Australia: Federal Court rules on the interaction between the Victorian Construction Code and Implementation Guidelines and the adverse action provisions

Last Updated: 31 May 2013
Article by Jack de Flamingh

The CFMEU has successfully challenged a key aspect of State Government regulation of industrial relations in the building and construction industry, with the Federal Court finding in two separate decisions that implementation of the Victorian Government's Construction Code and Implementation Guidelines involved unlawful adverse action and coercion against the employees of two bidders for government-funded work.

The decisions have been keenly anticipated, both as a measure of the extent to which State Governments can pursue industrial relations objectives through procurement policy, and also as an indicator of the extent to which industrial laws need to factored into commercial contract negotiations involving labour supply. These decisions illustrate the increasing significance of the general protections provisions in Part 3-1 of the Fair Work Act 2009 (FW Act) in everyday commercial contexts such as large-scale tender and contractor selection processes. The two decisions are likely to be appealed, and it remains to be seen whether this particular extension of the reach of the general protections will be upheld.

For further background to the Victorian Guidelines and the National Building Code, see our earlier Corrs in Briefs. 1

BACKGROUND

The proceedings concerned two Victorian Government projects: the $630 million Bendigo Hospital Project and the Circus Oz project in Melbourne. In each case the Victorian Construction Code Compliance Unit (CCCU) had informed two bidders for work on the projects that their enterprise agreements were not compliant with the Victorian Guidelines due to the fact that they contained certain 'union-friendly' provisions, and encouraged them to bring their agreements into line with the Guidelines''.

In the Bendigo Hospital matter:

  • The Victorian Government sought bidders for the Bendigo Hospital project, which included construction, facility management and maintenance services. Lend Lease was a member of one of two shortlisted consortia for the project, and during the tender process it concluded an enterprise agreement with employees. Just prior to the agreement being approved by Fair Work Australia (FWA), CCCU advised Lend Lease that aspects of the agreement did not comply with the Guidelines.
  • There were lengthy discussions between Lend Lease and CCCU in the course of which Lend Lease offered to provide a number of undertakings to the State Government. However, the CCCU remained of the view that it could reconsider its non-compliance assessment only if Lend Lease varied its enterprise agreement.
  • In late December 2012, the CFMEU filed an application in the Federal Court alleging that the State of Victoria had taken adverse action against Lend Lease and its employees by refusing, or threatening to refuse, to engage it on the Bendigo Hospital Project.
  • Whilst the matter was before the Court the Lend Lease consortium won the tender, and as a result the CFMEU modified its claim to focus only on the threat of adverse action rather than the exclusion of Lend Lease from the Bendigo Hospital Project.

In the Circus Oz matter:

  • Eco Recyclers Pty Ltd (Eco), a tenderer for demolition works on the Circus Oz project, was advised by CCCU that its enterprise agreement, though approved by FWA, did not comply with the Guidelines. Eco was then informed by the principal contractor for the project, McCorkell Constructions Pty Ltd (McCorkell), that it could not continue to tender for the work.
  • Following discussions with CCCU, Eco tried to obtain the approval of its employees to vary the agreement to remedy areas of non-compliance. The changes were approved by employees, but the CFMEU opposed the variations and commenced proceedings in the Federal Court alleging that the State of Victoria and McCorkell had breached the adverse action and coercion provisions of the FW Act by refusing, or threatening to refuse, to engage Eco because it was not compliant with the Guidelines.

SUMMARY OF FINDINGS

On 17 May 2013 Justice Bromberg handed down his decisions in both cases. 2 He found that the State of Victoria had:

  • taken adverse action against employees of Lend Lease by threatening to refuse to engage or make use of the services of Lend Lease for the construction of the Bendigo Hospital because the employees were entitled to the benefit of the Lend Lease enterprise agreement; and
  • taken action against Eco with intent to coerce Eco and its employees to exercise their workplace right to vary the Eco enterprise agreement.

McCorkell was also found to have taken adverse action against employees of Eco by refusing to engage or make use of the services of Eco in relation to the demolition works for the Circus Oz Project because the employees were entitled to the benefit of the Eco agreement. However, the Government was found not to be an accessory to McCorkell's breach.

