, Final Report of the Royal Commission into the Building and Construction Industry, Hearings- Victoria Part 2, paragraph 66. 192 The Federation Square Project Case Study, Final Report of the Royal Commission into the Building and
Construction Industry, Hearings - Victoria Part 2, paragraphs 1 09 and 114-116.
Re form - Na tional issues Part 1 i 3 7
1 93 See CFMEU v Hamburger [1999] FCA 693.
194 Lavarack Barracks, Final Report of the Royal Commission into the Building and Construction Industry, Volume 17, Hearings, Queensland- Part 1, paragraph 3. 195
Lavarack Barracks, Final Report of the Royal Commission into the Building and Construction Industry, Volume 17, Hearings, Queensland- Part 1, paragraph 4. 196 Lavarack Barracks, Final Report of the Royal Commission into the Bw!ding and Construction Industry,
Volume 17, Hearings, Queensland - Part 1, paragraph 9.
197 Lavarack Barracks, Final Report of the Royal Commission into the Building and Construction Industry, Volume 17, Hearings, Queensland- Part 1, paragraph 10. 198
Lavarack Barracks, Final Report of the Royal Commission into the Building and Construction Industry, Volume 17, Hearings, Queensland - Part 1 , paragraph 11 .
199 Lavarack Barracks, Final Report of the Royal Commission into the Building and Construction Industry, Volume 17, Hearings, Queensland- Part 1, paragraph 16.
200 Lavarack Barracks, Final Report of the Royal Commission into the Building and Construction Industry, Volume 17, Hearings, Queensland - Part 1 , paragraph 16. 201 Lavarack Barracks, Final Report of the Royal Commission into the Building and Construction Industry,
Volume 17, Hearings, Queensland- Part 1, paragraph 18.
202 Lavarack Barracks, Final Report of the Royal Commission into the Building and Construction Industry, Volume 17, Hearings, Queensland - Part 1 , paragraphs 18-19.
203 Lavarack Barracks, Final Report of the Royal Commission into the Building and Construction Industry, Volume 17, Hearings, Queensland - Part 1, paragraph 26.
204 Lavarack Barracks, Final Report of the Royal Commission into the Building and Construction Industry, Volume 17, Hearings, Queensland -Part 1, paragraphs 29-48.
205 Lavarack Barracks, Final Report of the Royal Commission into the Building and Construction Industry, Volume 17, Hearings, Queensland- Part 1, paragraph 37. 206
Lavarack Barracks , Final Report of the Royal Commission into the Building and Construction Industry, Volume 17, Hearings, Queensland - Part 1, paragraphs 18, 38-39 and 75. 207 Lavarack Barracks, Final Report of the Royal Commission into the Building and Construction Industry,
Volume 17, Hearings, Queensland- Part 1, paragraphs 22 and 77-78.
208 Lavarack Barracks, Final Report of the Royal Commission into the Building and Construction Industry, Volume 17, Hearings, Queensland- Part 1, paragraph 81. 209 Lavarack Barracks, Final Report of the Royal Commission into the Building and Construction Industry,
Volume 17, Hearings, Queensland- Part 1, paragraphs 86-87 and 91. 2 10 Lavarack Barracks, Final Report of the Royal Commission into the Building and Construction Industry, Volume 17, Hearings, Queensland- Part 1, paragraph 89. 211
Lavarack Barracks, Final Report of the Royal Commission into the Building and Construction Industry, Volume 17, Hearings, Queensland- Part 1, paragraphs 91-92 and 96. 2 12 Lavarack Barracks, Final Report of the Royal Commission into the Building and Construction Industry,
Volume 17, Hearings, Queensland -Part 1, paragraphs 125-133. 213 Lavarack Barracks, Final Report ::>I the Royal Commission into the Building and Construction Industry, Volume 17, Hearings, Queensland - Part 1 , paragraphs 134-143.
214 Baird, T11232/20-31.
i 38 Final Report of the Royal Commission into the Building and Construction Industry
4
Demarcation disputes
Reform- National issues Part 1 139
140 Final Report of the Royal Commission into the Building and Construction Industry
The problem
Introduction
Inter-union rivalry over the right to enrol and represent workers has been a cause of disputation
in the building and construction industry in Australia for many years. Although the level of
disputation has declined in recent years, it has not been eli minated .
2 Inter-union disputes are common ly known as 'demarcation disputes' . That term is defined in
s4(1) of the Workplace Relations Act 1996 (C'wth) to include:
(a) a dispute arising between two or more organisations, or within an organisation, as
to the rights, status or functions of members of the organisations or organisation in
relation to the employment of those members; or
(b) a dispute arising between employers and employees, or between members of
different organisations, as to the demarcation of functions of employees or classes of employees; or
(c) a dispute about the representation under this Act of the industrial interests of
employees by an organisation of employees.
3 Demarcation disputes have the potential to cause serious economic damage to participants in
the industry and the economy generally. Time and energy which might be better directed
towards productive work is taken up with negotiations to resolve the demarcation dispute. If the dispute leads to industrial action, it can have wider ramifications, particularly if the action
impinges on work which is on the critical path for a project.
4 Most importantly, demarcation disputes involving two or more unions usually affect entirely
innocent parties. In the building and construction in dustry, those parties include c lients,
contractors and workers.
5 The largest unions with coverage in the building and construction industry are the Construction, Forestry, Mining and Energy Union (CFMEU), the Australian Workers Union
(AWU) and the Automotive, Food, Metals, Printing and Kindred Industries Union (AMWU) and
their respective state registered counterparts. The CFM EU has the strongest presence on
capital city building projects. The AWU has coverage on many civil engineering projects. The
AMWU has a presence in both the commercial construction and civil engineering sectors.
Other trade unions also span both sectors. These include the Communications, Electrical,
Reform - National issues Part 1 I 4 I
El ectronic, En ergy, Information , Postal, Plu mbing and Allied Services Union of Australia (CEPU)
which represents electricians and plumbers.
6 Th ere appears to be a consensus that demarcation disputes occur less frequently in the
building and construction industry at present than in the recent past. 1 The Productivity
Commission recognised in its report on Work Arrangements on Large Capital City Building
Projects :
Demarcation disputes between different unions were a major problem 1n the 1980s.
Inefficiencies arose because of unreasonable restrictions on what work could be done by
each employee. Dispute related delays also occurred as unions competed to maintain or
extend their coverage of employees. It appears that union amalgamation and award
restructuring have reduced demarcation problems and facilitated multiski/ling. 2
7 This assessment is consistent with many of the St.;bmissions recei ved by the Commission.
8 The Housing Industry Association Limited (HIA) noted in its submission to the Commission that
'although matters have improved since the days of Norm Gallagher and "one man one job",
there are still real demarcation problems affecting the building and construction industry' 3 HIA
argued that there were
ample grounds to believe that demarcation disputes are causing and will continue to
cause real and serious problems in the building and construction industry, and that the
potential exists for significant future demarcation disputes. 4
9 HIA said that demarcation disputes were particularly difficult for employers to deal with , as
there may be no concessions or other actions open to the employer to resolve the dispute. HIA
said that efforts in the past to avoid such disputes through 'greenfields agreements' have not
always been successful because unions may engage in industrial action on other sites of the
same employer or head contractor. 5
10 In a joint submission to the Commission, the Australian Industry Group (AI G) and the Australian
Constructors Association (ACA) said that, although demarcation disputes now occur much
less frequently in the building and construction industry than has historically been the case ,
some problems still arise. They referred to recent disputes in Victoria between the Construction and General Divis ion and the Federated Engine Drivers' and Firemen's Association (FEDFA)
Division of the CFMEU , which typically do not allow interchange between riggers, scaffolders
and doffers even though all may be dual ticketed. AIG and ACA also referred to problems in Victoria involving plumbers and metal trades workers regarding the installation of pipe work 6
AIG and ACA said that although the Australian Council of Trade Unions (ACTU) and the State
trades and labour Councils have processes in place to deal with demarcation issues, problems remain ?
11 Th e Master Builders Association of Western Australia (MBAWA) said th at since the mid-1990s
demarcation disputes on commercial sites in Western Australia have been relatively minor in nature and resolved quickly with minimal disruption, but that the same could not be said of the
resou rces sector in Western Australia. 8
12 In its submission, the CFMEU , Construction and General Division, said :
1 4 2 Final Report of the Royal Commission into the Building and Construction Industry
Demarcation disputes in the building and construction industry have reduced sharply in
the last decade. This has occurred largely as a result of many 'craft' based unions
amalgamating to form larger industry based unions such as the CFMEU. The kinds of
disputes which previously occurred between trades such as carpenters and
plasterers! gyprock fixers and between painters and solid plasterers are now almost
unheard of as craft unions and their territorial imperatives have disappeared. 9
13 The submission went on to assert :
Some evidence was led before the Royal Commission about demarcation issues in
Victoria, but such disputes are, in our submission, insignificant given the size of the
Australian building and construction industry 10
14 In its submission to the Commission, the State of Queensland said that in that State, 'industrial
disputes relating to demarcation issues are not a sign ificant problem and, in fact. there have
been no notable demarcation disputes in Queensland since the mid 1990s' .11
15 Demarcation disputes in the bu il ding and constru ction industry tend to fall within one of the
following two categories:
⢠attempts by ind ividual unions to expand thei r coverage; and
⢠dual ticketing .
Attempts to expand coverage
16 Underlying most demarcation disputes are disagreements between unions as to the scope of
their rules dealing with eligibility for membership. Sometimes elig ibility rules overlap so that two
or more unions have an entitlement to enrol certain classes of workers. In other cases unions
assert an entitlement to enrol wh ich is incon sistent with their rules.
17 In the building and construction industry there is a history of disputation between the CFMEU
and the AWU over eligibility to recruit members working in the civi l construction area. The civi l
construction area has traditionally been th e preserve of the AWU but the CFMEU has from time
to time attempted to assert and expand upon its limited coverage. Demarcation disputes
between the CFMEU and the AWU are complicated by the fact that many workers and the
contractors for whom they work move between the commercial and high-rise residential
construction sector and the civi l construction sector. Workers who have joined the CFMEU
wh ile working on a city office building site might next obtain employment on a major
infrastructure project which brings them within AWU eligibility rules. The same su bcontractor
may one day be working on a high-rise apartment building and the next on an oil refin ery. Th e
contractor's workers will be eligible to join the CFMEU on the first day and the AWU on the
second .
18 Not surprisingly, this situation has given rise to considerable tension between the two unions,
culminating in long running litigation arising out of an attempt by the CFMEU to amend its rul es
to give it the right to move into the civil construction sector.
19 Prior to 19 May 1997 the CFMEU, through its predecessors, was party to a series of
demarcation agreements made with a number of the AWU 's predecessors.12 For some tim e
Reform- National Issues Part 1 i 43
these agreements were generally accepted and honoured by the parties. 13 From about 1 995,
however, the CFMEU and AWU, with increasing regularity, resiled from them. 14 By a letter
dated 19 May 1997, the CFMEU advised the AWU that it was withdrawing from the
ag reements. 15
20 On 25 July 1997 the CFMEU lodged an appl ication under s204 of the Workplace Relations Act
1996 (C'wth) for consent to change its eligibility rules. For present purposes, it is sufficient to
summarise the ru le change by noting that, subject to a lengthy list of mainly piecemeal
exceptions and the exclusion of Queensland, the proposed rule change sought to extend the
coverage of the CFMEU to include
any worker (other than metal, electrical or plumbing tradespersons), engaged in any work
in or in connection with or incidental to the construction, repair, renovation, maintenance,
ornamentation, alteration, removal or demolition of any building or structure or any other
works or projects ... 16
21 An extensive list of different types of civil construction projects was expressly included within
thi s definition. The principal significance of the proposed rule change was that it sought to
extend the CFMEU's coverage to non-tradesmen engaged on civil projects . In the absence of
the proposed rule change, this was an area outside the scope of the CFM EU 's existing eligibility
ru les, and within the scope of other unions' eligibility ru les, including principally (as far as the
bui lding and construction industry is concerned) the AWU.
22 The AWU, a number of other unions and a number of employer organisations objected to the
proposed rule change . Some of these objections, including all objections from other unions
apart from the AWU, were settled by agreement during the course of the hearing of the
application.17
23 On 28 Jan uary 2000 Williams SDP granted the CFMEU 's application. 18
24 Williams SDP referred to his earl ier decision in Re National Tertiary Education Union where he
said , in relation to the effect of the Workplace Relations and Other Legislation Amendment Act
1996 (C'wth):
[T]he legislative objects which previously favoured a rationalisation of unions have been
replaced with objects which promote freedom of choice. The underlying philosophy of
the current legislation is that, not only are employees to be free to join or not to join an
organisation should they choose to join an organisation, they should be able to join the
organisation of their choice. Competition between organisations for membership and
representative rights is no longer discouraged.
The changes made by the [Workplace Relations and Other Legislation Amendment] Act
constitute, in my view, a fundamental change in approach to registration and
representative rights of organisations, particularly organisations of employees. Unions are
encouraged to be effective, not only so that they can retain and possibly exceed, their
existing membership and representative rights, but also so that they can provide choices
for employees. That is not to say that the potential adverse effects of competition are not
recognised. Controls remain in place to prevent a proliferation of ineffective or unviable
organisations. Competition leading to industrial action which is harmful to an employer's
144 Final Report of the Royal Commission into the Building and Construction Industry
operations may be the subject of orders under the amended s 118A. But the fact that
overlapping coverage may lead to competition is not the barrier that it previously was to
an eligib!lity rule extension. 19
25 Accordingly, and being satisfied on the evidence that contractors and their employers
increasingly operate in both the bui lding, the civil and the mechan ical sectors of the industry,
Will iams SOP concluded :
Any requirement that ... the membership entitlement of the employees of such employers
be determined from time to time by the sector of the construction industry in which the
employer happens at the particular time to be working and/or that such employees be
required to either change their union membership as the employer moves from one
sector to another and then back again or else be 'dual ticketed' is, in my view, in this day
and age, unjus tifiable and is contrary to the concept of freedom of choice of
representation inherent in the current provisions of the WR Act. 20
26 On 28 February 2001, a Full Bench of the AI RC determined that Williams SOP had erred in his
approach to the applicati on of s204. Some of the errors identified by the Full Bench are of
present relevance. In summary, the Full Bench held that:
⢠Wil liams SOP had incorrectly identified the relevan t class of employees for the purpose of
assessing the proposed rule change. He had failed to discern that it was broad enough
to apply to workers who were not employed on any work in or in connection with or
incidental to the construction industry. 21
⢠Williams SOP had failed to identify the evidence which led him to conclude that the
concerns expressed by employer objectors about the potential for the proposed rule
change to lead to demarcation disputes were , in reality, concerns about the expansion in
influence of the CFM EU at the possible expense of the AWU.22 This fail ure constituted an
error, having regard to the substantial body of evidence which was consistent with the
employers' expressed concerns.
⢠Williams SOP erred by concluding that, if the CFMEU's application were granted, the
resultant potential for industrial disputation would be outweighed by the opportunity for
the re levant employees to choose as their representative the organisation that they
perceived would provide them with the most effective representation. 23
27 The Full Bench then heard further argument as to how it ought to dispose of the CF MEU 's
application , before deciding on 13 June 2001 to quash the decision of Williams SOP and refuse
the CFMEU's application 24
28 On 27 May 2002 the Full Federal Court, by majority, quashed the Full Bench's decision and
remitted the matter to the Full Bench with a direction to reconsider th e appeal from the decision of Wi lliams SOP. 25
29 On 31 July 2002 the Full Bench of the AIRC again decided to refuse the CFMEU's
application 26 The reason ing of the Full Bench was that the class of employees who would be
affected by the rule change by reason of becoming el igible for CFMEU membership could more
'conveniently belong' to the AWU.27 The Full Bench held that th e granting of consent to th e
proposed rule change wou ld lead to demarcation disputes between the AWU and the
Reform - National issues Part 1 1 45
CFMEU. 28 This was a consideration that led to the Full Bench exercising its discretion against
granting the application.
Dual ticketing
30 The resolution of demarcation disputation often has implications for the rights of individual
workers. Un der the Workplace Relations Act 1996 (C'wth) workers are free to join or not to join
a union and, if they choose to join, may apply for membership of any union which has
constitutional coverage of the type of work which they perform. One device for resolving
demarcation disputes about wh ich the Commission has heard a good deal of evidence is 'dual
ticketing' . The Commission also heard evidence of a related device known as 'casual ticketing' .
31 For example, an asphalting contractor might have a workforce whose members have chosen
to join the AWU. When it is known that the contmctor is to perform work on or adjacent to a
building project, the CFMEU may bring industrial pressure to bear with a view to preventing the
contractor being allowed to perform the work. A 'commercial decision ' is often made by the
head contractor or the asphalting contractor to pay the CFMEU for union membership tickets
for the workers who are already members of the AWU. Such an arrangement might forestall the
threatened industrial action and allow the work to proceed. 29 The consequence for the workers
is that they are treated as members of the CFMEU even though they may have no wish to join
that organisation.
32 I have addressed dual ticketing and casual ticketing elsewhere in my report .
1 46 Final Report of the Royal Commission into the Building and Construction Industry
The evidence
Overview
33 Evidence was presented to the Commission of demarcation disputes in Victoria, Queensland,
South Australia and Western Australia. I received evidence of disputes between:
⢠the CFMEU and the AWU ;
⢠the CFMEU and the CEPU Plumbing Division;
⢠two branches (the Victorian Building Unions Divisional Branch and the Federated Engine
Drivers' and Firemen's Association Divisi on (FEDFA) Victorian Divisional Branch) of the
CFMEU;
⢠the CFMEU and the AMWU;
⢠the AWU and the AMWU; an d
⢠the Construction , Forestry, Mining & En erg y, Industrial Union of Employees, Queensland
(C FMEU Q), the Australian Building Construction Employees and Bui lders' Labourers'
Federation (Queensland Branch) Union of Employees (BLF Q) and the Austral ian
Workers' Union of Employees, Queensland (AWU Q).
34 These disputes are the subject of detailed findings in the relevant State volumes of my report. I
do not propose to repeat my detailed findings here. A brief summary of the key features of a
few representative case studies will assist in illustrating the nature and extent of the problem.
Tarong North Power Station project
35 The evidence concerning the Tarong North Power Station project30 in Queensland was an
example of a demarcat ion dispute between the BLF Q and the AWU Q over the rig ht to cover
certain workers engaged in the erection of a boiler. The project was covered by a project
agreement which had been certified in the Queensland Industrial Relations Commission
(QI RC) , to which a number of unions, including both the BLF Q and AWU Q, were parties. The
project agreement required the parties to attempt to resolve grievances at the workplace level
or, if that proved unsuccessful, by application to the QIRC. The project agreement required that
work continue normally on the site while these steps occurred .
36 In addition, the BLF Q and AWU Q had reached an agreement regarding thei r re spective
representation of workers on the project.
Reform- National issues Part 1 I 4 7
37 Despite these matters, the project was beset by a number of demarcation disputes relating to
the workers engaged in the erection of the boiler. The scaffolders on the project, who were
covered by the AWU 0, began a strike on I 0 October 200 1. The dispute came on for hearing
before the OIRC on 12 October 2001 . The OIRC recommended the lifting of bans and
limitations to allow work to recommence on 14 October 2001 . That recommendation was
ignored and the AWU 0 members remained on strike even on 15 October 2001 . In total, the
demarcation dispute resulted in five days of stoppages affecting the boiler, in breach of the
project agreement, the OIRC's recommendation and sl81 (2) of the lndustnal Relations Act
1999 (Old).
Charles Grimes Bridge project
38 The case study concerning the Charles Grimes Bridge project in Victoria was another example
of a demarcation dispute. In February 2000 Walter Construction Group Ltd (Walters) proposed
to engage a company, CSR Emoleum Pty Ltd (CSR), to undertake the road asphalting on the
Charles Grimes Bridge, a job which was estimated to require less than a week's work. CSR
employed 33 workers, all of whom were AWU members, to do the work in question. The
Branch President of the CFMEU, Construction and General Division, Victorian Building Unions
Divisional Branch, placed bans on al l asphalting work on the bridge because the CSR workers did not have CFMEU tickets.
39 Walters was faced with potentially heavy liquidated damages for delay in completing the bridge
project. It thus had a strong commercial incentive to complete the asphalting. Walters and the
CFMEU agreed that if Walters paid for CFMEU tickets for the CSR employees who were to do
the work on the bridge, the CFMEU bans preventing that work from taking place would be lifted. Walters purchased 33 CFMEU tickets at $145 each, totalling $4785. None of the 33
workers wanted to join the CFMEU. CSR , the employer of the workers, did not know that
Walters had bought the tickets. The bans were lifted immediately after the CFMEU had agreed to the payment being made by Walters .
The Age Print Centre project
40 A further case study il lustrating the nature of demarcation disputes in the building and
construction industry involved the Age Print Centre project in Victoria. The project was
governed by a project agreement signed by a number of parties, including the CFMEU FEDFA Division on 14 August 2000, and the CEPU Plumbing Division on 22 September 2000 .
41 Clause 12 of the project agreement provided that each union signatory was entitled to have a
delegate from its union members on site who, along with the relevant companies, would be
responsible for ensuring that all parties 'adhered to the dispute settlement procedure. The
dispute settlement procedure involved discussions and negotiations within the various levels of the contracting company and the union without recourse to industrial action, bans or work
limitations, with the status quo, as it was prior to the dispute, preserved. If the dispute could
not be settled by a conference between the parties, it was to be referred to the AIRC , or, by agreement, to the Victorian Building Industry Disputes Board.
I 48 Final Report of the Royal Commission into the Building and Construction Industry
42 Clause 13 of the project agreement prescribed a demarcation disputes procedure. Cause
13.1 (a) was in the following terms:
Without prejudice to final resolution, normal work shall continue at all times in accordance
with the Company's normal work allocation; progress on the Project will not be affected
by any dispute in respect of demarcation.
43 The Branch Secretary of the CEPU, Plumbing Division, Victorian Branch, phoned the site shop
steward for that union on 13 September 2000 and instructed that all plumbers were to 'sit in
the sheds ' until he attended the site, due to a demarcation dispute between the CEPU
Plumbing Division and the CFMEU FEDFA Division over coverage of the operator of a
subcontractor's forklift. Lat er, an org aniser employed by the CEPU Plumbing Division arrived on
site and met with the plumbers, the result of which was that the plumbers returned to work.
The organiser told the head contractor's On Site Project Manager that the forklift operator, a
CEPU Plumbing Division member, had been directed to continue operating the forklift and that,
if the operator was not a CEPU Plumbing Division member, all plumbers would cease work on
site .
44 The CEPU Plumbing Division organiser had a discussion with a shop steward for the CFMEU
FEDFA Division regarding the demarcation dispute but the issue was not resolved and each
union claimed that, if the opposing union operated the forklift, its members would cease work.
45 During the dispute, the subcontractor was permitted to unload the trucks off si te, in the car
park, but was not permitted to bring the materials ooto the site. Thi s meant that delays
occurred and trucks had to wait until a CFMEU FEDFA Division member became available to
drive the forklift to unload the truck. Thi s resulted in manual labour being used to unload the
trucks as the subcontractor's forklift was not allowed to be used . In one instance, a shipment
of spiral ducts, each weighing 300 kilog rams, was unloaded by hand. Ramps had to be
constructed so that the workers could roll the ducts off the truck. It would have been safer to
use forklifts for this work.
46 On 14 September 2000, two CFMEU organisers attended the site between 7.30 am and 8 am
and held a meeting with the shop stewards regarding the demarcation dispute . A CEPU
Plumbing Division organiser also attended the site . The head contractor complained that each
union was threatening that its members would stop work if a member of the opposing union
operated the forklift. The union organisers were unable to reach a resolution on the matter. The
dispute continued until 6 October 2000 when it was resolved by the respective shop stewards
agreeing that CFMEU FEDFA Division members could offload plumber's deliveries once th e
plumbers had unloaded 'one truck' with their forklift.
Sun Metals project
4 7 On the Sun Metals project in Townsville, unlawful industrial action was taken between 2 and
25 March 1999 in furtherance of a campaign by the CFMEU, the CFMEU 0 , and the BLF 0 to
recruit workers on the project at the expense of the AWU 0, and to further their opposition to
the use of 'greenfields agreements'. Officers and employees of the CFMEU and the CFMEU 0
had from at least December 1997, and the BLF 0 had from at least February 1999, deliberately
set out to foment industrial discontent, and in the course of doing so counselled and
Reform- National issues Part 1 149
encouraged workers at the site (including , but not limited to, their members) to take unlawful
industrial action. The dispute was a demarcation dispute in the sense that it involved
competition between two unions for the representation of the industri al interests of workers on
the project.
48 Officers and employees of the CFMEU , the CFMEU 0 and the BLF 0 :
⢠took an active part in the dispute;
⢠cou nselled , procured and aided others engaged in the industrial action;
⢠encouraged the industrial action; and
⢠were directly and indirectly concerned abou t the in dustri al action.
49 During the course of the campaign, the National Secretary of the CFMEU Construction and
General Division wrote to striking workers thanking th em for 'supporting the inclusion of the
CFMEU/ BLF in any settlement reac hed with the employer'. After the dispute had ended , a BLF
0 organiser wrote in a BLF 0 jou rnal to thank the BLF 0 State Secretary on behalf of the striking workers for his support and to thank 'all branc hes of the CFMEU around Australia who
provided moral and fin ancial assistance and in many cases actually visited the picket line '.31
50 On several occasio ns , the CFMEU and BLF 0 misled workers, and promoted claims which a OIRC Commissioner said, correctly, were 'not achievable under the [project agreement]' and
that '[bordered] on being mischievo us'. 32
51 This industri al action put at risk the continuation of th e project and the considerable
advantages that the project brought to Townsville, Queensl and and Australia. It damaged the
reputation of Australia and Townsvill e as places in which to invest. The client, Sun Metals Corporation Pty Ltd, estimated its total losses as a result of the strike to be at least $7 .3 million.
It is also reasonable to infer that subcontractors would have suffered losses as a consequence
of the industrial action. The general sentiment among electricians worki ng for one of the
subcontractors was th at they had lost $6000 to make $1 000 as a result of the strike .
1 50 Final Report of the Royal Commission into the Building and Construction Industry
The current law
52 The Workplace Relations Act 1996 (C'wth) and the industrial relations laws of most States contain provisions for the resolution of demarcation disputes. Before examining options for
reform and making recommendations, it is convenient to summarise the relevant law in each
Australian jurisdiction.
Commonwealth
53 Organisations registered under the Workplace Relations Act 1996 (C 'wth) are required to have
rules, which must specify the conditions of el igibility for membership of that organisation 33
54 Demarcation disputes are included in the definition of 'industrial dispute' .34 Where an
organisation or an employer becomes aware of the of an alleged industrial dispute
affecting the organisation or its members or affecting the employer, the organisation or
employer must notify the relevant Presidential Member or Registrar of the AIRC ,35 who shall,
unless satisfied that it will not assist the prevention or settlement of the alleged dispute, refer it
for conciliation .36
55 Section 118A of the Workplace Relations Act 1996 (C'wth) provides a mechanism for a party affected by a demarcation dispute to seek orders from the AIRC . It provides, in part:
(1) Subject to this section and subsection 202(6), the Commission may, on the
application of an organisation, an employer or the Minister, make the following
orders in relation to a demarcation dispute:
(a) an order that an organisation of employees is to have the right, to the
exclusion of another organisation or other organisations, to represent under
th1s Act the industrial interests of a particular class or group of employees
who are eligible for membership of the organisation;
(b) an order that an organisation of employees that does not have the right to
represent under this Act the industrial interests of a particular class or group
of employees is to have that right;
(c) an order that an organisation of employees is not to have the right to
represent under this Act the industrial interests of a particular class or group
of employees who are eligible for membership of the organisation.
(1 A) The Commission must not make an order unless:
Reform - National issues Part 1 151
(a) it has decided under section 100 not to refer the dispute for conciliation; or
(b) a conciliation proceeding in relation to the dispute is completed, but the
dispute has not been fully settled
(1 B) The Commission must not make an order unless the Commission is satisfied that:
(a) the conduct, or threatened conduct, of an organisation to which the order
would relate, or of an officer, member or employee of the organisation:
(i) is preventing, obstructing or restricting the performance of work; or
(ii) is harming the business of an employer; or
(b) the consequences referred to in subparagraph (a)(i) or (ii) :
(!) have ceased, but are likely to recur; or
(i!) are imminent;
as a result of such conduct or threatened conduct.
56 By s1 18A(2) the AIRC is required to have regard to the wishes of employees who are affected
by the dispute and various other matters if it considers it appropriate to do so when exercising
its powers under the section. By s118A(4) the AIRC's powers may only be exercised by a Fu ll
Ben ch or a Presidential Member. Organisations which are subject to an order under this section
are bound to obey the order. 37 Orders are enforceable through the Federal Court.38
57 The various preconditions that are prescribed by s118A all tend against a speedy resolution of
demarcation disputes. Before any orders can be made:
⢠a dispute must have arisen; 39
⢠the AIRC must have referred the dispute for conciliation (unless satisfied that this would
not assist in resolving the dispute); 40
⢠the AIRC must determine that conciliation has not fully settled the dispute; 4 1
⢠it must be demonstrated that the dispute is affecting the performance of work or the business of the employer; 42 and
⢠the AIRC must assess and form a view about the wishes of the employees concerned 43
58 These processes inevitably take time to implement. Work is generall y impeded while the matter
proceeds before the AIRC. The AIRC can play no part until a dispute exists or relevant conduct has been threatened.
59 As a result, formal proceedings to resolvG demarcation issues lack practical utility and are
potentially costly. As a result, most demarcation disputes are resolved at site level following industrial action or the threat of industrial action.
60 A person affected by industrial action in connection with a demarcation dispute may
commence proceedings in tort without first obtaining a certificate from the AIRC 4 4 Where industrial action taken during a bargaining period relates, to a significant extent, to a
I 52 Final Report of the Royal Commission into the Building and Construction Industry
demarcati on dispute, the AIRC may, in its discretion, suspend or term inate the bargaining
period 45 A negotiating party may make an application to the AIRC for such an order46
61 A new business, whic h does not yet have any employees, may seek to negotiate a 'greenfields
agreement' with one or more unions who are entitled to rep resent the proposed employees.
Section 170LL of the Workplace Relations Act 1996 (C 'wth) provides:
(1) If"
(a) the single business is a new business that the employer proposes to
establish or is establishing, when the agreement is to be made; and
(b) the agreement is to be made before the employment of any of the persons
who will be necessary for th e normal operation of the business or part and
whose employment will be subject to the agreement;
then the employer may make the agreement with one or more organisa tions of
employees meeting the requirements of subsection (2).
(2) When the agreement is made, each organisation must be entitled to represent the
industrial interests of one or more of the persons, whose employment is likely to be
subject to the agreement, in relation to work that will be subject to the agreement.
New South Wales
62 Section 294 of the Industrial Relations Act 1996 (NSW) provides:
(1) The Commission may; by its order, determine any question as to th e demarcation
of the industrial interests of industrial organisations of employees ('demarcation order').
(2) A demarcation order may be made on the Commission 's own initiative or on
application by an industrial organisation, an employer or a State peak council.
63 Section 295 provides:
(1) The demarcation orders that the Commission may make include (but are not
limited to) any one or more of the following orders:
(a) an order tha t an industrial organisation of employees is to have the righ t, to
the exclusion of another such organisation or other such organisations, to
represent under this Act the industrial interests of a particular class or group
of employees who are eligible for membership of the organisation,
(b) an order that an industrial organisation of employees that does not have the
righ t to represen t under this Act the industrial interests of a particular class or
group of employees is to have that right,
(c) an order that an industrial organisation of employees is not to have the nght
to represent under this Act the industrial interests of a particular class or
group of employees who are eligible for membership of the organisation.
Reform- National Issues Part 1 1 53
Victoria
(2) When the Commission makes a demarcation order, the Commission may, after
giving each industrial organisation and each State peak council concerned an
opportunity to be heard, require the rules of the organisation to be altered in
accordance with the demarcation order or a subsequent order of the Commission
so as to give effect to the demarcation order.
(3) Such a requirement has effect as follows:
(a) In the case of a State organisation incorporated under this Act, the rules of
the organisation are altered as specified in the order by force of this section.
(b) In any other case, the Commission may cancel the registration of the
organisation under Part 3 if the organisation does not alter its rules as
specified in the order within the time allowed by the order
64 By reason of the State of Vrctoria's referral of its industrial relations powers to the
Commonwealth, 47 the Workplace Relations Act 1996 (C'wth) is the only legislation dealing with
demarcation disputes in Victoria.
Queensland
65 Section 279(1) of the Industrial Relations Act 1999 (Old) provides:
(1) The full bench may, on application by an organisation, an employer or the Minister,
make the following orders about a demarcation dispute -(a) an order that an employee organisation has the right, to the exclusion of
another organisation, to represent a particular group of employees who are eligible for membership of the organisation;
(b) an order that an employee organisation that does not have the nght to
represent a particular group of employees has the right;
(c) an order that an employee organisation does not have the right to represent
a particular group of employees who are eligible for membership of the
organisation.
66 'Demarcation dispute' is defined in the Industrial Relations Act 1999 (Old) as including:
(a) a dispute arising between 2 or more organisations, or within an organisation, about
the nghts, status or functions of members of the organisations or organisation in
relation to the employment of the members; and
(b) a dispute arising between employers and employees, or between members of
different organisations, about the demarcation of functions of employees or classes of employees; and
(c) a dispute about the representation under this Act of the Industrial interests of
employees by an employee organisation.
1 54 Final Report of the Royal Commission into the Building and Construction Industry
67 Before any orders about an industrial dispute may be made by the OIRC:
⢠a dispute must have arisen; 48
⢠the OIRC must have refused to refer the dispute for conciliation 49 or have been satisfied
that conciliation proceedings would not help in the prevention or settlement of the dispute; 5°
⢠the OIRC must have determined that conciliation has not ful ly resolved the dispute; 5 1
⢠it must have been demonstrated that the dispute is, or is likely to prevent, obstruct or
restrict the performance of work or harm an employer's business; 52 and
⢠the OIRC must have assessed and formed a view about the wishes of the employees concerned 5 3
68 In addition, the OI RC is required to consider whether it should consult with appropriate State
peak councils or organisations 54
South Australia
69 A demarcation dispute is defined by s4 of the Industrial and Employee Relations Act 1994 (SA)
to include:
(a) a dispute within an association or between associations about the rights, status or
functions of members of the association or associations in relation to the
employment of those members; or
(b) a dispute between employers and employees, or between members of different
associations, about the demarcation of functions of employees or classes of
employees; or
(c) a dispute about the representation under this Act of the industrial interests of
emoloyees by an association of employees ...
70 The Industrial and Employee Relations Act 1994 (SA) does not deal separately with
demarcation disputes , but rather treats them as a species of industrial dispute. The Industrial
Relations Commission of South Australia may mediate to resolve an industrial dispute 5 5
Western Australia
71 Section 72A of the Industrial Relations Act 1979 (WA) provid es:
(1) In this section -
'enterprise ' means -(a) a business, or part of a business, that is carried on by a single
employer;
(b) a business, or part of a business, that is carried on by 2 or more
employers as a joint venture or single enterprise;
(c) activities carried on by a public authority, or part of those activities; or
Reform- National issues Part 1 1 55
(d) a single project, undertaking or place of work;
"organization" means an organization of employees and includes the Western
Australian Branch of the Australian Medical Association Incorporated.
(2) An organization, an employer or the Minister may apply to the Full Bench for an
order -(a) that an organization has the right, to the exclusion of another organization or
other organizations, to represent under this Act the industrial interests of a
particular class or group of employees employed in an enterprise who are
eligible for membership of the organization,
(b) that an organization that does not have the right to represent under this Act
the industrial interests of a particular class or group of employees employed
in an enterprise has that right;
(c) that an organization does not have the right to represent under this Act the
industrial interests of a particular class or group of employees employed in an
enterprise who are eligible for membership of the organization.
(3) The Full Bench shall not hear an application under subsection (2) until the
application has been published in the Industrial Gazette and 30 days have expired
since the day of publication.
(4) On an application under subsection (2), the Full Bench may make one or more of
the orders applied for, and may make any such order subject to any condition or limitation.
(5) The Full Bench shall not make any order described in subsection (2) without giving
persons who, in the opinion of the Full Bench, have a sufficient interest in the
matter an opportunity of being heard.
(6) Where an order is made under subsection (4), the Full Bench is to refer the matter
to the President unless the Full Bench is satisfied that the rules of the organizations
concerned do not need to be altered.
(7) On a referral under subsection (6) the President shall, after giving the organizations
concerned an opportunity of being heard, make such alterations (if any) to the rules
of the organizations as are, in the President's opinion, necessary to reflect the order made by the Full Bench.
(8) An alteration shall be made by instrument in writing signed by the President and
shall take effect on a day specified in the instrument.
Tasmania
72 Under s65A of the Industrial Relations Act 1984 (Tas), any union registered under that Act may
apply to the President of the Tasmanian Industrial Commission to have any other union 's
interest in an award deleted from its certificate of registration 56 Such applications are referred
I 56 Final Report of the Royal Commission into the Building and Construction Industry
to a Commissioner sitting alone for determination 57 The Commissioner must give all unions
having an interest in the award concerned an opportunity to be heard on the matter. 58
The Territories
73 Demarcation disputes in the Australian Capital Territory and the Northern Territory are wholly
governed by the Workplace Relations Act 1996 (C'wth).
Reform - National issues Part 1 1 57
158 Final Report of the Royal Commission into the Building and Construction Industry
Options for reform
Introduction
7 4 The Commission's Discussion Paper 16 invited submissions to address the best ways of
preventing and settling demarcation disputes in the building and construction industry.59 A
number of responses were received, which canvassed several different options for reform.
75 Before making recommendations for reform, I will summarise briefly and comment on the
principal options for reform canvassed in the submissions received by the Commission .
Retention of existing mechanisms
76 The CFMEU Construction and General Division contendeq that the current remedies avai lable
to deal with demarcation disputes are sufficient. In particul ar it argued that:
⢠sections 118A, 99 and 127 of the Workplace Relations Act 1996 (C'wth) each provide a
remedy to employers in the event of a demarcation dispute arising;
⢠industrial action relating to a demarcation dispute cannot be protected action;60 and
⢠'the law has never provided more options to employers to take legal action against
unions in the face of alleged industrial action , including where such action may be part of a demarcation dispute' 6 1
77 The HIA provided partial support for the CFMEU 's views, submitting that:
It is by no means clear that the existing remedies under the Workplace Relations Act
1996 are inappropriate or ineffective. It is certainly not true that the AIRC is powerless to
act until industrial action occurs, as [Discussion Paper No 16} suggests - the AIRC can
deal with a 'threatened, impeding or probable' dispute. Nor do the processes under
s 118A impede the AIRC acting to deal with illegal industrial action taken in pursuit of a
demarcation dispute. The powers of the AIRC under s 118A(1) to make orders relate to
future industrial coverage, not to current industrial action. 62
78 The evidence presented to the Commission is that demarcation disputes continue to occur in
the building and construction industry and cause, or have the potential to cause, sign ificant
loss to clients, contractors and employees. The existing mechanisms are manifestly not
working or not being enforced .
Reform- Nationaiissues Part 1 l 59
79 It follows that if demarcation disputes and the losses they occasion are to be minimised, reform
of the law or the enforcement mechanisms of the law is necessary.
Specialist tribunal within the AIRC
80 Th e AIG and the ACA provided a joint submission63 in which they stated that a Maj or
Construction Projects Tribunal should be established within the AIRC, presided over by a
Presidential member of the AIR C. They argued that members of such a specialist division
would gain a better understanding of current major construction projects and the industrial
relations issues arising in such projects than current arrangements allowed. This, they
contended, would assist tribunal members to deal with industrial disputes relating to major
projects, including demarcation disputes, in a more timely and efficient manner64
81 The subm ission contended that such a tribunal should deal with, among other matters:
⢠disputes wh ich arise in the course of major construction projects; and
⢠appl ications under s127 of the Workplace Relations Act 1996 (C'wth) to stop or prevent
industrial action, applications under s166A of the Workplace Relations Act 1996 (C'wth)
fo r a certificate to bring proceedings in tort, and other relevant applications under the
Workplace Relations Act 1996 (C 'wth) relating to major construction projects 65
82 Th e submission by AIG and ACA said such a tribunal should be required to hear and determine
s127 applications and issue an in terim order within 24 hours of their lodgment, unless satisfied
that it would not be in the public interest to do so . Th ey argued that such a tribunal should have
the power to suspend the registration of a union (perhaps for a relatively short period for a first offence) on the ground that it had failed to comply, or failed to ensure that its members
complied, with AIRC orders, including orders relating to demarcation disputes 66
83 The HI A was opposed to the concept of a specialist industry tribunal, as it was not satisfied that such a tribun al would be sign ificantly more effective or expert than the AIRC .67 The HIA
said that demarcation disputes wh ich resu lt in industrial action should be regarded as simply a
species of unlawful industrial action, and should not be sing led out for special treatment. Th e HIA said :
[T]he problem is not the subject matter of the dispute, but the fact that unions feel free to
indulge in unlawful industrial action without fear of retribution. If effective measures were
in place to deal with unlawful industrial action, demarcation disputes would be able to be
dealt with in the same way as other disputes. 68
84 The State of Queensland also opposed such a proposal 69 It argued that the establishment of such a tribunal would be flawed because:
⢠its jurisdiction would be limited to matters validly the subject of Commonwealth laws;
⢠there is insufficient evidence to justify the need for such a tribunal, and no cogent
argument has been advanced as to why persons in the building and construction industry should be subject to different standards, laws and regulations than
workers and employers in other Industries;
1 60 Final Report of the Royal Commission into the Building and Construction Industry
⢠specialist tribunals operating in narrow fields of industry are undesirable as they
tend to develop a limited outlook due to a confined range of expertise, experience
and input, as opposed to broader jurisdictions which do not fall prey to industry
parochialism;
⢠specialist tribunals risk being seen as lacking independence and impartiality and as
being subject to the influence of government, thereby undermining their credibility
and support from industry participants;
⢠such a tribunal would duplicate existing structures and resources and
consequently impose substantial costs on the taxpayer; and
⢠since the Queensland governmen t would not refer powers to such a tribunal,
workers in the building and construction industry in Queensland engaged under
federal conditions would most likely be governed by different conditions and
obligations than their counterparts under the Queensland system, which could
create animosity and disruption in the workplace, and impose additional regulatory
requirements upon contractors. 70
85 Under s37 of the Workplace Relations Act 1996 (C'wth), the President of the AIRC may assign
an industry or group of industries to a panel of members consisting of at least one Presidential
Member and at least one Commissioner. Panels have been established for, among other
industries, the building , metals and civil construction in du stries. The advantage of panels is that
members are able to build up a level of fam il iarity and . expertise with issues aris ing within
specific industries. The operation of the panel for the building, metals and civi l construction
industries is a matter for the President of the AIRC, and is not a matter upon wh ich I propose to
make any further comment.
Dual ticketing
86 The submission by AIG and ACA argued that the Workplace Relations Act 1996 (C'wth) should
be amended to include offences of:
⢠coercing an employer to pay th e un ion dues of a person through threaten ing, organi sing
or taking industrial action; and
⢠advising, encouraging or inciting an employer to pay the union dues of a personl1
87 The HIA went slig htly further than thi s, arguing that it should be unlawful for any employer,
directly or indirectly, to pay the union membership of its employees or con tractors, or
employees or contractors of another contractor, or make payments generally for the purposes
of seeking to resolve a demarcation dispute, or for purposes including those purposesn
88 I have addressed dual and casual tickets elsewhere in my report.
Industrial action in connection with demarcation disputes
89 The HIN 3 and the MBAWA74 each submitted that there shou ld be a provision maki ng any
industrial action over demarcation issues unlawful in all cases. The HIA said that there should
be no opportunity for the tak in g of protected action again st an em ployer over what is
Reform - National issues Part 1 1 61
essentially an inter-union dispute .7 5 The MBAWA contended that any such provisions must be
backed up by appropriate sanctions. 76
90 The State of Queensland contended that any proposal that unions should be required to pay
compensation for any losses to contractors and workers arising from demarcation action was
ill-conceived, since:
⢠s166A(2)(b) of the Workplace Relations Act 1996 (C'wth) provides that an action in tort
may be taken in respect of conduct arising out of a demarcation dispute;
⢠contractors and workers will not necessarily suffer loss arising from a demarcation
dispute; and
⢠such matters woul d have to be litigated in the Fed eral Court and would create a more
litigious, costly and time consuming regime. 77
91 I do not find any of the arguments put by the State of Queensland persuasive:
⢠Wh ile it is true that con tractors and workers may bring tort actions to recover
compensation in relation to losses occasioned by demarcation disputes, such actions
are usually costly and protracted. There needs to be a simpler and more cost-effective
means for parties to recover losses resulting from such disputes .
⢠The second argument by the State of Queensland is nonsensical. No compensation
order cou ld be made in circumstances where a contractor or worker had not suffered any
loss. Where such losses occur, however, there must be a facility for them to be recovered as again st the responsible party. Developing a culture of accountability for one's actions
is central to the objective of restoring the rule of law to the bui lding and construction
industry.
⢠I do not accept the third argument put by the State of Queensland . It would be likely that
proceedings to enforce a simple prohibition against industrial action in connection with
demarcation issues would be cheaper and faster than tort proceedings in the Supreme Court of a State or Territory. Moreover, adherence to the law would be greatly facilitated
by a simple prohi bition wh ich was well un derstood by all participants in the industry.
Abolition of greenfields agreements
92 The CFMEU Construction and General Division said that greenfields agreements, made under
s 170LL of the Workplace Relations Act 1996 (C'wth) , undermine the Act's objective of guaranteein g freedom of association. Th e argument was that such agreements can have the
resul t of excluding a union from the right to represent its members (employed under such an
ag reement) engaged on work within its el igibility ru les. The union argued that the Workplace
Relations Act 1996 (C'wth) should be amended to provide that an organisation cannot be
excluded from greenfields agreements where it is eli gi bl e to en rol members carrying work covered by the agreement. 78
93 I have addressed greenfields agreements in Volume 5, Reform - Establishing Employment Conditions, of this report .
1 62 Final Report of the Royal Commission into the Building and Construction Industry
Abandonment of competitive unionism
94 The State of Queensland said that union amalgamations within the bu ilding and construction
industry had resu lted in an overlap of union rules covering certain classifications of workers l 9 It
said the Workplace Relations Act 1996 (C'wth) contains provisions which promote 'competitive
unionism' such as the 'more conveniently belong' rule, the greenfields agreements provisions
and by restricting project agreements.80 The State of Queensland argued that the best way of
preventing and settling demarcation disputes would be to remove the provisions in the
Workplace Relations Act 1996 (C 'wth} that promote competitive unionism and to restore the
conciliation and arbitration powers of the AIRC 81
95 I disagree. The evidence presented to the Commission was that demarcation disputes in the
building and construction indu stry are typically accompanied by industrial action which is
unlawful or which, having regard to its consequences on innocent parties, ought to be unlawful .
The State of Queensland's argument is, in effect, that since unions do not act within the law,
the law should be changed. That argument must be rejected. Preventing and settling
demarcation disputes in the building and construction industry is, in my estimation, more likely
to be achieved by:
⢠restoring the rule of law to the industry;
⢠ensuring that all participants in the industry understand their rights and obligations; and
⢠putting in place investigative and enforcement mechanisms capable of preventing and
resolving disputes.
Requirement to consult State peak councils
96 The State of Queensland said that the Industrial Relations Act 1999 (Old) incorporates a range
of statutory criteria to which the OIRC must have regard in determining demarcation disputes.
One such criterion is whether in the circumstances State peak councils or organisations should
be consulted. The State of Queensland's view was that such councils play an important and
influential role in fostering harmony and cooperation among their affiliate members and that it is
desirable that demarcation issues be dealt with within the union movement or among employer
groups 82
97 I agree that State peak councils and organisations can play an important role in mediating
between different unions with a view to ensuring that demarcation disputes do not occur or
resolving demarcation disputes where they do occur. Formalising a consultative ro le for such
councils and organisations, however, would be likely to prolong disputes and is therefore
undesirable, at least while productive work is being disrupted by industrial action .
Reform - National Issues Part 1 1 63
164 Final Report of the Royal Commission into the Building and Construction Industry
Solutions and recommendations
General matters
98 While demarcation disputes have arisen less frequently in the building and construction
industry in recent years, the evidence presented to and submissions received by the
Commission established that such disputes do still occur, and th at they have a prejudicial
impact on the in dustry. The case studies demonstrated that the currently available procedures
for resolving demarcation disputes do not provide an adequate or coherent response to the
multiple problems which arise when such disputes occur.
99 While demarcation disputes are ostensibly about resolving issues of coverage as between two
or more unions, they almost invariably cause significant, collateral loss to entirely inn ocent
parties, including clients, contractors and employees: They undermine productivity and
workplace relationships .
Industrial action in support of demarcation disputes
1 00 The most important objective of any law in relation to demarcation disputes must be to prevent
such disputes from causing collateral loss to innocent parties.
101 There can, in my view, be no excuse in any circumstances for industrial action to be organised,
threatened or taken in support of demarcation disputes.
1 02 The object of a union which organises or takes industrial action in support of a demarcation
dispute, as distinct from pursuing remedies in the AIRC , is to bring pressure to bear upon
employers with a view to them intervening or acting in the dispute to the benefit of the union ,
and to the detriment of competing unions.
1 03 Elsewhere in my report I have made recommendations in relation to reforming the law of
unlawful industrial action as it applies to the bui lding and construction industry. I have
recommended that there should be a prohibition on employers, employees and unions (and
their officers and employees) taking unlawful industrial action.
104 The recommendations I have made in relation to the law of unlawful industrial action would, if
implemented, apply to in dustrial action organised, threatened or taken in connection with
demarcation disputes. Responsible parties would be potentially liable for substantially
increased civil penalties of $100 000 for a body corporate or $20 000 in other cases. In
addition, responsible parties would potentially be liable to pay compensation in respect of loss
Reform - National issues Part 1 i 65
suffered by reason of the industrial action . Uni ons would as a general rule be liable for the
conduct of their officers and employees.
1 05 I have also made recommendations elsewhere in my report in relation to the reporting of actual
or threatened industrial action.
106 Under the Workplace Relations Act 1996 (C'wth), protected industrial action may only be taken
in connection with supporting or advancing claims made in respect of a proposed
agreement. 83 Industrial action in support of a demarcation dispute could not constitute
protected action. There is, however, no express provision to that effect in the Workplace
Relations Act 1996 (C'wth) . There would be an advantage in including an express provision to
that effect. Such a provision would facil itate compliance with and enforcement of the law.
107 In addition to the general recommen dations to which I have already referred, therefore ,
legislation applying to the bui lding and construction industry should expressly provide that
industrial action is not protected action if the reason, or one of the reasons , for the action is the
existence of a demarcation dispute.
Issue
Demarcation disputes, involving inter-union rivalry over the right to enrol and represent workers, have been a cause of disputation in the building and construction industry in Australia for many years . Although the level of disputation has declined in recent years, it has not been eliminated.
Demarcation disputes have the potential to cause serious economic damage to participants in the industry and the economy generally. Time and energy which might be better directed towards productive work is taken up with negotiations to resolve the demarcation dispute. If the dispute leads to industrial action, it can have wider ramifications, particularly if the action impinges on work which is on the critical path for a project.
Most importantly, demarcation disputes involving two or more unions usually affect entirely innocent parties. In the building and construction industry, those parties include clients, contractors and workers.
The most important objective of any law in relation to demarcation disputes must be to prevent demarcation disputes from causing collateral loss to innocent parties.
Recommendation 55
The recommendations I have made elsewhere in my report in relation to reforming the law of unlawful industrial action apply to industrial action which is organised, threatened or taken in connection with demarcation disputes between unions.
The Building and Construction Industry Improvement Act provide that industrial action is not protected action if the reason, or one of the reasons, for the action is the existence of a demarcation dispute between unions.
1 66 Final Report of the Royal Commission in to the Building and Construction Industry
Powers of the AI RC
108 The secondary objective of laws concerning demarcation disputes is to provide an effective
mechanism for resolving such disputes as between the competing unions.
109 Section 118A of the Workplace Relations Act 1996 (C'wth) enables the AIRC to make a range
of orders to resolve demarcation disputes. Those powers should continue to be available in
demarcation disputes in the building and construction industry.
110 Under s118A(1 ), only an organisation, an employer or the Minister may apply for orders in
relation to a demarcation dispute. In the building and construction industry, however,
demarcation disputes have the potential to affect persons other than organisations and
employers. It is therefore desirable that the right to apply for orders under s118A should be
extended, in the building and construction industry, to any person (including a body corporate)
who is or may be adversely affected by a demarcation dispute.
11 1 Similarly, any person who suffers loss by reason of a contravention of an order under s118A
should be entitled to bring proceedings for a civil penalty and to recover compensation from the
responsible party. I have made recommendations in relation to obtaining compensation where a person suffers loss by reason of a contravention of a provision in legislation applying to the
building and construction industry elsewhere in my report.
112 Finally, the Australian Building and Construction Commission (ABCC) should have standing to
apply for orders in relation to demarcation disputes, including orders for the imposition of a civil
penalty.
Issue
The secondary objective of laws concerning demarcation disputes is to provide an
effective mechanism for resolving such disputes as between the competing unions.
Under s118A(1) of the Workplace Relations Act 1996 (C'wth), only a registered
organisation, an employer or the Minister may apply for orders in relation to a
demarcation dispute. In the bui lding and construction industry, however, demarcation
disputes have the potential to affect persons other than registered organ isations and
employers. It is therefore desirable that the right to apply for orders and the range of
available orders should be extended .
Recommendation 56
The right to apply for orders under s 118A of the Workplace Relations Act 1996 (C 'wth)
be extended, in the Building and Construction Industry Improvement Act, to any person
(including a body corporate) who is or may be adversely affected by a demarcation
dispute between unions.
Reform- National issues Part 1 167
Recommendation 57
The Building and Construction Industry Improvement Act provide that a person who
suffers loss by reason of a contravention of an order under s118A be entitled to bring
proceedings to recover a civil penalty and compensation from the responsible party or
parties.
Recommendation 58
The Australian Building and Construction Commission have standing to apply for orders
in relation to demarcation disputes, including orders for the imposition of a civil penalty.
I 68 Final Report of the Royal Commission into the Building and Construction Industry
Notes to Demarcation disputes
Submission by Master Builders Australia Inc, exhibit 771, document 067.0160.097 4.0002 at 0008; Submission by Australian Industry Group, exhibit 1955, document 090.0742 .0950.0001 ; Submission by Construction, Forestry, Mining and Energy Union 2002, exhibit 1807, document 029.0348.0978.0001 at
0008.
Productivity Commission 1999, Work Arrangements on Large Capital City Building Projects, Labour Market Research Report, Ausinfo, Canberra, p.136.
Housing Industry Association response to Discussion Paper 16, exhibit 1890, document 039.0697.0237.0001 at 0004.
Housing Industry Association response to Discussion Paper 16, exhibit 1890, document 039.0697. 0237 0001 at 0005.
Housing Industry Association response to Discussion Paper 16, exhibit 1890, document 039 0697.0237 0001 at 0005.
Submission of the Australian Industry Group and Australian Constructors Association regarding Discussion
Paper 16: Demarcation Disputes in the Bui lding and Construction Industry, 23 December 2002, exhibit 1955, document 090.07 42 0950.0001.
Submission of the Australian Industry Group and Australian Constructors Association regarding Discussion Paper 16: Demarcation Disputes in the Building and Construction Industry, 23 December 2002, exhibit 1955, document 090.0742.0950.0001 at 0002.
Submission of the Master Builders Association of Western Australia regarding Discussion Paper No 16: Demarcation Disputes in the Building and Construction Industry, 27 November 2002, exhibit 1883, document 057.0584.0725.0001 .
Response by the Construction, Forestry, Mining and Energy Union, .Construction and General Division to Discussion Paper 16- Demarcation Disputes in the Building and Construction Industry, exhibit 1913,
document 050.0510.0860.0002.
10 Response by the Construction, Forestry, Mining and Energy Union, Construction and General Division to
Discussion Paper 16- Demarcation Disputes in the Building and Construction Industry, exhibit 1913,
document 050.0510 0860.0002 at 0003. 11 Response of the State of Queensland to Discussion Paper 16, exhibit 1926, document 002.0068.0880 0002 at 0003.
12 Reasons for Decision of Williams SOP, AIRC, PrintS 2640, 28 January 2000, paragraph 84. 13 Reasons for Decision of Williams SOP, AIRC, Print S 2640, 28 January 2000, paragraph 103.
14 Reasons for Decision of Williams SOP, AIRC, PrintS 2640, 28 January 2000, paragraph 104. 15 Reasons for Decision of Williams SOP, AIRC, Pnnt S 2640, 28 January 2000, paragraph 1 02; Reasons for Decision of Full Bench of AIRC, Print PR 901486, 28 February 2001 , paragraph 113.
16
See Attachment 1 - Amended variation of its Rules by CFMEU in Proceeding D, No. 20004 of 1997 in the
AIRC .
17
Reasons for Decision of Williams SOP, AIRC, PrintS 2640, 28 January 2000, see paragraphs 4-9 for more information regarding the objections lodged to the rule change and their disposition.
18
Reasons for Decision of Williams SOP, AIRC, PrintS 2640, 28 January 2002 .
19
Reasons for Decision of Williams SOP, AIRC , PrintS 2640, 28 January 2002, paragraph 31.
20 Reasons for Decision of Williams SOP, AIRC, PrintS 2640, 28 January 2002, paragraph 70.
2 1
Reasons for Decision of Full Bench of AIRC, Print PR 901486, 28 February 2001 , paragraphs 46 and 79 .
22 Reasons for Decision of Full Bench of AIRC, Print PR 901486, 28 February 2001 , paragraph 101.
23 Reasons for Decision of Full Bench of AIRC, Print PR 901486, 28 February 2001 , paragraph 139. 24 Reasons for Decision of Full Bench of AIRC, Print PR 905003, 13 June 2001 .
Reform- National issues Part 1 169
2s (2002) 114 IR 185.
26 Reasons for Decision of Full Bench of AIRC, Print PR 920670, 31 July 2002. 27 Reasons for Decision of Full Bench of AIRC, Print PR 920670, 31 July 2002. 28 Reasons for Decision of Full Bench of AIRC , Print PR 920670, 31 July 2002.
29 This example is drawn from evidence presented to the Commission in relation to the Charles Grimes Bridge project and the Globex site: Johnston, T6508/01 -6509/42.
3° Considered as part of the Barclay Mowlem Construct1on Limited case study during the Queensland sittings. 31 Sun Metals Tender Bundle, exhibit 1039, document 028.0693.0988.0036.
32 Sun Metals Tender Bundle, exhibit 1039, document 028.0693.0988.0036 at 0123-0124. 33 Workplace Relations Act 1996 (C'wth}, ss194 & 195.
34 Workplace Relations Act 1996 (C'wth), s4(1).
35 Workplace Relations Act 1996 (C'wth), s99(1 ). 36 Workplace Relations Act 1996 (C'wth}, s100(1). 37 Workplace Relations Act 1996 (C'wth}, s118A(5). 38 Workplace Relations Act 1996 (C'wth), s118A(6). 39 Workplace Relations Act 1996 (C'wth}, s118A(1 ). 40 Workplace Relations Act 1996 (C'wth), s100(1). 41 Workplace Relations Act 1996 (C'wth), s1 18A(1 A), read with s100(1) .
42 Workplace Relations Act 1996 (C'wth), s118A(1 B). 43 Workplace Relations Act 1996 (C'wth), s118A (2); see also South Corp Australia Pty Ltd v National Union of Workers (1998) 43 AILR 3-7 41; Application by Diamond Offshore General Company (1998) 78 IR 85.
44 Workplace Relations Act 1996 (C'wth), s166A(2)(b) . 45 Workplace Relations Act 1996 (C'wth), s170MW(1), (5). 46 Workplace Relations Act 1996 (C'wth}, s170MW(8)(a). 47 See the Commonwealth Powers (Industrial Relations) Act 1996 (Vic) and s493(1) of the Workplace Relations
Act 1996 (C'wth} . 48 Industrial Relations Act 1999 (Old) , s279(1). 49 Industrial Relations Act 1999 (Old), s279(2)(b) . 50 Industrial Relations Act 1999 (Old}, s279(2)(a). 51
Industrial Relations Act 1999 (Old}, s279(2)(b). 52 Industrial Relations Act 1999 (Old}, s279(3). 53 Industrial Relations Act 1999 (Old), s279(4)(a). 54
Industrial Relations Act 1999 (Old), s279(4)(c) .
55 lndustnal and Employee Relations Act 1994 (SA), s197. 56 Industrial Relations Act 1984 (Tas}, s65A(1) . 57 Industrial Relations Act 1984 (Tas), s65A(2).
58 Industrial Relations Act 1984 (Tas), s65A(4). 59 Royal Commission into the Building and Construction Industry, Demarcation Disputes in the Building and Construction Industry, Discussion Paper 16.
60 Response by the Construction, Forest ry, Mining and Energy Union, Construction and General Division to Discussion Paper 16- Demarcation Disputes in the Building and Construction Industry, exhibit 1913, document 050.0510.0860.0002 at 0006.
1 7 0 Final Report of the Royal Commission into the Building and Construction Industry
61 Response by the Construction, Forestry, Mining and Energy Union, Construction and General Division to Discussion Paper 16 - Demarcation Disputes in the Building and Construction Industry, exhibit 1913, document 050.051 0.0860.0002 at 0007.
62 Housing Industry Association response to Discussion Paper 16, exhibit 1890, document 039.0697.0237.0001 at 0006.
63 Submission of the Australian Industry Group and Australian Constructors Association regarding Discussion Paper 16: Demarcation Disputes in the Bu ilding and Construction Industry, 23 December 2002, exhi bit 1955, document 090.0742.0950 0001.
64 Submission of the Australian Industry Group and Australian Constructors Association regarding Discussion Paper 16: Demarcation Disputes in the Building and Construction Industry, 23 December 2002, exh ibit 1955, document 090.07 42.0950 0001 at 0002.
65 Submission of the Australian Industry Group and Australian Constructors Association regardi ng Discussion Paper 16: Demarcation Disputes in the Building and Construction Industry, 23 December 2002, exhibit 1955, document 090.07 42.0950 0001 at 0002-0003 66 Submission of the Australian Industry Group and Australian Constructors Association regarding Discussion
Paper 16: Demarcation Disputes in the Building and Construction Industry, 23 December 2002, exhibit 1955, document 090.0742.0950.0001 at 0003. 67 Housing Industry Association response to Discussion Paper 16, exhi bit 1890, document
039.0697.0237.0001 at 0006.
68 Housing Industry Association response to Discussion Paper 16, exhibit 1890, document 039.0697 0237 0001 at 0005.
69 Response of the State of Queensland to Discussion Paper 16, exhibit 1926, document 002.0068.0880.0001 at 0006. 7 ° Fin al Submiss1on of the State of Queensland, exhibit1811, document 083.075.0607.0001 at 0021. 71
Submission of the Australian Industry Group and Australian Constructors Association regarding Discussion Paper 16: Demarcation Disputes in the Building and Construction Industry, 23 December 2002, exhibit 1955, document 090 0742.0950.0001 at 0003. 72 Housing Industry Association response to Di scussion Paper 16, exhibit 1890, document
039.0697.0237 0001 at 0006. 73 Housing Industry Association response to Discussion Paper 16, exhibit 1890, document 039.0697.0237.0001 at 0005. 74
Submission of the Master Builders Association of Western Australia regarding Discussion Paper No 16: Demarcation Disputes in the Building and Construction Industry, 27 November 2002, exhibit 1883, document 057.0584.0725.0001 at 0002. 75
Housing Industry Association response to Discussion Paper 16, exhibit 1890, document 039 0697 0237 0001 at 0005. 76 Submission of the Master Builders Association of Western Australia regard ing Discussion Paper No 16:
Demarcation Disputes in the Building and Construction Industry, 27 November 2002, exhibit 1883,
document 057.0584.0725.0001 at 0002. 77 Response of the State of Queensland to Discussion Paper 16, exhibit 1926, document 002.0068 0880 0001 at 0007. 78
Response by the Construction, Forestry, Mining and Energy Union, Construction and General Division to Discussion Paper 16- Demarcation Disputes in the Building and Construction Industry, exhibit 1913, document 050 0510 0860.0002 at 0007. 79 Response of the State of Queensland to Discussion Paper 16, exhibit 1926, document 002.0068.0880.0001 at 0003.
80 Response of the State of Queensland to Discussion Paper 16, exhibit 1926, document 002 0068.0880.0001 at 0004-0005.
Reform - National issues Part 1 1 71
8 1 Response of the State of Queensland to Discuss1on Paper 16, exhibit 1926, document
002.0068.0880.0001 at 0003.
82 Response of the State of Queensland to Discussion Paper 16, exhibit 1926, document
002 0068.0880.0001 at 0006.
83 Workplace Relations Act 1996 (C'wth), ss170ML(2)(e) , m and 170ML(3)(a), (b).
1 7 2 Final Report of the Royal Commission into the Building and Construction Industry
5
Entry to premises and inspection of records
Reform- National Issues Part 1 1 73
174 Final Report of the Royal Commission into the Building and Construction Industry
The problem
Introduction
The Workplace Relations Act 7996 (C'wth) and the industrial relations legislation of each State
other than Victoria contain provisions regulating entry to premises and inspection of
employment records by unions. Underlying each piece of legislation is the premise that unions
have a legitimate interest in having their officers and employees enter premi ses for the purpose
of investigating suspected breaches of industrial instruments, and of holding discussions with
persons who are or are eligible to become members of the relevant union. In addition, in New
South Wales and Western Australia, entry to premises by authorised union officers and
employees is expressly permitted for the purpose of investigating suspected breaches of
occupational health and safety standards.
2 This myriad of potentially applicable laws makes it difficult for participants in the build ing and
construction industry to know their rights and obligations concerning entry to premises and
inspection of employment records.
3 Statutory provisions which entitle officers and employees of unions to enter premises authorise
conduct which would otherwise constitute a trespass. Because they are a statutory intrusion
into the premises and business affairs of another and because of their potential to cause
disruption to workplaces, the circumstances in which entry is permitted need to be precisely
defined and limited to what is necessary to ach ieve the purpose for which entry is permitted.
4 The evidence presented at the public hearings of the Commission disclosed widespread
disregard in the building and construction industry of obligations concerning entry to premises
and inspection of employment records in New South Wales, Victoria, Queensland, Western
Austral ia, Tasmania and the Australian Capital Te rritory. I did not receive evidence of similar
abuses in South Australia and the Northern Territory. Most of the evidence of lawlessness
related to misconduct by officers and employees of the Construction, Forestry, Mining and
Energy Union (CFMEU).
5 Ensuring that provisions regulating entry and inspection by unions operate properly in the
building and construction industry is a matter of considerable importance. Overwhelmingl y, the
evidence presented to the Commission was that industrial disruption on building and
construction sites followed upon union officers and employees entering sites pursuant to the
exercise or purported exercise of a statutory entitlement. Industrial disruption was almost
Reform - National issues Part 1 1 7 5
always the result of intervention in workplace relations by union officers. That intervention was
often uninvited and sometimes unwanted by the affected employees.
6 The reform s recommended elsewhere in my report in relation to the taking of unlawful industrial
action and the attribution of responsibility for industrial disruption will go some of the way
towards preventi ng abuses of powers of entry and inspection . In this section, I make
recommendations relatin g specifically to the form which entry and inspection provisions should
take in Federal legislation applying to the buil din g and construction indust ry.
The evidence
7 The evidence was that obligations concerning entry to premises and inspection of employment records were abused in the building and construction industry in a number of ways, including
by:
⢠persons holding permits under the Workplace Rela tions Act 1996 (C'wth) or State
industri al re lations leg islation enteri ng premises without havin g given notice as required
by app licable legislation;
⢠permit holders entering premises on the pretext of safety concerns before proceeding to
engage in activities of an industrial nature;
⢠permit holders entering premises and holding discussions with workers concerning
industri al matters during ordinary working hours, causing disruption to work and lost
productivity;
⢠permit holders entering premises for the purpose of inciting workers to take unlawful
industri al action; and
⢠perso ns other than permit holders enterin g prem ises and exe rcising powers accorded to
permit holders .
8 I do not propose to catalogue each of the many examples of abuses of entry and inspection
provisions presented in evidence to the Commission. They are contained in the State Hearings
vol umes of this report. A summary of a small number of case studies will, however, assist in
illustrating the nature and extent of the problem.
9 The Civil Man agement Group Pty Ltd (C ivil Management Group) case study affords an
illu stration of an abuse of entry provisions in New South Wales . Mr Peter Primmer, an organiser
employed by the CFMEU in its Construction and General Division , New South Wales Divisional
Branch, sought entry to a site without pri or noti ce to look arou nd and inspect the machinery.
He produced a union card which iden tified him as a union official . The site foreman, Mr Russell Larkham, refused to al low the organiser to enter the site and asked him to leave. Primmer then
asked whether the workers on site had Australian Business Numbers (ABN s) or whether they
were paid wages. Larkham told Primmer that as far as he was aware, the workers were on AB Ns. Primmer told Larkham he would ensure the Australian Taxation Office (ATO) and
WorkCover visited the site. Larkham asked Primmer to leave three more times and threatened
to call the po lice . Each time, Primmer started ranting. He asked Larkham if Larkham was preve nti ng him from performing a safety inspection . Primmer told Larkham he was going to
sh ut the site down and shut down other sites where the company was working . Primmer finally
1 7 6 Final Report of the Royal Commission into the Building and Construction Industry
left after Larkham told him he had called the police. On his way out, Primmer again told
Larkham he would have the ATO and WorkCover attend the site . He asked Larkham what
other sites Civil Management Group was working on and said he would close down all other
Civi l Management Group jobs. Primmer told Larkham to 'get your boss down here and tell him
to bring his cheque book. You 'll lose your job over this; I'll see that you'll lose your job .'
1 0 An example of a pervasive attitude among union officers in New South Wales appears from the
Crown International Holdings Pty Ltd (Crown) case study. On 3 July 2001, five organisers
employed by the CFMEU in its Construction and General Division, New South Wales Divisional
Branch attended a site. Mr Paul Appleby, Crown's General Manager, asked the organisers for
their entry cards. Only two of the organisers were able to produce their cards . One of the
organ isers , Mr Brian Redfern , was aggressive and refused to all ow Appleby to touch or read
the cards . Redfern admitted to Appleby that he had no authority or paperwork, but said he
could take whatever action he wanted on site.
11 I was told in the Sydney sittings by Mr Daniel Murray, an Industrial Advocate with the Master
Builders Association of New South Wales, th at the New South Wales Industrial Registrar had
refused to issue a list of persons holding permits under the Industrial Relations Act 1996 (NSW) .1
12 In Victoria, I found that officials of the CFMEU generally seek to assert and rely on powers given
to them under the Victorian Building Industry Agreement (VBIA), the National Building and
Construction Industry Award 2000 (NBCIA) and the pattern agreements to which the CFMEU
is a party, rather th an the more prescriptive provisions in· the Workplace Relations Act 1996
(C'wth) . During investigations into members' entitlemen ts, employers are routinely insulted,
abused, harassed and intimidated, often for the purpose of pressing employers to make
corrective payments to employees, and with the premature assertion that the employer's records are not in order.
13 The Construction, Forestry, Mining and Energy Union Subcontractor Audits case study in
Victoria illustrated, among other matters, that permit holders with no formal qualifications or
training in accountancy or bookkeeping are used to conduct audits of employers' financial
documents. Thi s results in inconsistent approaches being taken by individual permit holders,
exaggerated claims or inaccurate estimates being made and incorrect principles being applied .
The union 's practice in Victoria is to demand in a pro forma memorandum that employers bring
all documents to the union 's offices for inspection.
14 In Western Australia, entry requirements are commonly disregarded by officials and organisers
of the CFMEU in its Construction and General Division, Western Australian Divisional Branch.
Entry is claimed for the purpose of investigating suspected breaches of industrial instruments,
but exercised for the purpose of maintaining a high visible presence or disrupting work for other
purposes. Safety issues are advanced to justify entry and abandoned once entry has been
achieved . The Graham Farmer and Kwinana Freeways Civil Construction Projects case study,
the Universal Constructions Pty Ltd case study and the Woodman Point Wastewater Treatment
Plant case study are illustrations of the nature and extent of the problem in Western Australia.
15 The problems of dual authorities under Fed eral and State legislation also arose in Western Australia. Mr Joseph McDonald, the Branch Assistant Secretary of the CFMEU, Constru ction
Reform- National Issues Part 1 i 77
and General Division, Western Australian Divisional Branch, had his permit under the
Workplace Relations Act 1996 (C'wth) revoked, but continued to hold an entry permit under
the Industrial Relations Act 1979 (WA) . The evidence was that the revocation of his Federal
permit had little, if any, practical impact on McDonald's ability to enter sites .
16 Th e Kenoss Contractors Pty Ltd (Kenoss Contractors) case study is an example of repeated
abuses by a union organiser of entry and inspection privi leges in the Austral ian Capital Territory.
Among other matters, the evidence in relation to that case study was that Mr Steven King , an
organiser employed by the CFMEU in its Construction and General Divis ion , Australian Capital
Territory Divis ional Branch, had repeatedly entered various Kenoss Contractors' sites without
giving prior notice. King had asserted that he was entitled to come to sites any time he wanted.
Kenoss Contractors eventually lodged a formal complaint against King with the Office of the
Employment Advocate. On 15 May 2001, King sent a fax to Kenoss Contractors advising of his
intention to visit its worksites between 17 May ar,d 21 December 2001 for the purpose of
checking compliance with 'relevant ACT Awards and Acts'. Between 22 October 2001 and 26
November 2001, Kenoss Contractors received twelve separate notifications from the union of
its intention to have officials attend on sites on which Kenoss Contractors was working to
conduct inspections. On 4 December 2001 the union commenced proceedings alleging that
Ken oss Contractors and a related company had refused to allow it entry to sites. At a
conference on 13 December 2001 Commissioner Deegan of the Australian Industrial Relations
Commission (AIRC) said that there was no substance to the union 's complaints and that it was
obliged to give 24 hours notice of its intention to visit sites.
17 In short , I am satisfied from the evidence presented to the Commission that disregard of the
law in relation to entry and inspection by union officers and employees is widespread in the
bui lding and construction industry. Unlawful industrial action or threats of unlawful industrial
action often coincide with abuses of righ ts of entry and inspection. Even where actual or
threatened industrial action does not result, abuses of rights of entry in the building and
construction industry usually resul t in unjustifiable disruption to productive work. That widespread abuses occur demonstrates that the law in this area is either inadequate,
inadequately enforced or both. It follows that the law in this area is in need of reform .
18 Before exam ining options for reform, it is convenient to summarise the relevant provisions
concerning entry to premises and inspection of employment records in the Workplace Relations Act 1996 (C'wth), and in the industrial relations and occupational health and safety
leg islation of the various States.
1 7 8 Final Report of the Royal Commission into the Building and Construction Industry
The current law
Commonwealth
19 Until 1973, the Conciliation and Arbitration Act 1904 (C'wth) did not contain any provisions
giving unions or their officers and employees a right to enter premises and inspect employment
records. Entitlements to enter premises and inspect records were dealt with in awards.
20 Section 42A of the Conciliation and Arbitration Act 1904 (C'wth) came into effect on
13 November 1973. It provided:
(1) An officer of an organization authorized in writing by the secretary of the
organization or of a branch of the organization to act under this sub-section may, at
any time during working hours, but subject. to any conditions provided by the
relevant award, enter any premises in which work to which an award binding on the
organization is applicable is being carried on, being premises specified in the
authority, or premises occupied by an employer who is bound by the award and is
specified in the authority, for the purpose of ensuring observance of the award, and
may for that purpose inspect any work, books or documents and interview any
employee, being a member or a person eligible to be a member of his organization,
on those premises, but an officer so authorized shall not hinder or obstruct an
employee in the performance of his work during working time.
(2) If an officer of an organization proposing to enter, or being in or on, premises in
pursuance of this section is required by the occupier or person in charge of the
premises to produce evidence of his authority to that occupier or person, the
officer is not entitled to enter or remain on the premises unless he produces to that
occupier or other person the authority 1n writing referred to in sub-section (1 ).
(3) A person shall not hinder or obstruct an officer of an organization in the exercise of
a power conferred by this section.
Penalty: $100.
(4) In this section-
"officer", in relation to an organization, means a person holding office in, or
employed by, the organization or a branch of the organization;
Reform- National issues Part 1 1 79
"premises" includes any building, structure, mine, mine working, ship, vessel or
place.
21 This provision was substantially replicated in s286 of the Industrial Relations Act 1988 (C'wth).
22 The Workplace Relations and Other Legislation Amendment Bill 1996 (C'wth), in its original
form, sought to replace s286 of the Industrial Relations Act 1988 (C 'wth) wi th a statutory
entitlement to enter premises only after a specific invitation was made in writing by a union
member employed at the premises for the purpose of ensuring compliance with an award ,
order of the Commission or certified agreement, or of holding discussion with members 2 In a
report on the Bill, a majority of the Senate Economics References Committee recommended
maintaining the existing entry regime. 3 The majority said:
4.366 The right of entry has been an important component of the compliance function.
Rather than being a privilege, it is part of the effective armory to undertake
compliance. In light of th1s, there seems little rationale to limiting this to invitation
only Individual employees have an interest in ensuring that their standards are
maintained without having their concerns subject to scrutiny by the employer. Small
business, in particular, has expressed an interest in ensuring that their competitors
are not using illegal means as a basis of competition with them. Unions have an
interest in ensunng that sharp practices are not putting undue pressure on their
members' wages and conditions. There is no rationale for making the nomination
of an employee a precondition of the function.
4.367 Not to recognise this and to assist the union discharge this function has no basis in
logic or good public policy This is particularly so in these times of budgetary
austerity What is the point of restricting unions from discharging a public function
which is at no cost to the Government?
23 The entry and inspection provisions originally proposed in the Workplace Relations and Other Legislation Amendment Bill 1996 (C'wth) were the subject of substantial amendment before
they were eventually passed. The current Federal regime appears in Division 11 A of Part IX of
the Workplace Relations Act 1996 (C 'wth) . That regime is substantially more complicated than
its predecessors. The constitutional validity of the Division depends principally on the
constitutional power to regulate Federally reg istered industrial organisations 4
24 In Moranbah North Coal (Management) Pty Ltd v Construction, Forestry, Mining and Energy
Union, a Full Bench of the AIRC said that 'the primary intention of the Parliament was to itself prescribe the circumstances in which entry to premises would be allowed. '5
25 'Premises' is defined in s4(1) of the Workplace Relations Act i996 (C 'wth) to include 'any land,
building, structure, mine, mine working, ship, aircraft, vessel, vehicle or place'.
26 By s285A of the Workplace Relations Act 1996 (C'wth), a Registrar may, on application by an
organisation in accordance with the regulations, issue a permit to an officer or employee of the
organisation 6 Such a permit remains in force until it expires or is revoked 7 A permit expires at the earlier of three years after the day on which it was issued, or the time at which the permit
holder ceases to be an officer or employee of the organisation concerned 8
180 Final Report of the Royal Commission into the Building and Construction Industry
27 The Workplace Rela tions Act 1996 (C'wth) contemplates permit holders entering and
inspecting premi ses for two purposes:
⢠for the purpose of investigating a suspected breach of the Workplace Relations Act 1996
(C'wth) , or an award, an order of the AIRC or a cert ifi ed agreement that is in force and
binds the organisati on of wh ich the permit holder is an officer or employee: s285B; and
⢠for the purpose of holding discussions with employees who are members, or elig ib le to
become members, of the organ isation of which the permit holder is an officer or
employee: s285C.
28 There are a number of limitations on the powers of persons exercising powers under ss285B or
285C:
⢠They may only enter premises during working hours 9 The expression 'during working
hours' has been interpreted as meaning 'those hours where the premises are ordinarily
occupied for the purposes of work' w
⢠They may only exercise a right of entry and inspection under s285B if they suspect that a
breach of the Act, or of a relevant award, order or certified agreement, has occurred or is
occurring, 11 and there are employees working on the premises who are members of the
organisation of which they are an officer or employee. 12 A Full Court of the Western
Australian Supreme Court held in Molina v Zaknich 13 that 'premises' of an employer
means 'any premises where an employer who employs Union labour is carrying out
work' .14 In the case of a building site where a number of subcontractors are working,
there may therefore be a right to enter so long as there is at least one subcontractor
employing union labour.15 Malcolm CJ explained th is conclusion as follows:
Those portions of the building site which were occupied by subcontractors
employing members of the relevant Union were the respective premises of those
subcontractors. In the circumstances, the appellant had a statutory right of entry
onto the site for the purpose of entry into the areas in which subcontractors on site
who employed union labour were carrying out work on site. 16
⢠They may only enter premises under s285C if work is being carried out on the premises to which an award applies that is binding on the organisati on of which they are an officer
or employee, and there are employees on the premises who are members, or eligible to
become members, of that organi sation. 17 Di scussions may be held with such employees only du ring their meal time or other breaks.18
⢠They must show the occupier of the premises their permit upon request. 19
⢠They must give the occupier of prem:ses at least 24 hours notice of their intention to enter premises 2 0 'Occupier' is defined in s4(1) as including 'a person in charge of the
premises '. In Australasian Meat Industry Employees' Union v Australian Food
Corporation Pty Ltd, 21 Wilcox J rejected a submission that a security guard could be regarded as 'a person in charge of' premises. His Honour said that 'an officer of a
company that occupies premises, whose duties include day-to-day control of the
premises on behalf of the company, may properly be regarded as "a person in charge of" those premises' 22
Reform - National issues Part 1 1 81
⢠They must not enter any part of premises used for residential purposes without the
permission of the occupier. 23
⢠They must not intentionally hinder or obstruct any employer or employee24
29 Where a permit holder enters premises to investigate a suspected breach under s285B, he or
she may:
⢠require the employer of the employees who are members of the organisation of which the
permit holder is an officer or employee to allow him or her, during working hours, to
inspect and make copies of various documents kept by the employer that are relevant to
the suspected breach, including time sheets, pay sheets and other documents (other
than an AWA, an ancillary document or a document that shows some or all of the content
of an AWA or an ancillary document): s285B(3)(a);
⢠require the employer to produce such documents at the premises at which the
employees work or at some other agreed place: s285B(4)(a); and
if the documents are to be produced at premises where the employees work, enter
those premises during working hours and inspect and make copies of the
documents: s285B(4)(b); or
if the documents are to be produced at some other place, inspect and make
copies of those documents at that place at an agreed time: s285B(4)(c);
⢠inspect or view any work, material, machinery or appliance that is relevant to the
suspected breach: s285B(3)(b); and
⢠interview any employees who are members or eligible to become members of the organisation of which the permit holder is an officer or employee during working hours
about the suspected breach : s285B(3)(c) .
30 The right to inspect documents and make copies is not an unfettered right to have full and free
access to search for books, documents and papers. In Australian Federation of Air Pilots v
Australian Airlines Ltd, 25 Gray J said of s286 of the Industrial Relations Act 1988 (C'wth):
No express right is given to such an officer to range over the premises, searching for documents in relation to which a right to inspect exists. To imply such a right of search
would be difficult, in view of the limited rights given by the section, and of the proviso,
which prevents an officer hindering or obstructing an employee in the performance of
work during working time. To conduct a widespread search effectively would be difficult whilst refraining from hindering or obstructing employees. 26
31 The same reasoning would apply to entry and inspection under s285B of the Workplace
Relations Act 1996 (C'wth).
32 Permit holders who enter premises under s285C for the purpose of holding discussions with
relevant employees during meal times or other breaks may conduct meetings, canvass collective views and take votes on matters of interest to the union 27
33 Occupiers of premises must not refuse or unduly delay entry to premises by a person entitled
to enter the premises under ss285B or 285C 28 A person must not intentionally hinder or
I 82 Final Report of the Royal Commission into the Building and Construction Industry
obstruct a person exercising powers under ss285B or 285C 29 A failure to agree on a place or
a time for inspecting and making copies of documents as mentioned in s285B(4)(a) or (c) does
not constitute hindering or obstru cting a person exercising powers under s285B 30 Refusing
access to records for an indefinite period can constitute hindering or obstructin g a person
exercising powers under s285B 31
34 In re lation to the requirement in s285B that a permi t holder 'suspect' that a breach has
occurred or is occurring, it has been argued that 'there is strong reason to believe that
the ... requirement will be construed as referring to objective rather than subjective purpose, so
that a permit holder under s285A wi ll not be entitled to exercise powers of entry, inspection or
interview under s285B unless he or she has reasonable grounds for suspecting a breach of
award etc ' 32
35 Under s285A(3), a Regi strar may revoke a permit if he or she is satisfied that the person to
whom it was issued has, in exercising powers under Division 11 A, intentionally hindered or
obstructed any employer or employee or otherwise acted in an improper manner. 33 A person to
whom a permit has been issued must, within 14 days after the expiry or revocation of the
permit, return the permit to the Registrar34 Th e Registrar must take into account the fact that a
permit issued to a person under s285A has been revoked when deciding whether to issue a
further permit to the person. 35
36 By s285F(1 ), the following provisions of Division 11 A are defined as 'penalty provisions':
⢠s285A(5) (return of expired or revoked permit withil1 14 days);
⢠s285 E(1) (person exercising power under ss295B or 285C intentionally hindering or
obstructing an employer or employee);
⢠s285E(2) (occupier of premi ses refusing or und uly delaying entry to premises by a person
entitled to enter the premises under ss285B or 285C);
⢠s285E(3) (employer refusing or fai ling to comply with a requirement under ss285B(3)(a) or
2858 (4) : that is, a requirement in relation to the production of documents); and
⢠s285E(4) (intentionally hindering or obstructing a person exercising powers under ss285B
or 285C) .
37 A contraventi on of a penalty provision is not an offence, but may be the subject of a civil
penalty36 not exceeding $10 000 for a body corporate or $2000 in other cases. 37 An
application for a penalty may be made by any person 38 to the Fed eral Court, a District, County
or Local Court, or a magistrate's court 39 Such a court may grant an injunction, including an
interlocutory injunction, requiring a person not to contravene, or to cease contravenin g, a
penalty provision. 40
38 In Addison v Public Transport Corporation of Victoria, Polites SOP held that a person could be
said to have exercised powers under Division 11 A even though he or she had not given notice
of an intention to exercise those powers and had not produced his or her permit 41 He said that
s285(3), which deals with the revocation of permits, 'should be construed so that it has
operation where there is a purported exercise of the power under the Division . '42 He said that
the phrase 'i ntentionally hindered or obstructed any employer or employee or otherwise acted
Reform- National issues Part 1 183
in an improper manner' contemplated two separate classes of conduct. The second category,
namely otherwise acting in an improper manner, contemplated:
at least the intentional or reckless disregarding of requirements under s2850. Thus a person who is on property in purported exercise of powers conferred by the holding of a
permit under the Division who is required to show a permit and refuses is otherwise
acting in an improper manner. The same can be said of a failure to give the appropriate
notice under s2850. Put another way, in my view accepting that Div 11A is a code for the
entry on to premises under certain conditions, a deliberate failure to comply with the
provisions of the code can be regarded as acting in an improper manner for the
purposes of s285A. 43
39 That construction was approved by a Full Bench of the AIRC in Employment Advocate v
McDonald. 44
40 Permits have been revoked where permit holders contravened notice requirements and visited
premises outside normal working hours, 45 held discussions with employees other than during
the employees' meal-time or other breaks,46 and breached a formal undertaking given to the
District Court of Western Australia not to engage in a variety of conduct, including
contraventions of s285C of the Workplace Relations Act 1996 (C'wth) 47
41 In some cases, the Commission has ordered that a permit holder whose permit is revoked not
be permitted to apply for another permit for a specified period of time 48
42 The Commission may exercise its dispute prevention and settlement powers under Part VI of the Workplace Relations Act 1996 (C'wth) to prevent and settle industrial disputes about the
operation of Division 11 A of Part IX, but must not make an order for that purpose conferring
powers that are additional to, or inconsistent with, powers exercisable under that Division. 49
The Commission does have the power, however, for the purpose of preventing or settling an
industrial dispute, to revoke a permit, or to make any order that it considers appropriate about
the issue of a permit or furth er permit to a person. 50
43 By s 127 AA of the Workplace Relations Act 1996 (C 'wth), all award provisions dealing with
rights of entry are unenforceable. By s134, the Commission may authorise a person who is not an officer or employee of an organisation to enter premises for defined purposes.
New South Wales
44 Part 7 of Chapter 5 of the Industrial Relations Act 1996 (NSW) governs entry and inspection by
'authorised industrial officers' of industrial organisations of employees registered, or taken to be registered, under that Act. The rights and obligations are broadly similar to those in Division
11A of Part IX of the Workplace Relations Act 1996 (C'wth).
45 Rights of entry are conferred under the Industrial Relations Act 1996 (NSW) for the purpose of:
⢠holding discussions at the premises, during any lunch time or non-working time, with
employees who are members of the organ isation or are eligible to become members of the organisation: s297; and
I 84 Final Report of the Royal Commission into the Building and Construction Industry
⢠investigating any suspected breach of the industrial relations legislation, or of any
industrial in strument that applies to any employees who are members of the organisation
or are eligible to become members of th e organ isati on : s298.
46 Instruments of authority may be issued by the Industrial Registrar, on application, to officers or
employees of industrial organisations of employees ('authorised industrial officers' )51 An
authorised industrial officer must produce the authority if req uested to do so by the occupier of
any premises that the officer enters, or if requested to do so by a person whom the officer
requires to produce anything or to answer any question 5 2 An authority remains in force until it
expires or is revoked 5 3 An authority expires when the person to whom it was issued ceases to
be an officer or employee of the industrial organi sati on of employees concerned 54 The
Industrial Registrar may revoke an authority, on application, if satisfied that the person to whom
it was issued has intentionally hin dered or obstructed employers or employees during their
working hours or has otherwise acted in an improp er manner in the exercise of any power
conferred on the person 55
47 Authorised industrial officers may on ly enter premises during working hours 56 The right to
enter is contingent on there bei ng employees engaged at the premises who are members of
the organisation or are eligible to become members of the organisation. 57 Authorised industrial
officers do not have the authori ty to enter any part of premises used for residential purposes,
except with the permission of the occupier58
48 Where an authorised industrial officer enters · premises under s298 for the purpose of
investigating a suspected breach of the industrial relations legislation or an industrial
instrument, he or she may requ ire any employer of relevant employees to produce 'any
employees' records and other documents kept by the employer that are related to the
suspected breach' for inspection, during the usual office hours at the employer's prem ises or at
any mutually convenient time and place, and make copies of the entries in any such records or other documents. 59
49 Auth orised industrial officers must give at least 24 hours notice before exercising the powers
conferred by s298.60 Where the authorised industrial officer requires an employer to produce
records or other documents that are kept elsewhere than on the employer's premises, at least
48 hours notice must be given 61 The Commission or the Industrial Registrar may, on an ex
parte application by an authorised industrial officer, waive the requirement to give notice of an
intended exercise of a power conferred by s298 if satisfied that giving such notice would defeat
the purpose for which it is intended to be exercised. 52
50 It is an offence under Part 7 of Chapter 5 of the Industrial Relations Act 1996 (NSW) :
⢠for an authorised industrial officer to deliberately hinder or obstruct an employer or
employees during their workin g time; 63
⢠for a person to deliberately hinder or obstruct an authorised industrial officer in the
exerc ise of powers conferred by the Part ;64
⢠for a person, without lawful excuse, to refuse to comply with a requ irement of an
authorised industrial officer under the Part; 65 and
Reform- National issues Part 1 '1 85
⢠for a person to purport to exercise the powers of an authorised industrial officer under the
Part if the person is not the holder of a current authority issued by the Industrial
Registrar. 66
51 The maximum penalty for these offences is 1 00 penalty units. One penalty unit is currently
$1 10. 67
52 A person to whom an authority has been issued who fails to return the authority to the Industrial
Reg istrar for cancellation within 14 days of its expiry or revocation is liable to a maximum
penalty of 20 penalty units. 58
53 The State Commission may deal with industrial disputes about the operation of Part 7 of
Chapter 5, but does not have any jurisdiction to make an award or order conferring additional
or inconsistent powers of entry or inspection.
54 A separate right of entry is conferred on authorised representatives of industrial organisations of
employees in New South Wales by Division 3 of Part 5 of the Occupational Health and Safety
Act 2000 (NS W) .
55 Under that Divis ion, authorised representatives may, without notice, 59 and for the purposes of
investigating any suspected breach of the occupational health and safety legislation, enter any
premises which the representative has reason to believe is a place of work where members of
that organisation (or persons who are eligible to be members of that organisation) work. 70 The
authorised representative must notify the occupier of the premises of his or her presence on
the premises as soon as reasonably practicable after entering the premises, unless to do so
would defeat the purpose for which the prem ises were entered or would unreasonably delay
the authorised rep resentative in a case of urgency, or the occupier is already aware that the
authorised rep resentative has entered the premises or was notified in advance of when the authorised officer would enter the premi sesT1 'Authorised representatives' are officers of
industrial organisations of employees (includ ing persons who are concerned in, or take part in ,
the management of such organisations) who are authorised under Part 7 of Chapter 5 of the
Industrial Relations Act 1996 (NSW).
56 Authorised representatives who enter premises for the purpose of investigating any suspected
breach of the occupational health and safety legislation may:
⢠make searches and inspections, and take photographs and make video and audio
record ings;
⢠require the occupier of the premises to provide the authorised representative with such
assistance and facilities as is or are reasonably necessary to enable the representative to exercise his or her functions; and
⢠requ ire the production of and inspect any documents in or about those premises that
directly affect or directly deal with the occupational health and safety of employees
working at those premises, and take copies of or extracts from any such documents. 72
57 The power to enter premises or to make an inspection or take other action on premises under
the Occupational Health and Safety Act 2000 (NSW) may not be exercised unless the person
proposing to exercise the power is in possession of an authority issued by the Industrial
l 86 Final Report of the Royal Commission into the Building and Construction Industry
Registrar under Part 7 of Chapter 5 of the Industrial Relations Act 1996 (NSW) and produces
the authority if required to do so by the occupier of the premises l 3 Entry may only be made at
a reasonable time in the daytime or at any hour when work is carried on or is usually ca rri ed on
at the premises74 The powers of entry are not exercisable in relation to any part of premises
used on ly for residen tial purposes except with the permission of the occupier of the premises. 75
Authmised representatives must do as little damage as possible in exercising their functions m
58 It is an offence, pun ishable by a maximum penalty of 20 penalty units ($2200), for a person,
without reasonable excuse, to refu se or fail to comply with a requirement made by an
authorised representative in accordance with Division 3 of Part 5 of the Occupational Health
and Safety Act 2000 (NSW)n It is an offen ce, pu nishable by a maximum penalty of 100
penalty units ($11 000) , for a person to impersonate, or falsely represent that the person is , an
authorised representative. 78
59 The evidence before the Commission established that authorised representatives in New South
Wales - who are almost always union organisers - routinely claim a right of entry to premises
without notice on the pretext of investigati ng alleged safety issues, before proceeding to
discuss industrial matters with workers and contractors. They use safety issues, including
manufactured and exaggerated safety issues, as a pretext in order to avoid the obligation to
give prior notice under s285D(2) of the Workplace Relations Act 1996 (C'wth) or s298(3) of the
Industrial Relations Act 1996 (NSW) .
60 The problems that can arise because of the lack of uniformity in legislation in New South Wales
are illu strated by the decision of Regi strar Elli s on 29 May 2001 to revoke the permits held by
Mr Andrew Ferguson, the Branch Secretary of the CFM EU , Construction and General Division,
New South Wales Divisional Branch, and an organiser, Mr Malcolm French .79 Ferguson and
French had :
⢠entered premises without permission;
⢠showed their instruments of authority to the employer under the Industrial Relations Act
1996 (NSW) but were not asked to and did not show their permits under the Workplace
Relations Act 1996 (C 'wth);
⢠conducted a general meeting of employees which discussed enterprise bargaining
matters, occupational health and safety matters and possible claim s that the employer
was discriminating against members of the CFMEU ;
⢠walked or marched around th e premises with a number of employees chanting slogans;
and
⢠conducted an inspection in relation to occupational health and safety matters 8 0
61 Ferguson was quoted in the media as having said that the revocation of his Federal permit
would have no impact on his work as a union official, and as sayin g that he went to building
sites every day of the week and would continue to do so because he had a New South Wales
entry permit and rights under New South Wales occupational health and safety laws . He was
quoted as saying that any employer who tried to stop him entering a site would find workers
going off site to hold meetings, but that he doubted employers would try to restrict his
access 8 1
Reform - National issues Part 1 1 8 7
62 The revocation of Ferguson 's and French's permits was reversed on appeal by a Full Bench of
the.AIRC, which found that at the time, Ferguson and French had not been exercising powers
under the Workplace Relations Act 1996 (C'wth) 82 Th e Full Bench concluded that Ferguson
and French had not attempted to justify their conduct by reference to the Workplace Relations
Act 1996 (C'wth) and had not purported to exercise powers under either s285B or s285C, as
their conduct did not involve investigating suspected breaches of industrial instruments or
holding discussions with employees who wished to participate in them. The reason for this
latter conclusion is somewhat obscure. The Full Bench said only that:
With respect to s285C, it appears from paragraph [32] of the Deputy Industrial
Registrar's decision that he took the view that, because the appellants entered to
conduct a 'general meeting' and because enterprise bargaining matters were discussed
at the meeting, the appellants were therefore exercising powers under s285C. In our
respectful opinion, in forming this view, the Deputy Industrial Registrar was in error.
Powers under s285C include to enter premises for the purposes of holding discussions
with any of the employees described in s285C(1)(b) who wish to participate in those
discussions. (We will assume, without so deciding, that the meeting held on 20 July 2000
constituted discussions with any of the employees described in s285C(1 )(b) who wished
to participate in those discussions.) Section 285C, however, does not say anything as to
what the discussions may be about ..
That the meeting was a 'general meeting' or discussed enterprise bargaining matters does not, in our view, take the matter any further. As we mentioned a moment ago,
s285C does not say anything as to what the discussions may be about. The walk or
march chanting slogans and the occupational health and safety inspection did not
involve the exercise of powers under s285C. Accordingly, in our view, the appellants did
not, on 20 July 2000, exercise powers under s285C. 83
63 This decision highlights a serious problem with the current legislative regime. It highlights the
ease with which jurisdictional differences and inadequacies in the current legislative scheme can be and are exploited to avoid the legal consequences of havi ng abused a rig ht of entry. I
shall recommend later in th is section a solution to this problem.
64 The problem of differing Federal and State provisions is exacerbated in New South Wales by the existence of the additional entry and inspection provisions conferred on State permit
holders under the Occupational Health and Safety Act 2000 (NSW). Those provisions operate
concurrently with the entry and inspection provisions in the Industrial Relations Act 1996 (NSW)
and, where the State permit holder also holds a Federal permit, the entry and inspection provisions in the Workplace Relations Act 1996 (C'wth).
65 The problems which can arise because of inconsistencies between these three schemes were illustrated by the Cretecon Pty Ltd case study. On 24 April 2002 two organisers employed by
the CFMEU in its Construction and General Division , New South Wales Divisional Branch,
entered a site and proceeded to identify various occupational health and safety hazards. They did not report to the site shed or site manager immediately upon entering the site. Some way
through the safety walk, they spoke to the site manager who accompanied them. One of the
organisers then declared he had seen enough and called a mass meeting. At the meeting , the
1 88 Final Report of the Royal Commission into the Building and Construction Industry
union representatives raised th e condition of the amen ities, the shutting down of the site for the
day, and called for a vote to close the site for the rostered day off (RDO) on 26 Apri l 2002 and
also for 27 April 2002. 25 April 2002 was ANZAC day and the closures would have resu lted in
workers having three and a half days off. So far as the evidence discloses, no other safety
issues were raised by the organisers. No hands were raised in support of closing the site down
and work recommenced, after one hour and 20 minutes of lost time. The union organ isers then
checked all subcontractors' insurances.
66 In their submissions to the Commission, the union organisers contended that they were
exercising their right of entry under the Industrial Relations Act 1996 (NSW), not the Workplace
Relations Act 1996 (C'wth), and that fai lure to report to the site shed or site manager on arrival
at the site did not breach s78(2) of the Occupational Health and Safety Act 2000 (NSW). In fact,
none of the exceptions in s78(2) applied in this instance. No notice of entry was given as
required by either s298(3) of the Industrial Relations Act 1996 (NSW) or s285D(2) of the
Workplace Relation s Act 1996 (C'wth) .
67 The un ion organisers had not been invited to the site and their presence was apparently
unwanted by the workers, who rejected their attempts to close the site down.
68 New South Wales and Western Australia are the only Australian States or Territories which
cu rrently accord an express right of entry to authorised representatives in order to investigate
safety issues. There was no evidence to suggest that the existence of that right has led to
improved levels of safety on bui ldin g and construction sites in New South Wales or Western
Australia. Indeed, in respect of New South Wales, Mr Andrew Ferguson, the Branch Secretary
of the CFMEU in its Construction and General Division, New South Wales Divisional Branch ,
gave evidence that an issue of concern to the industry was '[a]ppalling safety standards' 84
69 Ferguson asserted that the union's presence on sites was 'essential' in ensuring compliance
with occupational health and safety legislation, 'particularly as WorkCover does not have
sufficient OHS inspectors to extensively police the industry. '85 The evidence was , however, that
all too often union officials, an d in particular organisers employed by the CFMEU in its
Construction and General Division , NSW Divisional Branch, manufactu re or exaggerate safety
issues in order to pursue industrial objectives such as increased union membership or the
penetration throughout the industry of uni on-endorsed EBAs. Occupational health and safety is
simply too important an issue to be abused in this way.
70 I address the role of union officials in ensuring occupational health and safety standards are
observed on building and construction sites in a separate section of my report.
Victoria
71 In Victoria, the circumstances in which entry and inspection is permitted by representatives of
industrial organisations are governed by the provisions of the Workplace Relations Act 1996
(C 'wth) considered above .
72 The Occupational Health and Safety Act 1985 (Vic) does not contain an express right of entry
for officers or employees of unions. Under that Act, however, employees may be elected to
designated work groups86 or as representatives on the health and safety committee at the
Reform- National issues Part 1 1 89
workplace.s7 Health and safety representatives have the right, when considered necessary, to
seek the assistance of any person, 88 including a union officer or employee. Employers are
oblig ed to allow such persons entry to premises unless the employer considers that the person
is not suitable to assist by reason of a lack of knowledge of occupational health and safety
matters. 89
Queensland
73 Chapter 11 of the Industrial Relations Act 1999 (Old) establishes a detailed reg ime for entry and
inspection of premises by authorised officers or employees of organisations registered under
that Act.
7 4 In broad terms, authorised officers may enter any workplace at which an employer carries on a
calling of the officer's organisation during the employer's business hours for the purpose of
inspecting time and wage records of member employees, employees who are eligible to
become members of the officer's organisation, and employees who are parties to Queensland
Workplace Agreements or ancillary documents, with th e written consent of the employee 90
75 Officers may discuss matters under the Industrial Relations Act 1999 (Old) with employers, member employees and employees who are eligible to become members of the officer's
organ isation during working or non-working time 91 They may discuss any other matter with a
member employee or an employee who is el igible to become a member of the officer's
organisation, during non-working ti me92
76 Exercise of the power of entry is conditional upon :
⢠the authorised officer notifying the employer or the employer representative of the
officer's presence; and
⢠producing the officer's authorisation if requested by the occupier of the premises 93
77 No prior notice of an in tention to exercise a power of entry is required.
78 It has been held that an employer may not restrict the place where an authorised officer may
hold discussions with employees. In delivering his reasons in an appeal, 94 Moynihan P of the
Qu eensland Industrial Relations Commission said :
Provided then that a power is being exercised within the constraints laid down by the
statute there is no occasion for the employer to become involved in its exercise. If the
power is not being exercised within the constraints laid down by the section, the
legislation provides its own means of deal1ng with the situation. Provided then that an authorised entrant is exercising his power of entry in terms of the section there is no limit
that he may do so only in a particular place- even a place determined by the [employer}.
79 The Queensland Industrial Relations Commission may, upon application , revoke , suspend or
attach conditions to an officer's authority if the authorised officer has :
⢠breached a condition of the authority;
⢠failed to notify the employer of his or her presence at the workplace or to produce his or
her authority on request;
190 Final Report of the Royal Commission into the Building and Construction Industry
⢠exercised the power to enter in an unreasonable or vexatious way; or
⢠made unreasonable, vexatious or inappropriate use of information obtained fro m an
inspection o(a record produced under the authority95
South Australia
80 By s140(1) of the Industrial and Employee Relations Act 1994 (SA), officials of associati ons of
employees may, if authorised to do so by an award or enterprise agreement, enter an
employer's premises at which one or more members of the association are employed and :
⢠inspect time book and wage records, at the premises ;
⢠inspect the work carried out by employees who are members of the association and note
the conditions under which the work is carried out; and
⢠if specific complaints of non-compliance with the award or enterprise agreement have
been made - interview employees who are members of the association about the
complaints.
81 Officials must give reasonable notice to the employer, and comply with any other requirements
imposed by the award or enterprise agreement, before exercising those powers 96 It is an
offence, punishable by a maximum penalty of $5000, for a person exercising those powers to
harass an employer or employee, or hinder or obstruct an employee in carrying out a duty of
employment. 97 If the Industrial Relatio ns Commission of South Australia is of the opinion that a
person has abused his or her powers, it may withdraw the relevant powers 98
Western Australia
82 Divisions 2F and 2G of Part II of the lndustnal Relations Act 1979 (WA) govern entry and
inspection by authorised representatives of organisations of employees. Those Divisions came
into effect on I August 2002 as a result of amendments effected by Part 8 of the Labour
Relations Reform Act 2002 (WA).
83 By way of summary, the current position in Western Austra lia is as follows:
⢠employers must, on written req uest by a person authorised in writing by the employee,
produce for inspection employment records relating to the employee; 99
⢠the Registrar must, on application by the secretary of an organisation of employees,
issue an au thority to a person nomin ated by the secretary ('authorised
representative') ; 100
⢠an authority may be revoked or suspended by the Western Austral ian Industrial Relations
Commission where the person to whom it was issued has acted in an improper manner
in the exercise of a power conferred on the person, or has intentionally an d un duly
hindered an employer or employees during their working time; 10 1
⢠the Registrar may revoke an authority on application by the secretary of the organisation
on whose behalf the application for the authority was made; 102
Reform - National issues Part 1 I 9 I
⢠a person whose authority has been revoked must return the authority to the Regi strar
within 14 days; 103
⢠authorised representatives of an organisation may, during working hours, enter any
premises where employees who are members of the organisation or who are eligible to
become members of the organisation ('relevant employees ') work, for the purpose of
holding discussions at the premises with any of the relevant employees who wish to
participate in the discussions; 104
⢠authorised representatives must comply with any relevant notice provision in an award,
order or industrial agreement or, if an award, order or industrial instrument is silent as to
powers of entry onto premises and the giving of notice, give at least 24 hours written
notice before exercising that power; 105
⢠authorised representatives may also, during working hours, enter premises where
relevant employees work for the purpose of investigating suspected breaches of the
Industrial Relations Act 1979 (WA), the Long Service Leave Act 1958 (WA), the Minimum
Conditions of Employment Act 1993 (WA), the Occupational Safety and Health Act 1984
(WA), the Mines Safety and Inspection Act 1994 (WA), or an award, order, industrial
agreement or employer-employee agreement that applies to any such employee; 106
⢠for the purpose of investigating any such suspected breach, authorised representatives
may:
require employers to produce, during working hours at the employer's premises or
at any mutually convenient time and place, any employment records of employees
or other documents kept by the employer that are relevant to the suspected
breach, other than workplace agreements, or employer- employee agreements
where the employee has made a written request to the employer that the record
not be available for inspection by an authorised representative; 107
make copies of the entries in the employment records or documents related to the
suspected breach ; and
during working hours, inspect or view any work, material , machinery or appliance
that is relevant to the suspected breach .1 08
⢠at least 24 hours written notice is req uired before an employer is required to produce
employment record s or other documents; at least 48 hours written notice is required if
the records or documents are kept other than on the employer 's premises; 109
⢠that notice requirement may be waived by the Western Australian Industrial Relations
Commission on the ex parte application of an authorised representative if the Commission is satisfied that giving such notice would defeat the purpose for which a
power is intended to be exercised; 110
⢠authorised representatives may not enter any part of premises of an employer that is
principally used for habitation by the employer and his or her household; 111
⢠authorised representatives must produce their authority to the occupier of premises upon request; 11 2
192 Final Report of the Royal Commission into the Building and Construction Industry
⢠occupiers of premises must not refuse, or intentionally and unduly delay, entry to
premises by an authorised representative; 113
⢠a person must not intentionally and unduly hinder or obstruct an authorised
representative in the exercise of his or her powers; 114
⢠a person must not purport to exercise the powers of an authorised representative if he or
she is not the holder of a current authority issued by the Registrar; 115 and
⢠the Western Australian Industrial Relations Commission does not have jurisdiction to
make an award or order or reg ister an agreement conferring or making provision for the
exercise of powers of entry and inspection that are additional to or inconsistent with the
powers of entry and inspection set out above, except where the award, order or
provision relates to the period of notice to be given before an authorised representative
may enter premises. 11 5
84 In practice, there is usually no obligation on authorised representatives to give notice before
entering building and construction sites in Western Australia. Clause 40 of the Building Trades
(Construction) Award (WA) provides, in relevant part:
The Secretary or any other duly accredited representative of the union shall have the right
to enter any place or any premises where employees are employed at any time during
normal working hours or when overtime is being worked, for the purpose of interviewing
employees, checking on wage rates, award breaches or safety conditions or regulations
so long as they do not unduly interfere with the work being performed by any employee
during working time, and provided that they present themselves, with their authority as
prescribed by this Award, to a representative of site management prior to pursuing their
union duties on site.
Tasmania
85 By s77(1) of the Industrial Relations Act 1984 (Tas), officers of organisations of employees may:
⢠during working hours, enter any premises where members of that organ isation are
employed for the purpose of talking with or interviewing the employees at the premises;
⢠during working hours, enter any premises where members of that organisation are or
were empioyed for the purpose of investigating any alleged breach of the Industrial
Relations Act 1984 (Tas), any award or registered agreement in relation to the industry or
enterprise in which those members are or were employed;
⢠for the purpose of investigating any such alleged breach, and with the approval of the
employee or former employee, require the employer to produce for inspection during
usual office hours at the employer's office the employee or former employee's
employment record (being an employment record which employers are required to keep
by s 75 of the Industrial Relations Act 1984 (Tas)); and
⢠make copies of the entries in any such record related to any alleged breach.
86 At least two working days' notice must be given before exercising the power of requiring an
employer to produce an employment record for inspection and copying. Saturdays, Sundays
Reform- National issues Part 1 l 93
and public holi days are excluded fro m the calculation of the notice period .117 Employers may
waive co mplian ce with the notice period .118
87 An officer of an organisation of employees may not inspect a record until he or she has made a
'declaration of secrecy ' in the prescribed form before a justice. 119 It is an offence, punishable by
a maximum fine of 20 penalty units (currently $2000 120), for a person who has made a
declaration of secrecy to disclose, contrary to that declarati on, any information obtained from
an inspection of a reco rd.121 The prescribed form fo r a declaration of secrecy involves a
declaration that the officer 'will not divulge to any person the contents of any record produced
by an employer for [his or her] inspection under the provisions of section 77 of the Industrial
Relations Act 1984, except as relevant in the hearing of a matter before the Tasmanian
Industri al Commi ss ion, or as required for the purpose of taki ng proceedings for an offence against that Act or by reference to an inspector under that Act. '122
88 It is an offence for an employer to fail to produce a record for inspection by an officer of an
organisation of employees in response to a written notice, in circumstances where the officer is entitled to inspect the reco rd pursuant to s77(1 ). The maximum penalty is 10 penalty units (curren tly $1 000) .123
89 An officer of an organi sation of employees may only enter prem ises, or part of premises, if the
officer iden tifies himself or herself to the person in charge, or apparently in charge, of the
premises or part of the premises. 124
The Territories
90 The Workplace Relations Act 1996 (C 'wth) governs entry to premises and inspection of records
by unions in the Australian Capital Territory and the Northern Territory.
1 94 Final Report of the Royal Commission into the Building and Construction Industry
Options for reform
91 The Workplace Relations Legislation Amendment (More Jobs, Better Pay) Bill 1999 (C'wth)
would, if passed, have effected substantial changes to the entry and inspection provisions in
the Workplace Relations Act 1996 (C'wth). The Bill was introduced to the House of
Representatives on 30 June 1999. It passed the House of Representatives on 29 September
1999 and was introduced to the Senate on 14 November 1999. The Senate Employment,
Workplace Rel ations, Small Business and Education Committee reported on the Bill on 29
November 1999. The Bill failed to pass the Senate and lapsed when Parliament was prorogued prior to the 2001 Federal election.
92 Many of the proposed amendments were simi lar to the original form of the entry and inspection
provisions in the Workplace Relations and Other Legislation Amendment Bill 1996 (C'wth)
discussed above.
93 The major changes which would have been effected by the 1999 Bill in relati on to entry and
inspection included:
⢠limiting entry under ss285B and 285C, essentially, to circumstances where the
organisation in question had an invitation in writing signed no earlier than 28 days before
the proposed entry by at least one employee working at the premises who was a
member of the organisation;
⢠requiring an organisation to ask each inviting employee if he or she wished his or her
identity to remain confidential, and to respect such wishes;
⢠where entry was exercised to investigate a breach of the Act or an award, order or
certified agreement, requiring the invitation to specify that purpose;
⢠where a relevant employer or occupier requested a person to show his or her invitation,
show his or her permit, or provide particulars of any suspected breach of an industrial
instrument, prohibiting that person from entering or remaining on premises under ss285B
or 285C until they complied with that request;
⢠where a person was requested to provide particulars of a suspected breach, requiring
that person to state:
the requ irement of the Act, award, order or agreement that was suspected of being
breached;
the person's reasons for suspecting that a breach had occurred; and
Reform- National issues Part 1 195
the person's reasons for believing tr1at there was evidence of the suspected breach
on the premises;
⢠entitling an organisation to apply to a Registrar for a certificate that a valid invitation had
been given to the organisation , or a certificate setting out a suspected breach of the Ac t
or an award, order or agreement and stating the grounds the on which the organisation
suspected the breach;
⢠making such a certificate evidence for all purposes that an invitation had been given and
met the requirements of the Division, or that there were reasonable grounds for the
suspicions set out in the certificate;
⢠entitling a relevant employer or occupi er to specify a particular room or area of the
premises on which a permit holder could conduct interviews or discussions with
employees under ss285B or 285C, and requiring the permit holder to comply with that
direction or leave the premises;
⢠requiring at least 24 hours notice in writing of an intention to enter premises and exercise
powers under ss285B or 285C, with the notice specifying the day on which entry was
proposed;
⢠expandir)g the civil penalty prohibitions to:
prohibit persons exercising powers under ss285B or 285C from intentionally
hindering or obstructing any person, or otherwise acting in an improper manner;
require a person exercising powers under ss285B or 285C to comply with any
condition applying to his or her permit; and
prohibit a relevant employer or occupier from te lling a person that he or she was
not satisfied in relation to particulars provided by the person of a suspected breach of an industrial instrument unless the employer or occupier had reasonable
grounds for not being so satisfied;
⢠empowering the Commission to vary or revoke a permit if satisfied that the holder, in exercis ing powers under ss285B or 285C, intentionally hindered or obstructed any
person, otherwise acted in an improper manner, failed to ask an inviting employee if he or
she wished to keep his or her identity confidential, or disclosed the identity of an inviting
employee contrary to the employee's wishes;
⢠defining the expression 'act in an improper manner' by reference to examples, including :
seeking to enter or remain on premises in spite of having failed to give notice as
required under the Division;
giving notice of multiple entries without intending to make all those entries, so that
the employer or occupier does not have genuine notice that the person will seek to enter premises on a particular day;
continuing to seek entry to premises, or remaining on premises , in spite of having failed to comply with a request to show an invitation or permit, or to provide
particulars of a suspected breach; and
1 96 Final Report of the Royal Commission into the Building and Construction Industry
failing to comply with a request by a relevant employer or occupier that interviews
or discussions with employees take place in a particular room or area of the
premises;
⢠entitling the Commission to vary a permit by attaching a condition that the person must
not enter specified premises, or a specified part of premises, for a specified period;
⢠where the Commission ordered the revocation of a permit of a person , entitling the
Commission to order that no further permit be issued to that person for a specified
period , or that any further permit issued to that person be subject to a condition that he
or she not enter specified premises, or a specified part of premises, for a specified period;
⢠deeming entry provisions in awards and orders to be of no effect, rather than merely
unenforceable;
⢠requiring a Registrar to refer an application for a permit to the Commission in various
circumstances, including where the Registrar was satisfied that a permit previously
issued to the officer or employee in question had been revo ked or varied or issued
subject to a condition, or if the officer or employee had contravened a penalty provision;
and
⢠entitling the Commission to make whatever orders it deemed appropriate to restrict the
powers of an organisation, or officers or employees of the organisation, if satisfied that
the organisation or particular officers or employees had abused the permit system.
94 The majority report of the Senate Employment, Workplace Relations, Small Business and
Education Committee supported the proposed amendments.
95 The Labor Senators' Report concluded that the proposed amendments were an attack on
freedom of association which would 'increase the ability of employers to intimidate their
employees so that they will not join a union even if they want to ' .125 In relation to the proposed
requirement that permit holders be invited to attend premises as a condition of exercising
powers under ss285B or 285C, the Labor Senators' said that 'this proposition may seem
reasonable at an abstract level', before arguing that it presented important practical problems,
including:
⢠requ iring an employee to issue an invitation in writing would discriminate against
employees from non-English speaking backgrounds or with poor literacy skills;
⢠requiring an employee to sign his or her name to an invitation would be very intimidating
for employees in workplaces where union membership is discouraged; and
⢠requiring an employee to provide details of a suspected breach of an Act, award, order or
agreement would call for skills which many employees would be unlikely to have. 126
96 The Democrat Senator's Report criticised the proposed amendments as an 'unnecessary and
unacceptable impediment on the rights of unions to meet and recruit members' and as being
'contrary to the general principle of freedom of association '. The Democrat Senator's Report
acknowledged that better practice in relation to entry and inspection processes was required,
Reform - National issues Part 1 1 9 7
and argued that a code of practice on search and entry ought to be developed in conjunction
with employer and employee organisations. 127
97 I have taken the matters raised in the Labor Senators' and the Democrat Senator's Reports into
account in formulating solutions and recommendations for the building and construction
industry. In the recommendations made later in this section :
⢠I reject the notion that the power to enter premises or inspect records should be
contingent on an employee having issued a prior invitation; and
⢠I accept that unions have a legitimate interest in entering premises to meet with and
recru it members, subject to compliance with statutory obligations directed at ensuring
that work is not unduly disrupted.
98 Options for reform of entry and inspection provisions were canvassed in several of the
submissions received by the Commission. I set out below some of the key submissions.
99 The Australian Industry Group identified four deficiencies in the entry and inspection provisions
of the Workplace Relations Act 1996 (C'wth):
⢠Achieving the revocation of an entry permit under the Workplace Relations Act is of
little benefit when the relevant official has the right to enter the same site under
state industrial relations legislation and state OHS legislation.
⢠The lack of a fast and effective remedy enabling a member of the Commission or a
Registrar to suspend or revoke the entry permits of union officials who act
unlawfully. .
⢠The lack of a mechanism enabling the Registrar to make an order that a further
permit not be issued upon application for a specified time period, where a permit
has been revoked. The Commission currently has this power but a Registrar does
not ..
⢠The lack of a mechanism enabling permits to be suspended (perhaps for a
relatively short period for an initial offence). Under the present provisions, it is all or noth1ng. The Commission member or Registrar must revoke a permit totally
(requiring the official to reapply for a permit at some later stage) or not revoke it at alf.128
100 In a later submission to the Commission, the Australian Industry Group argued:
It is essential that a mechanism be established to ensure that union officials who abuse
their nght of entry privileges lose their right to enter building and construction sites under all federal and state industrial and occupational health and safetv laws through a single
unitarv investigation and determination process. If the A!RC cannot be given the power to
make an order with such effect because of Constitutional/imitations then some form of coordination of state and federal processes to cancel right of entry is essential.
Alternatively, some referral of state powers to the Commonwealth may be needed. 129 (orig inal emphasis)
198 Final Report of the Royal Commission into the Building and Construction Industry
101 The Commonwealth Government identified two options to overcome the problem of entry
provisions being abused or circumvented:
90. An option is to make clear right of entry conditions part of a national code. As noted above in paragraph 21, if this was enacted through Commonwealth
legislation, it would be limited by the reach of the Commonwealth's constitutional
powers. An option could be for the States to refer powers to the Commonwealth,
or enact complementary legislation that ensures that State right of entry provisions
comply with a national code.
91. An option is to penalise union officials who breach right of entry provisions by
withdrawing their nght to enter any building site under any jurisdiction. This penalty
could be administered by an industry tribunal. An option for dealing with repeated
right of entry offences could be to provide for the withdrawal or limitation of a
union's right of entry privileges. This penalty could apply for a period or
permanently. 130 (original emphasis)
102 The Housing Industry Association argued that rights of entry needed to be regulated to
minimise disruption to the workplace, prevent interference by a third party in commercial
relationships and ensure the orderly resolution of workplace disputes. 131 The Association
argued that:
⢠permits under s285A of the Workplace Relations Act 1996 (C 'wth) should be issued only
to 'persons who are of "good character" and have passed a rigorous competency
assessment to show that they have a minimum level of knowledge of the Act, relevant
Awards and industrial law generally; such assessments should be carried out by the
Registrar on the basis of competency standards set by him or her';
⢠reassessments should occur every two years;
⢠where a permit holder acts contrary to law, his or her permit should be revoked for a
minimum of two years;
⢠permit holders should be held personally liable for their acts and omissions whi le
exercising their rights and obligations; and
⢠State systems should be encouraged to adopt mirror provisions .132
I 03 Master Builders Australia Inc (M BA Inc) raised a number of similar points in a submission to the Commission . It advocated amending the Workplace Relations Act 1996 (C'wth) to:
⢠make applications for permits conditional on an organisation disclosing whether or not a
person has previously had a permit revoked and on the Registrar being satisfied that the applicant is a fit and proper person to be issued with a permit, taking into account the
purposes for which the permit is to be issued ;
⢠enable a permit to be revoked where the holder has used it for purposes other than those
for which it was issued; and
Reform- National issues Part 1 i 99
⢠require a permit holder investigating a suspected breach of the Act to specify to the
relevant employer particulars of the suspected breach and the grounds upon which the
suspicion has been formed. 133
104 MBA Inc also argued that:
⢠revocation of a right of entry under State or Federal legislation should automatically lead
to all rights of entry, both Federa l and State, bei ng revoked; and
⢠Commonwealth and State award provisions in respect of rights of entry should be
aligned or, alternatively, 'the award respondency of the head contractor be used to
determine the right of entry compliance requ irements' .134
1 05 I have taken each of these options and matters into account in formulating the solutions and
recommendations appearing in the next section .
200 Final Report of the Royal Commission into the Building and Construction Industry
Solutions and recommendations
Introduction
106 Under the Workplace Relations Act 1996 (C'wth) and the State legislation surveyed above,
union officers and employees holding permits entitling them to enter premises and inspect
employment records enjoy a range of righ ts and privileges . In some respects, those rights and privileges are of a kind normally accorded only to government authorities.
107 The extent to which entering premises and inspecting records has the potential to interfere with
work and workplace relati onships is particularly acute in the buildi ng and construction industry.
Building and construction sites are workplaces in which at any given time there are likely to be
a range of workers employed or engaged by a number of contractors and subcontractors.
Often , more than one union wi ll have coverage. In the bu il ding and construction industry, as an
almost inevitable incident of exercising their powers, permit holders cause a level of disruption to productive work, even where they fully comply with their statutory obli gations.
1 08 In analysing th e case for reform of entry and inspection provisions as they ap ply to the buil ding
and construction industry, I start from the premise that duly authorised officers or employees of
unions should be able to enter premises for the purpose of holding discussions with members
and potential members during non-working time. Provided that premises and entered and
discussions held in a way which minimises disruption to work, and provided that all statutory
obligations are observed, the abi lity to hold discussions with members and potential members
is an important and appropriate means by which unions can organise and represen t.
1 09 The case for an entitlement to enter premises and inspect records is much less clear in relat ion
to the investigation of suspected breaches of industrial relations legislation , awards and
agreements. The enforcement of statutory and award obligations is, on one view, properly the
province of statutory authorities, rather than unions. Wh ile legislation has long accorded unions
special righ ts to enter premises and inspect records for the purpose of ensuring that employers
meet their obligations to their employees, the evidence presented to this Commission has
revealed that those special rights are routinely abused. In many cases union officers and
employees lack the ski ll s or experience to identify whether breaches of any such obligations
have occurred. The evidence was that the investigation of suspected breaches often leads to
the making of unjustifiable, exaggerated or false claims , and can be a catalyst or vehicle for
threatening or taking unlawful industrial action. There is, in all the circumstances, a strong case
for union officers and employees not having any entitlement to enter premises or inspect
Reform- National issues Part 1 201
records for the purpose of investigating suspected breaches of industrial relations legislation,
awards or ag reements.
110 On the other hand, I am satisfied on the evidence presented to the Commission that, in the
building and construction industry, underpayment or miscalculation of workers' wages and
entitlements, in particular, is a substantial problem. Underpayments and miscalculations may
occur inadvertently or del iberately. Other complian ce issues also arise . It is unrealistic to expect
statutory authorities to intervene each and every time a dispute arises in relation to compliance
with statutory or award obligations, or obligations under workplace agreements.
111 On balance, I accept that in the building and construction industry, union officers and
employees should be permitted to enter premises and inspect records for the purpose of
investigating suspected breaches of industrial relations legislation, awards and agreements,
subject to strict compliance with statutory obligations.
112 Pl ainl y, however, the present system operating in the building and construction industry in
Australia does not work. The evidence presented to the Commission has established beyond
any doubt that statutory entitlements to enter premises and inspect records are widely abused
with impunity in this in dustry. Such abuses are regularly a precursor to the taking of unlawful
industrial action, and cause sign ifi cant disruption to productive work and significant losses on
bu il ding and construction sites .
113 The solution is rec ognising that the issue of a permit to an authorised officer or employee of a
union bestows that officer or employee and the sponsoring union wi th a range of extraordinary
righ ts and privileges. Among other things, holders of permits are entitled to enter premises in
circumstances which would otherwise consti tute a trespass. Further, they are permitted to
inspect the books and records of another person's business. These are pri vi leges which are
ordinarily accorded only to government bodies with obligations of public accountability. Each is
a significant intrusion into the rights of others.
11 4 The privileges attaching to permits should not be granted to unsuitable persons, and should be
withdrawn from persons who show themselves by their conduct to be unsuitable. Un der the
present regime, neither of these objectives is met Permits are granted to officers and
employees who have little or no understanding of their rights and obligations in relat ion to entry to premises and in spection of records, and officers and employees who abuse their rights and
obligations are not penalised by losing their perm its, or avoid being penalised by exploiting
juri sd ictional differences between the Federal and State systems.
11 5 I am satisfied on the evidence presented to the Commission that, in many cases :
⢠participants in the industry are ignorant of their rights and obligations in relation to entry
to premises and inspection of records;
⢠notice requi rements are ignored ;
⢠lim itations on entry and inspection are disregarded;
⢠permit holders exploit jurisdictional differences between Federal and State law to their own advantage; and
⢠the law is not enforced adequately or at all.
11 6 The reforms recommended in th is section have been formu lated with these problems in mind.
202 Final Report of the Royal Commission into the Building and Construction Industry
Objects
117 Division 11 A of Part IX of the Workplace Relations Act 1996 (C'wth) does not contain a
statement of objects in relation to the granting of permits, or entry and inspection by union
officers and employees. In view of the widespread contraventions of entry and inspection
provisions in the building and construction industry, a statement of objects is desirable and
would be likely to contribute to an environment in which participants in the industry understand
and enforce their rights and obligations.
11 8 I recommend that a statement of objects be included in entry and inspection provisions in
legislation applying to the building and construction industry, to the following effect:
Section [x] Objects of Division
As well as the objects set out in section [y], this Division has these objects:
(a) to establish a framework which balances:
(i) the right of organisations to hold discussions with members and potential
members during non-working time and 1iwest1gate suspected breaches of
industria/legislation and instruments; and
(ii) the right of occupiers of premises and employers to conduct the1r business
without undue interference or harassment;
(b) to ensure that permits to enter premises and i(lspect records are only granted to
persons who understand their rights and obligations under this Division;
(c) to ensure that occupiers of premises and employers understand their rights and
obligations under this Division; and
(d) to ensure that permits are suspended or revoked where rights granted under this
Division are abused.
Reform- National issues Part 1 203
Issue
The Workplace Relations Act 1996 (C'wth) and the industrial relations legislation of each
State (other than Victoria) contain provisions regulating entry to premises and inspection
of employment records by unions. Underlying each piece of legislation is the premise
that unions have a legitimate interest in having their officers and employees enter
premises for the purpose of investigating suspected breaches of industrial instruments,
and of holding discussions with persons who are or are eligible to become members of
the relevant union. In addition, in New South Wales and Western Australia, entry to
premises by authorised union officers and employees is expressly permitted for the
purpose of investigating suspected breaches of occupational health and safety standards.
This myriad of potentially applicable laws makes it difficult for participants in the building
and construction industry to know their rights and obligations concerning entry to
premises and inspection of employment records.
Statutory provisions which entitle officers and employees of unions to enter premises
authorise conduct which would otherwise constitute a trespass. Because they are a
statutory intrusion into the premises and business affairs of another and because of their
potential to cause disruption to workplaces, the circumstances in which entry is
permitted need to be precisely defined and limited to what is necessary to achieve the
purpose for which entry is permitted.
The evidence presented at the public hear;ngs of the Commission disclosed widespread
disregard in the building and construction industry of obligations concerning entry to
premises and inspection of employment records in New South Wales, Victoria,
Queensland, Western Australia, Tasman ia and the Australian Capital Territory. Most of the evidence of lawlessness related to misconduct by officers and employees of the
Construction, Forestry, Mining and Energy Union.
Ensuring that provisions regulating entry and inspection by unions operate properly in
the building and construction industry is a matter of considerable importance. Overwhelmingly, the evidence presented to the Commission was that industrial
disruption on building and construction sites followed upon union officers and
employees entering sites pursuant to the exercise or purported exercise of a statutory
entitlement. Industrial disruption was almost always the result of intervention in workplace relations by union officers. That intervention was often uninvited and
sometimes unwanted by the affected employees.
Statutory provisions which entitle officers and employees of unions to enter premises
authorise conduct which would otherwise constitute a trespass. Because they are a
statutory intrusion into the premises and business affairs of another and because of their potential to cause disruption to workplaces, the circumstances in which entry is
permitted need to be precisely defined and limited to what is necessary to achieve the purpose for which entry is permitted.
204 Final Report of the Royal Commission into the Building and Construction Industry
The evidence presented at the public hearings of the Commission disclosed widespread
disregard in the building and construction industry of obligations concerning entry to
premises and inspection of employment records in New South Wales , Victoria,
Queensland, Western Australia, Tasmania and the Australian Capital Territory. Most of the
evidence of lawlessness related to misconduct by officers and employees of the
Construction, Forestry, Mining and Energy Un ion.
Ensuring that provisions regulating entry and inspection by unions operate properly in the
building and construction industry is a matter of considerable importance. Overwhelmingly, the
evidence presented to the Commission was that industrial disruption on building and
construction sites followed upon union officers and employees entering sites pursuant to the
exercise or purported exercise of a statutory entitlement. Industrial disruption was almost
always the result of intervention in workplace relations by union officers. That intervention was
often uninvited and sometimes unwanted by the affected employees.
Entry and inspection provisions are routinely contravened in the build ing and construction
industry. If the rule of law is to be restored to the industry, entry and inspection provisions
are in need of urgent and substantial reform.
A statement of objects for entry and inspection provisions applying to the building and
construction industry would be likely to contribute to an environment in which
participants in the industry understand their rights and obl igations.
Recommendation 59
Entry and inspection provisions in the Building and Construction Industry Improvement
Act contain a statement of objects to the foll owing effect:
Section [x] Objects of Division
As well as the objects set out in section [y), this Division has these objects:
(a) to establish a framework wh ich balances:
(i) the right of organisations to represent their members in the workplace,
hold discussions with potential members and investigate suspected
breaches of industrial legislation and instruments; and
(ii) the right of occupiers of premises and employers to conduct their
business without undue interference or harassment;
(b) to ensure that permits to enter premises and inspect records are only granted
to persons who understand their rights and obligations under this Division;
(c) to ensure that occupiers of premises and employers understand their rights
and obligations under this Division; and
(d) to ensure that permits are suspended or revoked where rights granted under
this Division are abused.
Reform- National issues Part 1 205
Granting of permits
119 Under s285A of the Workplace Relations Act 1996 (C'wth), a Registrar may, on application by
an organisation in accordance with the Regulations, issue to an officer or employee of the
organisation a permit in the prescribed form .
120 The Workplace Relations Act 1996 (C'wth) does not give any guidance as to the circumstances
in which Registrars should exercise their discretion to grant permits.
121 The evidence presented to the Commission establishes to my satisfaction that many persons
to whom permits have been issued by Registrars have little or no understanding of their rights
and obl igations. Ignorance on the part of permit holders as to their rights and obligations has
contributed to a culture in which obligations attaching to entry and inspection permits are
widely disregarded in the building and construction industry. A good illustration of the
ignorance of permit holders as to their rights and obligations is afforded by the Nambour
Hospital Dispute case study from Queensland. The evidence presented to the Commission generally was that permit holders see themselves as being entitled to enter sites on demand
and without notice for whatever purpose they consider appropriate.
122 Significant problems can arise where permit holders inspect employment records. Unless the
permit holder has an adequate understanding of statutory and award requirements, or the
requ irements of certified agreements, the exercise of a power of inspection is prone to abuse . I
can see no reason why a union officer or employee who has no adequate understanding of the
terms and conditions of employment applying to members of the union should hold a permit
entitling the officer or employee to demand to inspect and make copies of employment
records.
123 Taking these matters into account, I recommend that in legislation applying to the building and
construction industry, a Registrar should not be permitted to grant a permit to an officer or
employee of an organisation unless:
⢠the organisation has notified the Australian Building and Construction Commission
(ABCC) of the application and the Registrar has given the ABCC an opportunity to be
heard;
⢠the organisation has certified that it has provided the relevant officer or employee with training as to:
the circumstances in wh ich permit holders may enter premises;
the obligation to give prior notice;
what permit holders may and may not do having entered premises;
the times at which permit holders may enter premises, and at which they may conduct discussions with workers;
the obligation not to intentionally hinder or obstruct employers or employees;
the documents which permit holders are permitted to inspect;
206 Final Report of the Royal Commission into the Building and Construction Industry
the investigation of breaches of the Workplace Relations Act 1996 (C'wth), awards,
ord ers and certified agreements;
the requirements of the National Building and Construction Industry Award and
other Federal award s applyi ng to the building and construction industry, and how
to identify analogous requ irements in orders and certifi ed agreements;
the obligation to show a permit upon request; and
the penalties for abusing a rig ht of entry and inspection;
⢠the Registrar is sati sfied that the training was adequate and appropriate and that the
officer or employee understands his or her rights and obligations; and
⢠the Reg istrar is satisfied that the officer or employee is a fit and proper person to hold a
permit, taking into account any matters the Registrar considers appropriate, including
whether any permit previously granted to th e officer or employee under Federal or State
industrial relations legislation has ever been suspended or revoked, or issued subject to
conditions.
124 The legislation should specify that an organisation which falsely certifies that it has provided an
officer or employee with training as to the rights and obligations of permi t holders:
⢠is liable to a civil penalty; and
⢠is liable to pay compensation for any loss or damage suffered by reason of th e officer or
employee contravening an entry or inspection provision.
125 In appropriate cases, such as cases of repeated contravention by officers or employees of the
same organisation, or where an organisation has provi ded inadequate train ing to its officers
and employees who hold perm its, the ABCC shoul d be entitled to apply to a Pres idential
member of the AIRC for orders that:
⢠the right of the organisation to apply for permits to be issued to its officers or employees
be suspended for a fixed period or revoked or made subject to such conditions as may be appropriate; and
⢠all permits issued to officers and employees of an organisation be suspended or revoked,
or made subject to such conditions as may be appropriate.
126 Registrars should have the power to impose conditions on the granting of perm its, in clu ding
cond itions that the permit holder not be permitted to enter specified premises .
Reform- National issues Part 1 207
Issue
The Workplace Relations Act 1996 (C'wth) does not give any guidance as to the
circumstances in which Registrars should exercise their discretion to grant permits to
officers or employees of unions to enter premises and inspect records. Permits are
frequently granted in the building and construction industry to persons who have little or
no understanding of their rights and obligations as the holders of such permits.
Ignorance on the part of permit holders as to their rights and obligations has contributed
to a culture in which obligations attaching to entry and inspection permits are widely
disregarded in the building and construction industry.
Sig nificant problems can arise where permit holders inspect employment records. Unless
the permit holder has an adequate understar:ding of statutory and award requirements,
or the requirements of certified agreements, the exercise of a power of inspection is
prone to abuse. There is no cogent reason why a union officer or employee who has no
adequate understanding of the terms and conditions of employment applying to
members of the union should hold a permit entitling the officer or employee to demand to
inspect and make copies of employment records.
Recommendation 60
Under the Building and Construction Industry Improvement Act, a Registrar not be
permitted to grant a permit to an officer or employee of a union unless:
(a) the union has certified that it has provided the relevant officer or employee with
training as to the rights and obligations of permit holders;
(b) the Registrar is satisfied that the training was adequate and appropriate and that the
officer or employee understands the rights and obligations of holding a permit; and
(c) the Reg istrar is satisfied that the officer or employee is a fit and proper person to
hold a permit, taking into account any matters the Registrar considers appropriate,
including whether any permit previously granted to the officer or employee under
Commonwealth or State industrial relations legislation has ever been suspended or revoked, or issued subject to conditions.
Recommendation 61
A range of remedies be available where an organisation falsely certifies that it has provided an officer or employee with training as to the rights and obligations of permit
holders. Those remedies include civil penalties and the payment of compensation.
Recommendation 62
In appropriate cases, such as cases of repeated contravention of entry and inspection
provisions by officers or employees of the same union, or where a union has provided
inadequate training to its officers and employees who hold permits, the Australian
208 Final Report of the Royal Commission into the Building and Construction Industry
Building and Construction Commission be entitled to apply to a Presidential member of
the Australian Industrial Relations Commission for orders that:
(a) the right of the union to apply for permits to be issued to its officers or employees
be suspended for a fixed period or revoked or made subject to such conditions as
may be appropriate; and
(b) all permits issued to officers and employees of a union be suspended or revoked,
or made subject to such conditions as may be appropriate.
Recommendation 63
Registrars have the power to impose conditions on the granting of permits, including
conditions that the permit holder not be permitted to enter specified premises.
Coverage and uniformity
127 Differences between Commonwealth and State regimes concerning entry to premises and
inspection of records are highly undesirable. Under the current system, conduct which is
permitted under Commonwealth legislation may not be permitted under State leg islation and
vice versa. It is not always possible to identify whethe,r a person claiming a right to enter
premises or inspect records is acting under Commonwealth or State authority or both . The
obligation to give notice differs from place to place . Inconsistent entry and inspection provisions
in awards override statutory provisions in some State legislation but not in the Commonwealth
leg islation. Persons who have had their permits revoked under the Workplace Relations Act
1996 (C'wth) might continue to be permitted to enter premises and inspect records under
State industrial relations legislation and vice versa.
128 In short, the lack of uniformity of Commonwealth and State laws has the effect of making it
difficult for employers, employees, occupiers of premises, unions and union officers and
employees to know their rights and obligations. It leads to the law being disregarded or flouted.
129 Thi s problem is illustrated by the decision of a Full Bench of the AIRC in the appeal reversing a
Reg istrar's decision to revoke permits issued under the Workplace Relations Act 1996 (C'wth)
to Mr Andrew Ferguson , Branch Secretary of, and Mr Malcolm French, organiser employed by,
the CFMEU, Construction and General Division, New South Wales Divisional Branch. 135 1 have
already explained my view that that decision highlighted a serious deficiency in the current
legislative regime. It is too easy for persons holding permits under the Workplace Relations Act
1996 (C'wth) to enter premises, hold discussions with employees who are members or el igible
to become members of a Federally registered union, and engage in disruptive activities to
assert later that they were exercising powers under State legislation to avoid having their
permits revoked under the Workplace Relations Act 1996 (C'wth). In such cases, permit
holders exploit jurisdictional differences to their own advantage and avoid being held
accountable for conduct which is plainly inconsistent with the rights and privi leges attach in g to
permits, whether issued under Commonwealth or State law.
Reform- National issues Part 1 209
130 If the ru le of law is to be imposed on the building and construction industry, it is critical that all
participants come to understand their rights and obligations, and that there are adequate
enforcement mechanisms in place.
131 For these reasons , Commonwealth right of entry and inspection provisions for the building and
construction industry should apply as widely as possible. To the maximum extent permitted by
the Constitution, participants in the industry should have to comply with only one legal regime.
In view of Constitutional limitations and in furtherance of this objective, the Commonwealth
should seek to persuade each State to enact right of entry and inspection provisions for the
building and construction industry which mirror the Commonwealth provisions.
Issue
Differences between Commonwealth and State regi mes concerning entry to premises
and inspection of records are highly undesirable. Under the current system, conduct
which is permitted under Commonwealth legislation may not be permitted under State
legislation and vice versa. It is not always possible to identify whether a person claiming
a right to enter premises or inspect records is acting under Commonwealth or State
authority or both. The obligation to give notice differs between States. Inconsistent entry
and inspection provisions in awards override statutory provisions in some State legislation but not in the Commonwealth legislation. Persons who have had their permits
revoked under the Workplace Relations Act 1996 (C 'wth) might continue to be permitted
to enter premises and inspect records under State industrial relations legislation and vice versa.
The lack of uniformity of entry and inspection provisions in Commonwealth and State
law has the effect of making it difficult for employers, employees, occupiers of premises,
unions and union officers and employees to know their rights and obligations. It leads to the law being disregarded or flouted.
It is too easy for permit holders to exploit jurisdictional differences to their own
advantage and avoid being held accountable for conduct which is plainly inconsistent
with the rights and privileges attaching to permits, whether issued under
Commonwealth or State law.
Recommendation 64
Entry and inspection provisions in the Bu ilding and Construction Industry Improvement
Act be implemented to the full extent of Commonwealth Constitutional power.
Recommendation 65
The Commonwealth seek to persuade each State (other than Victoria, which does not
have a separate State entry and inspection regime) to enact entry and inspection provisions for the building and construction industry which mirror those recommended
for inclusion in the Building and Construction Industry Improvement Act.
21 0 Final Report of the Royal Commission into the Building and Construction Industry
Invitations and notices
132 The Workplace Relations and Other Legislation Amendment Bi/11996 (C'wth) in its original form
and the Workplace Relations Legislation Amendment (More Jobs, Better Pay) Bill 1999 (C'wth)
each sought to impose, as a precondition to a permit holder entering premises, a requirement
that the permit holder be invited to enter the premises by an employee working at the premises who was a member of the union.
133 There is an attraction about that proposal. Permit holders are, by definition, officers or
employees of unions . The evidence presented to this Commission is that in a range of areas
unions in the building and construction industry have strayed well beyond their legitimate
functions and have had a deleterious effect on workplace harmony and productivity. Industrial
disruption, in particular, frequently occurs following misuse of a right of entry or inspection by permit holders.
134 The objective of any reform should be to limit the right of union officers and employees to enter
premises and inspect employment records to situations in which they have a genuine interest
in doing so on behalf of their members. Requiring a permit hold er to have been invited to enter
prem ises would be one way of achieving that objective.
135 On balance, however, I do not recommend for the building and construction industry the
imposition of an invitation requirement of the kind advocated in the Bills referred to above. I have reached that view principally because:
⢠any invitation requirement could be easily circumvented, particularly on large buildin g and
construction sites where union site delegates are employed;
⢠the fact that an invitation has been issued is not necessarily evidence that any gen uine
issue has arisen requiring the permit holder to attend at th e site, enter the premises or inspect employment records; and
⢠focussing on whether an invitation has been issued ignores what is to my mind a more
important matter, namely ensuring that occupiers of premises and employers understand
and are able to enforce their rights.
136 Abuses of entry provisions in the building and construction industry will be less likely to occur if
notice requirements are adhered to and occupiers of premises and employers understand their
rights and obligations and have the opportunity to seek advice, if necessary.
137 If the exploitation of jurisdictional differences is to be minimised, permit holders should be
compelled to declare in advance whether they are entering premises for th e purpose of exercising
powers under a permit granted pursuant to Commonwealth legislation (a Federal perm it).
138 These objectives could be achieved by the following reforms :
⢠requiring persons who seek to rely on the benefits which flow from holding a Federal
permit to give to the relevant occupier or employer, no less than 24 hours before entering
premises or inspecting records, a statement of rights and obligations in a prescribed form
(a Federal notice);
⢠requiring a Federal notice to contain the fol lowing matters if it is to be valid:
Reform - National issues Part 1 211
the name and permit number of the permit holder, and the union he or she
represents;
the time and date of the proposed entry or inspection (being a specific time and
date - as distinct from a range of dates or period - not less than 24 hours and not
more than 14 days after delivery of the notice to the relevant occupier or employer);
the purpose of the proposed entry or inspection, being a purpose permitted by
Commonwealth legislation (including, where appli cable, particulars of any
suspected breach of industrial legislation or an industrial instrument - the obligation
to give particulars is discussed further below); and
a summary of relevant statutory requirements; that is, the purposes for which
Federal permit holders may enter premises, the obligation to give prior notice, the
times at which permit holders may enter premises and at which they may conduct
discussions with workers, the obligation on permit holders not to intentionally
hinder or obstruct employers or employees, the documents which permit holders
are permitted to inspect, the obligation to show a perm it upon request , the
obligation on occupiers and employers not to refuse or unduly delay entry to
premises, the obligation to allow the permit holder to inspect relevant employment
records and conduct interviews with employees about suspected breaches of
industrial legislation and instruments, the obligation not to intentionally hinder or
obstruct a permit holder, relevant penalties, and the right to report abuses of power
by permit holders to the appropriate authority;
⢠providing that a Federal permit h8lder is not entitled to the benefits which flow from
hold ing a Federal permit unless a Federal notice has been given;
⢠providing that where a Federal permit holder enters premises, having given a Fed eral
notice, he or she is not entitled to the benefits which flow from holding the Federal permit
if he or she engages in conduct other than that specified in the notice; and
⢠providing that a Federal permit holder is only entitled to the benefits which flow from
holding a Federal permit if he or she enters the premises on the date, and at about the
time, specified on the face of the Federal notice.
139 The principal benefits which flow from holding a Federal permit are an entitlement to enter
premises in circumstances which would otherwise constitute a trespass, and an entitlement to
inspect certain records.
140 The proposed reforms would clarify the operation of Commonwealth entry and inspection
provisions. To obtain the benefits which flow from holding a Federal permit, permit holders
would be forced to declare in advance that they wished to exercise a power under the permit.
They would be required to specify the purpose for which they wished to enter premises or
inspect documents, and would only be entitled to the benefit of the permit while engaging in
the conduct specified in the notice. Occupiers of premises and employers would have at least
24 hours in which to consider the Federal notice and obtain advice.
21 2 Final Report of the Royal Commission into the Building and Construction Industry
141 The reforms would assist in preventing the situation which commonly arises of union officers
and employees entering premises pursuant to a Federal permit, and then proceeding to
engage in conduct which is completely unrelated to the purposes for which the Federal permit
has been granted , or the purposes for which entry was sought. In su ch a case, the person
would not be able to rely on Commonwealth entry and inspection provisions to remain on the
premises or in defending proceedings for trespass.
Issue
In order for the rule of law to operate in the building and construction industry, permit
holders must not be allowed to abuse their powers of entry and inspection.
Abuses of entry provisions in the building and construction industry will be less likely to
occur if notice requirements are adhered to and occupiers of premises and employers
understand their rights and obligations and have the opportunity to seek advice, if necessary.
If the exploitation of jurisdictional differences is to be minimised, permit holders should be
compelled to declare in advance whether they are entering premises for the purpose of
exercising powers under a permit granted pursuant to Commonwealth legislation (a
Federal permit) or pursuant to some other entitlement.
Recommendation 66
Persons who seek to rely on the benefits which flow from holding a Federal permit be
required to give to the relevant occupier or employer, no less than 24 hours before
entering premises or inspecting records, a statement of rights and obligations in a prescribed form (a Federal notice).
To be valid , a Federal notice must contain the following matters:
(a) the name and permit number of the permit holder, and the union he or she
represents;
(b) the time and date of the proposed entry or inspection (being a specific time and
date - as distinct from a range of dates or period - not less than 24 hours and not
more than 14 days after delivery of the notice to the relevant occupier or employer);
(c) the purpose of the proposed entry or inspection, being a purpose permitted by
Commonwealth legislation (including, where applicable, particulars of any
suspected breach of industrial legislation or an industrial instrument - see
Recommendation regarding the obligation to give particulars); and
Reform - National issues Part 1 2 i 3
(d) _ a summary of relevant statutory requirements; that is, the purposes for which Federal
permit holders may enter premises, the obligation to give prior notice, the times at
which permit holders may enter premises and at which they may conduct discussions
with workers, the obligation on permit holders not to intentionally hinder or obstruct
employers or employees, the documents which permit holders are permitted to
inspect, the obligation to show a permit upon request, the obligation on occupiers and
employers not to refuse or unduly delay entry to premises, the obligation to allow the
permit holder to inspect relevant employment records and conduct interviews with
employees about suspected breaches of industrial legislation and instruments, the
obligation not to intentionally hinder or obstruct a permit holder, relevant penalties, and
the right to report abuses of power by permit holders to the appropriate authority.
Recommendation 67
(a) Federal permit holders not be entitled to the benefits which flow from holding a
Federal permit unless a Federal notice has been given.
(b) Where a Federal permit holder enters premises, having given a Federal notice, he
or she not be entitled to the benefits which flow from holding the Federal permit if
he or she. engages in conduct other than that specified in the notice.
(c) Federal permit holders only be entitled to the benefits which flow from holding a
Federal permit if they enter the premises on the date, and at about the time,
specified on the face of the Federal notice.
Suspected breaches of industrial legislation and instruments
142 Th e right to entry and in spection in s285B of the Workplace Relations Act 1996 (C'wth) may be
exercised where a permit holder 'suspects that a breach has occurred, or is occurring, of' the
Act, or an award, an order of the Commission or a certified agreement that is in force and binds
the organisation of which the permit holder is an officer or employee.
143 There is no express requirement on permit holders to tell relevant employers the nature of their
suspicion, or to give any particulars of their suspicion. There is no express requirement that the
suspicion be reasonable or based on credible information , although it is at least arguable that such a requirement applies.136
144 The evidence presented to the Commission establishes that permit holders routinely gain access to
premises and records simply by asserting a suspicion that a relevant breach has occurred. Often the
assertion is made on the basis of no evidence at all. It is difficult or impossible for employers to
challenge the assertion, because permit holders typically refuse to give any details of their suspicion.
145 Th is conjunction of circumstances has led to a situation where the power of entry and
inspection under s285B is abused and exploited by permit holders.
146 The purpose of the power of entry and inspection under s285B, broadly, is to facilitate
adherence to the law. That objective cannot be effectively achieved if those alleged to be in
breach of the law do not know the nature of the allegation against them .
21 4 Final Report of the Royal Commission into the Building and Construction Industry
14 7 Permit holders sometimes refuse to identify suspected breaches of the Act, awards or certifiec
agreements on the grounds that to do so would be to identify a complainant and expose the
complainant to the risk of repercussions. It should, however, almost always be possible for permit
holders to identify the nature of their suspicion without identifying a complainant. In cases where a
complainant is dismissed, or injured or prejudiced in his or her employment by reason of having made
a complaint, the employer would generally be in breach of the freedom of association provisions of the Workplace Relations Act 1996 (C 'wth): see ss298K(1) and 298L(1 )(i) and (1).
148 Taking each of these matters into account, I recommend that provisions be included in
legislation applying to the building and construction industry which:
⢠require permit holders who suspect a breach to specify in a Federal notice in the
prescribed form, at least 24 hours before they are entitled to enter premises or inspect
records:
whether the suspicion relates to a breach of the Act, an award, an order of the
AIRC or a certified agreement; and
the nature of the breach (without there being any obligation to identify any complainant);
⢠expressly require any suspicion on the part of a permit holder to be reasonable; that is,
objectively reasonable having regard to the information in the possession of the permit
holder at the time he or she purports to exercise the relevant power of entry or
inspection; and
⢠impose a reverse onus of proof, so that in proceedings in which it is alleged that a permit
holder did not reasonably suspect that a breach had occurred or was occurring, the onus
is on the permit holder to establish that he or she held a reasonable suspicion. A reverse
onus of proof of this kind is desirable because it will generally be difficult or impossible for
anyone other than the permit holder to prove the nature of a permit holder's suspicion.
149 I have made recommendations elsewhere in relation to the establishment of the Australian
Building and Construction Commission (ABCC) as a body empowered to investigate alleged contraventions and enforce legislation applying to the building and construction industry. To
assist the ABCC in its functions, and to enable it to assess the extent to which rights of entry
and inspection are exercised for the purpose of investigating suspected breaches, permit
holders should be required to provide a copy of the Federal notice to the ABCC, not less than
24 hours before the time and date specified in the notice for entering the premises or
inspecting the records (as the case requires).
150 The following additional protections are desirable:
⢠a civil penalty should attach to any employer who, having been given a Federal notice
setting out a suspected breach, destroys or conceals any documents relevant to the
suspected breach;
⢠organisations and the ABCC should have standing to apply for orders in respect of the
alleged destruction or concealment of documents relevant to a suspected breach ; and
⢠there should be a fac ili ty for an organisation to apply, on an ex parte basis, to a Registrar
for a certificate which entitles a permit holder to enter premises or inspect documents
Reform - National Issues Part 1 21 5
relevant to a suspected breach without giving prior notice, if the Registrar is satisfied that
there are grounds for believing that the relevant employer would destroy or conceal
documents if notice were given.
Issue
Under s2858 of the Workplace Relations Act 1996 (C'wth), permit holders exercising a
right of entry or inspection for the purpose of investigating a suspected breach of the Act
or a relevant award, order of the Australian Industrial Relations Commission or certified
agreement are not required to tell the relevant employer the nature of their suspicion, or
to give any particulars of their suspicion. There is no requirement that the suspicion be
reasonable or based on credible information.
The evidence presented to the Commission established that permit holders routinely
gain access to premises and records simply by asserting a suspicion that a relevant
breach has occurred. Often the assertion is made on the basis of no evidence at all. It is
difficult or impossible for employers to challenge the assertion, because permit holders
typically refuse to give any details of suspicion.
This conjunction of circumstances has led to a situation where the power of entry and
inspection under s2858 is abused and exploited by permit holders.
The purpose of the power of entry and inspection under s2858, broadly, is to facilitate
adherence to the law. That objective cannot be effectively achieved if those alleged to be
in breach of the law do not know the nature 9f the allegation against them.
Recommendation 68
In the Building and Construction Industry Improvement Act:
(a) permit holders be required in a Federal notice in the prescribed form to identify the
breach which they suspect has occurred or is occurring, by identifying whether the
suspicion relates to a breach of the Act, an award, an order of the Australian
Industrial Relations Commission or a certified agreement and specifying the nature of the breach (without there being any obligation to identify any complainant);
(b) any suspicion on the part of a permit holder be reasonable; that is, objectively
reasonable having regard to the information in the possession of the permit holder
at the time he or she purported to exercise the relevant power of entry or
inspection;
(c) a reverse onus of proof apply, so that in proyeedings in which it is alleged that a
permit holder did not reasonably suspect that a breach had occurred or was
occurring, the onus is on the permit holder to establish that he or she held a reasonable suspicion;
2 i 6 Final Report of the Royal Commission into the Building and Construction Industry
(d) permit holders be required to provide a copy of the Federal notice to the Australian
Building and Construction Commission not less than 24 hours before the time and
date specified in the notice for entering the premises or inspecting documents (as the case requires);
(e) a civil penalty attach to any employer who, having been given a notice setting out
a suspected breach, destroys or conceals any documents relevant to the suspected breach;
(n unions and the Australian Building and Construction Commission have standing to apply to a Registrar for orders in respect of the alleged destruction or concealment
of documents relevant to a suspected breach; and
(g) unions be able to apply, on an ex parte basis, to a Registrar for a certificate which
entitles a permit holder to enter premises or inspect documents relevant to a
suspected breach without giving prior notice, if the Registrar is satisfied that there
are grounds for believing that the relevant employer would destroy or conceal
documents if notice were given .
Inc onsistent provisions in awards, orders and agreements
151 While entry and inspection provisions in Federal awards and orders are unenforceable by virtue
of s127AA of the Workplace Relations Act 1996 (C'wth), the same is not true of entry and
inspection provisions in Enterprise Bargaining Agreements (EBAs).
152 Many EBAs contain expansive entry and inspection provisions. The CFMEU 's pattern
agreement in Victoria, for example, contains an entry provision in the following terms:
Accredited union officials shall have nght of entry to any place or any premise's [sic]
where the company is undertaking work for the purpose of interviewing employees,
checking on wage rates, award/agreement breaches, or safety conditions or
regulations ... 137
153 The Victorian Building Industry Agreement (VB/A) provides:
Where an accredited Official of a Union wishes to check to see whether all the provisions
of the Schemes! Acts are being complied with, he/she shall be entitled to do so. 138
154 The existence of enforceable entry and inspection provisions in such agreements means that
on the same building and construction site, different rights of entry and inspection might apply
under Federal legislation, State industrial relations legislation, State awards, or the workplace
agreements of any contractor working on the site at the time entry or inspection is sought.
155 I have come to the view that Commonwealth legislation applying to the building and
construction industry should provide that the AIRC:
Reform - National issues Part 1 21 7
⢠must, on application, vary an award or certified agreement to exclude a provision
providing any organisation, or any officer or employee of an organisation, with an
entitlement to enter premises or inspect records;
⢠must refuse to certify any agreement that applies to conduct in the building and
construction industry if it contains such a provision; and
⢠does not have power to include such a provision in an award .
156 Matters weighing in favour of such a reform include:
⢠adherence to the rule of law in this area is likely to be enhanced by having one set of entry
and inspection rules applying to the maximum extent possible across the whole of the
building and construction industry. Currently, there is the potential on the same site for
Commonwealth and State statutory provisions, provisions in State awards, and
provisions in workplace agreements to come into conflict, particularly on sites involving a
range of different contractors from different sectors of the industry;
⢠s127 AA of the Workplace Relations Act 1996 (C'wth) currently deems entry and inspection
provisions in Federal awards and orders to be unenforceable. The proposed reform is
therefore broadly consistent with and an amplification of the current approach; and
⢠as the Fu ll Bench of the AIRC recognised in Moranbah North Coal (Management) Pty Ltd
v Construction, Forestry, Mining and Energy Union, 139 the policy underlying the current
entry and inspection provisions in the Workplace Relations Act 1996 (C 'wth) was for
Parliament itself to prescribe the circumstances in which entry to premises would be
allowed . Extending that prescription beyond overriding awards and orders to overriding
provisions in agreements is consistent with that policy.
157 I recognise that the proposed reform would fetter the ability of employers and employees to include entry and inspection provisions suited to their own enterprises in EBAs. On balance,
however, that disadvantage will be outweighed by the advantages identified above .
158 I recommend that the operation of this reform be reviewed after a period of three years .
Issue
Entry and inspection provisions in Federal awards and orders are unenforceable by
virtue of s127AA of the Workplace Relations Act 1996 (C 'wth). The position is different,
however, with entry and inspection provisions in Enterprise Bargaining Agreements (EBAs). Many EBAs contain expansive entry and inspection provisions.
The fact that such provisions are enforceable means that on the same building and
construction site, different rights of entry and inspection might simultaneously apply
under Commonwealth legislation , State industrial relations legislation, State awards, or the workplace agreements of any contractor working on the site.
2 i 8 Final Report of the Royal Commission into the Building and Construction Industry
Recommendation 69
The Building ana Construction Industry Improvement Act provide that the Australian Industrial Relations Commission:
(a) must, on application, vary an award or certified agreement to exclude a provision
providing any union, or any officer or employee of a union, with an entitlement to
enter premises or inspect records;
(b) must refuse to certify any agreement that applies to conduct in the building and
construction industry if it contains such a provision; and
(c) does not have power to include such a provision in an award.
The operation of this reform be reviewed after a period of three years.
Po wers of entry and inspection
159 Sections 285B and 285C of the Workplace Relations Act 1996 (C'wth) impose a range of
limitations on permit holders' powers of entry and inspection. In particular:
⢠a right of entry for the purpose of investigating a su.spected breach of the Act, an award, an order of the AIRC or a relevant certified agreement may only be exercised during
working hours, and only if employees work at the premises who are members of the
organisation of which the permit holder is an officer or employee; 140
⢠discussions concerning suspected breaches may only be held during working hours,
with members of the organisation of which the permit holder is an officer or employee, or
persons who are eligible to become members of that organisation , and must be confined
to discussions about the suspected breach; 141
⢠employers are only required to produce a limited range of records relevant to the suspected breach; 142
⢠a right of entry for the purpose of holding discussions with employees in relation to other
matters may only be exercised during working hours, where work is carried on at the
premises to which an award applies that is binding on the organisation of wh ich the
permit holder is an officer or employee, and where employees who are members, or
eligible to become members of that organisation work; 143 and
⢠such discussions may only occur during the employees ' meal time or other breaks.144
160 The evidence presented to the Commission is that these limitations are widely disregarded by
permit holders. The likely explanation is that occupiers of premises and employers are not
sufficiently aware of the limitations, and that the law is not adequately enforced .
Reform - National issues Part 1 21 9
161 The recommendations made elsewhere in this section in relation to the giving of a prescribed
notice to occupi ers and employers setting out rights and obligations, and expanded and
increased remedies and penalties, would be likely to assist in ensuring a higher level of
compliance with the law.
Suspension and revocation of permits
162 Despite evidence that entry and inspection provisions are routinely contravened , it appears
that, wi th notable exceptions, permits are rarely revoked. There may be a number of
explanations:
⢠occupiers of premises and employers may not recog nise that a permit holder has
exceeded his or her powers;
⢠occupiers of premises and employers rnay not be reporting contraventions of entry or
inspection requ irements;
⢠app lications for revocation of permits may not be being made; or
⢠applications for revocation of permits may not be succeeding.
163 If the rule of law is to operate in the building and construction industry, then permit holders
must not be allowed to abuse their privileges. One way of minimising the risk of powers being
abused is to ensure, to the maxi mum extent possible , that occupiers of premises and
employers are aware of the rights and oblig ations of permit holders. I have already made
recommendations which would achieve that objective. Other ways of minimising abuses of
power are to empower an appropriate .authority to investigate and enforce the law, and to
prescribe remedies which will be likely to prevent and deter permit holders from exceeding their
powers.
1 64 A common problem exposed by the evidence presented to the Commission and not
adequately addressed in the current provisions involves permit holders purporting to exercise a power of entry and inspection for one of the purposes permitted by Division 11 A of Part IX of
the Workplace Relations Act 1996 (C 'wth), but in fact exercis ing that power for an ulterior
purpose, such as to hold site meetings to discuss general industrial issues during working
hours, to disrupt work on sites, or to engage in conduct that contravenes freedom of
bargaining or freedom of association provisions. Such conduct is obviously unacceptable and
should not be allowed to occur.
165 Taki ng these matters into account, I recommend that:
⢠the ABCC should be given the power to receive and investigate complaints concerning abuses of pri vileges by permit holders;
⢠the ABCC shou ld be given the power to make application to a Registrar to suspend or
revoke a Federal permit, or to have conditions attached to a permit;
⢠Reg istrars should be required to suspend or revoke a Federal permit if satisfied that the person to whom it was issued has, in exercising a Federal power of entry or inspection:
intentionally hindered or obstructed any person;
2 2 0 Final Report of the Royal Commission into the Building and Construction Industry
failed to provide the necessary Federal notice in the prescribed form;
provided a Federal notice, or repeatedly provided Federal notices, for vexati ous or
frivolous reasons or in vexatious or frivolous circumstances;
failed to comply with a condition attaching to a Federal permit;
other than in cases involving an inadvertent or minor breach , failed to comply with
any of the statutory obligations of a Federal perm it holder; or
otherwise acted in an improper manner.
166 It would be desirable for some guidance to be given as to the meaning of the expression
'otherwise acted in an improper manner'. The expression should be taken to include:
⢠exercising a right of entry or inspection in a vexatious, unreasonable or inappropriate manner;
⢠making unreasonable, vexatious or inappropriate use of information obtained from an
inspection of a record; and
⢠unreasonably failing to comply with a request by a relevant occupier or employer that
discussions or interviews with employees take place in a particular room or area of the premises.
167 Under the Workplace Relations Act 1996 (C'wth), there is currently no power to suspend a
permit. This is un desirable. If abuses of entry and inspet:tion privileges are to be adequately
addressed in the building and construction industry, real, substantial and certain penalties must
apply. Permit holders should know that if they abuse the rights and privileges attaching to a
permit, their permit will be suspended for a minimum known period or revoked entirely.
168 I therefore recommend that where a ground for suspension or revocation of a perm it is made
out, the following mandatory minimum penalties should apply:
⢠for a first contravention: minimum suspension of three months;
⢠for a second contravention: minimum suspension of 12 months; and
⢠for a third or further contravention : minimum suspension of five years.
169 The minimum suspension periods are analogous to those which apply to drivers who exceed
the speed limit by a prescribed amount, or who have over the prescribed limit of alcohol in their
blood. Just as drivers of motor vehicles automatically lose their licences if they breach the law
in certain circumstances, so should permit holders lose their licence to enter premises and
inspect records if they do not comply with statutory obligations.
170 A right of appeal to the AIRC from a mandatory suspension period should be preserved, with
the AIRC having the power to shorten or lengthen a suspension period, or overturn a
suspension period entirely, if satisfied in all the circumstances that the mandatory period of
suspension is manifestly unreasonable having regard to the nature of the contravention in
question and any other circumstances the AIRC considers relevant.
Reform- National issues Part 1 22 i
171 I have already observed that problems can arise out of the fact that union officers or employe es
commonly hold permits under both the Workplace Relations Act 1996 (C 'wth) and State
industrial relations legislation. An illustration is the revocation in July 2001 of the Federal perm it
held by Mr Joseph McDonald, the Branch Assistant Secretary of the CFMEU, Construction and
General Division, Western Australian Divisional Branch. 145 After the revocation of his Federal
permit, McDonald continued to hold an entry permit under the Industrial Relations Act 1979
(WA). The evidence was that the revocation of his Federal permit had little, if any, practical
impact on McDonald's ability to enter sites.
1 72 These problems could be ameliorated by including provisions in Commonwealth legislation for
the building and construction industry to the effect that:
⢠where a permit to enter premises or inspect documents issued to a person under a State
law has been suspended or revoked, a Registrar must, on application , similarly suspend
or revoke the person's Federal permit; and
⢠a person is prevented from applying for a Federal permit while any permit held by that person
under Commonwealth or State industrial relations legislation is suspended or revoked.
Issue
Despite evidence that entry and inspection provisions are routinely abused, it appears
that, with notable exceptions, permits are rarely revoked.
Under the Workplace Relations Act 199q (C'wth), there is currently no power to suspend
a permit. This is undesirable. If abuses of entry and inspection privileges are to be
adequately addressed in the building and construction industry, real, substantial and
certain penalties must apply. Permit holders should know that if they abuse the rights
and privileges attaching to a permit, their permit will be suspended for a minimum known
period or revoked entirely.
An appropriate authority needs to be empowered to investigate complaints and enforce
the law in relation to entry and inspection by permit holders.
Effective remedies need to be available to prevent and deter permit holders from
exceeding their powers.
Recommendation 70
The Australian Building and Construction Commission be given the power to receive and
investigate complaints concerning abuses of privileges by permit holders, and to make
application to a Registrar to suspend or revoke a permit, or to have conditions attached to a permit.
Recommendation 71
Registrars be required to suspend or revoke a permit if satisfied that the person to whom
it was issued has, in exercising a Federal power of entry or inspection:
222 Final Report of the Royal Commission into the Building and Construction Industry
(a) intentionally hindered or obstructed any person;
(b) failed to provide the necessary Federal notice in the prescribed form;
(c) provided a Federal notice, or repeatedly provided Federal notices, for vexatious or
frivolous reasons or in vexatious or frivolous circumstances;
(d) failed to comply with a condition attaching to a Federal permit;
(e) other than in cases involving an inadvertent or minor breach, failed to comply with
any of the statutory obligations of a Federal permit holder; or
otherwise acted in an improper manner.
Recommendation 72
The expression 'otherwise acted in an improper manner' referred to in Recommendation 71 be taken to include:
(a) exercising a right of entry or inspection in a vexatious, unreasonable or
inappropriate manner;
(b) making unreasonable, vexatious or inappropriate use of information obtained from
an inspection of a record; and
(c) unreasonably failing to comply with a request by a. relevant occupier or employer
that discussions or interviews with employees take place in a particular room or area of the premises.
Recommendation 73
Where a ground for suspension or revocation of a Federal permit is made out, the
following mandatory minimum penalties apply:
(a) for a first contravention: minimum suspension of three months;
(b) for a second contravention: minimum suspension of 12 months; and
(c) for a third or further contravention: minimum suspension of five years .
Recommendation 74
A right of appeal from a mandatory suspension period referred to in Recommendation
73 be preserved, with the Australian Industrial Relations Commission having the power
to shorten or lengthen a suspension period, or overturn a suspension period entirely, if
satisfied in all the circumstances that the mandatory period of suspension is manifestly
unreasonable having regard to the nature of the contravention in question and any other
circumstances the Australian Industrial Relations Commission considers relevant.
Reform- National issues Part 1 223
Recommendation 75
(a) Where a permit to enter premises or inspect documents issued to a person under
a State law has been suspended or revoked, a Registrar be required, on
application, similarly to suspend or revoke the person's Federal permit.
(b) A person be prevented from applying for a Federal permit while any permit held by
that person under Commonwealth or State industrial relations legislation is
suspended or revoked.
Civil penalty provisions
173 In light of the recommendations made above, there should be an expansion of the categories
of conduct attracting a civil penalty as follows:
⢠permit holder failing or refusing to return an expired, suspended or revoked permit to the
Registrar within 14 days;
⢠permit holder intentionally hindering or obstructing any person while exercising a right of entry
or inspection;
⢠person impersonating a permit holder, or falsely representing that he or she is a permit holder;
⢠organisation falsely certifying that it has provided an officer or employee with training as to the
rights and obligations of permit holders;
⢠occupier of premises refusing or unduly delaying entry to premises by a permit holder who has
complied with all relevant statutory obligations, including the obligation to give a Federal notice
in the prescribed form at least 24 hours before seeking to enter the premises;
⢠employer who, having been given a Federal notice setting out a suspected breach, destroys or
conceals any documents relevant to the suspected breach; and
⢠employer refusing or failing to make relevant employment records available for inspection and
copy1ng, or failing to produce documents properly requested by a permit holder.
22 4 Final Report of the Royal Commission into the Building and Construction Industry
Issue
Civil penalties should be available to deter participants in the industry from fa iling to
observe obligations concerning entry to premises and inspection of records .
Recommendation 76
In light of the other recommendations made in the Chapter on Entry to premises and
inspection of records contained in Volume 7, Reform - National Issues of this report, the
categories of conduct attracting a civi l penalty in the bui lding and construction industry be expanded as follows:
(a) permit holder fail ing or refusing to return an expired, suspended or revoked permit
to the Registrar within 14 days;
(b) permit holder intentionally hindering or obstructing any person while exercising a
right of entry or inspection;
(c) person impersonating a permit holder, or falsely representing that he or she is a
permit holder;
(d) union falsely certifying that it has provided an officer or employee with training as to
the rights and obligations of permit holders;
(e) occupier of premises refusing or unduly delaying· entry to premises by a permit
holder who has complied with all relevant statutory obligations, including the
obligation to give a Federal notice in the prescribed form at least 24 hours before seeking to enter the premises;
(D employer who, having been given a Federal notice setting out a suspected breach,
destroys or conceals any documents relevant to the suspected breach; and
(g) employer refusing or failing to make relevant employment records available for
inspection and copying, or failing to produce documents properly requested by a permit holder.
Other remedies
17 4 In view of my findings that entry and inspection requirements are widely disregarded in the
building and construction industry despite the provisions of Division 11 A of Part IX of the Workplace Relations Act 1996 (C'wth), I am satisfied that the maximum civil penalty for
contravening that Part; namely $10 000 for a body corporate and $2000 in other cases, is
inadequate.146
175 In line with recommendations I have made elsewhere in relation to civil penalties, the maximum
civil penalty for contravening an entry or inspection provision in the building and construction
industry should be $100 000 for a body corporate and $20 000 in other cases.
Reform- National issues Part 1 225
176 I have already made a recommendation in relation to the circumstances in which perm its
should be suspended and revoked.
177 I have also recommended elsewhere expanding the remedies available in cases involving
contraventions of the law, includi ng compensation for loss and damage by reason of the
contravention, and suspension and disqualification of a person from holding office or a paid
position in a registered organisation. Those remedies should be available in proceedings for
contraventions of entry and inspection provisions.
178 Finall y, I have made recommendations elsewhere in relation to the circumstances in which
unions should be held accountable for the conduct of their officers and employees. The
principles formulated should apply in cases involving contraventions by officers and employees
of un ions of right of entry and inspection oblig ations. The case for hold ing unions accountable
for contraventions by their officers and employees is strengthened by the recommendation
already made that unions be required to provide training to officers and employees, and certify
that they have done so, as a condition of a permit being granted .
Issue
The maximum· civil penalty for contravening the provisions of Division 11 A of Part IX of
the Workplace Relations Act 1996 (C'wth) is currently $10 000 for a body corporate and
$2000 in other cases.
The widespread abuse of entry and inspection requirements in the building and
construction industry suggests that those penalties are inadequate.
Recommendation 77
In the Building and Construction Industry Improvement Act:
(a) the maximum penalty for contravening an entry or inspection provision attracting a
civ il penalty be $1 00 000 for a body corporate and $20 000 in other cases;
(b) there be a mandatory period of suspension of at least 3 months for permit holders
who fail to comply with their statutory obligations (see Recommendation 73);
(c) other remedies, including compensation for loss and damage, and suspension or
disqualification from holding an office or paid position in a registered organisation, be available where contravention of a right of entry and inspection provision is proved; and
(d) unions be accountable for contraventions of entry and inspection provisions by
their officers and employees.
226 Final Report of the Royal Commission into the Building and Construction Industry
Notes to Entry to premises and inspection of records
Murray Statement, exhibit 708, paragraphs 35-37, document 032.014 7.0569.0001.
See CCH 2003, Australian Labour Law Reporter, Volume 2, Australia Limited , paragraph 3-021.
Senate Economics References Committee 1996, Consideration of the Workplace Relations and Other Legislation Amendment Bill 1996, paragraphs 4.366-4.372.
See for example, Jumbunna Coal Mine NL v Victorian Coal Miners' Association (1908) 6 CLR 309; R v
Bowen; ex parte Amalgamated Metal Workers and Shipwrights Union (1980) 144 CLR 462.
(2000) 103 IR 267 at 273. See also Ford, W.J . 2000, 'Being There: Changing Union Rights of Entry Under Federal Industrial Law', Australian Journal of Labour Law, vol. 13, p. 1.
Workplace Relations Act 1996 (C'wth) s285A(1) .
Workplace Relations Act 1996 (C'wth) s285A(2)(a) .
Workplace Relations Act 1996 (C'wth) s285A(2)(b).
Workplace Relations Act 1996 (C'wth) ss285B(2), 285C(2) . 10 Australasian Meat Industry Employees' Union v Australian Food Corporation Ply Ltd (2001) 111 IR 425 at 438 (Hill J) . In the same case, Wilcox J said that Parliament intended by the expression 'during working
hours' to take into account the occupier's interests: ibid at 436. 11 Workplace Relations Act 1996 (C'wth) s285B(1 ). 12
Workplace Relations Act 1996 (C'wth) s285B(2). 13 (2001) 24 WAR 562. 14 (2001) 24 WAR 562 at paragraph 57 (McKechnie J, with whom Malcolm CJ and Templeman J agreed) . See
aiso Australasian Meat Industry Employees' Union v Australian Foo_d Corporation Ply Ltd (2001) 111 IR 425 at 432-3, 440. 15 (2001) 24 WAR 562 at paragraph 57 (McKechnie J, with whom Malcolm CJ and Templeman J agreed) . 16
(2001) 24 WAR 562 at paragraph 10. 17 Workplace Relations Act 1996 (C'wth) s285C(1). 18
Workplace Relations Act 1996 (C'wth) s285C(2). 19 Workplace Relations Act 1996 (C'wth) s2850(1). 20
Workplace Relations Act 1996 (C'wth) s2850(2). 21 (2001) 111 IR 425. 22
(2001) 111 IR 425 at 435. 23 Workplace Relations Act 1996 (C'wth) s2850(3). 24
Workplace Relations Act 1996 (C'wth) s285E(1 ). 25 (1991) 36 IR 194. 26
(1991) 361R 194 at 199-200. 27 Australasian Meat Industry Employees Union v Thomas Borthwick & Sons (Pacific) Ltd (1991) 32 FCR 28. See also Australasian Meat Industry Employees Union v Meat and Allied Trades Federation (1992) 41 IR 13. 28
Workplace Relations Act 1996 (C 'wth) s285E(2) . 29 Workplace Relations Act 1996 (C'wth) s285E(4). 30
Workplace Relations Act 1996 (C'wth) s285E(4). 31 Ansell Transport Industries (Operations) Pty Ltd v Australian Federation of Air Pilots (1991) 38 IR 282 at 288-9. 32
Ford, W.J . 2000, 'Being There: Changing Union Rights of Entry Under Federal Industrial Law', Australian Journal of Labour Law, vol. 13, p . 1 at footnote 49. 33 Workplace Relations Act 1996 (C'wth) s285A(3).
Reform - National issues Part 1 2 2 7
34 Workplace Relations Act 1996 (C'wth) s285A(5). 35 Workplace Relations Act 1996 (C'wth) s285A(6) . 36 Workplace Relations Act 1996 (C'wth} s285F(2). 37
Workplace Relations Act 1996 (C'wth) s285F(3).
38 Workplace Relations Act 1996 (C'wth} s285F(4). 39 Workplace Relations Act 1996 (C'wth) s285F(1). 40 Workplace Relations Act 1996 (C'wth} s285F(5); Community and Public Sector Union v Pacific Access Pty Ltd (1998) 89 FCR 106. 41
(1998) 861R 308 at 316-7.
42 (1998) 86 IR 308 at 317.
43 (1998) 86 IR 308 at 317.
44 Australian Industrial Relations Commission (AIRC) (2001) PR906747 . 45 Addison v Public Transport Corporation of Victona (1993) 86 IR 308. See also Australian Industrial Relations Commission (AIRC) (2001) PR906747 [Employment Advocate v McDonald].
46 Australian Industrial Relations Commission (AIRC) (2001) PR906747 [Employment Advocate v McDonald]. 47 Australian Industrial Relations Commission (AI RC) (2001) PR906747 [Employment Advocate v McDonald]. 48 See for example, Australian Industrial Relations Commission (AIRC) (2001) PR905041 [BHP Iron Ore Pty Ltd
v Tr"acey]. 49 Workplace Relations Act 1996 (C'wth) s285G(1) 50 Workplace Relations Act 1996 (C'wth) s285G(2) 51 Industrial Relations Act 1996 (NSW) s299(1). 52 Industrial Relations Act 1996 (NSW) s299(2).
53 Industrial Relations Act 1996 (NSW) s299(3)(a) .
54 Industrial Relations Act 1996 (NSW) s299(3)(b).
55 Industrial Relations Act 1996 (NSW) s299(4) . 56 Industrial Relations Act 1996 (NSW) ss297, 298(1 ). 57 Industrial Relations Act 1996 (NSW) ss297, 298(1 ), 296.
58 Industrial Relations Act 1996 (NSW) s300.
59 lndustnal Relations Act 1996 (NSW) s298(2).
5o Industrial Relations Act 1996 (NSW) s298(3)(a)
6 1 Industrial Relations Act 1996 (NSW) s298(3)(b).
62 Industrial Relations Act 1996 (NSW) s298(4).
63 Industrial Relations Act 1996 (NSW) s301 (1 ). 64 Industrial Relations Act 1996 (NSW) s301 (2).
65 Industrial Relations Act 1996 (NSW) s301 (3).
66 Industrial Relations Act 1996 (NSW) s301 (4).
67 Crimes (Sentencing Procedure) Act 1999 (NSW) s17. 68 Industrial Relations Act 1996 (NSW) s299(6) .
69 Occupational Health and Safety Act 2000 (NSW) s78(1 ).
70 Occupational Health and Safety Act 2000 (NSW) s 77.
71 Occupational Health and Safety Act 2000 (NSW) s78(2).
72 Occupational Health and Safety Act 2000 (NSW) s81 .
73 Occupational Health and Safety Act 2000 (NSW) s79(1 ).
2 2 8 Final Rep ort of the Royal Commission in to the Building and Construction Industry
74
Occupational Health and Safety Act 2000 (NSW) s79(2). 75 Occupational Health and Safety Act 2000 (NSW) s80. 76
Occupational Health and Safety Act 2000 (NSW) s82. 77 Occupational Health and Safety Act 2000 (NSW) s84. 78
Occupational Health and Safety Act 2000 (NSW) s85 . 79 Australian Industrial Relat1ons Commission (AIRC) (2001) PR904 755 [CSR Limited trading as CSR Humes v Andrew Ferguson, Phil Davey and Martin French].
80
See Australian Industrial Relations Commission (AIR C) (2001) PR91 0502 [Andrew Ferguson and Martin French v CSR Limited trading as CSR Humes] at paragraph 20. 81 Australian Industry Group (AIG) 2002, Submission to the Royal Commission into the Building and
Construction Industry, 28 March, exhibit 441, document 016.0672.0673.0001 at 0024-0025. 82 Australian Industrial Relations Commission (AIRC) (2001) PR91 0502 [Andrew Ferguson and Martin French v
CSR Limited trading as CSR Humes].
83 Australian Industrial Relations Commission (AI RC) (2001) PR91 0502 [Andrew Ferguson and Martin French v CSR Limited trading as CSR Humes]. 84 Ferguson Statement, exhibit 573, par&graph 24, document 082 .0010.0549.0001.
85
Ferguson Statement, exhibit 573, paragraph 101, document 082. 0010 .0549.0001 . 86 Occupational Health and Safety Act 1985 (Vic) s29. 87
Occupational Health and Safety Act 1985 (Vic) ss30, 31 . 88 Occupational Health and Safety Act 1985 (Vic) s32(1).
89 Occupational Health and Safety Act 1985 (Vic) s32(2). 90 Industrial Relations Act 1999 (Old) ss372(1), 373(2). 91 Industrial Relations Act 1999 (Old) s373(6).
92 Industrial Relations Act 1999 (Old) s373(7). 93 Industrial Relations Act 1999 (Old} s372(2) . 94 Appeal by JV O'Rourke from decision at Industrial Commission re right of entry (1987) AILR paragraph 189,
cited in CCH 2000, Australian Labour Law Reporter, Vo lu me 1, Australia Limited, paragraph 14-915.
95 Industrial Relations Act 1999 (Old) s365. 96 Industrial and Employee Relations Act 1994 (SA) s140(2). 97 Industrial and Employee Relations Act 1994 (SA) s140(3). 98 Industrial and Employee Relations Act 1994 (SA) s140(4). 99 Industrial Relations Act 1979 (WA) s49E(1).
100 Industrial Relations Act 1979 (WA) s49J(1), (3). 101 Industrial Relations Act 1979 (WA) s49J(5) .
102 Industrial Relations Act 1979 (WA) s49J(6) . 103 Industrial Relations Act 1979 (WA) s49J(9). 104
Industrial Relations Act 1979 (WA) s49H(1 ). 105 Industrial Relations Act 1979 (WA) s49H(2), (3). 106
Industrial Relations Act 1979 (WA) s491(1 ). 107 Industrial Relations Act 1979 (WA) s491(2), (3). 108
Industrial Relations Act 1979 (WA) s491(2).
109 Industrial Relations Act 1979 (WA) s491(6). 110 Industrial Relations Act 1979 (WA) s491(7), (8).
Re form - National Issues Part 1 229
111
Industrial Relations Act 1979 (WA) s49K.
11 2 Industrial Relations Act 1979 (WA) s49L.
11 3 Industrial Relations Act 1979 (WA) s49M(1).
114 Industrial Relations Act 1979 (WA) s49M(2). 115 Industrial Relations Act 1979 (WA) s49M(3) . 116 Industrial Relations Act 1979 (WA) s49N(1), (2). 117
Industrial Relations Act 1984 (Tas) s77(2).
11 8 Industrial Relations Act 1984 (Tas) s77(2A).
119 Industrial Relations Act 1984 (Tas) s77(3). 120 Penalty Units and Other Penalties Act 198 7 (Tas) s4. 121 Industrial Relations Act 1984 (Tas) s77(4).
122 Industrial Relations Regulations 1993 (Tas), reg. 27(1 ), Form 16. 123 Industrial Relations Act 1984 (Tas) s77(5), (6). 124 Industrial Relations Regulations 1993 (Tas), reg. 26. 125 Senate Employment, Workplace Relations, Small Business and Education Legislation Committee 1999,
Consideration of the Provisions of the Workplace Relations Legislation Amendment (More Jobs, Better Pay)
Bi/11999, Labor Senators' Report, paragraph 6.189.
126 Senate Employment, Workplace Relations, Small Business and Education Legislation Committee 1999, Consideration of the Provisions of the Workplace Relations Legislation Amendment (More Jobs, Better Pay)
Bi/11999, Labor Senators' Report, paragraphs 6.147- 6.148.
12 7 Senate Employment, Workplace Relations, Small Business and Education Legislation Committee 1999, Consideration of the Provisions of the Workplace Relations Legislation Amendment (More Jobs, Better Pay)
Bi/11999 , Democrat Senator's Report, paragraph 16.
128 Australian Industry Group (AIG) 2001, Submission to the Royal Commission into the Building and Construction Industry, 12 November, exhibit 17, document 016.0672.0673.0001 at 0042-0043.
129 Australian Industry Group (AIG) 2002, Submission to the Royal Commission into the Building and Construction Industry, 28 March, exhibit 441, document 016.0672.0673.0001 at 0024.
130 Commonwealth Government 2002, Submission to the Royal Commission into the Building and Construction Industry: Phase Three, 6 August, exh ibit 494, document 100.0721.0253.0002 at 0101.
131 Housing Industry Association Limited (HI A) 2002, Submission to the Royal Commission into the Building and
Construction Industry, 25 March, exhibit 521, document 007.0670.0881.0001 at 0005-0006.
132 Housing Industry Association Li mited (H IA) 2002, Submission to the Royal Commission into the Building and Construction Industry, 25 March, exhibit 521, document 007.0670.0881.0001 at 0005-6, 0024-0025.
133 Master Builders Australia Incorporated (MBA Inc) 2001, Opening Submission to the Royal Commission into the Building and Construction Industry, 11 December, exhibit 6, document 064.0681 .0226.0003 at 0042.
134 Master Builders Austral ia Incorporated (MBA Inc) 2001 , Opening Submission to the Royal Commission into the Building and Construction Industry, 11 December, exhibit 6, document 064.0681.0226.0003 at 0042-0043.
135 Austra lian Industrial Relations Commission (AIRC) (2001) PR91 0502 [Andrew Ferguson and Martin French v CSR Limited trading as CSR Humes].
136 Ford, W.J. 2000, 'Being There: Changing Union Rights of Entry Under Federal Industrial Law', Australian Journal of Labour Law, vol. 13, p. 1 at footnote 49.
137 Victoria- Overview Bundle Volume 3, exhibit 2C, document 006.0455.0478.0137 at 0154- Anderson Construction Group Pty Ltd and MBAV/CFMEU Building and Construction Industry Collective Bargaining
Agreement 1999- 2002, clause 30.
230 Final Report of the Royal Commission into the Building and Construction Industry
138 Victoria- Overview Bundle Volume 1, exhibit 2A, document 007.0137.0535.0004 at 0027- Victorian Building Industry Agreement 2000-2005, clause 22 .1 . 3.
139 (2000) 103 IR 267 at 273.
140 Workplace Relations Act 1996 (C'wth), s2858(2). 141 Workplace Relations Act 1996 (C'wth), s285B(3)(c). 14
2 Workplace Relations Act 1996 (C'wth), s285B(3)(a).
14 3 Workplace Relations Act 1996 (C'wth), s285C(1), (2) .
144 Workplace Relations Act 1996 (C'wth), s285C(2). 145 Australian Industrial Relations Commission (AI RC) (2001) PR906747 [Employment Advocate v McDonald]. 14
6 Workplace Relations Act 1996 (C'wth), s285F(3).
Reform- National Issues Part 1 23 i
232 Final Report of the Royal Commission into the Building and Construction Industry
6
Freedom of association
Reform- National issues Part 1 233
234 Final Report of the Royal Commission into the Building and Construction Industry
In troduction
Centra! to the objects of the Workplace Relations Act 1996 (C'wth) is 'ensuring freedom of
association, including the rights of employees and employers to join an organisation or
association of their choice, or not to join an organisation or association' .1 Part XA of the Act,
which has been reproduced in Appendix A of this section, contains provisions which are
intended to implement that objective. In addition to the objective already identified, Part XA has
the objects of ensuring 'that employers, employees and independent contractors are free to
join industrial associations of their choice or not to join industrial associations' and ensuring
'that employers, employees and independent contractors are not discriminated against or
victimised because they are, or are not, members or officers of industrial associations'. 2
2 Provisions aimed at guaranteeing freedom of association are also enshrined in the industrial
relations legislation of most States.
3 In its public hearings, the Commission heard a great deal of evidence of conduct which had as
its object undermining freedom of association in the building and construction industry. For the
most part, the conduct was directed to ensuring that the workforce on building and
construction sites , particularly on large sites and sites in the central business districts of the
major State capitals, was as highly unionised as possible. The broad objective of maintaining or
establishing a highly unionised workforce was shared, in many instances, by the major unions
with coverage in the industry and head contractors. The individual rights of workers to freedom
of association were subordinated to the interest of unions in obtaining new members and the
interest of head contractors in ensuring that their projects proceeded on time, on budget and
without industrial disruption.
4 Some of the conduct identified in the public hearings pointed to contraventions of existing Commonwealth or State freedom of association legislation. In most cases, alleged
contraventions had not been reported to relevant authorities and had not been the subject of
civil penalty proceedings. In some cases, where contraventions of freedom of association
legis lation had been the subject of proceedings, only small civil penalties were imposed with
limited or no deterrent effect.
5 Other conduct identified in the public hearings of the Commission offended the spirit of
Commonwealth or State freedom of association legislation, and had the effect of forcing
workers to join a union against their wishes, but for a range of reasons did not fit within the
currently prescribed prohibitions.
Reform - National issues Part 1 235
6 In this section, I will make recommendations as to how freedom of association should be
protected in legislation of specific application to the bui lding and construction industry. By way
of overview, this section sets out:
⢠the nature of the problem concerning freedom of association in the building and
construction industry, based on the evidence presented to the Commission;
⢠the exist in g provisions relating to freedom of association in the Workplace Relations Act
1996 (C'wth), and the authorities applying those provisions;
⢠the way in which freedom of association is protected in State industrial relations
legislation;
⢠the extent to which freedom of association is the subject of international treaties and
conventions rat ified by Australia;
⢠the way in which freedom of association is dealt with in Codes of Practice for
government-funded building and construction projects;
⢠the role of the Office of the Employment Advocate in investigating contraventions of and
enforci ng Part XA of the Workplace Relations Act 1996 (C'wth);
⢠details of the attempt to reform Part XA of the Workplace Relations Act 1996 (C 'wth) in
the Workplace Relations Legislation Amendment (More Jobs, Better Pay) Bill 1999
(C'wth);
⢠some key submissions to this Commission in relation to freedom of association made by
a range of industry participants;
⢠an analysis of the major options for reform of freedom of association provisions; and
⢠reco mmendations as to the form wh ich freedom of association provisions should take in
Federal legislation of specific application to the building and construction industry.
7 I emphasise at the ou tset that it is of fundamen tal importance that all workers are free to join a
union having coverage over the industry in which they work of their own free will. In the reforms
I propose in this section , I do not intend to undermine that right in any way. Indeed, many of the
reforms I propose are intended to and will , if adopted, have the effect of strength'3ning that
right. For example, among other reforms, I recommend substantial increases in the penalties which should apply where employers dismiss an employee, injure an employee in his or her
employment, or alter the position of an employee to his or her prejudice, because of the
employee being a un ion member, delegate or official.
8 The evidence presented to, and the submissions received by, the Commission, however, leave
me in no doubt that the central problem facing the building and construction industry in this area is how to ensure that workers are free, if they so choose, not to join a union. Together with
recommendations I have made in other sections of my repo rt deal ing with the establishment of
employment conditions, ensuring freedom of bargaining, and changing the culture of the building and construction industry, adoption of the reforms in this section will , I believe,
contribute greatly to the establishment of an environment in which freedom of association can
develop and flourish in this industry.
236 Final Report of the Royal Commission into the Building and Construction Industry
Nature of the problem
Overview
9 On the basis of the evidence presented during the public hearings and submissions from
indu stry participants from across the spectrum, I am satisfied that a culture exists within the
building and construction industry nationally, particularly on major sites and sites in the central
business districts of the major capital cities, which has the following characteristics :
⢠there is a widespread belief among head contractors, particularly major national head
contractors, that having a highly unionised workforce minimises the risk of industrial disruption;
⢠that belief is informed in part by the historical of building sites being 'closed
shops', in part by actual experience of industrial disruption on sites where the workforce
is not highly unionised, and in part by a fear of in dustrial disruption engendered or
encouraged by union officials, organisers and site delegates;
⢠head contractors and subcontractors fear industrial disruption because it has immediate
commercial ramifications in the form of delays, extra costs and potential liability for liquidated damages; and
⢠participants in the industry tend not to report conduct which undermines freedom of
association to the relevan t authorities, and civil penalty proceedings are rarely pursued to verdict.
1 0 The culture I have identified leads to freedom of associati on, and more particularly the righ t of
workers not to join a union if they so choose, being undermined in a range of overt and covert ways .
11 For example, among many other matters, the Commission heard of:
⢠sites where 'no ticket no start ' practices were enforced to the maximum extent possible
by union officials , organisers and site del egates or head contractors;
⢠union officials, organisers and site delegates threatening to shut down work, or shutting
down work, on sites because not al l workers on the site were members of the union;
⢠union officials , organisers and site delegates pres su ring head contractors not to eng age
subcontractors unless all of the subcontractors ' employees were union members;
Reform- Nationaflssues Part 1 237
⢠head contractors only engaging subcontractors where all of the subcontractors'
employees were union members, or declining to engage subcontractors where not all of
the subcontractors' employees were union members;
⢠head contractors requiring the employees of subcontractors to be union members, or
engaging in conduct which had the effect of coercing the employees of subcontractors
into becoming union members;
⢠union officials, organisers and site delegates threatening to have subcontractors
removed from sites unless all of their employees joined the union, or hav1ng
subcontractors removed from sites because not all of their employees were members of the un ion;
⢠union officials and organisers requiring all employees, or a substantial proportion of
employees, of a contractor to JOin the union as a condition of the union entering into an
enterprise bargaining agreement (EBA) under s170LJ of the Workplace Relations Act
1996 (C'wth);
⢠head contractors requiring subcontractors to be members of employer organisations as
a condition of obtaining work on their sites;
⢠employers requiring their employees to become union members for a variety of reasons,
including to avoid industrial disruption, to win or retain work, or to keep peace with head
contractors or unions; and
⢠union officials and organisers demanding that a contractor purchase 'casual tickets' for
some or all of the workers on a site: that is, a payment which is actually or notionally for
the purposes of union membership fees for workers on a site, in circumstances where
the workers concerned have not voluntarily decided to join the union.
12 The evidence of conduct undermining freedom of association came from across the country,
with the notable exception of the Northern Territory. Disregard and abuse of the law was
particularly evident in New South Wales, Victoria, Queensland and Western Australia.
13 I do not propose in this section to rehearse all of the relevant findings I have made of such
conduct. It will suffice for present purposes to summarise a small number of findings from the
various jurisdictions which illustrate the nature and extent of the problem.
New South Wales
14 Freedom of association principles are disregarded in New South Wales. The absence of
freedom of association is a consequence of union pressure, particularly pressure from the Construction , Forestry, Mining and Energy Union (CFMEU), head contractors bowing to that
pressure, and subcontractors bowing to the pressure applied by head contractors and the CFMEU.
15 I hemd evidence of widespread attempts to enforce 'no ticket no start' practices in New South
Wales on various building and construction sites in and around the Sydney central business
district and elsewhere. Participants in the industry understand that ful l union membership is a requirement on major sites in Sydney.
238 Final Report of the Royal Commission into the Building and Construction Industry
16 In the New South Wales hearings, I heard of many instances where CFMEU organisers or site
delegates demanded that workers join unions as a condition of being allowed to work or to
continue to work on sites, and that employers pay union fees on behalf of their workers 3
17 There was also evidence of union membership requirements being imposed by CFMEU officials
or organisers as a condition of obtaining a CFMEU-endorsed EBA, or of companies becoming
fully unionised shortly before or after CFMEU -endorsed EBAs were signed 4
18 The evidence was that CFM EU organisers and site delegates in New South Wales used a
variety of means to achieve increased union membership, including:
⢠contriving or exaggerating occupational health and safety issues; 5
⢠organising or threatening to organise secondary boycotts;6
⢠organising or threatening to organise other industrial action or interfering with contractual
relations; 7
⢠carrying out or threatening to carry out time and wage book inspections;8
⢠demanding or requesting details of all subcontractors and workers on a site and their
union membership status, including via contractor information sheets and during
inductions conducted by union site delegates; 9 and
⢠lodging or threatening to lodge complaints with government bodies when demands were
not met, or insinuating that such complaints would r:ot be lodged if demands were met. 10
19 There was a substantial body of evidence in New South Wales of head contractors acquiescing
in , or actively supporting, these sorts of practices.
20 The production supervisor of one contractor operating in New South Wales, Blue Circle
Southern Cement Limited (Blue Circle), candidly admitted to operating a closed shop in
disregard of freedom of association laws. Blue Circle is a supplier of cement for the civil and
domestic markets with a market share of about 55 per cent in New South Wales. In a statutory
declaration tendered before the Commission, Blue Circle's Production Supervisor,
Mr Dirk Van Vuuren said:
22. Blue Circle Southern at Berrima is one hundred percent unionized.
23. Non site union membership would cause problems for Blue Circle. A person would
be approached by a union representative and asked to join the union. If they
declined they would be asked to leave the site by the union. All the persons
approached by the union have agreed to be union members. It is presented as a
fait accompli. The unions have never to my knowledge gone on strike over this
issue because all persons on site (contractor or employee) approached have joined
the union.
24. Blue Circle wants to avoid the above problem at all costs. The non-membership of
a union would definitely see industrial action on site. Blue Circle views these
problems through the prism of commercial reality. If all the unions on site went on
strike then construction would cease. This would have a 'roll on effect' across
NSW Construction in this State would be badly hit and held up. Blue Circle is
Reform - National issues Part 1 239
Victoria
normally running on the edge of capacity and it is very hard for Blue Circle's
competitors to make up the short fall. So our clients' construction would probably
cease to a large degree. This causes another problem, if the union causes
industrial disruption, then we may lose market share. The customer may move their
business to one of our competitors. Blue Circle adheres to union demands
because it's a commercial decision of whether we can afford industrial disruption.
We cannot afford industrial disruption.
25. Blue Circle requires that forms be completed before an independent contractor
starts work. The first form is the Contractor Induction form which is completed prior
to tender On this form there is a section that requires the contractor to advise Blue
Circle what union their employees belong to on site. It has been my experience that
all contractors complete this section and nominate a union. It is apparent to all
concerned that without membership of the union a contractor will not in all
likelihood get work on site. Blue Circle 'recommends' union membership on site
and unions demand it. Contractors know that without membership of a union they
probably would not get the tender .. .
26. The second form is to be completed by the Blue Circle person in charge of the
Independent contractor This form is to be completed a few days before start of
work. This form is called the Contract Notification sheet. On this form, there is a
section to be filled out that specifies what type of work the contractor Will perform
and which union covers that work. For example, if the contractor is an electrician,
then the ETU would be the union that covers that work. This form is then sent to
administration, the shift supe, intendent, union delegates concerned, and the union
area. In the past if there had been problems with the sheet not being completed
then the unions would cause industrial disruptions. If contractors came on site and
did not supply employees of [sic] union membership, there would be industrial
disruption on site. If such industrial disruption did occur then any contractors on
site would stop work obeying the union's directive .. 11
21 The evidence in Victoria was replete with instances of unions demanding, successfully, that
workers must become union members. Despite repeated requests, no union official who gave
evidence to the Commission during its Melbourne sittings was able to identify a single site in or
near the central business district of Melbourne on which there could be found a worker who
was not a member of the union.
22 The evidence in relation to the National Gallery of Victoria (NGV) redevelopment project
illustrated a range of unlawful and inappropriate conduct, including restrictions on freedom of
association. The State, correctly as it turned out, anticipated industrial trouble if it awarded the
demolition contract for the project to Able Demolitions and Excavations Pty Ltd, because that
company's workers were not members of the CFMEU. The State understood that in the
Melbourne central business district, only workers who belonged to the CFMEU were permitted by the union to perform building demolition works. Physical damage of some $1 00 000 to
$150 000 was caused by an invasion of and rampage through the NGV site on 1 0 August 2000
2 40 Final Report of the Royal Commission into the Building and Construction Industry
by the CFMEU. At the same time, the CFMEU orchestrated a stoppage of other government
projects, causing losses to the government, contractors and workers.
23 Mr Gary Carter, was employed as a site labourer and shop steward, Construction, Forestry,
Mining and Energy Union, Construction and General Division, Victorian Building Unions
Divisional Branch on various sites in Geelong, Lorne and Apollo Bay, gave evidence during the
Melbourne sittings of the Commission. I was told that Carter was instructed in his duties by Mr
Brendan Murphy, organiser for the Construction, Forestry, Mining and Energy Uni on,
Construction and General Division, Victorian Building Unions Divisional Branch. He was
instructed to ensure that every person who wanted to work on a site for which Carter had been
allocated responsibility was a union member with a current union ticket. Carter prided himself
on his ability to secure I 00 per cent union membership within a week of his first attendance at
a building site. He threatened industrial action and employed a range of other strategies in
order to ensure his demands were met.
24 Similar evidence was adduced from Mr Shaun Hughes, a shop steward and Occupational
Health and Safety Representative for the Construction, Forestry Mining and Energy Union,
Construction and General Division, Victorian Building Unions Divisional Branch. Hughes told
me that when conducting inductions, he expected subcontractors to produce relevant tickets,
including union membership tickets, and that he had never encountered a situation where a
subcontractor failed to produce union tickets for employees.
25 I heard evidence of a third site union representative, Mr Alan Dawson, of the Construction,
Forestry, Mining and Energy Union, engaging in a range of disgraceful conduct, which included
telling a director of a commercial interiors contractor:
If you want to work in the city, it's our playground and if you want to play in our playground then you have to join the union. 12
26 The same contractor was later told by Mr John Setka, an organiser for the Construction,
Forestry, Mining and Energy Union, Construction and General Division , Victorian Building
Unions Divisional Branch , that if his employees wanted to work in the city they had to join the
union, and that it did not matter how small the job was. 13
27 The purchase of 'casual tickets' as a means of avoiding industrial disruption is a pmblem in
Victoria. I heard evidence, for example, of head contractors making payments to the CFMEU
for agreed numbers of union tickets for the purpose of avoiding demarcation and other
disputes on various sites. The evidence in relation to Westfield Design and Construction Pty Ltd
(Westfield) in Victoria is a good illustration . Th e evidence was that, as a rule of thumb, Westfield
purchases two CFMEU tickets per shop in its shopping centre developments to minimise the
risk of the CFMEU causing industrial unrest during the fit-out stage, when any disruption will be
likely to delay completion and the opening of the shopping centre. In November 1998, for
example, Westfield paid $18 500 to the CFM EU for I 00 union tickets, notional ly for workers on
the Airport West project. No individuals became members as a consequence of the payment.
Similar payments were made on other Westfield redevelopment projects.
28 The evidence in relation to the construction of the Saizeriya Australia Pty Ltd food processing
plant at Melton also had a freedom of association dimension. A CFMEU representative claimed
that all employees of an asphalting contractor should hold dual Australian Workers' Union
Reform - National Issues Part 1 2 4 1
(AWU) and CFMEU tickets. The relevant employees were all AWU members, but not CFMEU
mer:nbers. After negotiations, the contractor agreed with the CFMEU that the workers affected
by the dispute would be dual ticketed .
29 Abuses of the right to freedom of association in Victoria were not confined to the CFMEU. The
evidence presented in relation to the Age Pri nt Centre project in Tullamarine was that the
Automotive, Food, Metals, Engineering, Prin ting and Kindred Industries Union (referred to as
the Australian Manufacturing Workers Union) (A MWU) required the metalworking contractor on
that project to have an AMWU pattern certified agreement, and requ ired full union membership
as a condition of signing the pattern certified agreement. Only one of the contractor's
employees was not already an AMWU member, and the contractor paid that employee's union membership fees for three months.
30 Evidence in relation to the Woolworths OP2 project in Broadmeadows was to the effect that the
unions involved, including the AMWU, consistently enforced a 'no ticket no start' policy on the
site. Among other matters, employees of one subcontractor were forced to join the AMWU to
enable the project to progress, wh ile another subcontractor, when forced by the AMWU to
have a union-endorsed EBA, also had to ensure that all its workshop employees were union
members.
31 I also heard evidence in Victoria concerning what is known as the Geelong Code of Practice,
which had been adopted by the Council of the City of Greater Geelong. Attached to the Code
were a subcontractor compliance statement and various enclosures which subcontractors were supposed to complete before starting work. One of the enclosures required each
employee of a subcontractor to be identified, together with the employee's union and union
card number.
Queensland
32 I heard evidence in Queen sland of building sector unions pursuing, and often achieving, full
union membership, particularly on sites to which the Statement of Intent applies. The means by
which ful l union membership is achieved incl ude coercion and intimidation of head contractors,
employers and employees. The evidence disclosed instances in which some head contractors
imposed a full union membership requirement on subcontractors.
33 The case studies from Townsville provided good examples of a range of behaviour which had a
tendency to undermine freedom of association. Among other matters, the case studies involved:
⢠contentions by two unions that particular sites in Queensland were 'union sites' where
membership was required;
⢠unions interpreting the Queensland Statement of Intent as requiring employers to ensure
that subcontractors' employees were union members;
⢠threats by a union organiser of industrial trouble on other sites of a head contractor
unless the head contractor required a subcontractor to accede to union membership requirements for the subcontractor's employees;
242 Final Report of the Royal Commission into the Building and Construction Industry
pressure by a head contractor placed upon a subcontractor to have its employees join a union to avert the risk of industrial action;
⢠a head contractor paying for union membership for a subcontractor's employees to avert the risk of industrial action;
⢠a threat by a union organiser of industrial action if a subcontractor did not ensure its
employees joined a union, even though all employees had decided, unanimously, that they did not wish to join, as the organiser well knew;
⢠employees joining a union against their wishes;
⢠a union enrolling as a member a person who had not signed an application form, nor paid any fees;
⢠a union organiser requiring a subcontractor to pay for the enrolment of a number of
employees in order to continue work on a site;
⢠threats by a union organiser to employees that if they did not join the union, he would run them off the site; and
⢠the actual and threatened harassment of subcontractors by a union organiser, which
harassment was to cease if the subcontractor's employees joined the union.
34 The Homezone Home and Garden Centre, MarGra Pty Ltd and Peri Australia Pty Ltd case
studies are further useful illustrations of compulsory uni.onism requirements being imposed in Queensland.
35 In one case study, I heard of an organiser for the Australian Building Construction Employees
and Builders' Labourers' Federation (Queensland Branch) Union of Empl oyees (BLF 0), Mr
Jamie McHugh, telling a contractor, in relation to a single employee who was not a union
member, 'If you don't have him in the union you'll be off this job ' .14 When later challenged about
the worker's right to freedom of associatio n, McHugh said:
Well, I'm going to speak to [the head contractor] so you won't have any work of theirs on
the Gold Coast;
and
I'm going to get the taxation department to go through [the contractor's] books. That 'll fix you. 15
36 In another case study, there was evidence of work stopping on the Roma Street Parkland
project in Bri sbane in September 2000 because the contractor on the Albert Street Bridge
section of the project had workers who were not union members. The dispute was resolved
with a number of the contractor's workers leaving the site because they did not want to join the
union. 16
37 There was also evidence in Queensland of the use which unions make of clauses in awards
and agreements which encourage union membership. Such clauses are expressly permitted by s11 0 of the Industrial Relations Act 1999 (Old) . A model union encouragement clause has
been approved by a Full Bench of the Queensland Industrial Relations Commission. Far from
Reform- National issues Part 1 2 43
merely encouraging union membership, the evidence was that such clauses are used as a
means of coercing reluctant workers into joining unions against their wishes , or as a means of
ensuring that only union members are permitted to work on particular sites.
38 A related problem was illustrated by evidence concerning the operation of the Queensland
Construction Training Fund. A resolution was carried by the Board of the Fund on
24 October 2000 that until further notice, as a condition of receiving a 'worker grant' from the
fund, and having regard to the limited funds available, 'both financial membership of BERT and either or the CFMEU, BLF or CEPU be demonstrated ' .17 I have found that, for the most part,
that resolution has not in fact been implemented by the Fund in its consideration of worker grant applications.
39 Finally, the evidence presented in relation to the Nambour Hospital Dispute case study
illustrated, among other matters, unions and their organisers threatening persons with action that would disadvantage them in their employment, prospective employment, contracts for
services or prospective contracts for services because they had not joined , or did not propose to join, in industrial action.
South Australia
40 There was evidence of conduct undermining the right to freedom of association on the
Adelaide Convention project. A CFMEU project delegate employed by the head contractor told
the Construction Manager of a subcontractor that he would prefer that interstate workers
coming to South Australia to work on the project join the South Australian Branch of the
CFMEU. A CFMEU shop steward employed by the subcontractor subsequently demanded
that a number of workers join the union in order to work at the site. The workers joined the
union, and had their membership fees reimbursed by the subcontractor. The conduct had the effect of denying the workers thei r right not to join a union. 18
Western Australia
41 Western Australia is another State in which abuses of the right to freedom of association are
endemic. 'No ticket no start ' is enforced by the CFMEU wherever possible, particularly on sites
in the Perth central business district. 'No ticket no start ' signs and like banners adorn sites
throughout Perth, as a silent statement of the reality.
42 In Western Australia, the policy of the CFMEU is that all persons working in the bui lding industry
in the central business district of Perth have to be financial members of the union.
Mr Joseph McDonald, the Assistant Secretary of the CFMEU, Construction and General Division, Western Austral ian Divisional Branch, gave evidence which showed beyond doubt his
views in relation to freedom of association. When asked by Counsel Assisting whether he
recognised the right of people to work in paid employment but not to be a member of a union,
he said:
I think that if I say that I believe that every man and woman should belong to a union, then
obviously there is no room for any belief that people shouldn 't. Doesn 't one follow th e
other?19
2 44 Final Report of the Royal Commission into the Building and Construction Industry
43 The view of McDonald and the CFMEU in Western Australia, which he represents, was that
employees have no right not to be a member of a union, and compelling an employee to join
the CFMEU, despite its illegality, is justifiable, because 'you can't make an omelette without breaking eggs' .20
44 Head contractors are complicit in the curtailment of freedom of association principles in
Western Australia. They acquiesce in or support the CFM EU 's conduct in a variety of ways,
including by directly employing CFMEU nominated representatives as site delegates, and
devolving to them the power and responsibi lity to conduct inductions which afford them the opportunity to enrol members voluntarily or compulsorily.
45 It is common in Western Australia for contractors to send only unionised workers to sites in the
Perth central business district, and to maintain a separate, non -unionised workforce for deployment on sites outside the central business district. 21
46 The evidence presented in relation to the demolition and refurbishment of the Western
Australian Cricket Association Inc. (WACA) ground affords an illustration of these attitudes and
practices. In that instance, McDonald considered it appropriate to try to achieve 1 00 per cent
union membership on the site, and to try to close the site down if everyone was not a member
of the union . He threatened a contractor that no wo rk would be undertaken on the site unless
his employees joined the union . The contractor's employees joined the union to keep the job
going, because that was the easiest available option. McDonald was found guilty of a
contravention of s96E(1)(b) of the Industrial Relations Act 1979 (WA), which prohibits
threatening to interfere with the free and lawful exercise of a person's trade, profession or
occupation by reason of the circumstance that that person or another person is not a member
of an organisation of employees. A penalty of $1 000 was imposed on McDonald by the court
less than the value of the union fees received from the contractor by reason of McDonald's
threat. McDonald was quoted in The West Australian on 1 0 October 2002 as having said
'That's alright', and of telling Raymond Antitich, who appeared for the complainant, 'I cou ld
have just given you $1000 and not worried about this' 22
47 Among other matters, that case study illustrated wholesale disregard for the principle of
freedom of association by McDonald and the CFMEU , and the inadequacy of the penalties for conduct undermining freedom of association.
48 Demands for the purchase of 'casual tickets' is an acute problem in Western Australia. In that
State, a casual ticket is a euphemism for an arrangement between the CFMEU and builders
whereby the builder pays a sum of money on account of the presence on a site of workers who
may not be members of the CFMEU . The evidence was that payments of approximately $1 .5
million had been made by a large number of builders in Western Australia on account of casual
tickets or payments for specialised training or the like, which were in reality nothing more than
payments made in the hope of securing industrial peace or building a relationship with the
union. Mr Kevin Reynolds, the Branch Secretary of the Construction, Forestry, Mining and
Energy Union, Construction a;ld General Division, Western Australian Divisional Branch, and
Secretary of the Construction, Forestry, Mining and Energy Union of Workers, conceded that
such payments did not necessarily secure industrial peace. He said:
Reform- National issues Part 1 2 45
Certainly they are hoping that we'll go away and won't bother them on their sites, there's
no question about that. /like to think we take the money and continue to bother them. 23
49 Th e evidence was that no union memberships were issued when money was paid on account
of casual tickets and very often the workers in respect of whom the payments were made were
not approached by the union . In Western Australi a, matters have developed to the stage where
payments fo r casual tickets have become a practice in the industry without any explicit threat
being necessary from the CFMEU.
50 Another practice wh ich emerged from the evidence presented at the Perth sittings of the
Commission was of CFMEU site delegates requiring contractors to engage union-nominated
labourers in the capacity of safety represen tatives for the duration of works at the site . The
evidence in relation to the Floreat Forum project is an illustration. That site was also a site on
which the CFMEU sought to enforce a 'no ticket no start' policy with support from the head
contractor, and on which the head contractor agreed to pay some $30 000, plus goods and
services tax , to the CFMEU for casual tickets in an attempt to maintain industrial peace.
Tasmania
51 The evidence in Tasman ia was that since about early 2000, freedom of association has been
under attack in Tasmania as a result of the adoption of pattern EBAs across substantial sectors
of the building and construction industry.
52 The Woolstore project in Hobart was a striking illustration of two unions, the CFMEU and the
Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Alli ed
Services Union of Australia (CEPU ), and a head contractor, Vos Construction and Joinery Pty
Ltd, acting in unison to enforce a policy of compulsory unionism, to the maximum extent
possibl e, on a high profile site. Subcontractors and employees had no practical alternative but
to bend to the wi ll of the unions and the head contractor; employees were coerced into joining
unions agai nst their will in order to work on the site, and subcontractors were forced to enter
into union -endorsed EBAs agai nst their will and the wi ll of their employees. A CFMEU site
delegate employed by the head contractor laid bare his method of operation when he said to
one subcontractor, 'stop arguing ... either join the union or get off site. You know the rules' 24
53 Other case studies from Tasmania which exposed the extent to which freedom of association is undermined in that State include the Royal Hobart Hospital Stage 2 Redevelopment case
study, the Hobart Private Hospital Project case study and the Norske Skog Boyer Paper Mills case st udy.
The Territories
54 Closed shop sites exist in the building and construction industry in the ACT. I heard evidence of
CFMEU organisers th reatening to shut sites down unless all workers joined the union, and of head contractors pressuring subcontractors to succumb to union demands.
55 Unlike the position in every other State and Territory, it appears that the right to freedom of
association is generally respected in the Northern Territory. The evidence was that union
interest in the Northern Territory was limited, and that the industry there was notable for an
2 46 Final Report of the Royal Commission into the Building and Construction Industry
absence of many of the unlawful and inappropriate practices observed on large building sites in
the rest of Australia. Generally speaking, I am satisfied that contractors in the Northern Territory
are free to work on building sites without having fully unionised workforces.
Summary
56 I have not rehearsed above all of the findings I have made of conduct exposed by the public
hearings of the Commission which has a tendency to undermine freedom of association . The
conduct identified above, however, leaves no room for doubt that the objects of the Workplace
Relations Act 1996 (C'wth) concerning freedom of association are not being achieved in the
building and construction industry. Substantial reform of the law is therefore required .
57 Before examining the various options for reform , it is convenient to set out the key provisions of
current Federal and State freedom of association laws, and to highlight problems in the
operation of those laws as they arise .
Reform - National issues Part 1 2 4 7
248 Final Report of the Royal Commission into the Building and Construction Industry
Current law
Historical context
58 Unions have always had a special role in Australian industrial relations law. They were accorded
corporate status upon registration, and various other rights, by the Conciliation and Arbitration
Act 7904 (C'wth). Unions generally flourished under the mandatory conciliation and arbitration
system which characterised the Australian industrial relations framework until the passage of
the Workplace Relations and Other Legislation Amendment Act 7996 (C'wth), although trade
union membership steadily declined during the years of the Hawke and Keating governments. 25 Under the conciliation and arbitration system, unions were subject to higher
degrees of regulation than unions in many other countries. 26 In return , they acquired an
extensive range of powers, including the power to for.ce employers into the negotiation or making of an award in settlement of a log of claims, rights of exclusive representation within
their areas of coverage, and rights of entry and inspection. 27
59 In R v Wallis 28 and R v Findlay; ex parte Victorian Chamber of Manufactures, 29 the High Court
held that awards could not give a monopoly of employment to un ion members, and that no
valid award could prescribe compulsory unionism . Nonetheless, under the conciliation and
arbitration model of industrial relations, compulsory unionism was 'a practical reality for large
segments of the Australian workforce'. 30 Many awards contained 'preference clauses' which,
while not prescribing compulsory unionism, gave a clear preference in employment to
unionists, thereby encouraging high levels of union membership. 31
60 Australian law has always recognised a right to freedom of association. The Conciliation and
Arbitration Act 1904 (C'wth) and the Industrial Relations Act 7988 (C'wth) each contained
freedom of association provisions directed to ensuring that employees could join unions
without fear of discrimination or victim isation . The provisions did not, however, prohibit
employers from discriminating against persons on the ground that they were not, or proposed
not to become, members of unions.
61 Section 334 of the Industrial Relations Act 7988 (C'wth), for example, made it an offence for an
employer, among other things, to:
⢠dismiss or threaten to dismiss an employee;
⢠injure an employee or threaten to injure an employee in his or her employment;
⢠alter or threaten to alter the position of an employee to his or her prejudice; or
Reform- National issues Part 1 2 49
⢠refuse to employ a person or discriminate against a person in the terms or conditions on
. which the employer offers to employ a person,
on various grounds, including that the person was or had been, or proposed, or had at any
time proposed, to become an officer, delegate or member of a union. It was not an offence for
an employer to do any of those things on the ground that the employee was not, or proposed
not to become, a member of a union.
62 Section 5 of the Conciliation and Arbitration Act 1904 (C'wth) contained less detailed, but
si milar protections for union ists and proposed unionists.
63 Other provisions in the Industrial Relations Act 1988 (C 'wth) protected employees from being
prejudiced in their employment for engaging in lawful industrial action, 32 and prohibited a range
of conduct by uni ons against employers. 33 Section 335 of the Industrial Relations Act 1988
(C 'wth) was broadly similar in its purpose and effect to ss298P, 2980 and 298R of the
Workplace Relations Act 1996 (C 'wth). Section 336 of the Industrial Relations Act 1988 (C 'wth)
was broadly similar in its purpose and effect to s298S of the Workplace Relations Act 1996
(C'wth).
64 The Workplace Relations Act 1996 (C'wth) fu ndamentally changed the role of unions in the
Australian industrial relations system .34 Rather than surviving by dint of statutory protection and
practical compulsion, the Federal Government 's policy is that unions 'are ultimately a
component of the service industry' which 'must be subject to market disciplines' .35
Strengthened protection for freedom of association, and in particular the freedom to choose
not to belong to a union , is central to the current legislative regime.
Workplace Relations Act 1996 (C'wth)
Definitions and limitations on the operation of Part XA
65 Part XA of the Workplace Relations Act 1996 (C'wth) establishes a detailed and complicated
regime for the protection of freedom of association. As Gray J observed in Employment
Advocate v Wi!liamson, 36 the provisions of Part XA 'are not necessarily easy to construe' . His
Honour said:
It seems from the terms of s3m and s298A that the provisions have been drafted on the
assumption that the freedom not to join an association and the freedom to join an
association are counterpart freedoms. In metaphorical terms, it is assumed that freedom
to join and freedom not to join are two sides of the one coin. Th e attempt to carry this
notion into specific provisions, however, has created some difficulty. .. 37
66 The text of Part XA has been reproduced in Appendix A of this section.
67 For constitutional reasons, there are lim its to th e application of Part XA. 38 Part XA relies on a
number of heads of power, most notably the corporations power (s5 1 (xx)) and the conciliation
and arbitration power for the prevention and settlement of industrial disputes extending beyond
the limits of any one State (s51 (xxxv)). Reliance has also been placed on the power to make
laws in relation to the Territories (s 122) , and in the case of the application of Part XA to conduct
in Victoria, on the power to make laws in relation to matters referred to the Commonwealth by
2 50 Final Report of the Royal Commission into the Building and Construction Industry
a State (s51 (xxxvii)). Principally through its heavy reliance on the corporations power, Part XA
applies well beyond the usual sphere of Commonwealth legislative coverage for industrial
relations issues, and to a great deal of conduct involving State unions, State awards and State agreements.
68 By way of overview, the Part applies to, and on ly to: 39
⢠conduct by an organisation registered under the Workplace Relations Act 1996 (C'wth)
or a branch of such an organisation, 40 an officer of such an organisation acting in that
capacity or conduct carried out with a purpose or intent relating to a person 's
membership or non-membership of an organisation; 41
⢠conduct by a constitutional corporation or conduct that adversely affects a constitutional corporation; 42
⢠conduct in Victoria; 43
⢠conduct in a Territory; 44
⢠conduct carried out with a purpose or intent relating to a person's participation or non
participation in industrial action within the meaning of subsection 4(1 ); 45
⢠conduct carried out with a purpose or intent relating to a person 's participation or non participation (in any capacity) in any proceedings under the Act or any other activity for
which the Act provides; 46 and
v conduct carried out with a purpose or intent relating to the fact that a Federal award,
certified agreement or Australian Workplace Agreement (AWA) applies to a person's
employment, or that the person is bound by a Federal award, a certified agreement or
AWA 47
69 In broad terms, there is a statutory presumption for the purposes of Part XA that industrial
associations are responsible for the actions of their representatives. Action is taken to have
been done by an industrial association48 if it was done by:
⢠the committee of management of the association;
⢠an officer or agent of the association acting in that capacity;
⢠a member or group of members of the association acting under the rules of the
association; or
⢠a member of the association who performs the function of dealing with an employer on
behalf of the member and other members of the association , acting in that capacity4 9
70 The association will not be responsible for action by a member or group of members of the
association acting under the rules of the association, or by a member of the association who
performs the function of dealing with an employer on behalf of the member and other members
of the association, if the committee of management, a person authorised by the committee of
management, or an officer of the association took reasonable steps to prevent the action 50
The relationship between this statutory presumption of liabil ity on the part of an industrial
association for acts done by its representatives with common law principles of vicarious and
Reform - Nationallssues Part 1 2 51
direct co rporate liability is discussed in Rowe v Transport Workers' Union of Australia 5 1 In that
case, Cooper J observed that the statutory presumption 'involves no incontestable factu al
assumption contrary to the real fact' .
71 For the purposes of Part XA, 'industrial association' is given a very broad meaning. It means an
association of employees, independent contractors or employers that is registered or
recognised as such an association under an industrial law; or an association of employees, ind ependent contractors or employers a principal purpose of which is the protection and
promotion of their interests in matters concerning employment or independent contractors 52
Th e definition encompasses State reg istered unions and unincorporated un ions, as well as
federally registered un ions, and any branch of such a union.
72 Although the terms 'industrial actior' and 'industrial dispute' are defined in s4(1) of the Act, the
terms have separate and expanded meanings for the purposes of Part XA. Essen tially, the
definition of 'industrial action' in Part XA extends beyond the situations contemplated by the
s4(1) definition to situations where industrial action is taken where the terms and conditions of
employment of the relevant persons are regulated by awards, agreements or orders made by
State or Territory tribunals 53 The definition of 'industrial dispute' in Part XA is broader than the
definition in s4(1 ), in that it is not limited to disputes extending beyond the limits of any one
State, or which are likely to extend beyond the limits of any one State. 54 The s4(1 ) definitions of
'industrial action' and 'industrial dispute' are discussed in the section of this report dealing with
industrial action.
73 Th e term 'industrial law' is defined in Part XA to include laws of the Commonwealth , States and
Territories regulating the relationships between employers and employees or providing for the
prevention or settlement of disputes between employers and employees 55 An 'industrial body' means the Australian Industrial Relations Commission (AIRC) or a court or commission
exercising powers and functions under an in dustrial law corresponding to those conferred on
the AIRC by the Workplace Relations Act 1996 (C'wth].56 An 'industrial instrument' means an
award or agreement made under or recogn ised by an industrial law and concerning the
relationship between an employer and the employer's employees, or providing for the
prevention or settlement of disputes between employers and employees 5 7 An 'officer' of an
industrial association includes a delegate or other representative of the association, and an employee of the association 5 8
7 4 Divisions 3-5 of Pa rt XA contain a series of prohibitions on conduct wh ich has a tendency to
undermine freedom of association. The prohibitions are divided into prohibitions on:
⢠conduct by employers and persons who engage independent contractors: Division 3;
⢠conduct by em ployees: Division 4; and
⢠conduct by industrial associations and their officers and members: Division 5.
75 The fo llowing is a summary of the va rious prohibitions in Part XA.
Conduct by employers and persons who engage independent contractors
76 Section 298K of the Workplace Relations Act 1996 (C'wth) is the principal provision governing
conduct by employers and persons who engage independent contractors which has a
2 52 Final Report of the Royal Commission into the Building and Construction Industry
tendency to undermine freedom of association. It prohibits certain conduct wh ich is done or
threatened for a 'prohibited reason' or for reasons that include a 'prohibited reason' .
77 The conduct prohibited by s298K is :
⢠dismissing an employee; 59
⢠terminating a contract for services with an independent contractor; 60
⢠injuring an employee in his or her employment; 61
⢠injuring an independent contractor in relation to the terms and conditions of the contract for services; 62
⢠altering the position of an employee to the employee's prejudice; 63
⢠altering the position of an independent contractor to the independent contractor's prejudice; 54
⢠refusing to employ a person; 65
⢠refusing to engage a person as an independent contractor; 66
⢠discriminating against a person in the terms or conditions on which the employer offers to
employ the person; 67 and
⢠discriminating against a person in the terms or conditions on which the person offers to
engage the person as an independent contractor68.
78 Conduct is for a 'prohibited reason' if it is carried out (or, in most circumstances, threatened69)
because the employee, independent contractor or other person concerned :
⢠is, has been, proposes to become or has at any time proposed to become an officer,
delegate or member of an industrial association/0
⢠is not, or proposes not to become, a member of an industrial association; 71
⢠has refused or failed to join in industrial action; 72
⢠has made, proposes to make or has at any time proposed to make an appli cation to an
industrial body for an order under an industrial law for the holding of a secret ballot;73
⢠has participated in, proposes to participate in or has at any time proposed to participate
in a secret ballot ordered by an industrial body under an industriallaw; 74
⢠is entitled to the benefit of an industrial instrument or an order of an industrial body; 75
⢠has made or proposes to make any inquiry or complaint to a person or body having the
capacity under an industrial law to seek compliance with the law or the observance of a
person's rights under an industrial instrument; 76
⢠has participated in, proposes to participate in or has at any time proposed to participate
in a proceeding under an industrial law; 77
⢠has given or proposes to give evidence in a proceeding under an industrial law; 78
Reform- National issues Part 1 253
⢠in the case of a refusal to engage another person as an independent contractor, has one
or more employees who are not or propose not to become members of an industrial
association; or has not paid or proposes not to pay a fee (however described) to an
industrial association;l9
⢠in the case of an employee, has refused or failed to agree or consent to, or vote in favour
of, the making of an agreement to which an industrial association of which the employee
is a member would be a party; 80
⢠in the case of an employee or an independent contractor who is a member of an
industrial association that is seeking better industrial conditions, is dissatisfied with his or
her conditions; 81
⢠in the case of an employee or independent contractor, has absented himself or herself from work without leave if the absence was for the purpose of carrying out duties or
exercising rights as an officer of an industri al association and the employee or independent contractor applied for leave before absenting himself or herself and leave
was unreasonably refused or withheld; 82 or
⢠as an officer or member of an industrial association, has done or proposes to do an act
or thing for the purpose of furthering or protecting the industrial interests of the industri al
association, being an act or thing which is lawful and within the limits of an authority expressly conferred on the person by the industrial association under its rules 8 3
79 Conduct will be for 'reasons that include a prohibited reason' if the prohibited reason was one
of the operative reasons for the acti on of the employer. It is not necessary to find that the
prohibited reason was a substantial reason for the employer's action 84
80 The authorities accord a wide meaning to what constitutes 'injury' or 'prejudice' for the
purposes of s298K. In Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia, 85 Brennan CJ, McHugh, Gummow, Kirby and Hayne JJ said of s298K(1): 86
Paragraph (a) [dismiss an employee] covers termination of employment; par (b) [injure an employee in his or her employment] covers injury of any compensable kind; par (c) [alter
the position of an employee to the employee's prejudice] is a broad additional category
which covers not only legal injury but any adverse affection of, or deterioration in, the
advantages enjoyed by the employee before the conduct in question.
81 In Davids Distribution Pty Ltd v National Union of Workers, 87 Wilcox and Cooper JJ said that
the objective of s298K 'is to ensure the threat of dismissal or discriminatory treatment cannot
be used by an employer to destroy or frustrate an employee's right to join an industrial
association and to take an active role in that association to promote the industrial interests of both the employee and association'.
82 Section 298K(1) will apply only where it can be said of an employee 'that he or she is,
individually speaking, in a worse situation after the employer's acts than before them; that the deterioration has been caused by those acts; and that the acts were intentional in the sense
that the employer intended the deterioration to occur' 88 Th e provision is aimed at the 'active,
intentional conduct' of an employer89 The requisite deterioration in an employee 's empl oyment will not be established where, for example, some employees accept, and others reject, an offer
254 Final Report of the Royal Commission into the Building and Construction Industry
made indiscrimrnately by an employer to all employees 90 The position will be different where an
employer acts in a way which directly and necessarily threatens the employment of each and
every one of its employees, considered as individuals, as where an employer participates in a
scheme leading to the appointment of administrators 91
83 In Squires v Flight Stewards Association of Australia, 92 it was held that an employee had been
injured in his employment when he was stood down at the request of a union on full pay for a
month. That action had the effect of 'singling out' the employee and treating him differently
from other employees for reasons not associated with the manner in which he performed his
work 93
84 In Construction, Forestry, Mining and Energy Union v Coal and Allied Operations Pty Ltd, 94 Branson J held that the effect of a written warning to employees issued as part of disciplinary
proceedings was to make the employees' continuing employment less secure, and constituted
an alteration of their employment to their prejudice95 By contrast, in Finance Sector Union of
Australia v Australia and New Zealand Banking Group Ltd, 96 Wilcox J held that an employer
who informally counselled an employee after she had given an interview to the media
concerning her union activities, in contravention of the employer's pol icy, did not injure the
employee in her employment or alter her position to her prejudice. His Honour concluded,
however, that a formal warning issued to the same employee in respect of later conduct did
constitute a contravention of s298K97
85 It has been held that an employee's employment will be altered to his or her preju dice where he
or she is excluded by the employer from regular daily employment in circumstances where he
or she has an expectation of continuing to be so employed 98 A diminution in the opportunity to
obtain work compared to other employees will generally amount to a prejudicial alteration of
employment. 99
86 In Employment Advocate v Williamson, 100 Gray J pointed out that for a contravention of s298K
to occur, there must be a person or persons who fall within the description in one or more of
the prohibited reasons set out in s298L. His Honour pointed out that a threat to engage in
conduct of one or more of the kinds referred to in s298K(1) for what appears to be a prohibited
reason wil l not be a contravention if there turns out to be no basis for the prohibited reason. 101
For example, if an employer believes he or she is dismissing an employee because the
employee is a member of an industrial association, there will be no contravention of s298K(1)(a)
if it turns out that the employee is not, in fact, a member of the industrial association. 102
87 I agree , with respect, with Gray J's analysis as to the correct interpretation of s298K. That
analysis leads, however, to an outcome which is undesirable. An employer who engages in
conduct of the kind identified in s298K, and intends to engage in that conduct for a prohibited
reason, ought to be taken to have engaged in the conduct for a prohibited reason.
88 Section 298M contains a further prohibition applying to employers and persons who engage
independent contractors. It provides that employers or persons who have engaged
independent contractors must not induce their employees or independent contractors to stop
being officers or members of industrial associations, whether by threats or promises or
otherwise. 103 Section 298M does not prohibit employers or persons who have engaged
independent contractors from inducing their employees or independent contractors to become
Reform- National issues Part 1 255
or remain officers or members of industrial associations. This is a significant flaw in the current
provi.sion . The case study concerning the Lotus Glen Correctional Centre in Townsville is an
illustration of this fl aw.
89 It was held in BHP Iron-Ore Pty Ltd v Australian Workers' Union 104 that s298M will be
contravened 'by conduct that leads or moves, by persuasion or influence, an employee to stop
being a member of a union'. 105 The words 'or otherwise' in s298M are intended to forbid an
employer 'from inducing an employee to the forbidden end by any means', including by
conduct which is not in the nature of a threat or promise.106 The prohibited inducement
extends beyond ostensible words and acts by the employer or person who engaged an
independent contractor.107 The better view appears to be that 'i ntention' is a necessary
element of inducement. 108 Indeed, in the absence of an express promise or threat, the intention
of the employer or person who engaged independent contractors will be critical to connect that
person's words or deeds with the outcome prohibited by s298M . It has been held that s298M
prohibits attempts and threats to induce an employee or independent contractor to stop being
an officer or member of an industrial association. 109
Conduct by employees and independent contractors
90 Division 4 of Part XA prohibits certain conduct by employees and independent contractors
which undermines the freedom of association objectives of the Workplace Relations Act 1996
(C'wth). Specifically, by s298N of the Act, employees and independent contractors must not
cease work because their employer or the person who engaged them:
⢠is an officer or member of an industri al association;
⢠is entitled to the benefit of an industrial instrument or an order of an industrial body;
⢠has made or proposes to make any inqu iry or complaint to a person or body having the
capacity under an industrial law to seek compliance with that law or the observance of a
person's righ ts under an industrial instrument;
⢠has participated in, proposes to participate in or at any time proposed to participate in
any proceedings under an industrial law; or
⢠has given evidence in a proceeding under an industrial law.
Conduct by industrial associations and their officers and members
91 Division 5 of Part XA prohibits a range of conduct by industrial associations and their officers
and members wh ich has a tendency to un dermine freedom of association .
92 By ss298P-298R of the Act, industrial associations and their officers and members must not:
⢠organise or take, or threaten to organise or take, industrial action against an employer
because the employer is an officer or member of an industrial association: s298P(1 );
⢠organise or take, or threaten to organise or take, industrial action against an employer
with intent to coerce the employer or person to become a member of an industrial
association of employers; to cease to be an officer or member of such an association; or not to become an officer or member of such an association: s298P(2);
256 Final Report of the Royal Commission into the Building and Construction Industry
⢠advise , encourage or incite an employer to take action in relation to a person that wou ld,
if taken, contravene s298K: s298P(3)(a);
⢠organise or take, or threaten to organise or take, industrial action against an employer
with intent to coerce the employer to take action in relation to a person that wou ld, if taken, contravene s298K: s298P(3)(b);
⢠advise, encourage or incite an employer, or organise or take, or threaten to organ ise or
take, industrial action against an employer, with intent to coerce the employer to
prejudice a member of the association in his or her employment or possible employment
because he or she has refused or failed to comply with a direction given by the
association (or the committee of management of the association; an officer or agent of
the association acting in that capacity; or a member or group of members of the
association authorised to give the direction by the rules of the associatio n, the committee
of management or an officer or agent of the association acting in that capacity: s298P(5)):
s298P(4);
⢠take or threaten to take action having the effect , directly or indirectly, of prejudicing a
person in his or her employment or possible employment with intent to coerce the person
to join in industrial action; or to dissuade or prevent the person from making an
application to an industrial body for an order under an industrial law for the holding of a
secret ballot: s2980; or
⢠impose or threaten to impose a penalty, forfeiture or disabi lity of any kind on a member of
the association: with intent to coerce the member to join in industrial action; because the
member has refused or failed to join in industrial action; because the member has made
or proposes to make or has at any time proposed to make an application to an industrial
body for an order under an industrial law for the holding of a secret ballot; or has
participated in, proposes to participate in or has at any time proposed to parti cipate in a
secret ballot ordered by an industrial body under an industrial law: s298R.
93 Section 298P(3) is a provision which is potentially capable of be ing applied in many cases
involving conduct in the building and construction industry which undermines freedom of
association . I heard of many occasions on which union organisers advised, encouraged or
incited employers to take action which would, if taken, contravene s298 K. There were also
many occasions on which union organisers organised or took, or threatened to organise or
take, industrial action against an employer unless the employer took action which would, if
taken, contravene s298K.
94 There is no need for the employer to act upon the advice, encouragement or incitement in
order for s298P(3)(a) to have been contravened , as the provision prohibits action which wou ld,
if taken, contravene s298K. Any action 'actually contemplated or taken by the employer is
irrelevant for the purposes of section 298P(3) and unnecessary for a breach of the section' .110
95 Einfeld J referred to the breadth of s298P(3)(a) in Employment Advocate v National Union of
Workers .111 His Honour observed that by choosing the words 'advise, encourage or incite' , th e
legislature 'did not wish to lim it possible contraventions to cases where coercion was involved
but also to constitute as a breach the mere act of putting the contravening propositi on to an
employer (whether a willing recipient or a shocked rejectionist)' .112
Reform - National issues Part 1 2 57
96 In Employment Advocate v Wil!iamson, 113 Branson J considered the meaning of the words
'advise, encourage or incite' and conclu ded that 'they bear different shades of meaning but
with advice being intended to encompass conduct somewhat more lenitive than conduct
which could be characterised as encouragement or incitement ' .114 Gray J agreed, adding that
it 'may be that th e legislative intention in ad ding the words "encourage " and "incite", when all
would fall within the mean ing of the word "advise", was to provide for different levels of
seriousness as a guide to the selection of the appropriate penalty'. 115
97 In the same case, Gray J pointed out that s298P(3) derogates from the right of free speech. His
Honou r observed that merely expressing the view th at a particular workplace should be entirely
unionised, or entirely non-union ised, is not unlawfu l.116 His Honour said that for there to be a
contravention of s298P(3), it must be possible to identify some conduct by the recipient of the
communication that the recipient is being advised , encouraged , incited or coerced to take, and which , if taken , would contravene s298K. 11 7 The circumstances of the making of the
communication will be critical. Gray J said , by way of example:
A demand that an employer not employ non-union labour may be of no effect when the
employer is not contemplating engaging further additional employees, but of a very
different effect when the employer is engaged in the process of hiring additional
employees. For there to be a contravention of s298P(3), there needs to be in
contemplation a person, or perhaps a class of persons, having the characteristics
described in one of the prohibited reasons, in respect of whom the recipient of the
communication could act in a way that would cause that recipient to contravene s298K. 11 8
98 There was some evidence in Employment Advocate v Williamson that a union shop steward
had 'no ticket no start' stickers in his office and on his hat, and that he had said to a person who was supervising the operations of a contractor on the site, 'Everybody who comes here to work has to be in the union '. 119
99 Gray J held that 'no ticket no start ' stickers and the like could not, of themselves , amount to a
contravention of s298P(3) in the absence of some context suggesting that they amounted to a
messag e that some action should be taken that would amount to a contravention of s298K.120
1 00 Gray J held that the statement 'Everybody who comes here to work has to be in the uni on', did
not supply the necessary context for a contravention of s298P(3), because there was no
evidence to suggest that there was any employee or prospective employee in respect of whom
any kind of action referred to in s298K could be taken. His Honour attached significance to the fact that there was no evidence to suggest that the contractor was in the process of engaging,
or plann ing to engage, any more employees than it already had worki ng at the site, or that the
contractor had any employees who were not union members working on th e site or contemplated bringing any such employees onto the site .121
101 Branson J, wi th whom Kenny J agreed , reached the same view for a different reason , concluding that:
Plainly enough, words to the effect of those attributed to [the shop steward] could,
assuming them to be delivered in a certain manner and in a certain context, constitute
258 Final Report of the Royal Commission into the Building and Construction Industry
advice to an employer to take action. On the other hand, circumstances can be
envisaged in which the same words would constitute nothing more than an expression of
aspiration or, indeed, I suppose, of exasperation. Although those aspects of the setting in
which [the steward's] statement was made which were relied upon by the employment
advocate make this, in my view, a borderline case, I have concluded that the total
absence of evidence as to (a) the conversational context, if any, in which ·the statement
was made; (b) the manner in which the statement was made; and (c) the apparent
impact of the statement on those present when it was made, means that it would not
have been open to his Honour to conclude that the ... contravention of s298P(3) was established.
102 My task is not to, nor do I, question the correctness of any decision of a court. My function is
to explore the consequences of the interpretation given to the statute by the courts and its
practical utility in implementing the objects of the statute, against the knowledge gained from
an extensive examination of the manner, in practice, in which conduct impacts on freedom of
association.
103 I have no doubt, based on the evidence presented to the Commission, that 'no ticket no start'
signs, stickers, banners and the like, and statements such as 'Everybody who comes here to
work has to be in the union' are tools used by unions in the building and construction industry
to convey the quite false and misleading messages that unionism can lawfully be compelled on
building and construction sites and that non -union members cannot work on building and
construction sites. In reality, such signs and statements do effectively restrict freedom of
association . That is why they are deployed and communicated .
104 While it might be true in isolation that the statement 'no ticket no start', of itself, does not
amount to a message that some action should be taken that would arnount to a contravention
of s298K, the statement is contrary to and a repudiation of the objects of the Workplace
Relations Act 1996 (C 'wth).
1 05 In my view, if a culture in which principles of freedom of association are respected is to be
established in the building and construction industry:
⢠participants in the industry cannot be free to make demands which, if acceded to, would
amount to a contravention of the freedom of association provisions;
⢠participants in the industry cannot be permitted knowingly to make false and misleading
statements with the intent of encouraging, persuading or coercing a person to join or not
join a union;
⢠statements such as 'no ticket no start' and 'everybody who comes here to work has to
be in the union' cannot be tolerated if made with the intent of encouraging , persuading or
coercing a person to join or not join a union; and
⢠a prohibition of the kind imposed by s298P(3) ought to apply whether or not the recipient
of the communication has in contemplation engaging in conduct which could contravene
the freedom of association provisions.
1 06 A further problem with the operation of s298P(3) is that threats by industrial associations and
their officers and members which have as their objective causing an employer to take action
Reform- National Issues Part 1 259
that would, if taken, contravene s298K, may not amount to a contravention if they are made
wi tnout any indication that the employer should do one or more of the things prohibited by
s298K, such as dismissing an employee, injuring an employee in his or her employment, or
altering the position of an employee to his or her prejudice.
1 07 For example, suppose a union organiser threatens to take industrial action against a contractor
unless all of his or her employees join the union . Suppose, further, that the union organiser
does not expressly or impliedly suggest that the contractor should dismiss non -union member employees, injure such employees in their employment, or alter the position of such employees
to their prejudice. Suppose, finally, that the contractor responds to the threat by persuading his
or her employees to join the union, without threatening any consequences if they refuse . The
contractor might, for example, do no more than appeal to the employees to join the union for
the sake of not inviting trouble. In such a case, it may be that no contravention of s298P(3) will
have occurred, because the union organiser has not threatened the contractor with the intent
of coerci ng the employer to dismiss an employee, injure an employee in hi s or her employment,
or alter the position of an employee to his or her preju dice. Plainl y, however, in such a case, the
co nduct of the uni on org aniser has th e effect , and is calculated to have th e effect, of preventing
employees from exercising their rig ht to freedom of association.
108 In other words, the vice in such conduct is the threat itself, not the nature of the response it
provokes from the recipient of the threat.
109 Illustrations of this problem can be found in the evidence presented to the Commission in
relation to the Lotus Glen Correctional Centre project in Townsville, the Woolstore Apartments
Project in Hobart, and the involvement of Chadwick Technology Pty Ltd in the Adelaide Convention project.
11 0 In addition to these matters, s298P(3) applies only to conduct by industrial associations and
their officers and members. The evidence presented to the Commission has shown that it is
frequently head contractors or even clients who advise, encourage or incite employers to have their employees join a union. I can see no reason why an expanded prohibition derived from
s298P(3) ought not to apply to all partici pants in the building and construction industry.
111 These further deficiencies in s298P(3) which I have identified could be addressed by a prohibition on any person:
⢠organising or taking, or threatening to organise or take, any industrial action or other action; or
⢠refrainin g or threatenin g to refrain from organi sing or taking any action,
on the ground, or on grounds that include the grou nd, that another person is, has been ,
proposes to become, has at any time proposed to become, is not, or proposes not to become, an officer, delegate or mem ber of an industri al association .
112 A furth er important provision which prohibits a range of conduct by industrial associations and
their officers and members is s298S of the Workplace Relations Act 1996 (C'wth). That
provision prohibits certain conduct by industrial associations and their officers and members against independent contractors. Associations and their officers and members must not:
260 Final Report of the Royal Commission into the Building and Construction Industry
⢠advise, encourage or incite a person to take 'discriminatory action' against an 'eligible
person ' because the person is not a member of an industrial association : s298S(2)(a);
⢠take, or threaten to take, industrial action against an employer with intent to coerce the
employer to take 'discriminatory action' against an 'eligible person ' because the person
is not a member of an industrial association: s298S(2)(b); or
⢠take, or threaten to take, industrial action against an 'eligible person ' with intent to coerce
the person to join an industrial association : s298S(2)(c). 122
113 For the purposes of s298S, an 'eligible person' is a person who is not an employee, but who is
eligible to join an industrial association or would be eligible to join such an association if he or
she were an employee. 123 'Discriminatory action' means a refusal to make use of, or to agree
to make use of, services offered by an eligible person; or a refusal to supply, or to agree to
supply, goods or services to an eligible person .124
114 In Hamberger v Construction, Forestry, Mining and Energy Union, 125 Cooper J held that for the
purposes of s298S(2}(a), the person advised, encouraged or incited to take disc rim inatory
action against an elig ible person must be in a contractual relationship with that eligible
person .126 The evidence in the case was that a union organiser had urged a head contractor to
ensure that two individual independent contractors engaged by a subcontractor were union
members. His Honour concluded that the head contractor was not in a position to take
discriminatory action against the two individual independent contractors. On appeal, the Full
Court found it unnecessary to consider the correctness of Cooper J's construction of
s298S(2)(a) .127
115 Whatever the correct construction of s298S(2)(a), the conclusion reached by Cooper J seems
to me to be undesirable. Head contractors are frequently in a position to influence the choice of
independent contractors who are engaged by subcontractors. Take, for example, the situation
where a union organiser encourages a head contractor to refuse to allow independent
contractors who are not union members onto their sites, in circumstances where the
independent contractors have been engaged by a labour hire company that is in a contractual
relationship with the head contractor. In such cases, the intent and effect of the conduct is to influence the head contractor to take steps to ensure that only independent contractors who
are union members are allowed on site . Head contractors will frequently be in a position to take
such steps.128 On Cooper J's interpretation, however, it appears that such conduct would not
amount to a contravention of s298S(2)(a). because there would be no contractual relationship between the head contractor and the individual independent contractors. In my view, conduct
of this kind contravenes the objectives of freedom of association, is generally engaged in with the intent of ensu ring that on ly union mem bers are allowed on bui lding and construction sites.
and ought to be prohibited . This matter could be addressed in leg islation applying to the
building and construction industry by amending the defin ition of 'discriminatory action' to include action which involves advising, encouraging or inciting another person to engage in
discriminatory action.
116 In the appeal from Cooper J's decision, Australian Building Construction Employees and
Builders' Labourers' Federation v Employment Advocate, 129 a Full Court of the Federal Court
held that a threat to procure industrial action by a person with the capacity to take steps to
---------------- -------- - --R ::-e --:fo ,- r_ m __ Part 1 261
initiate the participation of workers in such action can constitute a threat to take that action for
the purposes of s298S. 130
117 The Court also held that no contravention of s298S(2)(b) could be said to have occurred unless
the relevant action to be taken by or against the employer was to be taken by or against it in its
capacity as an employer of labour. 13 1 The evidence was that a union officer had told three
independent contractors that if they did not join the union, the union would arrange for
industrial action to be taken against the company to whom they were contracted. As the threat
was not to take or procure the taking of industrial action by labour employed by the company
against the employer in its capacity as an employer of that labour, there was no contravention
of s298S(2)(b).
11 8 This outcome is undesirable and inconsistent with the freedom of association objectives of the
Workplace Relations Act 1996 (C'wth). In the Commission 's public hearings, I heard evidence of union officials threatening to take industrial action against head contractors and
subcontractors on building and construction sites with the intent of coercing them not to use,
or not to allow to be used, independent contractors who were not union members, or whose
employees were not union members. I can see no justification whatsoever for permitting such
conduct to occur.
II 9 The narrow focus of s298S was illustrated in the Lotus Glen Correctional Centre case study, involving the construction of an accommodation facility in Townsville. The case study
illustrated, among other matters, pressure by a union organiser and a head contractor placed
upon a subcontractor to have his employees join a union to avert the risk of industrial action.
The conduct of the union organiser would not have contravened s298S because the conduct
was taken against the subcontractor because the subcontractor's employees were not union
members. Section 298S would only have applied if the conduct had been taken against the
subcontractor because the subcontractor himself was not a member of an industrial association.
120 The deficiencies I have identified in s298S(2)(b) could be remedied by casting the prohibition more broadly, so as to prohibit an industrial association, or an officer or member of an industrial
association, from taking or threatening to take industrial action against any person, whether an
employer or not, with intent to coerce th at person to take discriminatory action against an
elig ible person because the eligible person, or any person employed or engaged by the eligible
person is, has been, proposes to become, has at any time proposed to become, is not, or
proposes not to become, an officer, delegate or member of an industrial association.
Remedies and related matters
121 Applications for relief in respect of contraventions of Part XA may be made to the Federal Court
by persons against whom prohibited conduct has been, is being or would be carried out, the Employment Advocate, or persons prescribed by the regulations. 132 In limited circumstances,
applications may also be made by reg istered organisations and industrial associations. 133
Applications may generally not be made if an application has already been made for a remedy
(other than the imposition of a criminal penalty) under a law of a State or Territory and the application has not failed for lack of jurisdiction. 134
262 Final Report of the Royal Commission into the Building and Construction Industry
122 The Federal Court may:
⢠impose a penalty not exceeding $10 000 in the case of a body corporate or $2000 in other cases;
⢠order the reinstatement of an employee or the re-engagement of an independent contractor;
⢠order the payment of compensation of such amount as the Court thinks appropriate;
⢠order a person or industrial association not to carry out a threat, or not to make any further threat;
⢠impose injunctions (including interim injunctions) and any other orders that the Court
thinks necessary to stop conduct or remedy its effects; and
⢠make other consequential orders. 135
123 By reason of s298V, a reverse onus of proof applies in Part XA in a number of important
circumstances. Where it is alleged that a person or industrial association engaged in conduct
for a particular reason or with a particular intent, and proof of that reason or intent is necessary
in order to establish a contravention of a provision in Part XA, it is presumed that the conduct
was carried out for that reason or with that intent, unless the person or industrial association
proves otherwise. 136 The reverse onus operates in relation to ss298K, 298P, 2980, 298R and
2988.137 It does not operate in relation to s298M. 138 The reverse onus applies to alleviate the
evidentiary difficulties that would otherwise be faced by ·a party seeking to prove the state of
mind or motivation of another party. 139 The reverse onus will be discharged where the
respondent proves, on the balance of probabilities, that no proscribed reason was included among the operative reasons for the conduct. 140
124 A contravention of Part XA is not an offence.141 Accordingly, the civil onus of proof applies.142
Havi ng regard to the penal nature of the provisions of Part XA, however, the principle derived
from Briginshaw v Briginshaw143 applies; that is, matters such as the seriousness of the
allegation made and the gravity of the consequences flowing from a finding that the allegation
is proved are each matters which affect whether a contravention has been proved to the
reasonable satisfaction of the court. 144
125 By s298Z, provisions of industrial instruments, agreements or arrangements are void to the
extent that they require or permit, or have the effect of requi ring or permitting, any conduct that
would contravene Part XA. 145 The AIRC must. on application by a relevant organisation, party
or employee, or the Employment Advocate, vary an award or certified agreemen t to remove
any provisions which require or permit, purport to require or permit, have the effect of requiring
or permitting, or purport to have the effect of requiring or permitting, conduct that would
contravene Part XA. 146
126 The heading for s298Z is 'Removal of Preference Clauses from Awards and Certified
Agreements'. It is clear that the intention of s298Z is to prohibit awards and certified
agreements from containing provisions which afford a preference to persons who are, or are
not, members of a union . In Communications, Electrical, Electronics, Energy, Information,
Postal, Plumbing and Allied Services Union of Australia v Woodside Heating and
Reform- National Issues Part 1 263
Airconditioning Pty Ltd, however, a Full Bench of the AIRC held that 'the fact that a [preference]
clause is, or may be void is not, in our view, a legitimate basis for refusing to certify it. .. '147 I
have made a recommendation in relation to this decision in the section of my report dealing with the establishment of employment conditions.
127 In Re Accurate Factory Maintenance Labour Hire Enterprise Agreement 2000-2003, 148 a Full
Bench of the AIRC held that a clause in a proposed agreement that 'strongly encouraged '
prospecti ve and current employees to join and maintain financial membership of a union, and
required a 'bargaining agent's fee' to be paid by new employees to the union, such fee being
generally waived in respect of persons who were or became members of the union, was not an
objecti onable provision for the pu rposes of s298Z. 149 I sha ll make a recommendation later in
this section about union encouragement and di scou ragement clauses in awards and certified
ag reements. I have addressed the question of bargaining agents' and services fees in more
detail in the section of my report dealing with the establishment of employment conditions.
1 28 In Re South Burnett Meatworks Co-operative Association - Australasian Meat Industry
Employees Union - Production and Productivity Enterprise Agreement 1998, 150 Mcintyre VP
considered an application to vary a certified agreement to delete the following clauses:
20.6.1.1
20.6.1(a)
20.6.1(b)
An employee shall forfeit seniority:
if they are not, or if they cease to be a member of the Union;
if they become an unfinancial member of the Union and fail to make themselves financial within 14 days after being called on by the Union to
do so ...
129 Mcintyre VP concluded that clause 20.6.1 (a) was an objectionable provision for the purposes
of s298Z. Mcintyre VP concluded that clause 20.6.1 (b) was not an objectionable provision
because the reason for any conduct that it requires or permits (etc) would be that the
employee is an unfinancial member of the AMIEU. This is not, in my view, a prohibited
reason. In particular, it is not within s298L(1 )(b), the provision relied on by the Co
operative.
130 Section 298W deals with the situation where a person or in dustrial association has engaged in
conduct which contravenes Part XA of the Workplace Relations Act 1996 (C'wth) and a
provision in a State or Territory industrial law which deals with discrimination or preference in
employment. 151 If an application has already been made under Part XA, an app lication (other
than a prosecution for an offence, or an application in connection with such a prosecution)
cannot be made in respect of the same conduct under the industrial law of a State or Territory
or any other law. 152 If an application has already been made under an industrial law of a State or Territory (other than an application in connection with a prosecution for an offence), an
application cannot be made in respect of the same conduct under Part XA. 153
131 In Construction, Forestry. Mimng and Energy Union v Coal and Allied Operations Pty Ltd (No
2), 154 Branson J said that in imposing a penalty for a contravention of Part XA, the court will
have regard to factors including:
264 Final Report of the Royal Commission into the Building and Construction Industry
⢠the circumstances in which the relevant conduct took place (including whether the
conduct was undertaken in deliberate defiance or disregard of the Act);
⢠whether the respondent has previously been found to have engaged in conduct in contravention of Part XA;
⢠where more than one contravention of Part XA is involved, whether the various
contraventions are properly seen as distinct or whether they arise out of the one course of conduct;
⢠the consequences of the conduct found to be in contravention of Part XA;
⢠the need, in the circumstances, for the protection of indust ri al freed om of association; and
⢠the need, in the circumstances, for deterrence.
132 In that case, the employer had engaged in three contraventions of Part XA by issuing written
notices to employees with the resu lt that they were more vu lnerable to being dismissed. Two of
the notices were issued aft er the employer had refused to approve union business leave for
employees to attend an AIRC hearing. The third notice was issued after the employer had
refused to approve leave for an employee to attend a meeting of union delegates. In each case,
the employees had failed to attend work without the employer's approval. Branson J held that
the conduct was at the lower end of the scale and imposed a total penalty on the employer of
$3500 out of a total available maximum of $30 cioo. The _ penalty was payable to the applicant
union.
133 In Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v DMG
Industries Pty Ltd, 155 Marshall J considered five separate contraventions of s298K. The most
serious contravent ion involved a sen ior manager te lling employees that they were at risk of losing their jobs should they join the union. Marshall J said that it was 'difficult to imagine a
more deliberate or serious breach' and imposed an effective penalty of $9000 for that
contravention, and lesser penalties for the remaining contraventions. 156
134 Marshall J im posed a penalty of $3000 on an employer in Australian Workers' Union v Johnson
Matthey (Aust) Ltd157 for contravening s298K of the Act, after a senior representative of the
employer told a union shop steward that if employee members of the union engaged in
protected industrial action they would not have jobs when they returned. A further penalty of
$6000 was imposed for a contravention of s170MU(1 )(a) in respect of the same conduct. Each
penalty was payable to the union .
135 In Employment Advocate v National Union of Workers, 158 a union organiser (Hearne) had had a
conversation with a labour hire company's area manager (Routledge) to the following effect, in
relation to an employee who was not a union member:
Hearne: Pull your casual out of there. He won't become a member of the union. I am not tolerating one person disrupting the whole thing.
Routledge: I have an obligation to my casual. If I pull him out I can be had up for wrongful
dismissal.
Reform- National Issues Part 1 265
Hearne: You have no obligation to him. Pull him out and stick him somewhere else. If
you don 't do this I'll spread the word for no-one to use [your company}. I'll tell
them to use [another company} because they are more co-operative. I'll tell
[the client} that they must use [the other company} as well. I am going to
organise and harass [the client} daily and disrupt their whole organisation,
until you get that man off site.
Routledge: Whatever happened to freedom of choice, Peter?
Hearne: There is a democracy out there. All those people don't want him. I have
called a stop work meeting at 10.00 am this morning. 159
136 Hearn e said he had had the conve rsation 'in the context of tryi ng to prevent an in dustrial
dispute erupting with the local members and the solution of [the employee] working
somewhere else meant that he would remain in employment and be paid while the potential for
an industrial dispute would be avoided' .160 Einfeld J imposed a penalty of $400 on Hearne
(from the maximum avai lable penalty of $2000). Hi s Honour took into account a number of
matters, including the fact that Part XA had come into effe ct only three weeks before the
contravention, that there was no evidence of any earlier or subsequent similar conduct by
Hearne or the union, that the contravening conduct was not accompanied by any direct
intimidation of the employee concerned, and that Hearne apparently believed he was entitled
to maintain the closed shop that had existed at the workplace for some time. Although his Honour fou nd the union was liabl e for Hearne 's conduct, 161 he imposed no penalty on it, as it
did not 'have knowledge of or give any specific authorisation for ' the organ iser's conduct. 162
Th e penalty was payable by Hearne into the Consolidated Reven ue Fund.
137 Cooper J imposed a penalty of $5000 on a union , and $750 on an organiser, in Hamberger v
Construction, Forestry, Mining and Energy Union.163 The organi ser had told a contractor that if he and his workers did not joi n th e un ion , he wou ld call a meeting on site to close down th e site
and stop the contractor and others from working. Cooper J em phasised that the union had done nothing in the course of the proceeding to suggest that it regarded the conduct of its
organiser as being wrong and unacceptable. His Honour found that the organiser's conduct
had been confrontational and intended to intimidate and coerce, an d was not in any sense an
attempt to enrol new mem bers by reason and persuas ion . The penalties were payabl e into the Consolidated Revenu e Fund .
138 Cooper J imposed penalties of $7500 on each of two unions, and penalties of $1500 and $750
respectively on two union organisers, in a separate case also called Hamberger v Construction,
Forestry, Mining and Energy Union. 164 The respondents in that case had coerced an unfinancial
member of the union into becoming finan cial by engaging in a campaign invo lving th reats to have him removed from the site, threats of secondary boycotts and general abuse, in
circumstances where the em ployee had expressed a conscientious objection to ioining the
union. Again, the unions gave no evidence as to their attitude towards the conduct of their
organisers. Cooper J ordered that the penalties be paid into the Consolidated Revenue Fund.
266 Final Report of the Royal Commission into the Building and Construction Industry
Other relevant provisions
139 There are a number of other provisions in the Workplace Relations Act 1996 (C'wth}
concerning freedom of association .
140 Under s170LU (2A) of the Act, the AIRC must refu se to certify an agreement under Part VIB if it
is satisfied that it contains provisions that require or permit, purport to require or permit, have
the effect of requiring or permitting, or purport to have the effect of requiri ng or permitting, any
conduct that would contravene Part XA or would, but for s298C, contravene Part XA. Section
298C provides that Part XA applies only to the extent provided in Division 2 of Part XA. The
limitations prescribed in Division 2 of Part XA have been summarised earlier in this section. In a
decision handed down on 9 February 2001, Mcintyre VP of the AIRC found that a clause in 236
certified agreements which required employees to pay a 'bargaining agent's fee ' to a union did
not contravene Part XA. 165 The Workplace Relations Amendment (Prohibition of Compulsory
Union Fees) Bill 2002 (C 'wth) would, if passed, reverse the effect of that decision. I have made
recommendations in relation to fees to bargaining agents in the section of my report dealing
with the establishment of employment conditions.
141 Section 94 of the Act provides that the AI RC does not have the power to include terms in an
award that require or permit, or have the effect of requiring or permitting, any conduct that would contravene Part XA.
142 Natural persons may apply under s267 of . the Act to a Reg istrar for a certificate of
conscientious objection to membership of industrial associations of employers or employees.
This provision is anomalous and would not appear to serve any useful purpose having regard
to the protection afforded by Part XA of the Act.
State industrial relations legislation
143 Freedom of association is also protected by industrial relations legislation in most States. A
variety of different approaches has been adopted . The key provisions are summarised below.
New South Wales
144 Chapter 5 of the Industrial Relations Act 1996 (NSW) enshrines :
⢠the right to join, or not to join, an in dustrial organisation ; 166
⢠the right to freedom from victimisation on the grounds of membership or non
membership or an industrial organisation; 167 and
⢠the right to freedom from discrimination on the grounds of membership or non
membership of an industrial organisation.168
145 The Industrial Registrar has the power to issue a certificate of conscientious objection to
membership of an industrial organisation. 169 The State Commission has broad enforcement
powers. 170
Reform- Nationallssues Part 1 267
Queensland
146 Chapter 4 of the Industrial Relations Act 1999 (Old) is in many respects similar to Part XA of the
Workplace Relations Act 1996 (C 'wth).
14 7 Significantly, however, s 11 0 of the Industrial Relations Act 1999 (Old) permits the inclusion of
'encouragement provisions' in industrial instruments; that is, provisions which encourage, but
do not coerce, a person to join or maintain membership of an industrial association. The Act expressly does not prohibit making an encouragement provision, acting under an
encouragement provision, or encouraging a person to join or maintain membership of an
industrial association .171
148 By a statement of poli cy made on 21 December 2000, a Full Bench of the Queensland
Industrial Relations Commission provided guidance in relation to applications to include union
encouragement clauses in awards. 172 The Full Bench approved a model union encouragement
clause in the fo llowing terms:
1. Union Encouragement
This clause gives effect to s. 110 of the Industrial Relations Act 1999 in its entirety.
Consistent with s. 110 a Full Bench of the Queensland Industrial Relations
Commission has issued a Statement of Policy on Union Encouragement (reported 165 QGIG 221) that encourages an employee to join and maintain financial
membership of an organisation of employees that has the right to represent the
industrial interests of the employees concerned.
At the point of engagement, an employer to whom this Award applies shall provide employees with a document indicating that a Statement of Policy on Union
Encouragement has been issued by the Queensland Industrial Relations
Commission, a copy of which is to be kept on the premises of the employer in a
place readily accessible by the employee.
The document provided by the employer shall a/so identify the existence of a union
encouragement clause in this Award.
2. Union Delegates
Union delegates and job representatives have a role to play within a workplace. The
existence of accredited union delegates and/or job representatives is encouraged.
The employer shall not unnecessarily hinder accredited union delegates and/or job
representatives in the reasonable and responsible performance of their duties.
3. Deduction of Union Fees
Where arrangements can be entered into, employers are encouraged to provide
facilities for the deduction and remittance of union fees for employees who signify in writing to their employer, their desire to have such membership fees deducted
from their wages.
149 I will make a recommendation in relation to union encouragement and discouragement clauses
later in this section.
2 68 Final Report of the Royal Commission into the Building and Construction Industry
South Australia
150 Freedom of association provisions are set out in Chapter 4, Part 1 of the Industrial and
Employee Relations Act 1994 (SA). Section 116 of the South Australian legislation provides that
no person may be compelled to become, or remain , a member of an association and that any
provision of a contract of employment or undertaking which requires a person to become or
remain a member of an association is void. 173 The legislation creates a number of offences, including offences of:
⢠requiring or inducing another to become or remain a member of an association, and of
preventing another from becoming or remain ing a member of an association ;174
⢠conduct engaged in by employers for a range of 'prohibited reasons'; 175 and
⢠discrimination in the supply or purchase of goods and services on the ground of membership or non -membership of an association.176
151 The Registrar has the power to issue a certificate of conscientious objection to becoming a member of an association based on religious belief. 177
Western Australia
152 Part VIA of the Industrial Relations Act 1979 (WA) creates a detailed regime for the protection of
freedom of association. Among other matters, the legislation prohibits:
⢠awards, agreements and arrangements which require persons to become, not become,
or cease being members of organisations or which confer preferences by reason of a
person 's membership or non-membership of an organisation; 178
⢠discrimination on the grounds of membership or non-membership of an organisation; 179
⢠conduct which intimidates or induces a person to join, not join or cease being a member
of an organisation; 180 and
⢠advising, encouraging or inciting another person to discriminate against a third person on
the grounds of membership or non-membership of an organisation. 181
Tasmania
153 Section 87(1) of the Industrial Relations Act 1984 (Tas) provides that it is not compul sory for any
person to be or not to be a member of, or to join or not to join, any organisation or association.
154 Section 87(2) prohibits persons, organisations and associations from taking or threatening to
take any action against a person:
⢠which directly has the effect of making the person join or not join, or remain or not remain
a member of an organisation or association; or
⢠with the intention of coercing the person to join or not to join, or remain or not remain a
member of, an organisation or association.
155 Section 86 prohibits victimisation of employees on a range of grounds, including being or
proposing to become an officer or member of an organisation.
Reform- National Issues Part 1 269
Victoria, the ACT and the Northern Territory
156 There is no relevant freedom of association legislation in Victoria or the Territories, other than
the Workplace Relations Act 1996 (C'wth).
Freedom of association in international law
15 7 The right to freedom of association has long been considered a fundamental human right. 182
Article 20 of the Universal Declaration of Human Rights 183 provides that '[e]veryone has the
right to freedom of peaceful assembly and association' and that '[n]o-one may be compelled to
belong to an association'.
158 A number of international treaties and conventions ratified by Australia enshrine the principle of
freedom of association. Most importantly:
⢠Article 22(1) of the International Covenant on Civil and Political Rights 184 provides:
Everyone shall have the right to freedom of association with others, including the
nght to form and join trade unions for the protection of his interests.
⢠Article 8(1) of the International Covenant on Economic, Social and Cultural Rights 185
provides:
The State Parties to the present Covenant undertake to ensure:
(a) The right of everyone to form trade unions and join the trade union of his
choice, subject only to the rules of the organisation concerned, for the
promotion and protection of his economic and social interests. No
restrictions may be placed on the exercise of this right other than those prescribed by law and which are necessary in a democratic society in the
interests of national security or public order or for the protection of the rights
and freedoms of others;
(b) The right of trade unions to establish national federations or confederations
and the right of the latter to form or join international trade-union
organisations;
(c) The right of trade unions to function freely subject to no limitations other tha n
those prescribed by law and which are necessary in a democratic society in
the interests of national security or public order or for the protection of the
rights and freedoms of others;
(d) The right to strike, provided that it is exercised in conformity with the laws of
the particular country.
⢠Articles 2 and 3 of the International Labour Organisation Freedom of Association and Protection of the Right to Organise Convention, 1948, No 87 186 provide:
2 7 0 Final Report of the Royal Commission into the Building and Construction Industry
Article 2
Workers and employers, without distinction whatsoever, shall have the right to
establish and, subject only to the rules of the organisation concerned, to join
organisations of their own choosing without previous authorisation.
Article 3
(1) Workers' and employers' organisations shall have the right to draw up their
constitutions and rules, to elect their representatives in full freedom, to
organise their administration and activities and to formulate their programmes.
(2) The public authorities shall refrain from any interference which would restrict
this right or impede the lawful exercise thereof.
⢠Article 1 of the International Labour Organisation Right to Organise and Collective
Bargaining Convention, 1949, No 98 187 provides :
(1) Workers shall enjoy adequate protection against acts of anti-union
discrimination in respect of their employment.
(2) Such protection shall apply more particularly in respect of acts calculated to
(a) make the employment of a workf!r subject to the condition that he shall
not join a union or shall relinquish trade union membership;
(b) cause the dismissal of or otherwise prejudice a worker by reason of
union membership or because of participation in union activities
outside working hours or, with the consent of the employer, within
working hours.
159 These provisions have at their core ensuring that workers are free to join trade unions of their
choice without interference, and prohibiting employers from discriminating against workers
because they are union members. It has been observed, in particular, that the most significant
International Labour Organisation Convention in this area (No 87) does not address a right not
to join organisations. The Convention 'neither endorses nor proscribes union security
arrangements such as "closed shops", preference clauses or direct deduction of union
dues' .188 That said, the unfettered right to elect to join a union must have as a necessary
concomitant an equally unfettered right to elect not to do so.
160 Overwhelmingly, the evidence before this Commission has been directed to a problem not
addressed by the international obli gations outlined above; namely the existence of an
environment in which workers feel compelled to join trade unions, and in which employers and
others discriminate in favour of union members. 189
161 As I observed at the start of this section , the right of workers to join a union having coverage
over the industry in which they work, of their own free will , is fundamental , as is the right to elect
not to do so. The reforms which I ultimately 1·ecommend in this section for the building and
construction industry will strengthen and consolidate both those rights.
Reform - National issues Part 1 2 71
Codes of Practice
162 Codes of practice for the construction industry developed by different Australian Governments
treat freedom of association in different ways.
163 The National Code of Practice for the Construction Industry 7997 states:
All parties have the right to freedom of association. This means that parties are free to join
or not to join industrial associations of their choice and that they are not to be
discriminated against or victimised on the grounds of membership or non membership of
an industrial assoCiation. A person cannot be forced to pay a fee to an organisation if not
a member. 190
164 This formulation of the right to freedom of association applies to Commonwealth Government
projects and to Government projects in Victoria, Tasmania, the Australian Capital Territory and
the Northern Territory.
165 The Commonwealth Industry Guidelines for the National Code provide that contractors must
adopt policies 'to ensure that all those working on projects covered by the code have their right
to choose whether or not to join a union or employer association properly respected ' .191 The
Guidelines assert that the following practices are inconsistent with the Code:
⢠provision by employers to unions of the names of new staff or job applicants;
⢠supplying the names of contractors or subcontractors to unions;
⢠'no ticket no start' signs, or other notices, posters, helmets or stickers that imply that
union membership is anything other than a matter for individual choice;
⢠'show card ' days;
⢠permitting unions to dictate which employees will be employed on a particular project;
⢠pressuring subcontractors to join employer associations;
⢠the use of site delegates to undertake or administer site induction processes; and
⢠the use of induction forms requiring employees to identify their union status.
166 Instances of each of these practices were the subject of evidence presented to this
Commission. I am satisfied from the evidence that each of the practices in this list has a
tendency to undermine the right to freedom of association.
167 The Guidelines state that employers must not co-operate with or act to facilitate these
practices, and that employers 'will be held responsible under the code if they are found to have
done so'. Parties are obliged to 'report any alleged or suspected breaches of freedom of
association provisions of the code and/ or the Act. of which they are aware, to the Office of the Employment Ad vocate' .192
168 The New South Wales Government's Code of Practice for the Construction Industry, July 7996
governs standards of behaviour expected in relation to public infrastructure projects in NSW. Clause 7.6 is in the following terms :
7. 6 Membership of registered organisations
2 7 2 Final Report of the Royal Commission into the Building and Construction Industry
Willing membership of unions or employer associations is encouraged through
proper and lawful means. This precludes victimisation, through any mechanism, for membership or non-membership of organisations. 193
169 The Queensland Code of Practice for the Building and Construction Industry, August 2000,
governs building and construction works for State Government agencies in Queensland. In relation to freedom of association, the Code provides:
5.3.5 Membership of Industrial Associations
Participation in industrial relations by employees and employers and responsible
representation by industrial associations is encouraged.
170 Clause 2.1 .1 of the November 2000 version of the Code of Practice for the Western Australian Building and Construction Industry provided:
A policy of voluntary unionism shall be established for all employees, to the fullest extent
legally possible. No party shall require or compel a person to join or not to join a union
and in particular 'no ticket, no start' shall be prohibited. No party shall discriminate in any
offer or contract of employment or contract for services on the basis of a person 's
membership or non-membership of a union. 194
171 That clause was superseded by clause 8.2 .1 of the January 2002 version of the Code, which
merely 'encourages participation in industrial relations by employees and employers and
responsible representation by industrial associations consistent with freedom of association legislation'. 195
172 The Code of Practice for the South Australian Building and Construction Industry, July 1995,
encourages freedom of association on projects that are managed or funded by the South
Australian Government in the following terms:
No party will require or compel ... another party to join an association unless there is a
requirement under existing legislation or awards for membership ... The term 'require or
compel' includes 'attempt to require or compel'. This does not limit the right of
associations within the industry to encourage membership. 196
173 I have made a more detailed analys is of, and recommendations in relation to, Codes of Practice
elsewhere in my report.
Office of the Employment Advocate
1 7 4 The functions of the Employment Advocate include:
⢠providing advice and assistance to employers and employees as to their rights and
obligations under the Workplace Relations Act 1996 (C 'wth); 197
⢠investigating contraventions of Part XA of the Act; 198 and
⢠providing free legal representation to a party in a proceeding under Part XA , if the
Employment Ad vocate considers it would promote the enforcement of the provisions of
that Part .199
Reform- Nationa//ssues Part 1 273
175 I am satisfied from the evidence presented to the Commission that the Office of the
Employment Advocate has not proved to be an effective mechanism for enforcing Part XA of
the Workplace Relations Act 1996 (C'wth) in the building and construction indu stry. The
evidence was that investigators from the Office of the Employment Advocate received, at best,
little or no co-operation or, at worst, active obstruction from union officials , organisers and
delegates and head contractors in investigating alleged contraventions of Part XA .
176 The attitude of some head contractors was illustrated by an incident in 1998 recounted in
evidence to the Commission by a Compliance Manager of the Office of the Employment Advocate. The Compliance Manager told me th at upon advising a head contractor of the
maximum penalty for a contravention of Part XA, the contractor said, '$1 0 0001 You have to be kidding. I'll call my secretary in with the petty cash ti n to take care of it now, shall I?' The project
in question had a value of more than $100 million. 200
177 In paragraph 10 of my First Report of 5 August 2002, I said :
The evidence before me makes plain that the Office of the Employment Advocate is
insufficiently funded and staffed to undertake the tasks referred to. It does not have the
specialist capacity or experience necessary to monitor the building and construction
industry, nor was it designed to give the necessary concentrated focus on the building
and construction industry.
178 I went on to recommend the establishment of an interim taskforce , established administratively,
to continue incomplete investigations, and monitor conduct and enforce industrial, criminal and
civil laws pen ding the consideration by government, and if appropriat e, the Parliament, of the
legislative changes reco mmended in my final report. I said I would be recommending the establishment of a natio nal ag ency to mon itor, investigate and prosecute any breaches of
industrial law, the criminal law, and aspects of civi l law in relation to the building and
construction industry.
179 Th e reforms I recommend later in this section will include empowering the proposed Australian Building and Construc tion Commission (ABCC) to investigate and enforce contraventions of
freedom of association provisions in the bui lding and construction industry.
2 7 4 Final Report of the Royal Commission into the Building and Construction Industry
Prior reform attempts
Overview
180 Schedule 14 to the Workplace Relations Legislation Amendment (More Jobs, Better Pay) Bill
7999 (C 'wth) would, if passed, have effected wide-ranging reforms to Part XA of the Workplace
Relations Act 7996 (C 'wth) . The Bill was introduced to the House of Representatives on 30
June 1999.
181 Most significantly:
⢠The amendments would have defined a 'threat' to include a direct, indirect, express or implied threat. 201
⢠The amendments would have expanded the c6ncept of a 'prohibited reason' for
engaging in conduct which undermines freedom of association 202 Prohibited reasons
would have included, among other matters, engaging in conduct because another
person:
is or is not an officer or member of an industrial association;
has not paid a fee to an industrial association (other than a fee payable under an
industrial law for a certificate on the grounds of conscientious objection to
membership of an industrial association, or a fee payable for services provided by
an industrial association on request by a person);
has refused or failed to join in industrial action;
has refused or failed to agree to or vote in favour of an agreement under an
industrial law to which an industrial association of which the person engaging in the
conduct is a member would be a party;
has made an application under an industrial law for the holding of a secret ballot, or
has participated in such a secret ballot;
is party to an industrial instrument;
has made an inquiry or complaint under an industrial law to seek compliance with
that law or the observance of a person 's rights under an industrial instrument;
has participated in proceedings under an industrial law;
Reform- National Issues Part 1 275
has been a member of an industrial association for a longer or shorter time than
another member;
refuses to enter into a restrictive agreement or arrangement; that is, an agreement
or arrangement that requires a person to provide the same or substantially the
same conditions of employment or engagement to some or all of the person 's
employees or independent contractors that work at a workplace or in an industry
as are provided to another person's employees or independent contractors who
also work at that workplace or in that industry; and
is doing something that the person is expressly required or permitted to do by a
Commonwealth industrial law, Commonwealth industrial instrument or order of the
AIRC.
⢠The scope of operation of Part XA would have been extended to include conduct carried
out wholly or partly with intent to affect adversely a constitutional corporation 203
⢠Section 298K of the Workplace Relations Act 1996 (C 'wth) would have been amended to
prohibit employers from discriminating against employees and independent contractors,
or refusing to consider persons for employment or engagement, for a reason covered by
s298L of the Act. 204
⢠Section 298P would have been expanded to prohibit a range of conduct by industrial
associations and their officers and members , including: 205
organising or taking or threatening to organise or take industrial action for a
prohibited reason;
organising or taking or threatening to organise or take industrial action wholly or partly with intent to coerce a person to become, not become, or cease being a
member of an industrial association;
advising, encouraging or inciting a person to refuse to make use of services offered
by a third person, or to refuse to supply goods or services to a third person, for a prohibited reason;
taking or threatening to take any action with intent to coerce a person to enter into
a restrictive agreement or arrangement (as defined); and
taking or threatening to take any action having the effect, directly or indirectly, or
prejud icing a person in his or her employment or engagement or possible
employment or engagemen t: for a prohibited reason; or with intent to coerce a person to become or remain a member of an in dustrial associat ion; or with intent to
coerce a person to join in industrial action; or with intent to dissuade or prevent a
person from making an application under an industrial law for the holding of a secret ballot.
⢠The amendments would have introduced a prohibition on establishing or maintaining, or
engaging in conduct wholly or partly with intent to establish or maintain , a 'closed
shop '.206 Under the proposed amendments, a closed shop would exist within a
workplace or business, essentially, if at least 60 per cent of the persons who perform the
2 7 6 Final Report of the Royal Commission into the Building and Construction Industry
same kind of work or belong to the same class of employee or independent contractor at
that workplace or business are members of the same industrial association and it is an
express or implied condition of employment or engagement that those persons become
or remain members of an industrial association , or it is reasonably likely that, if those
persons were not members, conduct that would contravene Part XA would be taken
against them by the person who employs or engages them. A reverse onus of proof was
proposed in relation to the circumstances in which a person could be said to have had,
wholly or partly, the intent to establish or maintain a closed shop.207
⢠The amendments would have prohibited persons, directly or indirectly, from asking,
requiring, advising , encouraging, inciting or coercing other persons to engage in conduct
that contravenes Part XA, with the necessary intent or for the reason specified in the relevant provision of Part XA. 2os
⢠The amendments would have prohibited persons from aiding, abetting, counselling,
procuring or inducing contraventions of Part XA; being in any way, directly or indirectly,
knowingly concerned in a contravention of Part XA; or attempting to contravene or to
induce a contravention of Part XA. 209
⢠The available remedies for contraventions of Part XA would have been expanded in a
number of ways, including by vesting jurisdiction in State courts and permitting
injunctions to prevent apprehended breaches of Part XA. 210
⢠The range of objectionable provisions in awards. and certified agreements would have
been expanded, most significantly by prohibiting clauses in awards and agreements
which encourage or discourage others from becoming or remaining members of
industrial associations. 211
182 The Bi ll was passed by the House of Representatives on 29 September 1 999 and introduced
to the Senate on 14 November 1999. The Bill was referred to the Senate Employment ,
Workplace Relations, Small Business and Education Committee on 11 August 1999. The
Committee reported on 29 November 1999. The Bill failed to pass the Senate and lapsed when
Parliament was prorogued prior to the 2001 Federal election.
183 I do not propose in this section to express a view about the desirability or undesirabiiity of each
and every reform to Part XA proposed in the Bill. In making recommendations as to what is
desirable by way of reform in the building and construction industry, I can be guided only by the
evidence presented and submissions received by this Commission. Furthermore, my inquiry
has been limited to the building and construction industry as defined by the Letters Patent. I will, however, make some brief observations about two aspects of the Bill: the proposed
prohibition on 'closed shops', and the proposed prohibition of clauses in awards and
agreements which encourage or discourage membership of industri al associations.
Closed shops
184 Those opposed to the closed shop provisions argued that the proposed prohibition was
unnecessary, having regard to existing prohibitions on conduct that undermines freedom of
association. 21 2 proposed test for a closed shop was criticised as being arbitrary,
Reform - National Issues Part 1 2 7 7
impossible to police and as establishing a presumption which fai led to acknowledge that in
many. workplaces both employers and employees recognise the benefits of a highly unionised
workforce. Business groups also criticised the closed shop provisions, particularly in relation to
the incidence of the onus of proof and on the ground that the prohibition on 'maintaining ' a
closed shop might apply to 'the passive situation of allowing a (highly unionised workforce] to
continue'.
185 There are obvious difficulties in formulating a definition of a 'closed shop'. The legislative indicia
chosen will invariably be arbitrary. Moreover, the application of legislative indicia may result in
undesirable or anomalous outcomes. The fact that a workplace has a particular level of union
membership - or even that a workplace is fully unionised or fully non-unionised - is not
necessarily evidence that any person has been denied their right to freedom of association.
Freedom of association is about the right of the individual to choose whether to join, or not to
join, a union; not about whether there is a particular level of union membership in a particular
workplace.
186 I have co me to the conclusion that a closed shop prohibition of the kind proposed in the
Workplace Relations Legislation Amendment (More Jobs, Better Pay) Bill 1999 (C'wth) is
unnecessary in the bui lding and construction industry having reg ard to the comprehensive
package of reforms I recommend later in this section. Those reforms, if adopted, will provide
strengthened protection for all participants in the industry against conduct which has the effect,
directly or indirectly, of undermining the freedom of individuals to choose whether or not to join
a union. Conduct which has the effect of establishing or maintaining a closed shop will
contravene the provisions I propose, if it involves an attack on that freedom .
Union encouragement and discouragement clauses
187 The Liberal Senators ' Report on the Bill observed that clauses in awards and agreements, which expressly encourage union membership, 'in their implementation, probably result in
employees, particularly new starters, believing that they must join the union in order to keep
their jobs. The Committee majority believes that union encouragement clauses do operate in
some cases to restrict employees' freedom of association'. 213
188 The Labor Senators on the Committee were opposed to the proposed amendment:
If the conduct of encouraging or discouraging union membership is not unlawful, then
there appears no good reason for removing from awards or certified agreements,
clauses which refer to legal conduct. The evidence presented in submissions from
unions, union peak councils and some Independent experts, suggests that amendments
to Section 298Z of the Bill have the intention of attacking or frustrating the capacity of
trade unions to organise in the workplace. 2 74
189 The Democrat Senator on the Committee concluded:
There is nothing wrong, (and much that is right), with union encouragement clauses
being included in agreements. Better workplace practices, greater equity, and better productivity often result when workplaces have strong union representation. The fact that
2 7 8 Final Report of the Royal Commission in to the Building and Construc tion Industry
some strong unions can also behave badly and counter-productively in some workplaces does not negate the general point. 2 75
190 As a matter of general concept there is an incongruity between an Act of the Parliament stating
that each individual has an unfettered freedom to decide whether he or she will, or will not, join
an association , and an instrument made under an Act of the Parliament providing
encouragement for a person to exercise that freedom in a particular way. If the freedom to
decide is truly unfettered, the person should neither be encouraged nor discouraged towards
an outcome. The focus should be on the individual 's freedom, not upon the effect the exercise
of that freedom might have on the officers of trade unions, or upon its consequences in the
workplace. Freedom of association relates to the rights of an individual, and the absence of
compulsion upon that individual in making his or her choice. Encouragement from the
legislature or by an instrument created under legislation is a step towards restricting that
freedom because even -handedness in making that choice is removed by the scales being
weighted in favour of one outcome.
1 91 The evidence before me has shown that in the building and construction industry, union
encouragement clauses are frequently used by unions and employers as an industrial tool to
coerce or pressure workers into joining unions. The evidence was particularly stark in this
regard in Queensland where such clauses are expressly allowed by si 10 of the Industrial
Relations Act 1999 (Old). The evidence concerning Abigroup Contractors Pty Ltd and the
Mackay Hospital and Mater Hospital Townsville projects is an illustration.
1 92 In the building and construction industry, I have reached the strong view that there are good
reasons to exclude encouragement clauses from awards and agreements. The fact that some
unions, and some employers for that matter, behave badly and counterproductively points, to
my mind, to a need to take remedial action which will guarantee the right of workers to freedom
of association. I recognise the force in the argument that union encouragement and
discouragement is not prohibited by the Workplace Relations Act 1996 (C'wth). It is important
to ensure that a prohibition on union encouragement and discouragement clauses does not
send the message in particular workplaces that union membership is , or is not, an express or
implied requirement.
1 93 Taking all of these matters into account, legislation applying to the building and construction
industry should include provisions which :
⢠prohibit the inclusion of clauses in awards and agreements that:
require or permit any conduct which wou ld contravene freedom of association
provisions; or
directly or indirectly require a person to encourage another person to become, not
become, remain or cease being a member of an industrial association, or
discourage another person from becoming, not becoming, remaining or ceasing to
be a member of an industrial association; and
⢠require all awards and agreements to include a clause which expressly states the
principle of freedom of association , in terms to the following effect:
Reform- National issues Part 1 279
Every person has the legal right to choose, freely and without interference, whether
he or she wishes to join, or not to join, an industrial association. Heavy penalties
apply to any person, including an employer or union, who coerces another person
into becoming, not becoming, remaining or ceasing to be an officer, delegate or
member of an industrial association.
No person has the right to discriminate in favour of or against, or victimise another
person because he or she is a member, or is not a member, of an industrial
association.
194 The proposed reform would strike an appropriate balance between ensuring that all participants in the industry are aware of the right to freedom of association, and preventing employers and unions from exploiting union encouragement clauses in awards, agreements and Codes of Practice to undermine that right.
280 Final Report of the Royal Commission into the Building and Construction Industry
Submissions received by the Commission
Introduction
195 In making recommendations as to the form that freed om of association provisions shou ld assume in legislation of specific application to the bui lding and construction industry, I have
taken into account the matters already discussed; namely, the nature of the problem as
revealed by the evidence presented to the Commission, the nature of the current law, the problems with the operation of the current law, and past reform attempts. A further matter
relevant to the formulation of recommendations in this area is the submissions recei ved from a
range of industry participants, principally in response to Commission discussion papers.
196 I set out below a summary of the key reform recommendations advocated by those who have
made submissions to the Commission.
Australian Industry Group
197 The Australian Industry Group216 contended that a range of steps were requi red to address
attempts to circumvent the operation of freedom of association and freedom of bargaining
laws, including:
⢠The imposition of a prohibition on unions charging bargaining agents' and services fees
on non-members who have the benefit of terms and conditions in certified agreements to
which the union is a party. I have addressed the question of whether such fees should be
allowed in the section of my report dealing with the establishment of employment
conditions.
⢠The establishment of a National Taskforce with the power to investigate and deal with
breaches of industrial an d criminal laws, including those dealing with free dom of
association and unlawful coercion . I have dealt with the establishment of a taskforce and
its powers elsewhere in my report. I agree that it is important that there be an effective
body with adequate powers and resources to investigate alleged contraventions of
freedom of association provisions and to prosecute civil penalty proceedings where
appropriate.
⢠The creation of offences of:
Reform- National issues Part 1 281
coercing an employer to employ or not employ particular persons through
threatening , organising or taking industrial action, and of advising, encouraging or
inciting an employer to employ or not employ particular persons. I have addressed
this suggestion in the section of this report dealing with inappropriate employment
and related demands;
coercing an employer to allocate or not allocate particular duties to a person,
through threatening , organising or taking industrial action, and of advising ,
encouraging or inciting an employer to allocate or not allocate particular duties to a
person. By 'particular duties' the Australian Industry Group intended primarily to
prevent employers from being forced to accept union nominations for occupational
health and safety representatives and union delegates. This suggestion is also
addressed in the inappropriate employment and related demands section of this
report ; and
coercing an employer to pay the union dues of a person through threatening,
organising or taking industrial action, and of advising, encouraging or inciting an
employer to pay the union dues of a person. This matter is dealt with in the
inappropriate payments section of this report.
Commonwealth
198 In its Phase Th ree submission to the Commission, 21 7 the Commonwealth canvassed various
options to combat activities which undermine freedom of association, including :
⢠enshrining freedom of association rights in a national code; 218
⢠increasing the penalties for breaches of freedom of association provi sions, and
expanding remedies to include disqualification from holding an office or paid position in a
union or corporation;219
⢠requiring union rules to contain provisions which allow employees to withdraw from union
membership at any time, or to cease union membership immediately upon ceasing work in the building and construction industry;220
⢠making it unlawful for an employer to pay the union dues of any employee;221 and
⢠making industrial action engaged in for the purpose of pursuing conduct in breach of
freedom of association provisions contrary to a national code and grounds for
deregistration of an organisation. 222
199 I agree with the Commonwealth that Codes of Practice are an important means by which rights
of freedom of association can be protected and enhanced. I have made recommendations in this regard elsewhere in my report.
200 I also agree that the penalties for contraventions of freedom of association provisions need to be substantially increased, and the available remedies expanded to include in appropriate
cases suspending or disqualifying a person from holding an office or paid position in an industrial association or corporation.
282 Final Report of the Royal Commission into the Building and Construction Industry
201 I am not persuaded of the need to require union rules to contain provisions allowing employees
to withdraw from union membership at any time, or to cease union membership immediately
upon ceasing work in the building and construction industry. The evidence presented to the
Commission does not suggest that employees experience any great difficulty in resigning from
unions or cancelling their membership. For reasons I will outline later in this report, however, I
am satisfied that unions should be prohibited from accepting payments on account of an
individual's union membership fees unless the individual has signed an application form stating that he or she wishes to join the union.
202 I am not persuaded that it should be unlawful for employers to pay the union dues of their
employees, provided that the employer and employee so agree and the employee so directs
the employer in writing. The evidence presented to the Commission suggested that in some
cases , employers paid their employees' union dues as part of a salary-sacrifice arrangement,
while in other cases employers paid union dues and recovered them over time from their
employees. I see no reason why employers and employees should not be able to reach
agreement between themselves as to the employer's role, if any, in the payment of union dues.
The position is quite different, however, where union officers, delegates or members, or
contractors , employees or others, engage in co nduct which has the effect of coercing an
employer to pay an employee's union dues. For reasons I have already outlined, such conduct
should be prohibited in the bu ilding and construction industry.
Construction, Forestry, Mining and Energy Unio.n
203 The Construction and General Division of the CFMEU did not advocate any changes to Part XA
of the Workplace Relations Act 1996 (C 'wth). One of the union 's submissions, however, asserted that many workers, especially in regional and country areas, did not identify
themselves as union members for fear of retribution. The union said that being in the union 'can lead to a death sentence in terms of employment'. It argued that few cases of victimisation of
union members reach a successful court outcome because 'workers are starved into
accepting an out of court settlement' . 223
204 The recommendations I make in this section will strengthen considerably the right to freedom
of association in all its guises. No worker should have any fear of retribution from identifying
himself or herself as a union member. Heavy penalties should apply in cases where workers are
penalised because of union membership.
205 The union argued that some employers use 'greenfields agreements' under s170LL of the
Workplace Relations Act 1996 (C'wth) to circumvent freedom of association being exercised by
workers. The union did not explain how such agreements had the effect of preventing workers
from joining the union if they so wished. The argument, presumably, must be that as greenfields
agreements may be made between an employer and particular unions, other unions exercising
coverage of employees performin g work on site are excluded from involvement in representing
such workers on that site. Thus, so the argument runs, a worker is restricted in his or her
choice of the union he or she may join as a result of the selection by the employer of the unions
with whom it will reach agreement under s170LL.
Reform- National Issues Part 1 283
206 Similarly, the union contended that, under s170 LJ of the Workplace Relations Act 7996
(C'wth), an employer may choose which union to make an enterprise agreement with, and
thereby which union can represent its employees. The union argued that this impinged upon
the freedom of association rights of workers to decide to which union they wish to belong. 224
207 I reject the argument that ss170LL and 170LJ undermine freedom of association in the way
contended. The fact that a greenfields agreement or an enterprise agreement is in place to
which one union is a party does not prevent individual employees from joining another union
coveri ng the nature of the work they perform if they so choose, or prevent unions from
exercising many of the privileges accorded to them by the Workplace Relations Act 7996
(C'wth). For example, regardless of whether a union is a party to a certified agreement, an
authorised officer or employee of the union has the right to enter premises during worki ng hou rs under s285C for the purpose of holding discussions during meal-time or other breaks
with employees who are members of the union or who are eligible to become members of the
union. To take a second example, subject to the requ irements of Division 8 of Part VIB of the
Act, unions have the rig ht to initiate a bargaining period for the negotiation of an agreement
under Division s 2 and 3 of that Part , regardless of wheth er a certified agreem ent is in place to
which another union is a party.
208 To the extent that the rights of a un ion are restricted whi le a certified agreement is in place to which another union is a party, that is a consequence of the way in which the Workplace
Relations Act 7996 (C 'wth) regulates employment conditions . That is a different issue involving
different considerations from an individual's righ t to join , or not join, a union.
209 In another submission to the Commission the union argued that the freedom of association
provisions in the National Code of Practice for the Construction Industry 799 7 and Implementation Guidelines 'are being implemented in such a way as to prevent a range of
conduct that promotes unions, but is not in breach of Part XA of the Workplace Relations Act
7996 (C 'wth) . The freedom of association provisions of the Guidelines go well beyond the
provisions of the Code, and are designed to weaken unions , including the CFMEU, rather than
to protect freedom of association' .225 I have dealt with Codes of Practice, and this argument,
elsewhere in my report .
210 The National Assistant Secretary of the Construction, Forestry, Mining and Energy Union, Mr
John Sutton, argued that freedom to join, or not to join, a union have been treated in the
Workplace Relations Act 7996 (C'wth) as two sides of the one coin, with the coin weig hted in favour of non- unionist employees and anti -union employers. He said that under the current
regime, non-u nioni sts enjoy the frui ts of the uni on ists' exertions. 226 Sutton said the freedom of
association provisions of the Act were 'cumbersome', a 'legal minefiel d', 'unwieldy' and
'impractical' 227 He offered no constru ctive suggestions fo r reform.
Housing Industry Association Limited
211 In a submission to the Commission, the Housing Industry Association Limited stated that
one of the most effective single reforms possible for the building and construction industry would be to fully implement Freedom of Association laws, thus breaking the
union monopoly on the supply of labour. As the history of the industry since the Gyles
2 84 Final Report of the Royal Commission into the Building and Construction Industry
Royal Commission in NSW has clearly shown, it is only where a public enforcement body
exists to enforce those laws that there is any chance of genuine compliance. 228
212 The Housing Industry Association Limited submission said it was unrealistic to expect
employers to enforce freedom of association laws, because of the risk of industrial action by
building unions and liquidated damages being payable where industrial action leads to delays.
It argued that any enforcement body should have the power to enforce freedom of association
provisions regardless of whether a person is employed under Federal or State awards, and
should be able to address the issue of certified agreements which contain clauses 'requiring
head contractors to use "best endeavours" to ensure that all labour on site is comprised of union members'. 229
213 In further submissions to the Commission, the Housing Industry Association Limited advocated:
⢠extending the freedom of association provisions in the Workplace Relations Act 1996
(C'wth) to 'conduct involving constitutional corporations, whether or not employment under a Federal Award is involved';
⢠encouraging the States to fully implement freedom of association laws mirrori ng the
Federal provisions, with dedicated and appropriately resourced State enforcement
bodies set up to work co-operatively with the Office of the Em ployment Advocate; and
⢠substantially increasing the penalties for contraventions of the freedom of association
provisions of the Workplace Relations Act 1996 (C 'wth), particularly with respect to individuals. 230
214 I have dealt with each of these matters elsewhere in this section . In summary:
⢠Freedom of association provisions for the building and construction industry should apply
as widely as possible. Constitutional limitations, however, mean that there will continue to
be a role for State legislation. In the interests of uniformity, States should be encouraged
to pass legislation which mirrors Federal freedom of association legislation.
⢠An enforcement body needs to have adequate powers and resources to investigate
contraventions of freedom of association provisions and prosecute alleged contraventions.
⢠Awards and agreements should not contain clauses which encourage or discourage
union membership, but shou ld be requ ired to contain a clause expressly stating th e
principle of freedom of association.
⢠The penalties for contraventions of freedom of associati on provisions need to be
increased and the range of remedies expanded.
Master Builders Australia Inc
215 In its closing submission to the Commission, Master Builders Austral ia Inc called for freedom of
association provisions to be strengthened so as to prohibit:
Reform - National Issues Part 1 285
⢠any person, other than the employee concerned, from requesting another party to pay
. the employee's union membership fees;
⢠unions from accepting any person as a member who has not voluntarily completed a
union membership application form ; and
⢠unions from making it a condition of working at any location that any person be employed
under the terms of a particular agreement. 231
216 The first two of these proposals have been addressed in the section of this report dealing with
inappropriate payments. Th e third proposal is addressed in Volume 5, Reform - Establishing
Employment Conditions, of this report.
Transfield Pty Ltd
217 In its submission to the Commission, Transfield Pty Ltd argued that the flouting of Part XA of
the Workplace Relations Act 1996 (C'wth) was widespread and advocated the establishment
of a statutory enforcement agency charged with, among other things, enforcing freedom of
association provisions 232 Transfield argued that Part XA needed to be amended to provide an
'explicit prohibition on any person or organisation interfering or seeking to interfere in any other
person 's or organisation's negotiations or lawful actions in respect of any actual or proposed
employment contract'. It asserted that the 'common practice that often accompanies the right
to take industrial action is the intimidation, threats and violence directed to those employees
and employers or prospective employees and employers who choose not to take such action'.
Transfield supported the maintenance of the reverse onus of proof in s298V of the Workplace
Relations Act 1996 (C'wth).
218 I have dealt with the adequacy of the existing law concerning freedom of bargaining, and made
recommendations for improved protections in the building and construction industry, in Volume
5, Reform - Establishing Employment Conditions, of this report .
Other submissions
219 The Commission received a range of other submissions concerning freedom of association,
almost all of which related to the extent to which pressure is applied by unions and their
officers, delegates and members to maintain high levels of unionism in the building and
construction industry. The same point emerged from the private meetings I convened early in the life of the Commission 2 33
2 86 Final Report of the Royal Commission into the Building and Construction Industry
Solutions and recommendations
Introduction
220 I have so far in this section identified a range of specific matters which need to be addressed in
freedom of association provisions of specific application to the building and construc tion industry.
221 I have set out elsewhere in my report the reason why I have recommended the enactment of
legislation of specific application to the building and construction industry. In particular, this
Commission has inquired into that industry alone and is unable to express any view about the desirability of analogous reforms in other industries.
222 It is convenient to outline my views as to the content of .freedom of association provisions for
the building and construction industry. Model provisions of the kind I have in mind are set out in Appendix B.
General observations
223 As will be apparent from the above analysis, Part XA of the Workplace Relations Act 1996
(C 'wth) is complicated legislation. To ascertain whether particular conduct contravenes
Part XA, it is necessary:
(a) to ascertain whether the conduct in question is of a kind to which Part XA applies by
reason of Division 2, which, broadly speaking, reflects the constitutional limi tations on the
Commonwealth's power to make laws concerning workplace relations;
(b) to ascertain whether the conduct is by an employer or a person who has engaged an
independent contractor (in which case Division 3 of Part XA may apply}, an employee or
independent contractor (in which case Division 4 of Part XA may apply}, or an industrial
association or an officer or member of an industrial association (in wh ich case Division 5
of Part XA may apply};
(c) where the conduct is by an employer or person who has engaged an independent
contractor, to ascertain:
(i) whether that employer or person did, or threatened to do, one of the things set out
in s298K, such as dismiss an employee, injure an employee in his or her
employment or alter the position of an employee to his or her prejudice; and
Reform - National Issues Part 1 2 8 7
(ii) whether that employer or person did, or threatened to do, that thing for a
prohibited reason , with in the meaning of s298L;
(d) where the conduct is by an employee or independent contractor, to ascertain:
(i) whether the employee or independent contractor ceased work; and
(ii) whether the employee or independent contractor ceased work because the
employer or person who engaged the independent contractor was or had done
one of the things set out in paragraphs (a)-(e) of s298N;
(e) where the conduct is by an industrial association, or an officer or member of an industrial
association, to ascertain whether the conduct involved :
(i) organising or taking, or threatening to organise or take, industrial action against an
employer in circumstances prohibited by s298P(1), (2), (3)(b) or 4(b);
(ii) advising , encouraging or inciting an employer to take action prohibited by
s298P(3)(a) or (4)(a);
(iii) taking, or threatening to take, action having the effect, directly or indirectly, or
prejudicing a person in his or her employment or possible employment with intent
to coerce the person to join in industrial action or to dissuade or prevent the person
from applying to an industrial body for an order under an indu strial law for the
holding of a secret ba ll ot: s2980;
(iv) imposing, or th reatening to impose, a penalty, forfeiture or disability of any kind on
a member of the association for one or more of the reasons set out in s298R;
(v) where the conduct is against an 'elig ible person'; that is, a person who is not an
employee, but who is eligible to join an industrial association or would be eligible to
join an industrial association if he or she were an employee:
⢠advising , encouraging or inciting a person to take 'discriminatory action '
because the eligible person is not a member of an industrial association:
s298S(2)(a);
⢠taking, or th reatening to take , ind ustrial action against an employer with
intent to coerce the employer to take 'discriminatory action' because the
eligible person is not a member of an industrial association; or
⢠taking, or threatening to take, industrial action with intent to coerce the
eligible person to join an industrial association.
224 Good legislation is legislation which is easily comprehended by those to whom it applies.
Part XA fails that test, albeit for a number of understandable reasons, including the
constitutional limitations on the Commonwealth's powers and the decision to prohibit specific
conduct rather than broad categories of conduct. Nonetheless, an attempt should be made in
drafting freedom of association provisions for the bu ilding and construction industry to simplify
the way in which prohibitions are expressed, in the interests of making the provisions easier to understand.
288 Final Report ofthe Royal Commission into the Building and Construction Industry
225 At the same time, however, there is merit in stipulating with as much precision as possible th e
types of conduct which are prohibited . The alternative approach, which has been taken in
some of the State freedom of association provisions, resu lts in legislation which is vague and
general and which does not prohibit much of the conduct which ought to be prohibited .
226 These competing objectives can be best reconciled, in my view, by legislation of specific
application to the building and construction industry containing, in broad terms:
⢠a clear statement of objects;
⢠a small number of general prohibitions which apply to all participants in the building and
construction industry; and
⢠more detailed, specific prohibitions applying to particular participants in the bu ilding and
construction industry as required.
Objects
227 The evidence presented to the Commission has established that the objects of Part XA are
being thwarted in the building and construction industry. Participants in the building and
construction industry feel free to undermine pri nciples of freedom of association because,
among other reasons, Part XA is not adequately enforced and contains inadequate penalties .
228 I therefore recommend that freedom of association provisions applying to the building and
construction industry should include an expand ed statement of objects to the following effect:
As well as the objects set out in section [x], this Part has these objects:
(a) to ensure that employers, employees and independent contractors are free to join
industrial associations or not to join industrial associations;
(b) to ensure that employers, employees and independent contractors are not
discriminated against or victimised because they are, or are not. members or
officers of industrial associations;
(c) to provide effective relie f to employers, employees and independent contractors
who are prevented or inhibited from exercising their right to freedom of association;
and
(d) to prescribe effective remedies to penalise and deter persons who engage in
conduct which prevents or inhibits employers, employees and independent
contractors from exercising their right to freedom of association.
229 Proposed objects (c) and (d) have no counterpart in Part XA of the Workplace Relations Act
1996 (C'wth) . Their inclusion in legislation applying to the building and construction industry
should convey to all participants that freedom of association rights are real, substantial and
enforceable.
Reform- National Issues Part 1 289
Issue
Central to the objects of the Workplace Relations Act 1996 (C'wth) is 'ensuring freedom
of association, including the rights of employees and employers to join an organisation
or association of their choice, or not to join an organisation or association'. Part XA of
the Act contains provisions which are intended to implement that objective. In addition
to the objective already identified, Part XA has the objects of ensuring 'that employers,
employees and independent contractors are free to join industrial associations of their
choice or not to join industrial associations' and ensuring 'that employers, employees
and independent contractors are not discriminated against or victimised because they
are, or are not, members or officers of industrial associations'.
Provisions aimed at guaranteeing freedom of association are also enshrined in the
industrial relations legislation of most States.
In its public hearings, the Commission heard a great deal of evidence of conduct which
had as its object undermining freedom of association in the building and construction
industry. For the most part, the conduct was directed to ensuring that the workforce on
building and construction sites, particularly on large sites and sites in the central
business districts of the major State capitals, was as highly unionised as possible. The
broad objective of maintaining or establishing a highly unionised workforce was shared ,
in many instances, by the major unions with coverage in the industry and head
contractors. The individual rights of workers to freedom of association were subord inated to the interest of unions in obtaining new members and the interest of
head contractors in ensuring that their projects proceeded on time, on budget and
without industrial disruption.
Some of the conduct identified in the public hearings pointed to contraventions of
existing Commonwealth or State freedom of association legislation. In most cases ,
alleged contraventions had not been reported to relevant authorities and had not been
the subject of civil penalty proceedin gs . In some cases, where contraventions of
freedom of association legislation had been the subject of proceedings, only small civil
penalties were imposed with limited or no deterrent effect.
Other conduct identified in the public hearings of the Commission offended the spirit of
Commonwealth or State freedom of association legislation , and had the effect of forcing
workers to join a union against their wishes, but for a range of reasons did not fit within
the currently prescribed prohibitions.
The evidence establi shed beyond any doubt that the objects of Part XA of the
Workplace Relations Act 1996 (C'wth) are being thwarted in the building and construction industry. Participants in the building and construction industry feel free to undermine principles of freedom of association because, among other reasons, Part XA
is not adequately enforced and contains inadequate penalties .
There is an urgent need for substantial reform of the freedom of association provisions
applicable to conduct in the bu ilding and construction industry.
290 Final Report of the Royal Commission into the Building and Construction Industry
Recommendation 78
Freedom of association provisions in the Building and Construction Industry
Improvement Act include a statement of objects to the following effect:
As well as the objects set out in section [x]. this Part has these objects:
(a) to ensure that employers, employees and independent contractors are free
to join industrial associations or not to join industrial associations;
(b) to ensure that employers, employees and independent contractors are not
discriminated against or victimised because they are, or are not, members or
officers of industrial associations;
(c) to provide effective relief to employers, employees and independent
contractors who are prevented or inhibited from exercising their right to freedom of association; and
(d) to prescribe effective remedies to penalise and deter persons who engage in
conduct wh ich prevents or inhibits employers, employees and independent
contractors from exercising their right to freedom of association .
Conscientious objection
230 Section 267(1) of the Workplace Relations Act 1996 (C'wth) provide s:
Where a natural person:
(a) on application made to a Registrar, satisfies the Registrar:
(i) in the case of a person who is an employer or is otherwise ineligible to join an
organisation of employers - that the person's conscientious beliefs do not
allow the person to be a member of an association of the kind described in
paragraph 188(1)(a) [that is, an employer assoCiation]; or
(ii) in the case of a person who is an employee or is otherwise eligible to join an
organisation of employees- that the person's conscientious beliefs do not
allow the person to be a member of an association of the kind described in
paragraph 188(1)(b) [that is, an employee association]; and
(b) pays the prescribed fee to the Registrar;
the Registrar shall issue to the person a certificate to that effect in the prescribed form.
231 The prescribed form is Form 12 to the Workplace Relations Regulations 1996 (C'wth). 234
232 Section 267 is anomalous, and unnecessary in view of the freedom of association provisions in
Part XA of the Act, which enshrine a right not to join an industrial association, whether on
grounds of a conscientious objection or otherwise. The continuing ability under the Act to apply
for a certificate of conscientious objection to joining an industrial association falsely implies that
Reform - National Issues Part 1 2 91
a person must have such an objection to justify his or her decision not to join an association.
Section 267 therefore runs counter to the freedom of association objectives of the Act. I can
see no reason for including a provision equivalent to s267 in legislation applying to the building
and construction industry.
Issue
Natural persons may apply under s267 of the Workplace Relations Act 1996 (C'wth) to
a Registrar for a certificate of conscientious objection to membership of industrial
associations of employers or employees. This provision is anomalous. It implies that the
freedom not to join a union is contingent upon holding a conscientious objection to
joining a union. If the right to freedom of association is to be upheld in the building and
construction industry, legislation must recognise the right to join , and not to join, a union
as equal and complementary rights .
Recommendation 79
The Building and Construction Industry Improvement Act contain a provision to the
effect that s267 of the Workplace Relations Act 1996 (C'wth) does not apply in respect
of the building and construction industry.
Coverage
233 It is axiomatic, in my view, that freedom of association provisions should operate uniformly
throughout Australia. Currentl y, the Commonwealth and each State other than Victoria have
separate freedom of association laws with substantially different contents. Thi s is undesirable
for a number of reasons. Most importantly, it makes it alm ost impossible for participants in the
industry to know their righ ts and oblig ations with any precision. Th is contributes to a culture in
which the rule of law can be subverted to other interests, and in which the law tends to be
disregarded and unenforced.
234 It would therefore be desirable for Commonwealth freedom of association provisions applying
to the building and construction industry to cover the field , or for the Commonwealth provisions
to be mirrored in legislation enacted by each State.
235 Constitutional limitations on the Commonwealth's legislative power mean that it is not possible
for the Commonwealth to cover the field in relation to freedom of association. It is possible,
however, for Commonwealth laws in this area to have extended operation through careful reliance on the corporations power and the conciliation and arbitration power. As I have already
observed, as currently drafted, Part XA of the Workplace Relations Act 1996 (C'wth) applies
well beyond the usual sphere of Commonwealth legislative coverage for industrial relations
issues . It extends to a range of conduct involving State unions, State awards and State
agreements. Part XA has been upheld as constitutionally valid by every court so far to consider the question .
292 Final Report of the Royal Commission into the Building and Construction Industry
236 The corporations power, in particular, gives Part XA its wide application. By s298G of the
Workplace Relations Act 1996 (C'wth), Part XA applies to conduct by a constitutional
corporation, and to conduct that adversely affects a constitutional corporation.235 The
evidence presented to the Commission suggests that all major head contractors. and most
other contractors operating in the building and construction industry, are constitutional corporations.
237 The Workplace Relations Legislation Amendment (More Jobs, Better Pay) Bill 1999 (C'wth)
proposed an amendment of s298G which would have involved :
⢠extending the operation of Part XA to include conduct carried out wholly or partly with
intent to affect adversely a constitutional corporation;
⢠remedying an apparent defect in the drafting of s298G(2)(a) by deleting the word 'this' and substituting the word 'the'; and
⢠recasting s298G(2)(b) in clear and unambiguous terms.
238 No member of the Senate Employment, Workplace Relations. Small Business and Education
Committee expressed any opposition to the proposed reform of s298G. The proposed
amendment was sensible and I can see no reason why it ought not to be incorporated into
legislation applying to the building and construction industry.
239 As the provisions I have in mind will apply to conduct by constitutional corporations. and to
conduct which adversely affects constitutional corporat[ons or which is engaged in with intent
to affect adversely constitutional corporations. it may be that in time participants in the building
and construction industry will see a benefit from incorporating, if they have not already done so.
240 While there would be advantages in simplifying the categories of conduct to which freedom of
association provisions apply in the building and construction industry, I have concluded that the
provisions of Division 2 of Part XA of the Workplace Relations Act 1996 (C'wth) should be
replicated in any new legislation, with the amendments I have identified. The guiding principle in
relation to coverage is that the Commonwealth legislation should apply as widely as possible,
subject only to Constitutional limitations. For the same reason, the definitions set out in
s298B(1) and (4) of the Workplace Relations Act 1996 (C'wth) should be replicated in any new legislation .
241 Commonwealth legislation with the coverage I have indicated will be capable of regulating
most, but not all conduct in the bui lding and construction industry wh ich undermines freedom
of association. I therefore recommend that the Commonwealth seek to persuade each State to
enact complementary freedom of association provisions of specific application to the building
and construction industry in terms which mirror those in the proposed Commonwealth
legislation. An alternative means of establishing a uniform regulatory environment would be for
States to refer relevant powers to the Commonwealth, as Victoria did in 1996.
Reform- National Issues Part 7 293
Issue
Currently, the Commonwealth and each State other than Victoria have separate freedom
of association laws with substantially different contents. This is undesirable for a number
of reasons. Most importantly, it makes it almost impossible for participants in the
industry to kn ow their rights and obligations with any precision. Th is contributes to a
culture in whi ch other interests prevail over the rule of law and in which th e law tends to
be disregarded and unenforced.
It would therefore be highly desirable for freedom of association provisions applying to
the build ing and construction industry to operate uniformly throughout Australia. The
Commonwealth Parliament, however, does not have the Constitutional capacity to enact
freedom of association provisions which cover all participants in the industry in all
circumstances.
Recommendation 80
The regulation of freedom of association in the Bui lding and Construction Industry
Improvement Act apply as broadly as possible having regard to Constitutional
limitations.
Recommendation 81
Freedom of association provisions in the Building and Construction Industry
Improvement Act have generally the same coverage as Part XA of the Workplace
Relations Act 1996 (C 'wth) but with the following additional coverage:
(a) they shall apply to conduct carried out wholly or partly with intent to affect
adversely a constitutional corporation; and
(b) conduct shall be taken to affect adversely a constitutional corporation if an
employee of, or a person engaged by, a constitutional corporation is the person referred to in the provision in question and against whom the conduct has been, is
being or would be carried out, and the conduct affected, affects or would affect
the person in that capacity.
In order to cor.rect an apparent drafting anomaly the word 'the' be substituted for the
word 'this' in a provision equivalent to s298G(2)(a) of the Workplace Relations Act 1996 (C'wth) .
The definitions in s298B(1) and (4) of the Workplace Relations Act 1996 (C'wth) be
replicated in freedom of association provisions in the Building and Construction Industry Improvement Act.
294 Final Report of the Royal Commission into the Building and Construction Industry
Recommendation 82
The Commonw·ealth seek to persuade each State to enact complementary freedom of
association provisions of specific application to the building and construction industry in
terms which mirror those in the Building and Construction Industry Improvement Act. An
alternative means of establishing a uniform regulatory environment would be for States to refer relevant powers to the Commonwealth.
Prohibited conduct
242 Part XA is complicated legislation. I have reached the view that the best way of formulating
freedom of association provisions in legislation applying to the building and construction
industry would be to divide the conduct which is prohibited into two categories:
⢠conduct which is prohibited when engaged in by any participant in the industry; and
⢠conduct which is prohibited when engaged in by particular kinds of participants, such as
employers, persons who engage independent contractors , employees, and unions and their officers and members . These more detailed prohibitions will ma1ntain and extend the breadth
of conduct already proscribed by Part XA of the Workplace Relations Act 1996 (C'wth).
243 Taken together, the proposed provisions will constitute· a comprehensive package of reforms
designed to result in all participants in the building and construction industry understanding
and honouring their obligations concerning freedom of association .
244 The evidence presented to the Commission has shown that a great deal of conduct which
undermines freedom of association in the building and construction industry involves the making
of indirect and implied threats. For that reason, legislation for the industry should include a
definition of 'threat' which specifies that threats may be direct, indirect, express or implied.
Issue
Evidence presented to the Commission established that a great deal of conduct which
undermines freedom of association in the building and construction industry involves the
making of indirect and implied threats.
Part XA of the Workplace Relations Act 1996 (C'wth) does not contain a definition of 'threat'.
Recommendation 83
Freedom of association provisions in the Bui lding and Construction Industry
Improvement Act include a definition of 'threat' which specifies that threats may be
direct, indirect, express or implied.
Reform- National issues Part 1 295
Conduct which is prohibited when engaged in by any participant
245 In formulating prohibitions which should apply to conduct when engaged in by any participant
in the ind ustry, I intend to establish a small number of simple and eas ily understood provisions
wh ich will prohibit the most common forms of conduct which has a tendency to undermine
freedom of association in the bu ilding and construction industry. Having a small number of key
prohibitions will be likely to lead to greater understandin g among participants in the industry of
their righ ts and obl igations concerning freedom of association, and to facilitate enforcement of
those rights and obligations.
246 Taking into account the deficiencies identified in Part XA of the Workplace Relations Act 1996
(C 'wth), the evidence presented to the Commission and the submissions received by the
Commission, I have reached the view that freedom of association provisions applying to the
building and construc tion industry should contain general prohibitions which apply to all
participants in the industry to the following effect:
The first general prohibition
⢠A person must not organise or take, or th reaten to organise or take, any action with the
intent, directly or indirectly, of coercing another person to become, not become, remain
or cease being an officer, delegate or member of an industrial association .
The second general prohibition
⢠A pe rso n must not knowingly make a false or misleading statement to another person
with intent to encourage, persuade or coerce that other person, or any other person, to become, not become, remain or cease being an officer, delegate or member of an
industrial association.
⢠In addition, a person must not make any statement to the following effect:
that a bui lding or construction site, or any part thereof, is a 'no ticket no start' site
or a 'u ni on site';
that it is a requirement that any person entering or working on a bu ilding or
construction site, or any part thereof, must be a member of an industrial
association or must not be a member of an industrial association; or
that a person must disclose whether he or she or any other person is, or is not, a
member of an industrial association,
with intent to encourage, persuade or coerce another person to become, not become,
remain or cease being an officer, delegate or member of an industrial association.
⢠For the purpose of these provisions:
whether or not the recipient of the statement could become, not become, remain or cease being (as the case requires) an officer, delegate or member of an industrial association is irrelevant; and
a statement includes words, writing, signs and conduct, and may be express or implied.
296 Final Report of the Royal Commission into the Building and Construction Industry
The third general prohibition
⢠A person must not:
organise or take, or threaten to organise or take, any industrial action or other action; or
refrain or threaten to refrain from organising or taking any action;
on the ground, or on grounds that include the ground, that another person is, has been,
proposes to become, has at any time proposed to become, is not, or proposes not to
become, an officer, delegate or member of an industrial association.
⢠Industrial action cannot be protected action if it is threatened, organised or taken on the
ground, or on grounds that include the ground, that a person is, has been, proposes to
become, has at any time proposed to become, is not, or proposes not to become, an
officer, delegate or member of an industrial association.
247 Proh ibitions of this kind would, in my view, if adequately enforced, prevent much of the conduct
which has a tendency to undermine freedom of association which has been high lighted by the evidence presented to the Commission .
248 The first general prohibition is in tended to simplify (and expand in some respects) the
prohibitions currently set out in the following provisions of Part XA:
⢠s298K when read with s298L(1 )(a) and (b);
⢠s298P(3) when read with ss298K and 298L(1 )(a) and (b);
⢠s298M;
⢠s298P(1);
⢠s298P(2); and
⢠s2988(2).
249 The second general prohibition has no counterpart in Part XA. It is simi lar in some respects to
prohibitions in other areas of the law, such as s52 of the Trade Practices Act 1974 (C'wth).
250 The second general prohibition is intended to prevent a range of undesirable conduct,
including:
⢠head contractors and un ion organisers falsely representing to employers or employees
that union membership is a requirement on particular sites, with the intent of encouraging or persuading workers to join the union;
⢠head contractors and union organisers falsely representing to employers or employees
that union membership is a tender requirement, with the intent of encouraging or
persuading workers to join the union;
⢠head contractors and union organisers representing to employers or employees that all
workers have to be union members in order to obtain the benefits of a workplace
agreement to which the union is a party; and
Reform - National issues Part 1 297
⢠head contractors and union organisers representing to employers or employees that it is
·a condition of obtaini ng a workplace agreement that all workers be union members.
251 Although the second general prohibition affects freedom of expression , it does so in a way
which is app rop ri ately adapted to ac hi eve a leg itim ate end, namely securin g the fundamental
right to freedom of association in the building and construction industry, and is narrowly drafted
so as to exclude on ly knowing ly false or misleading statements, and particular statements
wh ich should have no place in the industry. The prohibition is intended to assist in stamping out
conduct which, according to the evidence presented to the Commission, is frequently engaged
in with the in tent of fo rcing persons to joi n unions agai nst their wishes. It no more restricts
freedom of expression than does s52 of the Trade Practices Act 1974 (C'wth} or the equivalent
provisions in State fair trad ing legi slation.
252 The third general prohibition is intended to simplify (and expand in some respects) the
prohi bition s currently set out in the fo llowin g provisions of Part XA:
⢠s298P(1);
⢠s298P(2);
⢠s298 P(3)(a) and (b), read with ss298K and 298L(1)(a) and (b); and
⢠s298S(2)(b) and (c) .
253 The third general prohibition picks up in some res pects the lang uag e used in s170NC of the
Workplace Relations Act 1996 (C'wth), an d the language used in the recommendation as to how that provis ion ought to be reformulated in legislation applying to the bui lding and
construction in dustry. The formulation of the third general prohibition in th is way recognises the
close association between principles of freedom of association, and the principle of freedom of
bargain ing in relation to workplace agreements. In much of the evidence presented to the
Commission, coercion in relation to workplace agreements coincided with and was
indistin guishable fro m coercion in rel ation to union membersh ip.
254 If adopted, the general prohibitions would obviate the need to include provisions equivalent to
s298P(1) and (2) of the Workplace Rela tions Act 1996 (C'wth} in legislation applying to the
building and construction industry. Some other provisions deri ved from Part XA of the
Workplace Relations Act 1996 (C'wth) will be capable of operating concurrently with the
general prohibitions.
255 Th e general proh ibitions apply only to conduct which has a coercive effect, to certain false and
misleading statements made with intent to undermine a person's abil ity to exercise his or her
right to freedom of association, and to conduct in the nature of industrial action which
undermines the right to freedom of association. By frami ng the prohibi ti ons in that way, the right of unions and their officers and members to persuade and encourage workers to join
unions by lawful and leg itim ate means is unaffected .
298 Final Report of the Royal Commission into the Building and Construction Industry
Issue
A deficiency in Part XA of the Workplace Relations Act 7 996 (C'wth) is that it does not
contain simple and easily understood provisions which apply to all participants in a
workplace to prohibit the most common forms of conduct that have a tendency to undermine freedom of association.
Having a small number of key prohibitions in legislation applying to the building and
construction industry will be likely to lead to greater understanding among participants in
the industry of their rights and obligations concerning freedom of association, and facilitate enforcement of those rights and obligations.
Recommendation 84
Freedom of association provisions in the Building and Construction Industry
Improvement Act contain general prohibitions which apply to all participants in the
industry to the following effect:
(a) A person must not organise or take , or threaten to organise or take, any action
with the intent, directly or indirectly, of coercing another person to become, not
become, remain or cease being an officer, delegate or member of an industrial
association.
(b) A person must not knowingly make a false or misleading statement to another
person with intent to encourage, persuade or coerce that other person, or any
other person, to become, not become, remain or cease being an officer, delegate or member of an industrial association.
(c) In addition, a person must not make any statement to the following effect:
(i) that a building or construction site, or any part thereof, is a 'no ticket no
start' site or a 'union site';
(ii) that it is a requirement that any person entering or working on a building or
construction site, or any part thereof, must be a member of an industrial
association or must not be a member of an industrial or
(iii) that a person must disclose whether he or she or any other person is , or is
not, a member of an industrial association,
with intent to encourage, persuade or coerce another person to become, not
become, remain or cease being an officer, delegate or member of an industrial
association.
(d) For the purpose of paragraphs (b) and (c):
(i) whether or not the recipient of the statement could become, not become,
remain or cease being (as the case requires) an officer, delegate or member
of an industrial association is irrelevant; and
Reform- Na tional issues Part 1 299
(ii) a statement includes words, writing, signs and conduct, and may be
express or implied.
(e) A person must not:
(i) organise or take, or threaten to organise or take, any industrial action or
other action; or
(ii) refrain or threaten to refrain from organising or taking any action,
on the ground, or on grounds that include the ground, that another person is, has
been, proposes to become, has at any time proposed to become, is not, or
proposes not to become, an officer, delegate or member of an industrial
association.
(0 Industrial action cannot be protected action if it is threatened, organised or taken
on the ground, or on grounds that include the ground, that a person is, has been,
proposes to become, has at any time proposed to become, is not, or proposes
not to become, an officer, delegate or member of an industrial association.
Conduct which is prohibited when engaged in by particular participants
256 The general prohibitions will be likely to prevent a great deal of the conduct exposed by
evidence presented to the Commission that has the effect of undermining freedom of
associatio n. Those prohibitions will not, however, be sufficient of themselves. Further specific
prohibitions ai med at particular industry participants are necessary if a comprehensive package
of freedom of associati on provisions is to be formulated.
257 In prescribing the conduct that shoul d be prohibited when engaged in by particular participants
in the industry, it is convenient an d sensible to use the existing prohib itions in Part XA as a
starting point, and to amend those prohibitions where necessary to take account of
deficiencies exposed by the foregoing analysis, the evidence P.resented to the Commission, and the submissions received by the Commission.
258 I have already identified in this section a number of problems with th e provisions of Part XA of
the Workplace Relations Act 1996 (C'wth) stemming fro m the way in which they define the
conduct which they prohibit. Those problems include the following:
⢠Section 298K, as presently drafted, does not prohibit an employer from engaging in
conduct of the kind set out in s298K, where the employer intends to engage in that conduct for one or more of the prohibited reasons set out in s298L, if th ere is in fact no
basis for the prohibited reason or reasons. To take an example, s298K would not be
contravened if an employer di smissed an employee because th e employer believed the employee to be a union member, if the employee was not in fact a union member. 236 In
such a case, however, the employer would plainly intend to undermine the right to
freedom of association and to thwart the objects of Part XA. To take another example,
s298K would not be contravened if a person terminated the contract of an independent
contractor because the person bel ieved the independent contractor had employees who
300 Final Report of the Royal Commission into the Building and Construction Industry
were not union members, if in fact all employees of the independent contractor were
union members 237 Again, in such a case, the person's conduct would be calculated to
undermine the right to freedom of association of workers. In my view, such conduct
ought to be prohibited. I therefore recommend that in freedom of association provisions
for the building and construction industry, a person who engages in prohibited conduct,
and intends to engage in that conduct for a prohibited reason , ought to be taken to have
engaged in the conduct for that prohibited reason.
Issue
Section 298K of the Workplace Relations Act 1996 (C'wth) does not prohibit an
employer from engaging in conduct of the kind set out in s298K, where the employer intends to engage in that conduct for one or more of the prohibited reasons set out in
s298L, if there is in fact no basis for the prohibited reason or reasons.
For example, s298K would not be contravened if an employer dismissed an employee
because the employer believed the employee to be a union member, if the employee was
not in fact a union member. In such a case, however, the employer would plainly intend to
undermine the right to freedom of association and to thwart the objects of Part XA.
Recommendation 85
Freedom of association provisions in the Building and Construction Industry
Improvement Act provide that a person who engages in prohibited conduct, and intends
to engage in that conduct for a prohibited reason, is taken to have engaged in the
conduct for that prohibited reason.
⢠There is a significant flaw in s298M of the Workplace Relations Act 1996 (C'wth). It
prohibits employers or persons who engage independent contractors from inducing
(whether by threats or promises or otherwise) an employee or contractor to stop being an
officer or member of an industrial association. It does not prohibit employers or persons
who engage independent contractors from inducing employees or contractors to
become or remain officers or members of an industrial association. 238 This flaw should be
remedied in freedom of association provisions for the building and construction industry.
Reform- National issues Part 1 30 I
Issue
Section 298M of the Workplace Relations Act 1996 (C'wth) prohibits employers or
persons who engage independent contractors from inducing (whether by threats or
promises or otherwise) employees or contractors to stop being officers or members of
an industrial association.
It does not prohibit employers or persons who engage independent contractors from
inducing employees or contractors to become or remain officers or members of an
industrial association. This is a significant flaw in the current provision.
Recommendation 86
In freedom of association provisions in the Building and Construction Industry
Improvement Act, an expanded provision similar to s298M be included which prohibits
employers or persons who engage independent contractors from inducing employees
or contractors to stop being, become or remain officers or members of an industrial
association.
⢠In Employment Advoca te v Williamson ,239 Gray J construed s298P(3) in a way which
requ ires courts to have regard to the capacity and subjective intentions of the recipient of
a communication in order to determine wheth er an industrial association , or an officer or
member of such an association has encouraged or incited an employer to take
action in re lation to a person that would, if taken, contravene s298K. For reason s I have
already identified, if the principle of freedom of association is to be respected in th e
building and construction ind ustry, a prohibition of the kind imposed by s298P(3) ought
to apply whether or not the recipient of th e comm unication could in fact contravene
s298K. The vice whi ch needs to be addressed is industrial associations and th eir officers
an d members making demands of employers or contractors that would, if acceded to,
contravene a freedom of association provision. The prohibition ought to apply where the
person making the demand intends to cause the recipient to act in a way that would
constitute a contravention of a freedom of associati on provision, regard less of whether
the recipient of the dem and could in fact act in that way. The same vi ce would also be
addressed in many cases by the second general prohibition.
302 Final Report of the Royal Commission into the Building and Construction Industry
Issue
Section 298P(3)' of the Workplace Relations Act 1996 (C'wth) has been interpreted in a
way which requires courts to have regard to the capacity and subjective intentions of the
recipient of a communication in order to determine whether an industrial association, or
an officer or member of such an association has advised, encouraged or incited an
employer to take action in relation to a person that would, if taken, contravene s298K.
The vice which needs to be addressed, however, is industrial associations and their
officers and members making demands that are calculated to undermine an individual's right to freedom of association.
Recommendation 87
Freedom of association provisions in the Building and Construction Industry
Improvement Act prohibit industrial associations and their officers and members making
demands of employers or contractors that would, if acceded to, contravene a freedom
of association provision. The prohibition to apply where the person making the demand
intends to cause the recipient to take action that would constitute a contravention of a
freedom of association provision, regardless of whether the recipient of the demand
intends to take, has in contemplation taking, or could in fact take that action.
⢠A further problem with s298P(3) was exposed by the evidence presented to the
Commission in relation to the Lotus Glen Correctional Centre project in Townsville.
Threats by industrial associations and their officers and members which have as their
objective causing an employer to take action which would, if taken, contravene s298K,
may not amount to a contravention if they are made without any indication that the
employer should do one or more of the things prohibited by s298K, such as dismissing an employee, injuring an employee in his or her employment, or altering the position of an
employee to his or her prejudice. That problem is addressed by the third general prohibition.
⢠The prohibition in s298S(2)(a) has been interpreted as applyi ng only where there is a
contractual relationship between the person who is advised, encouraged or incited to
take 'discriminatory action' against an 'eligible person' and the eligible person 240 This
narrow construction leads to undesirable outcomes because, for example, it does not
prohibit union organisers from advising, encouraging or inciting head contractors to exert
pressure on their subcontractors to engage individual independent contractors only
where they are union members. In legislation applying to the building and construction
industry, there should be a provision equivalent to s298S(2)(a), but with an expanded
definition of 'd iscri minatory action' which includes advising, encouraging or inciting
another person to engage in discriminatory action.
Reform- National issues Part 1 303
Issue
The prohibition in s298S(2)(a) of the Workplace Relations Act 1996 (C'wth) against
industrial associations taking 'discriminatory action' against 'eligible persons' has been
interpreted as applying only where there is a contractual relationship between the person
who is advised, encouraged or incited to take 'discriminatory action' against an 'eligible
person' and the eligible person . This narrow construction leads to undesirable outcomes
because, for example, it does not prohibit union organisers from advising, encouraging
or inciting head contractors to exert pressure on their subcontractors to engage
individual independent contractors only where they are union members.
Recommendation 88
A provision equivalent to s298S(2)(a) be included in the Building and Construction
Industry Improvement Act, but with an expanded definition of 'discriminatory action'
which includes advising, encouraging or inciting another person to engage in
discriminatory action.
⢠The prohibition in s298S(2)(b) of the Workplace Relations Act 1996 (C'wth) applies only to
industrial action taken or threatened against an employer with intent to coerce the
employer to take 'discriminatory action' against an 'eligible person ' because the eligible
person is not a member of an industrial association. A broader prohibition ought to apply:
namely a prohibition against an industrial association, or an officer or member of an
industrial association, taking or threatening to take industrial action against any person,
whether an employer or not, with intent to coerce that person to take discriminatory
action against an eligible person because he or she is, has been, proposes to become,
has at any time proposed to become, is not, or proposes not to become, an officer,
delegate or member of an industrial association. Conduct fa lling within this prohibition will
also be likely to fall with in the scope of the third general prohibition.
304 Final Report of the Royal Commission into the Building and Construction Industry
Issue
The prohibition in s298S(2)(b) of the Workplace Relations Act 1996 (C'wth) applies only
to industrial action taken or threatened against an employer with intent to coerce the
employer to take 'discriminatory action' against an 'eligible person' because the eligible
person is not a member of an industrial association.
Recommendation 89
A broader prohibition be included in the Building and Construction Industry
Improvement Act: namely a prohibition against an industrial association, or an officer or
member of an industrial association, taking or threatening to take industrial action against any person, whether an employer or not, with intent to coerce that person to
take discriminatory action against an eligible person because he or she is, has been ,
proposes to become, has at any time proposed to become, is not, or proposes not to become, an officer, delegate or member of an industrial association.
⢠A further problem with s298S is that it applies only to conduct against an 'el igible person'
engaged in because the eligible person is not a member of an industrial association or
with intent to coerce the eligible person to join .an industrial association. A practical
problem which arises because of the way in which s298S is drafted emerged from an
analysis of the Lotus Glen Correctional Centre case study, involving the erection of an
accommodation facility in Queensland. In that instance, a union organiser engaged in
conduct for the purpose of exerting pressure on the employees of a subcontractor to join
the union. The conduct would only have been prohibited by s298S if it had been engaged
in because the subcontractor himself was not a member of an indu strial association. A
prohibition of the kind in s298S for the building and construction industry ought to be
expressed in terms which prohibit industrial associations and their officers and members
from engaging in conduct against an eligible person because th e eligible person, or a
person employed or engaged by the elig ible person, is not a union member. Again, the
third general prohibition wi ll also be likely to apply in such cases.
Reform - National issues Part 1 305
Issue
Section 298S of the Workplace Relations Act 1996 (C'wth) applies to conduct against
an 'eligible person' engaged in because the eligible person is not a member of an
industrial association or with intent to coerce the eligible person to join an industrial association.
Recommendation 90
The Building and Construction Industry Improvement Act prohibit conduct engaged in
because an eligible person, or a person employed or engaged by the eligible person, is
not a member of an industrial association, or with intent to coerce the eli gible person, or
a person employed or engaged by the eligible person, to join an industrial association.
259 The variou s recommendations I have made in this section have been incorporated into the
model freedom of association provisions which are set out in Appendix B.
Onus of proof
260 Section 2988(2) of the Workplace Relations Act 1996 (C'wth) deems action done by one of the
following bodies or persons to have been done by an industrial association:
⢠the committee of management of the industrial association;
⢠an officer or agent of the industrial association acting in that capacity;
⢠a member or group of members of the industrial association acting under the rules of the
association; or
⢠a member of the industrial association, who performs the function of dealing with an
employer on behalf of the member and other members of the association, acting in that
capacity-except where a committee of management of the association, a person authorised by the
committee or an officer of the association has taken reasonable steps to prevent the action:
s298B(3) .
261 I am satisfied that provisions equivalent to s298B(2) and (3) ought to be included in freedom of
association provisions applying to the bui lding and construction industry. I have set out my
views as to the circumstances in which and the reasons why industrial associations should be
held responsible for the conduct of their representatives in more detail in the section of this
report dealing with achieving cultural change.
262 Section 298V of the Workplace Relations Act 1996 (C'wth) imposes a reverse onus of proof in
cases where proof that conduct was carried out for a particular reason, or with a particular
intent, is required to establish a contravention of Part XA. In such cases, there is a presumption
306 Final Report of the Royal Commission into the Building and Construction Industry
that the conduct was carried out for that reason or with that intent, unless the contrary is proved.
263 I am satisfied that s298V should be replicated in legislation applying to the building and
construction industry. A reverse onus of proof provision is desirable having regard to the
practical difficulties which plaintiffs would face in proceedings for contraventions of freedom of
association provisions if they had to prove the state of mind of the defendant.
Issue
Section 2988(2) of the Workplace Relations Act 1996 (C'wth) deems action done by
various representatives of industrial associations to have been done by the industrial association.
Section 298V of the Workplace Relations Act (C'wth) imposes a reverse onus of proof in
cases where proof that conduct was carried out for a particular reason, or with a particular intent, is required to establish a contravention of Part XA.
These provisions are desirable because:
(a) the cultural change which is necessary in the building and construction industry is
more likely to be achieved if industrial associations are held accountable for the conduct of their representatives; and
(b) a reverse onus of proof provision overcomes the practical difficulties which
plaintiffs would face in proceedings for contraventions of freedom of association
provisions if they had to prove the state of mind of the defendant.
Recommendation 91
Provisions equivalent to ss298B(2) and 298V of the Workplace Relations Act 1996 (C'wth) be replicated in the Building and Construction Industry Improvement Act.
Remedies
Employees
264 As currently framed, employees who are coerced into joining, or not joining, a union, or who are
affected by any conduct which contravenes Part XA, have only a limited right to apply for an
order under s298U. An employee may apply if he or she is 'the person, referred to in the
provision in question , against whom the conduct has been, is being or would be carried out ':
s2 98T(2)(a).241
265 Freed om of association provisions exist primarily to protect the rights of ind ividuals to join, or
not join, unions. It is therefore incongruous that under Part XA of the Workplace Relations Act
1996 (C'wth), employees affected by conduct undermining their right to freedom of association
do not necessarily have standing to enforce the law.
Reform- National issues Part 1 30 7
266 I therefore recommend that, in the building and construction industry, any employee:
⢠- of a person referred to in a freedom of association provision , against whom conduct has
been , is being or would be carried out; and
⢠who has been affected, is being affected or would be affected by the conduct -should be entitled to bri ng an application for orders in respect of a contravention of the relevant
provision. A similar right shou ld be accorded to independent contractors engaged by persons referred to in freedom of association provisions.
Issue
An employee may apply to the Federal Court for an order under s298U of the Workplace
Relations Act 1996 (C 'wth) on ly if he or she is 'the person, referred to in the provision in
question, against whom the conduct has been, is being or would be carried out'.
Employees can be affected by conduct carried out against their employers. Independent
contractors can be affected by conduct carried out against the persons who engage them .
Persons who are affected by conduct should have standing to apply for orders in
respect of that conduct.
Recommendation 92
Freedom of association provisions in the Bu il ding and Construction Industry
Improvement Act permit any employee of a person referred to in a freedom of
association provision, against whom conduct has been , is being or would be carried out
and who has been affected, is being affected, or would be affected by the conduct, to bring an application for a contravention of the relevant provision.
A similar right be accorded to any independent contractor engaged by a person referred
to in a freedom of association provision against whom conduct has been, is being or would be carried out.
308 Final Report of the Royal Commission into the Building and Construction Industry
The Australian Building and Construction Commission
267 I have elsewhere in my report made detail ed recommendations in relation to the establishment
and powers of the ABCC . The ABCC should have the power to make applications to the Court
for orders in respect of contraventions of freedom of association provisions in legislation for the building and construction industry.
268 In addition, the ABCC should have the power to investigate contraventions of the freedom of
association provisions and the power to provide free legal representation to a party in a
proceeding concerning a contravention of the freedom of association provisions. In other
words, the ABCC should be given the same powers as have been given to the Employment
Advocate in relation to freedom of association by s83BB(1 )(f) and (g) of the Workplace Relations Act 1996 (C 'wth) .
269 Th e powers which should be vested in the ABCC are discussed in more detail elsewhere in my report.
Issue
In Volume 11, Reform - Achieving Cultural Change, this report recommends the creation
of a body, provisionally called the Australian Building and Construction Commission,
with powers to investigate contraventions of and enforce the law in the building and construction industry.
If the Australian Building and Construction Commission is to be effective, it needs to
have powers to investigate complaints and enforce the law in relation to freedom of
association in the building and construction industry. Its powers should mirror those of the Employment Advocate.
Recommendation 93
The Australian Building and Construction Commission have the power to:
(a) make applications to the Federal Court for orders in respect of contraventions of
freedom of association provisions in the Building and Construction Industry
Improvement Act;
(b) investigate contraventions of those provisions; and
(c) provide free legal representation to a party in a proceeding concerning a
contravention of those provisions.
Penalties
270 The maximum penalty currently available in cases where contraventions of Part XA of the
Workplace Relations Act 1996 (C 'wth) are proved is $10 000 for a body corporate and $2000
in other cases 2 42 These penalties are inadequate. The extent to which freedom of association
laws are disregarded or flouted in the building and construction industry strongly suggests that the current penalties are ineffective as a deterrent.
Reform- National issues Part 1 309
271 Building and construction projects frequently have values of tens or hundreds of millions of
dollars. The incidence of liquidated damages clauses and other commercial factors have led to
an environment in which short term expediency too often prevails over adherence to the rule of
law.
272 In line with increased penalties I have recommended elsewhere in my report for other
contraventions of legislation applying to the building and construction industry, I recommend
that the maximum civil penalty for a contravention of the freedom of association provisions
should be $100 000 in the case of a body corporate, and $20 000 in all other cases.
273 I have recommended elsewhere in my report the enactment of provisions in legislation applying
to the bu ilding and construction industry setting out, among other matters:
⢠the payment of compensation in cases where contravention of a statutory prohibition has been proved; and
⢠the circumstances in which individuals should be suspended or disqualified from holding
office or a paid position in a reg istered organisation .
27 4 These additional penalties and remedies should be available in appropriate cases where
contraventions of freedom of association provisions have been proved. I have dealt with this
matter in more detail elsewhere in my report.
Issue
The maximum penalty currently available in cases where contraventions of Part XA of the
Workplace Relations Act 1996 (C'wth) are proved is $10 000 for a body corporate and
$2000 in other cases. These penalties are inadequate. The extent to which freedom of
association laws are disregarded or flouted in the building and construction industry
strongly suggests that the current penalties are ineffective as a deterrent.
Bui lding and construction projects frequently have values of tens or hundreds of millions
of dollars. The incidence of liquidated damages clauses and other commercial factors
have led to an environment in which short term expediency too often prevails over
adherence to the rule of law.
Recommendation 94
The maximum civil penalty fo r a contravention of freedom of association provisions in the Building and Construction Industry Improvement Act be $100 000 in the case of a body
corporate, and $20 000 in all other cases.
Additional remed ies be prescribed in cases where freedom of association
contraventions are proved, including, in appropriate cases:
(a) payment of compensation; and
(b) suspension or disqualification of an individual from holding office or a paid position
in a registered organisation.
31 0 Final Report of the Royal Commission into the Building and Construction Industry
Codes of practice
275 As I have identified elsewhere in my report , Codes of Practice can play an important ro le in
shaping the cu lture of the building and construction industry, particularly on projects which are funded or managed by Federal, State or Territory governments.
276 I have made recommendations concerning how Codes of Practice should protect and enhance the right to freedom of association elsewhere in my report.
Casual tickets
277 I have already made some observations concerning evidence presented to the Commission concerning demands for the purchase of casual union tickets. Such demands usually involve
the following elements:
⢠Non-union labour is being used on a building or construction site, or unionised labour is
being used where there is a demarcation dispute between two or more unions.
⢠A union demanding a payment that is actually or notionally for the purpose of purchasing union memberships for workers on the site.
⢠The demand is coupled with an express or implied threat of industrial action if the
demand for payment is not met.
⢠The demand is described as being for 'casual tickets' or sim il ar.
⢠Any payment does not involve a voluntary payment of union fees by or on behalf of an
individual worker on the site .
⢠Usual ly, no individual worker actually becomes a union member as a result of the purchase of a casual ticket.
278 It is not uncommon for unions to issue invoices for the amount of the payment for casual tickets
which misrepresent or conceal the nature of the payment in a variety of ways. Examples
include invoices which describe payments as being for 'negotiating fees' or 'trai ning '.
279 The evidence was that the practice of demanding payments for casual tickets was particularly
prevalent in , although not limited to, Western Australia and Victoria. I have mentioned some
relevant case studies earlier in this section.
280 Depending on the circumstances, demands by unions for casual ticket payments may
constitute a range of statutory or common law offences, including demanding property with
intent to steal, obtaining money by deception, conspiracy to defraud or making a false instrument. There is presently no provision in the Workplace Relations Act 1996 (C'wth),
however, which is directed at prohibiting unions or their officers, delegates or members from
coercing payments from employers or employees.
281 The mischief which has been exposed by the evidence presented to the Commission is the
payment of money, notionally for an individual's union membership fees, in circumstances
where the individ ual has not expressed a desire or intention to join the union . The practice
therefore undermines freedom of association.
Reform- National issues Part 1 31 I
282 I have made a recommendation concerning demands for the purchase of casual tickets in the
section of this report dealing with inappropriate payments.
Union encouragement clauses
283 For reasons I have al ready identifi ed, I recommend that legislation applying to the bu ilding and
construction in dustry contain a prohibition on the inclusion of clauses in awards and agreements which :
⢠require or permit any conduct which would contravene freedom of association
provisions; or
⢠directly or indirectly require a person to encourage another person to become, not
become, remain or cease being a member of an in dustrial association, or discourage
another person from becoming or remaining a mem ber of an in dustrial association .
284 I also recommend that there be a requ irement that all award s and agreements applying in the
building and construction industry include a clause which expressly states the principle of
freedom of association, in terms to the followin g effect:
Every person has the legal right to choose, freely and without interference, whether he or
she wishes to join, or not to join, an industrial association. Heavy penalties apply to any
person, including an employer or union, who coerces another person into becoming, not
becoming, remaining or ceasing to be an officer, delegate or member of an industrial
association.
No person has the nght to discrimin::Jte in favour of or against, or victimise another person
because he or she is a member, or is not a member, of an industrial association.
Issue
Clau ses encouraging union membership in awards and agreements applying to the
building and construction industry are frequently used by unions and employers as an
industrial tool to coerce or pressure workers into joining unions. This is contrary to the
objects of freedom of association.
There is an incongruity between an Act of the Parliament stating that each individual has
an unfettered freedom to decide whether he or she wil l, or will not, join an association,
and an instrument made under an Act of the Parliament providing encouragement for a
person to exercise that freedom in a particular way. If the freed om to decide is truly
unfettered, the person should neither be encouraged nor discouraged towards an
outcome. The focus should be on the individual's freedom, not upon the effect the
exercise of that freedom might have on the officers of trade unions, or upon its
consequences in the workplace . Freedom of association relates to the rights of an
individual, and the absence of compulsion upon that individual in making his or her choice. Encouragement from the legislature or by an instrum ent created un der
legislation is a step towards restricting that freedom because even-han dedness in
making that choice is removed by the scales being weighted in favour of one outcome.
31 2 Final Report of the Royal Commission into the Building and Construction Industry
Recommendation 95
The Building and Construction Industry Improvement Act include provisions which :
(a) prohibit the inclusion of clauses in awards and agreements that:
(i) require or permit any conduct which would contravene freedom of
association provisions; or
(ii) directly or indirectly require a person to encourage another person to
become, not become, remain or cease being a member of an industrial
association, or discourage another person from becoming, remaining or
ceasing to be a member of an industrial association; and
(b) require al l awards and agreements to include a clause which expressly states the
principle of freedom of association, in terms to the following effect:
Every person has the legal right to choose, freely and without interference,
whether he or she wishes to join, or not to join, an industrial association. Heavy penalties apply to any person, including an employer or union, who
coerces another person into becoming, not becoming, remaining or ceasing
to be an officer, delegate or member of an industrial association.
No person has the right to discriminate in favour of or against, or victimise
another person because he or she is a member, or is not a member, of an industrial association.
Model provisions
285 Model freedom of association provisions for the building and construction industry are set out
in Appendix B for the consideration of the Office of Parliamentary Counsel.
Issue
In order to implement the recommendations in this report in relation to freedom of
association in the building and construction industry, provisions implementing those
recommendations will need to be formulated for inclusion in the Building and Construction Industry Improvement Act.
Recommendation 96
The draft model provisions set out in Appendix B to the Freedom of association chapter
contained in Volume 7, Reform- National Issues Part 1, of this report be referred to the
Office of Parliamentary Counsel for it to consider when drafting a Bill for introduction into
Parliament.
Reform- National issues Part 1 31 3
314 Final Report of the Royal Commission into the Building and Construction Industry
Appendix A: Part XA of the Workplace Relations Act 1996 (C 'wth)
DIVISION 1 - PRELIMINARY
298A Objects of Part
As well as the objects set out in section 3, this Part has these objects:
(a) to ensure that employers, em ployees and independent contractors are free to join
industrial associations of their choice or not to join industrial associations; and
(b) to ensure that employers, em pl oyees and independent contractors are not di scriminated
against or victimised because th ey are, or are not, members or officers of industrial associations.
2988 Definitions
(1) In this Part, unless the contrary inten tion appears :
conduct includes an omission .
industrial action means:
(a) the performance of work in a manner different from that in wh ich it is customarily
performed, or the adoption of a practice in relation to work, the result of which is a
restriction or limitation on, or a delay in, the performance of the work, where:
(i) the terms and conditions of the work are prescribed, wholly or partly, by an
industrial instrument or an order of an industrial body; or
(ii) the work is performed, or the practice is adopted, in connection with an
industrial dispute; or
(b) a ban, limitation or restriction on the performance of work, or acceptance of or
offering for work, in accordance with the term s and condition s prescrib ed by an
industrial instrument or by an order of an industrial body; or
Reform - National issues Part 1 3 '1 5
(c) a ban, limitat ion or rest riction on the performance of work, or on acceptance of or
offering for work, that is adopted in connection with an industrial dispute; or
(d) a failure or refusal by persons to attend for work or a fai lure or refusal to perform
any work at all by persons who attend for work;
but does not include:
(e) action by employees that is authorised or agreed to by the employer of the
employees; or
(n action by an employer that is authorised or agreed to by or on behalf of employees
of the employer; or
(g) action by an employee if:
(i) the action was based on a reasonable concern by the employee about an
imminent risk to his or her health or safety; and
(ii) the employee did not unreasonably fail to comply with a direction of his or her
employer to perform other available work, whether at the same or another
workplace, that was safe and appropriate for the employee to perform .
industrial association means :
(a) an association of employees and/or independent contractors, or an association of
employers, that is registered or recognised as such an association (however
described) under an industrial law; or
(b) an association of employees and/or independent contractors a principal purpose
of which is the protection and promotion of their interests in matters concerning
thei r employment, or their interests as independent contractors, as the case
req ui res ; or
(c) an association of employers a principal pu rpose of which is the protection and
promotion of thei r interests in matters concerning employment and/or independent
contractors;
and includes a branch of such an association, and an organisation.
industrial body means:
(a) the Commission; or
(b) a court or commission, however designated , exercising under an industrial law
powers and functions corresponding to those conferred on the Commission by this
Act.
industrial dispute means:
(a) an industrial dispute (including a threatened , impending or probable industrial
dispute) that is about matters pertaining to the relationship between employers and
employees; or
(b) a situation that is likely to give rise to an industrial dispute of the kind referred to in
paragraph (a); or
316 Final Report of the Royal Commission into the Building and Construction Industry
(c) a dispute arising between two or more industrial associations, or within an
industrial association, as to the rights , status or functions of members of the
associations or association in relation to the employment of those members; or
(d) a dispute arising between employers and employees, or between members of
different industrial associations, as to the demarcation of functions of employees or classes of employees; or
(e) a dispute about the representation under an industrial law of the industrial interests
of employees by an industrial association of employees.
industrial instrument means an award or agreement, however designated, that:
(a) is made under or recognised by an industrial law; and
(b) concerns the relationsh ip between an employer and the employer's employees, or
provides for the prevention or settlement of a dispute between an employer and the employer's employees.
industria/law means this Act or a law, however designated, of the Commonwealth or of
a State or Territory that regulates the relationships between employers and employees or
provides for the prevention or settlement of disputes between employers and employees.
officer, in relation to an industrial association, includes:
(a) a delegate or oth er rep resentati ve of the association; and
(b) an employee of the association.
organisation includes a branch of an organisati on.
(2) For the purposes of this Part, action done by one of the following bodies or persons is
taken to have been done by an industrial association:
(a) the committee of management of the industrial association;
(b) an officer or agent of the industrial association acting in that capacity;
(c) a member or group of members of the industrial association acting under the rules
of the association;
(d) a member of the industrial association, who performs the function of dealing with
an employer on behalf of the member and other members of the association,
actin g in that capacity.
(3) Paragraphs (2)(c) and (d) do not apply if:
(a) a committee of management of the industrial association; or
(b) a person authorised by the committee; or
(c) an officer of the industrial association;
has taken reasonable steps to prevent the action.
(4) For the pu rposes of this Part :
Reform - National issues Part 1 31 7
(a) conduct is capable of constituting industrial action even if the conduct relates to
part on ly of the duties th at persons are required to perform in the course of their
employment; and
(b) a reference to industrial action includes a reference to a course of conduct
consisting of a series of industrial actions.
(5) It is declared that a reference in this Part, or in regulations made for the purposes of this
Part, to an independent contractor is not confined to a natural person.
DIVISION 2- CONDUCT TO WHICH THIS PART APPLIES
298C Application of this Part
This Part applies only to the extent provided in this Division.
298D Organisations
This Part applies to :
(a) conduct by an organisation; and
(b) conduct by an officer of an organisation acting in that capacity; and
(c) conduct carried out with a pu rpose or intent relating to a person's membership or non
membership of an organisation.
298E Industrial action
This Part applies to conduct carried out with a purpose or intent relating to a person 's
participation or non-participation in industrial action within the meaning of subsection 4(1 ).
Note: This section does not use the broader definition of Industrial action set out in section
2988.
298F Matters arising under this Act
(1) This Part appl ies to conduct carried out with a purpose or intent relating to a person 's
participation or non-participation (in any capacity) in:
(a) any proceedings under this Act; or
(b) any other activity for which this Act provides.
(2) This Part applies to conduct carried out with a purpose or intent relating to:
(a) the fact that an award, a certified agreement or an Austral ian Workplace
Ag reement applies to a person's employment; or
(b) the fact that the person is bound by an award, a certified agreement or an AWA.
298G Constitutional corporations
(1) This Part applies to:
31 8 Final Report of the Royal Commission into the Building and Construction Industry
(a) conduct by a constitutional corporation; and
(b) conduct that adversely affects a constitutional corporation .
(2) For the purpose of paragraph (1 )(b), conduct is taken to affect adversely a constitutional
corporation only if:
(a) the constitutional corporation is the person, referred to in the provision of this
Division in questi on, against whom the conduct has been, is be ing or wou ld be carried out; or
(b) the person so referred to is an employee of the constitutional corporation , or has
been engaged by the constitutional corporation as an independent contractor, and the conduct affects the person in that capacity.
Note: For constitutional corporation , see subsection 4(1 ).
298H Territories
This Part applies to conduct in a Territory.
298J Operation of State and Territory laws
Subject to section 298W, to the extent that this Part applies by virtue of the operation of section
298G or 298H, it is not intended to exclude or limit the concurrent operation of any law of a State or Territory.
DIVISION 3 - CONDUCT BY EMPLOYERS ETC.
298K Dismissal etc. of members of industrial associations etc.
(1) An employer must not, for a prohibited reason, or for reasons that include a prohibited
reason , do or threaten to do any of the following :
(a) dismiss an employee;
(b) injure an employee in his or her employment;
(c) alter the position of an employee to the employee's prejudice;
(d) refuse to employ another person;
(e) discriminate against another person in the terms or conditions on which th e
employer offers to employ the other person .
(2) A person must not, for a prohibited reason, or for reasons that include a prohibited
reason, do or threaten to do any of the following :
(a) terminate a contract for services that he or she has entered in to with an
independent contractor;
(b) injure the independent contractor in relation to the terms and conditions of the
contract for services;
Reform - National issues Part 1 31 9
(c) alter the position of the independent contractor to the independent contractor's
prejudice;
(d) refuse to engage another person as an independent contractor;
(e) discriminate against another person in the terms or conditions on which the person
offers to engage the other person as an independent contractor.
298L Prohibited reasons
(1) Conduct referred to in subsection 298K(1) or (2) is for a prohibited reason if it is carried
out because the employee, independent contrac tor or other person concerned :
(a) is, has been , proposes to become or has at any time proposed to become an
officer, delegate or member of an industrial association; or
(b) is not, or does not propose to become, a member of an industrial association; or
(c) in the case of a refusal to engage another person as an independent contractor:
(i) has one or more employees who are not, or do not propose to become,
members of an industrial association; or
(ii) has not paid, or does not propose to pay, a fee (however described) to an
industrial association; or
(d) has refused or failed to join in industrial action; or
(e) in the case of an employee- has refused or failed to ag ree or consent to, or vote in
favour of, the making of an agreement to which an industrial association of which
the employee is a member would be a party; or
(n has made, proposes to make or has at any time proposed to make an application
to an industrial body for an order under an industrial law for the holding of a secret
ballot; or
(g) has participated in, proposes to participate in or has at any time proposed to
participate in a secret ballot ordered by an industrial body under an industrial law;
or
(h) is entitled to the benefit of an industrial instrument or an order of an industrial body;
or
(i) has made or proposes to make any inquiry or complaint to a person or body having
the capacity under an industrial law to seek:
(i) compliance with that law; or
(ii) the observance of a person's rights under an industrial instrument; or
0) has participated in , proposes to participate in or has at any time proposed to
participate in a proceeding under an industrial law; or
(k) has given or proposes to give evidence in a proceeding under an industrial law; or
320 Final Report of the Royal Commission into the Building and Construction Industry
(I) in the case of an employee, or an independent contractor, who is a member of an
industrial association that is seekin g better industrial conditions - is dissatisfied with
his or her conditions; or
(m) in the case of an employee or an independent contractor- has abse nted himself or
herself from work w ithout leave if:
(i) the absence was for the purpose of carrying out duties or exercisin g rights as
an officer of an in dustrial association; and
(ii) the employee or independent contractor applied for leave before absenting
himself or herself and leave was unreasonably refused or w ithheld; or
(n) as an officer or member of an industrial association , has done, or proposes to do,
an act or thing for the purpose of furthering or protecting the industrial interests of
the industrial association, being an act or thing that is:
(2) If:
(i) lawful; and
(ii) within the limits of an authority expressly conferred on the employee,
independent contractor or other person by the industrial association under its
ru les.
(a) a threat is made to engage in conduct referrsd to in subsection 298K(I) or (2); and
(b) one of the prohibited reasons in subsection (I ) of this section refers to a person
doing or proposing to do a particular act, or not doin g or proposing not to do a
particular act; and
(c) the threat is made with the intent of dissuading or preventing the person from doing
the act, or coercing the person to do the act, as the case requ ires;
the threat is taken to have been made for that prohibited reason.
298M Inducements to cease membership etc. of industrial associations etc.
An employer, or a person who has engaged an independent contractor, must not (whether by
threats or promises or otherwise) induce an employee, or the independent contractor, (as the
case requires) to stop bei ng an officer or member of an industrial association.
DIVISION 4- CONDUCT BY EMPLOYEES ETC.
298N Cessation of work
An employee or independent contractor must not cease work in the service of hi s or her
employer, or of t he person who engaged th e independent contractor, (as the case requires)
because the employer or person :
(a) is an officer or member of an industrial association; or
(b) is entitled to the benefit of an industrial in strument or an order of an industrial body; or
Reform- National issues Part 1 32 1
(c) has made or proposes to make any inquiry or complaint to a person or body having the
· capacity under an industrial law to seek:
(i) compliance with that law; or
(i i) the observan ce of a person's rights under an industrial in strument; or
(d) has participated in , proposes to participate in or has at any time proposed to participate
in any proceedings und er an in dustrial law; or
(e) has given evidence in a proceeding under an industrial law.
DIVISION 5- CONDUCT BY INDUSTRIAL ASSOCIATIONS ETC.
298P Industrial associations acting against employers
(1) An industrial association, or an officer or member of an industrial association, must not
organise or take, or threaten to organise or take, in dustrial action against an employer
because th e employer is an officer or member of an indu strial association .
(2) An industrial association, or an officer or member of an industri al association , must not
organise or take, or threaten to organise or take , industrial action against an employer
with intent to coerce the employer or person:
(a) to become a member of an industrial association of employers; or
(b) to cease to be an officer or mem ber of such an association; or
(c) not to become an officer or rr,ember of such an association.
(3) An industrial association, or an officer or member of an industrial association, must not:
(a) advise, encourage or incite an employer; or
(b) organi se or take, or threaten to organise or take, industrial action against an
employer with intent to coerce the employer;
to take action in relation to a person that would, if taken, contravene section 298K.
(4) An industrial association, or an officer or member of an industrial association, must not,
because a member of the association has refused or failed to comply with a direction
given by the association :
(a) advise, encourage or incite an employer; or
(b) organise or take , or threaten to organise or take, industrial action against an
employer wi th intent to coerce the employer;
to prejudice the member in the member 's employment or possible employment.
(5) For the purposes of su bsection (4), a direction given by one of the following bodies or
persons is taken to have been given by an industrial association:
(a) the committee of man agement of the association;
(b) an officer or agent of the association acting in that capacity;
322 Final Report of the Royal Commission into the Building and Construction Industry
(c) a member or group of members of the association authorised to give the direction
by:
(i) the rules of the association; or
(ii) the committee of management of the association; or
(iii) an officer or agent of the association acting in that capacity;
(d) a member of the association, who performs the function of dealing with an
employer on behalf of the member and other members of the association, acting in that capacity.
2980 Industrial associations acting against employees etc.
An industrial association, or an officer or member of an industrial association, must not take, or
threaten to take, action having the effect, directly or indirectly, of prejudicing a person in the person's employment or possible employment wi th intent:
(a) to coerce the person to join in industrial action; or
(b) to dissuade or prevent the person from making an application to an industrial body for an
order under an industrial law for the holding of a secret ballot.
298R Industrial associations acting against members
An industrial association, or an officer or member of an industrial association, must not impose,
or threaten to impose, a penalty, forfeiture or disability of any kind on a member of the association :
(a) with intent to coerce the member to join in industrial action; or
(b) because the member has refused or failed to join in industrial action; or
(c) because the member has made, proposes to make or has at any time proposed to make
an application to an industrial body for an order under an industrial law for the holding of
a secret ballot; or
(d) has participated in, proposes to participate in or has at any time proposed to participate
in a secret ballot ordered by an industrial body under an industrial law
298S Industrial associations acting against independent contractors etc.
(1) In this section :
discriminatory action , in relation to an eligible person, means:
(a) a refusal to make use of, or to agree to make use of, services offered by the eligible
person; or
(b) a refusal to supply, or to agree to supply, goods or services to the eli gib le person .
eligible person means a person who is not an employee, but who:
(a) is eligible to join an industrial association; or
Reform- National issues Part 1 323
(b) would be eligible to join an industrial association if he or she were an employee.
(2) - An industrial association, or an officer or member of an industrial association, must not:
(a) advise, encourage or incite a person (whether an employer or not) to take
discriminatory action again st an eligible person because the el igible person is not a
member of an industrial association; or
(b) take, or threaten to take, industrial action against an employer with intent to coerce
the employer to take discriminatory action against an elig ible person because the
eli gible person is not a member of an industrial association; or
(c) take, or threaten to take, industrial action against an eligible person with intent to
coerce the person to join an industrial association.
DIVISION 6- REMEDIES FOR BREACHES OF THIS PART
298T Applications to the Court
(1) Subject to subsection (4), an application may be made to the Court for orders under
section 298U in respect of conduct in contravention of this Part.
(2) The application may be made by:
(a) the person, referred to in the provision in question, against whom the conduct has
been, is being or would be carried out; or
(b) in the case of a contravention of this Part by virtue of the operation of section 2980,
298E or 298F - an organisation of which the person is a member; or
(c) in the case of a contravention of th is Part by virtue of the operation of section 298G
or 298H - an industrial association of which the person is a member; or
(d) the Employment Advocate; or
(e) any other person prescribed by the regulations.
(3) A regulation prescribing persons for the purpose of paragraph (2)(e) may limit its
application to specified circ umstances.
(4) An application can not be made in respect of conduct in contravention of this Part by
virtue of the operation of section 298G or 298H if:
(a) an application has already been made for a remedy in respect of the conduct under
a law of a State or Territory; and
(b) that app lication has not failed for lack of jurisdiction.
(5) The reference in paragraph (4)(a) to a remedy is taken not to include the imposition of a
criminal penalty.
298U Orders that the Federal Court may make
In respect of conduct in contravention of this Part, the Court may, if the Court considers it
appropriate in al l the circumstances of the case, make one or more of the following orders:
32 4 Final Report of the Royal Commission into the Building and Construction Industry
(a) an order imposing on a person or industrial association whose conduct contravened or is
contravening the provision in question a penalty of not more than:
(i) in the case of a body corporate- $10 000; or
(ii) in any other case- $2000;
(b) an order requi ring the person or industrial association to reinstate an employee, or to re engage an independent contractor;
(c) an order requi ring the person or industrial associatron to pay to an employee or
independent contractor, or to a prospective employee or independent contractor,
compensation of such amount as the Court thinks appropriate;
(d) an order requiring the person or industrial association not to carry out a threat made by the person or association, or not to make any further threat;
(e) injunctions (including interim injunctions) , and any other orders, that the Court thinks
necessary to stop the conduct or remedy its effects;
(D any other consequential orders.
298V Proof not required of the reason for, or the intention of, conduct
If:
(a) in an application under this Division relating to a-person's or an industrial association's
conduct, it is alleged that the conduct was, or is being, carried out for a particular reason or with a particular intent; and
(b) for the person or industrial association to carry out the conduct for that reason or with
that intent would constitute a contravention of this Part;
it is presumed, in proceedings under this Division arising from the application, that the conduct
was, or is being , carried out for that reason or with that intent, unless the person or industrial association proves otherwise.
DIVISION 7- MISCELLANEOUS
298W Effect on other laws
(I ) This section applies if a person's or industrial association's conduct contravenes :
(a) this Part by virtue of the operation of section 298G or 298H; and
(b) a provision of an industrial law of a State or Territory, being a provision that deals
with discrimination or preference in employment.
(2) If an application is made under Division 6 in respect of the conduct, an application cannot
be made, under the industrial law of the State or Territory or any other law, in respect of
that conduct.
(3) Subsection (2) does not preclude a person or industrial association being prosecuted for
an offence, or any applications being made in connection with such a prosecution .
Reform- National issues Part 7 325
(4) If an application is made under the industrial law of the State or Territory in respect of the
-cond uct, an application cannot be made under Division 6 in respect of that conduct.
(5) Subsection (4) does not preclude an application being made under Division 6 if the
application under the industrial law of the State or Territory was made in connection with
the prosecution of the person or industrial association for an offence.
298X Contravention of this Part not an offence
A contravention of this Part is not an offence.
298Y Provisions of industrial instruments requiring or permitting conduct in contravention of this Part
A provision of an industrial instrument, or an agreement or arrangement (whether written or
unwritten), is void to the extent that it requires or permits, or has the effect of requiring or
permitting, any conduct that would contravene this Part.
298Z Removal of preference clauses from awards and certified agreements
(1) Where, on application by a person mentioned in subsection (2), the Commission is
satisfied that an award contains objectionable provisions, the Commission must vary the
award so as to remove the objectionable provisions.
(2) The app lication may be made by:
(a) an organisation or party bound by the award; or
(b) an employee whose employment is subject to the award; or
(c) the Employment Advocate.
(3) Where, on application by a person mentioned in subsection (4), the Commission is
satisfied that a certified agreement contains objectionable provisions, the Commission
must vary the agreement so as to remove the objectionable provisions.
(4) Th e application may be made by:
(a) a person bound by the certified agreement; or
(b) an employee whose employment is subject to the certified agreement; or
(c) the Employment Advocate.
(5) In this section:
objectionable provisions are provisions that:
(a) require or permit, or purport to require or perm it; or
(b) have the effect, or purport to have the effect, of requiring or permitting;
any conduct that would contravene this Part, whether or not those provisions would in
any case be void because of section 298Y
326 Final Report of the Royal Commission into the Building and Construction Industry
Appendix B: Model freedom of association provisions
PART [A]- FREEDOM OF ASSOCIATION
DIVISION 1 - PRELIMINARY
Objects of Part
As well as the objects set out in section [b], this Part has these objects:
(a) to ensure that employers, employees and independent contractors are free to join
industrial associations or not to join industrial associations;
(b) to ensure that employers, employees and independent contractors are not discriminated
against or victimised because they are, or are not, members or officers of industrial
associati ons;
(c) to provide effective rel ief to employers, employees and independent contractors who are
prevented or inhibited from exercising their right to freedom of association; and
(d) to prescribe effective remedies to penalise and deter persons who engage in conduct
which prevents or inhibits employers, employees and independent contractors from exercising their right to freedom of association .
2 Definitions
(1) In this Part, unless the contrary intention appears:
conduct includes an omission.
constitutional corporation means:
(a) a foreign corporation within the meaning of paragraph 51 (xx) of the Constitution; or
(b) a body corporate that is, for the purposes of paragraph 51(xx) of the Constitution,
a financial corporation formed within the limits of the Commonwealth; or
Reform- National issues Part 1 327
(c) a body corporate that is, for the purposes of paragraph 51 (xx) of the Constitution,
a trad ing corporation formed within the limits of the Commonwealth; or
(d) a body corporate that is incorporated in a Territory; or
(e) a Commonwealth authority.
industrial action means :
(a) the performance of work in a man ner different from that in which it is customarily
performed, or the adoption of a practice in relation to work, the result of which is a
restriction or limitation on , or a delay in, the performance of the work, where:
(i) the terms and conditions of th e work are presc ri bed, wholly or partly, by an
industrial instrument or an order of an industrial body; or
(ii) the work is performed , or the practice is adopted, in connection with an
industrial dispute; or
(b) a ban , limitation or restriction on the performance of work, or acceptance of or
offeri ng for work, in accordance with the terms and conditions prescribed by an
in dustrial instrument or by an order of an industrial body; or
(c) a ban , limitation or restriction on the performance of work, or on acceptance of or
offerin g for work, that is adopted in connection with an industrial dispute; or
(d) a failure or refusal by persons to attend for work or a failure or refusal to perform
any work at al l by persons who attend for work;
but does not include:
(e) action by employees that is authorised or ag reed to by the employer of th e
employees; or
action by an employer that is authorised or agreed to by or on behalf of employees
of the employer; or
(g) action by an employee if:
(i) the action was based on a reasonable concern by the employee about an
imminent risk to his or her health or safety; and
(ii) the employee did not unreasonably fail to comply with a direction of his or her
employer to perform other available work, wh eth er at the same or anoth er
workplace, that was safe an d appropriate for the employee to perform.
industrial association means:
(a) an association of employees and/or independent contractors, or an association of
em pl oyers, that is reg istered or recognised as su ch an associati on (however described) under an industrial law; or
(b) an association of employees and/or independent contractors a principal purpose of which is the protection and promotion of their interests in matters concerning
328 Final Report of the Royal Commission into the Building and Construction Industry
their employment, or th eir interests as independent contractors, as the case requires; or
(c) an association of employers a principal purpose of wh ich is the protection and
promotion of their interests in matters concerning employment and/or independent contractors;
and includes a branch of su ch an association, and an organisation.
industrial body means:
(a) the Commission; or
(b) a court or commission, however designated, exercising under an industrial law
powers and functions corresponding to those conferred on the Commission by th is Act.
industrial dispute means:
(a) an industrial dispute (in cluding a threatened, impendin g or probable industrial
dispute) that is about matters pertaining to the relationship between employers and employees; or
(b) a situation that is li kely to give rise to an industrial dispute of the kind referred to in
paragraph (a) ; or
(c) a dispute arising between 2 or more industrial associations, or within an industrial
association , as to the rights, status or functions of mem bers of the associations or
association in relation to the employment of those members; or
(d) a dispute arising between employers and employees, or between members of
different industrial associations, as to the demarcation of functions of employees or classes of employees; or
(e) a dispute about the representation under an industrial law of the industrial interests
of employees by an industrial association of employees.
industrial instrument means an award or agreement, however designated, that:
(a) is made under or recognised by an industrial law; and
(b) concerns the relationsh ip between an employer and the employer's employees, or
provides for the prevention or settlement of a dispute between an employer and the
employer's employees.
industria/law means this Act or a law, however designated , of the Commonwealth or of
a State or Territory that regul ates the relationships between employers and employees or provides for the prevention or settlement of disputes between employers and employees.
objectionable provision means a provision that:
(a) requires or permits, or purports to require or permit; or
(b) has the effect, or purports to have the effect, of requiring or perm itting :
Reform- National issues Part 1 329
(i) any conduct that would contravene this Part ; or
(ii) a person to encourage another person to become, not to become, remain or
cease being a member of an industrial association; or
(iii) a person to discourage another person from becoming or remaining a
member of an industrial association;
whether or not that provision would in any case be void because of section 26.
officer, in relation to an industrial association, incl udes :
(a) a person who holds an offi ce in the association;
(b) a president, vice-president, secretary or assistant secretary of the association;
(c) a member of a collective body of the association;
(d) a person who is, under the ru les of the association, entitled to participate in the
man agement of the affairs of the associat ion;
(e) a delegate or other representative of the association; and
(fj an employee of the association.
organisation includes a branch of an organisation.
threat means a direct, indirect , express or implied threat.
(2) For the purposes of th is Part, action done by one of the fol lowing bodies or persons is
taken to have been done by an industrial association:
(a) the committee of management of the industrial association;
{b) an officer or agent of the industrial association acting in that capacity;
(c) a member or group of members of the industrial association acting under the rules
of the associat ion;
(d) a member of the industrial association, who performs the function of dealing with
an employer on behalf of the member and other members of the association ,
acting in that capacity.
(3) Paragraphs (2)(c) and (d) do not apply if:
(a) a committee of management of the industrial association; or
(b) a person authorised by th e committee; or
(c) an officer of the industrial association;
has taken reasonable steps to prevent the action.
(4) For the purposes of this Part :
(a) conduct is capable of constituting industrial action even if the conduct relates to
part on ly of the duties that persons are requi red to perform in the course of their
employment; and
330 Final Report of the Royal Commission into the Building and Construction Industry
(b) a reference to industrial action includes a reference to a course of conduct
consisting of a series of industrial actions.
(5) It is declared that a reference in this Part, or in regulations made for the purposes of this
Part, to an independent contractor is not confined to a natural person .
DIVISION 2- CONDUCT TO WHICH THIS PART APPLIES
3 Application of this Part
This Part applies only to the extent provided in this Division .
4 Organisations
This Part applies to:
(a) conduct by an organisation; and
(b) conduct by an officer of an organisation acting in that capacity; and
(c) conduct carried out with a purpose or intent relating to a person's membership or non
membership of an organisation.
5 Industrial conduct
This Part applies to conduct carried out with a purpose or intent relating to a person's participation or non-participation in the fo llowing conduct:
(a) the performance of work in a manner different from that in which it is customarily
performed, or the adoption of a practice in relation to work, the result of which is a
restriction or limitation on, or a delay in , the performance of the work, where:
(i) the terms and conditions of the work are prescribed, wholly or partly, by an award or an order of the Commission, by a certified agreement or AWA, by an award,
determination or order made by another tribunal under a law of the Commonwealth
or otherwise by or under a law of the Commonwealth; or
(ii) the work is performed, or the practice is adopted, in connection with an industrial dispute;
(b) a ban, limitation or restriction on the performance of work, or on acceptance of or offering
for work, in accordance with the terms and conditions prescribed by an award or an
order of the Commission , by a certified agreement or AWA, by an award, determination
or order made by another tribunal under a law of the Commonwealth or otherwise by or
under a law of the Commonwealth;
(c) a ban, limitation or restriction on the performance of work, or on acceptance of or offering
for work, that is adopted in connection with an industrial dispute; or
(d) a failure or refusal by persons to attend for work or a failure or refusal to perform any work at all by persons who attend for work, if;
Reform - National issues Part 1 331
(i) the persons are members of an organisation and the failure or refusal is in
accordance with a decision made, or direction given, by an organisation, the
committee of management of the organisation, or an officer or a group of members
of the organisation acting in that capaci ty; or
(ii) the fai lure or refusal is in connection with an in dustrial dispute; or
(iii) the persons are employed by the Commonwealth or a constitutional corporation;
or
(iv) the persons are employed in a Territory;
but does not include:
(e) action by employees that is authorised or agreed to by the employer of the employees ; or
(n action by an employer that is authorised or agreed to by or on beh alf of employees of the
employer; or
(g) action by an employee if:
(i) the action was based on a reasonable concern by the employee about an
imminent risk to his or her health or safety; and
(ii) the employee did not unreasonably fail to comply with a direction of his or her
employer to perform other available work, whether at the same or another workplace, that was safe and appropriate for the employee to perform.
6 Matters arising under this Act etc.
(1) This Part applies to conduct carried out with a purpose or intent relating to a person 's
participation or non -participat ion (in any capacity) in :
(a) any proceedings under this Act or under the Workplace Relations Act 1996 (C 'wth) ; or
(b) any other activity for which thi s Act or the Workplace Relations Act 1996 (C'wth)
provides.
(2) This Part applies to conduct carried out with a purpose or intent relating to:
(a) the fact that an award , a certified agreement or an AWA applies to a person's
employment; or
(b) the fact that the person is bound by an award, a certified agreement or an AWA.
7 Constitutional corporations
(1) Th is Part applies to:
(a) conduct by a constitutional corporation;
(b) conduct that adversely affects a constitutional corporation; and
(c) conduct carried out wholly or partly with intent to affect adversely a constitu tional
corporation.
332 Final Report of the Royal Commission into the Building and Construction Industry
(2) For the purpose of paragraphs (1 )(b) and (c), conduct is taken to affect adversely a constitutional corporation only if:
(a) the constitutional corporation is the person, referred to in the provision of the Divis ion in
question , against whom the conduct has been , is being or would be carried out; or
(b) an employee of, or a person engaged by, a constitutional corporation is the person:
(i) referred to in the provision of the Division in question; and
(ii) against whom the conduct has been, is being or would be carried out;
and the conduct affected, affects or would affect the person in that capacity.
8 Territories
This Part applies to conduct in a Territory.
9 Operation of State and Territory laws
Subject to section 24, to the extent that this Part applies by virtue of the operation of section 7
or 8, it is not intended to exclude or limit the concurrent operation of any law of a State or Territory.
DIVISION 3- CONDUCT GENERALLY
10 Coercion of persons to join, not join industrial associations etc.
A person must not organise or take, or threaten to organise or take, any action with the intent,
directly or indirectly, of coercing another person to :
(a) become or not become; or
(b) remain or cease to be;
an officer, delegate or member of an industrial association.
11 False or misleading statements etc. concerning membership of industrial
associations
(1) A person must not knowingly make a false or misleading statement to another person
with intent to encourage, persuade or coerce that other person, or any other person to :
(a) become or not become; or
(b) remain or cease to be;
an officer, delegate or member of an industrial association.
(2) A person must not make any statement to the following effect:
(a) that a building or construction site, or any part thereof, is a 'no ticket no start' site
or a 'union site '; or
Reform- National issues Part 1 333
(b) that it is a requirement that any person enteri ng or working on a build ing or
construction site , or any part thereof, must be a member of an industrial
association or must not be a member of an ind ustrial associatio n; or
(c) that a person mu st disclose whether he or she or any other person is, or is not, a
member of an in dustrial association; or
(d) any statemen t wh ich is substantially to the same effect as the statements in parag raphs (a), (b) or (c);
with intent to encourage, pe rsuade, coerce or exert pressu re on another person to:
(e) become or not become; or
(n rem ain or cease to be;
an officer, delegate or member of an industrial association.
(3) For the purposes of subsections (1) an d (2), it is irrelevant whether the other person could
become , not becom e, rem ain or cease being (as the case requires) an offi cer, delegate or
member of the industrial association.
(4) For the pu rposes of th is section, a statement:
(a) in cludes words, writing, signs and conduct; and
(b) may be express or implied.
12 Industrial action on the ground of membership of an industrial association
(1) A person must not:
(a) organise or take , or threaten to organise or take, any industrial action or other
action; or
(b) refrain or threaten to refra in from organising or taking any actio n;
on the ground, or on grounds that include the ground , that another person:
(c) is, has bee n, proposes to become or has at any time proposed to become; or
(d) is not, or proposes not to become;
an officer, delegate or member of an industrial association .
(2) Industrial action is not protected action if it is organised, threatened or taken on the
ground, or on grounds that in cl ude the ground, that a person :
(a) is, has been, proposes to become or has at any ti me proposed to become; or
(b) is not, or proposes not to become;
an officer, delegate or member of an industrial association.
334 Final Report of the Royal Commission into the Building and Construction Industry
DIVISION 4- CONDUCT BY EMPLOYERS ETC.
13 Dismissal etc, of members of industrial associations etc.
(1) An employer must not, for a prohibited reason, or for reasons that include a prohibited
reason , do or threaten to do any of the following:
(a) dismiss an employee;
(b) injure an employee in his or her employment;
(c) alter the position of an employee to the employee's prejudice;
(d) refuse to employ another person;
(e) discriminate against another person in the terms or conditions on which the
employer offers to employ the other person.
(2) A person must not, for a prohibited reason, or for reasons that include a prohibited
reason, do or threaten to do any of the following:
(a) terminate a contract for services that he or she has entered into with an independent contractor;
(b) injure the independent contractor in relation to the terms and conditions of the
contract for services;
(c) alter the position of the independent contractor to the independent contractor's
prejudice;
(d) refuse to engage another person as an independent contractor;
(e) discriminate against another person in the terms or conditions on which the person
offers to engage the other pers on as an independent contractor.
14 Prohibited reasons
(1) Conduct referred to in subsection 13(1) or (2) is for a prohibited reason if it is carried out
because the employee, independent contractor or other pe rson concerned :
(a) is, has been, proposes to become or has at any time proposed to become an
officer, delegate or member of an industrial association; or
(b) is not, or proposes not to become, a member of an industrial association; or
(c) in the case of a refusal to engage another person as an independent contractor:
(i) has one or more employees who are not, or propose not to become,
members of an industrial association; or
(ii) has not paid, or proposes not to pay, a fee (however described) to an
industrial association; or
(d) has refused or failed to join in industrial action; or
R"'form- National issues Part 1 335
(e) in the case of an employee- has refused or fai led to agree or consent to, or vote in
favour of, the making of an ag reement to which an industrial association of which
the employee is a member would be a party; or
(0 has made, proposes to make or has at any time proposed to make an application
to an industrial body for an order under an industrial law for the holding of a secret
bal lot; or
(g) has participated in, proposes to participate in or has at any time proposed to
participate in a secret ballot ordered by an industrial body under an industrial law;
or
(h) is entitled to the benefit of an industrial instrument or an order of an industrial body;
or
(i) has made or proposes to make any ir1quiry or complaint to a person or body having
the capacity under an industrial law to seek:
(i) compliance with that law; or
(ii) the observance of a person's rights under an industrial instrument; or
U) has participated in, proposes to participate in or has at any time proposed to
participate in a proceeding under an industrial law; or
(k) has given or proposes to give evidence in a proceeding under an industrial law; or
(I) in the case of an employee, or an independent contractor, who is a member of an
industrial association that is seeking better industrial conditions - is dissatisfied with
his or her conditions; or
(m) in the case of an employee or an independent contractor- has absented himself or
herself from work without leave if:
(i) the absence was for the purpose of carrying out duties or exercising rights as
an officer of an industrial association; and
(ii) the employee or independent contractor applied for leave before absenting
himself or herself and leave was unreasonably refused or withheld; or
(n) as an officer or member of an industrial association, has done, or proposes to do,
an act or thing for the purpose of furthering or protecting the industrial interests of
the industrial association, being an act or thing that is:
(2) If:
(i) lawful; and
(ii) w ithin the limits of an authority expressly conferred on the employee,
independent contractor or other person by the industrial association under its
ru les.
(a) a threat is made to engage in conduct referred to in subsection 13(1) or (2); and
336 Final Report of the Royal Commission into the Building and Construction Industry
(b) one of the prohibited reasons in subsection (1) of this section refers to a person
doing or proposing to do a particular act, or not doing or proposing not to do a particular act; and
(c) the threat is made with the intent of dissuading or preventing the person from doing
the act, or coercing the person to do the act, as the case requires;
the threat is taken to have been made for that prohibited reason.
(3) If
(a) an employer or person engages in or threatens to engage in conduct referred to in
subsection 13(1) or (2); and
(b) the employer or person:
(i) intends to engage in that conduct for a prohibited reason; or
(ii) intends to threaten to engage in that conduct for a prohibited reason;
the employer or person is taken to have engaged 1n that conduct or to have
threatened to engage in that conduct for a prohibited reason.
15 Inducements to become or not become member etc. of industrial association
An employer, or a person who has engaged an .independent contractor, must not (whether by
threats or promises or otherwise) induce an employee, or the independent contractor (as the
case requires) to:
(a) stop being or not become; or
(b) become or remain;
an officer, delegate or member of an industrial association .
DIVISION 5- CONDUCT BY EMPLOYEES ETC.
16 Cessation of work
An employee or independent contractor must not cease work in the service of his or her
employer, or of the person who engaged the independent contractor, (as the case requires)
because the employer or person:
(a) is an officer or member of an industrial association; or
(b) is entitled to the benefit of an industrial instrument or an order of an industrial body; or
(c) has made or proposes to make any inquiry or complaint to a person or body having the
capacity under an industrial law to seek:
(i) compliance with that law; or
(i i) the observance of a person 's rights under an industrial instrument; or
(d) has participated in , proposes to participate in or has at any time proposed to participate
in any proceedings under an industrial law; or
Reform- National issues Part 1 337
(e) has given evidence in a proceeding under an industri al law.
DIVISION 6- CONDUCT BY INDUSTRIAL ASSOCIATIONS ETC.
17 Industrial associations acting against employers
(1) An industrial association, or an officer or member of an industrial association, must not