GENERAL PROTECTIONS EXPANDED

Much of the battleground over which these cases were fought involved the construction of key terms or phrases in Item 4 of section 342(1) of the FW Act which sets out the circumstances in which a principal may be found to have taken adverse action against an independent contractor.

While the State Government argued that this section should be interpreted narrowly as a protection for contractors who work in a manner analogous to employees, Justice Bromberg disagreed and his decision again highlights just how far the general protections can go under the FW Act.

Meaning of 'independent contractor'

The State of Victoria claimed that none of Lend Lease, Eco, or their respective employees attracted the protection of Item 4 of section 342(1) because neither company was an 'independent contractor' within the meaning of that section.

The State urged that the Court should adopt a narrow view of the term 'independent contractor', arguing that it was intended to be restricted to an individual that is the functional equivalent of an employee in that he, she or it provides services in the form of labour which would otherwise be performed by an employee.

In what was described as a 'very significant expansion' of the protections, Justice Bromberg said that while the term includes such 'self employed individuals' it also extends to a wide range of contractors (and their employees) who provide services pursuant to a contract that includes the provision of labour and which also includes the provision of other services.

Justice Bromberg rejected the State's narrow reading of the term, and found that both Eco and Lend Lease were independent contractors within the meaning of Item 4 of s 342(1) of the FW Act.

Meaning of 'propose to enter into a contract for services'

In the Lend Lease case, the Victorian Government argued that because the draft Project Agreement was between the successful consortium and the State of Victoria, it had never proposed to enter into a contract for services with Lend Lease.

Justice Bromberg rejected this argument on the basis that a proposed separate Builder Direct Deed to which Lend Lease would be a party was capable of being characterised as a 'contract for services' as it 'includes provisions which will entitle the State to require the provision of services, including labour services, to a material extent'.

CONSTITUTIONAL INCONSISTENCY REJECTED

As noted by Justice Bromberg, the Bendigo Hospital case raised 'some interesting and novel issues in the context of a potential clash between the application of the policies of a State and the operation of a Federal enactment'.

The State argued that sections 340 to 342 of the FW Act exceed the constitutional legislative power of the Commonwealth by reason of the Melbourne Corporation limitation because they operated so as to impair the State's capacity to function as a government and provide major public health infrastructure.

This argument was rejected, with Justice Bromberg noting that:

'[T]he only detrimental operation of ss 340-342 upon the State which is suggested by the evidence, is upon the State's capacity to apply its preferred industrial relations policy. That a federal law has impinged upon a state policy which is in conflict with it, is not (of itself) an impairment or detriment for which the Melbourne Corporation limitation provides an immunity.'

NEXT STEPS

Pending the outcome of the appeals in this matter, the Victorian Government has issued a revised version of the Guidelines which incorporates a new clause 3.5 entitled 'Relationship with Fair Work Act 2009'. This new clause makes it clear that the Guidelines do not 'require, encourage or promote conduct that would constitute a contravention of the FW Act' and that to the extent that a provision in the Guidelines does so, the provision is of no effect.

The new clause is complemented by Practice Direction 2013/1 – Workplace Instrument Based Conduct. The effect of this is that during the operation of the Practice Direction, section 5, section 8 and section 10 of the Guidelines do not operate and are to be disregarded in respect of 'workplace instrument based conduct'.

The two decisions will clearly have an impact outside of Victoria. The NSW government has already adopted Guidelines along the same lines as Victoria, and the Queensland government has indicated that it will also do so.

Corrs will keep you updated on progress of this matter, including any appeal or reaction from the NSW or Queensland governments.

Footnotes

1 New National Building Code Issued and given Legislative Backing; and NSW Joins Standoff Over Building and Construction Industry Guidelines.

2Construction, Forestry, Mining and Energy Union v State of Victoria [2013] FCA 445; and Construction, Forestry, Mining and Energy Union v McCorkell Constructions Pty Ltd (No. 2) [2013] FCA 446.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Most awarded firm and Australian deal of the year
Australasian Legal Business Awards
Employer of Choice for Women
Equal Opportunity for Women
in the Workplace (EOWA)

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions