HEYDON ROYAL COMMISSION AND CONSTRUCTION INDUSTRY ISSUES. Workshop Paper

Transcription

1 HEYDON ROYAL COMMISSION AND CONSTRUCTION INDUSTRY ISSUES Workshop Paper THE AUSTRALIAN INDUSTRY GROUP NATIONAL PIR GROUP CONFERENCE 2 & 3 MAY 2016

2 OVERVIEW This paper discusses recent developments in the regulation of workplace relations in the construction industry and issues impacting on companies in the industry. The areas discussed include: Heydon Royal Commission Into Trade Union Governance and Corruption; The Building and Construction Industry (Improving Productivity) Bill 2013; Developments relating to the 2014 Building Code; Amendments to the Building Code 2013; Fair Work Building and Construction Recent Alerts; Recent amendments to the Fair Work Act 2009 relating to greenfields agreements; 4 Yearly Review of Awards; Labor s Protecting Australian Workers Bill; Wage outcomes under enterprise agreements; and The repeal of the Road Safety Remuneration Act 2012 and the abolition of Road Safety Remuneration Tribunal HEYDON ROYAL COMMISSION INTO TRADE UNION GOVERNANCE AND CORRUPTION The final report of the Royal Commission into Trade Union Governance and Corruption was publicly released in late December The report recommends a wide range of legislative and other changes. The Royal Commission was established in March 2014 and continued until the end of There were 189 hearing days with evidence obtained from over 500 witnesses. 2

3 The final report contains 79 recommendations for legislative and other changes. Approximately 40 individuals and 7 organisations were referred to the police, directors of public prosecutions, the Fair Work Commission (FWC), Fair Work Building and Construction, the Taxation Commissioner and other authorities for consideration of whether proceedings should be instituted against them. In his report, Royal Commissioner Dyson Heydon AC QC said: These aberrations cannot be regarded as isolated. They are not the work of a few rogue unions, or a few rogue officials. The misconduct exhibits great variety. It is widespread. It is deep-seated. Nor can the list be regarded as complete. It would be utterly naïve to think that what has been uncovered is anything other than the small tip of an enormous iceberg. Ai Group has expressed the view publicly that the Royal Commission s final report demonstrates that the case for change is irrefutable and that any view that the existing laws are working effectively is simply unsustainable. Ai Group was heavily involved in the Royal Commission on behalf of Members. We made submissions on all the issues papers released by the Royal Commission. Amongst other matters, Ai Group s submissions focused on the millions of dollars of inappropriate revenue which flow to unions each year from some construction industry redundancy funds and from insurance companies which offer overpriced income protection insurance and pay hefty commissions to unions. As union membership revenue has declined, these lucrative and inappropriate revenue streams have become central to union finances. The revenue streams no doubt result in the fines which militant unions regularly incur for unlawful conduct having a significantly reduced impact on their operations. Consistent with Ai Group s proposals, the Royal Commission has recommended: 3

4 Legislation dealing comprehensively with the governance, financial reporting and financial disclosures required by worker entitlement funds (e.g. construction industry redundancy funds) including registration of these funds. (Recommendations 45-46). A statutory requirement that unions disclose to employers the direct and indirect pecuniary benefits obtained by them in connection with employee insurance products. (Recommendation 47). Amendments to the Fair Work Act 2009 (FW Act) requiring union bargaining representatives to disclose in writing to employees before they vote on an enterprise agreement all direct and indirect financial benefits that would be derived by the union, union officers or a related entity as a consequence of the terms of the proposed enterprise agreement. (Recommendation 48). An amendment to section 194 of the FW Act to make it unlawful to include any term in an enterprise agreement that requires or permits contributions to a worker entitlement fund (other than a superannuation fund) unless the fund is a registered worker entitlement fund or a registered charity. (Recommendation 49). A new civil remedy provision in the FW Act prohibiting a person from organising or taking any action, other than protected industrial action, with intent to coerce an employer to pay amounts to a particular employee benefit fund, superannuation fund or employee insurance scheme. (Recommendation 50). Amendments to the Competition and Consumer Act 2010 to outlaw enterprise agreement clauses that impose restrictions on the supply or acquisition of goods and services, e.g. clauses which restrict the engagement of contractors. This recommendation addresses the problematic decision of the Full Federal Court in Australian Industry Group v Fair Work Australia [2012] FCAFC 108 ( The ADJ Contracting Case ). (Recommendation 59). In addition to those recommendations outlined above, the Royal Commission has made recommendations in the following areas: 4

5 Strengthening the provisions of the Fair Work (Registered Organisations) Act 2009 to establish a new Registered Organisations Commission, to clarify and expand the duties of union officers, to increase penalties and disclosure obligations, and to provide for the disqualification of union officers who breach their duties. (Recommendations 1-39, 42-44). Amending the FW Act to criminalise the giving or receiving of corrupting benefits to union officers, with a maximum term of imprisonment of 10 years. (Recommendation 40) Amending the FW Act to make it a criminal offence for an employer to provide, offer or promise to provide any payment of benefit to a union or union official, subject to a small number of identified exclusions (e.g. union dues that an employer deducts from an employee s wages and passes on to the union). A two year maximum term of imprisonment would apply. The same penalty would apply to any person, soliciting, receiving or agreeing to receive a prohibited payment or benefit. (Recommendation 41). Amending the Superannuation Guarantee Legislation to prohibit enterprise agreement clauses which prevent employees selecting a superannuation fund of their own choice. (Recommendation 51). Strengthening the provisions of the Competition and Consumer Act 2010 regarding secondary boycotts and other industrial conduct. (Recommendations 52-58). Enacting special legislation to disqualify for a period those officers of the Construction, Forestry, Mining and Energy Union that the Parliament considers are not fit and proper persons to hold office in a union, given their culture of disregard for the law. (Recommendation 60). Supporting key provisions of the Government s Building and Construction Industry (Improving Productivity) Bill (Recommendations 61-66). 5

6 Tightening union right of entry provisions, including: o Requiring a union official to give written notice of entry when exercising a right of entry under work health and safety laws except where there is a reasonable concern that there has been a contravention of the laws and the contravention gives rise to a serious risk to the health and safety of a person; and o Prohibiting more than two officials of the same union entering one workplace at the same time. (Recommendations 67-76) At this stage the Federal Government has not announced its position on all of the recommendations in the final report of the Heydon Royal Commission, although it has expressed strong support for the findings and various key recommendations. Some of the recommendations of the Royal Commission would be implemented through the passage of the ABCC Bill (see below) and the Fair Work (Registered Organisations) Amendment Bill In its final report, the Royal Commission expressed support for both of these Bills. BUILDING AND CONSTRUCTION INDUSTRY (IMPROVING PRODUCTIVITY) BILL 2013 A double dissolution election is likely to be announced by the Federal Government a few days after the Budget is delivered on 3 May The likely date for the election is 2 July If the Government is returned after a double dissolution election, the Bills that were the trigger for the election are put to a joint sitting of both Houses of Parliament. The Senate has twice voted against the Building and Construction Industry (Improving Productivity) Bill 2013 (ABCC Bill) and the Fair Work (Registered Organisations) Amendment Bill 2014 (Registered Organisations Bill) and as a consequence both Bills are now double dissolution triggers. 6

7 If a double dissolution election is held, all Senators will be up for election, including the eight Crossbenchers. Given the recent passage of Senate voting reforms, it is likely that some of the Crossbenchers will lose their seats. The ABCC Bill deals with the following key issues: Re-establishment of the Australian Building and Construction Commission (ABCC) with its former powers (including compulsory interrogation powers); Higher penalties for unlawful industrial action (roughly 3 times the level that applies in other industries); The making of a Building Code which all building industry participants would be required to comply with; and Penalties for unlawful picketing. DEVELOPMENTS RELATING TO THE 2014 BUILDING CODE In April 2014, the Federal Government released the Building and Construction Industry (Fair and Lawful Building Sites) Code 2014 (2014 Code) and advised that the Code will have legal effect when the ABCC Bill passes through Parliament and comes into operation (see above). There have been media articles recently that have reported that the Minister has stated that the Code will not have any retrospective effect. The issue comes down to a question of interpretation of the term retrospective. Ai Group understands that the Government s position is: The Code will only apply to building work for which an expression of interest or request for tender is called on or after the date that the 2014 Code has legal effect; and At that time, any employer (and their related entities) seeking to tender for such work, must ensure that their employees undertaking building work are not covered by an enterprise agreement that breaches the 2014 Code. 7

8 If the Coalition Government is re-elected in the double-dissolution election which is expected to be held on 2 July 2016, the ABCC Bill will be voted upon at a joint sitting of Parliament. If the Bill is then passed, the Code (which will be made under the legislation) will no doubt have legal effect shortly thereafter. Ai Group s advice is that: It is very risky for a company to enter into an enterprise agreement that does not comply with the 2014 Code because the company could be excluded from tendering for work on future Commonwealth projects; Companies that enter into an enterprise agreement with a clause that states that the agreement will be amended if the 2014 Code comes into effect, are putting a great deal of faith in their employees and the unions to agree to the necessary amendments (in a timely fashion) to enable the company to participate in tenders for new Commonwealth projects after the Code has legal effect. AMENDMENTS TO THE BUILDING CODE 2013 The Building Code 2013 applies currently to businesses which carry out work on Australian Government funded projects and any of their privately funded construction work, and any construction work carried out by related entities of these businesses. Amendments made to the Building Code 2013 in October 2015 require a building contractor or building industry participant s WHS&R management system to, amongst other requirements, show the way in which drug and alcohol issues in the workplace will be managed to ensure that no person performing building work on site does so under the influence of alcohol or other drugs. Additional requirements apply to principal contractors on construction projects where the Commonwealth s contribution to the project meets or exceeds certain thresholds.the thresholds are: 8

9 Where the value of the Commonwealth s contribution to the project is at least $5,000,000 and represents at least 50% of the total construction project value; or Where the Commonwealth s contribution to the project is at least $10,000,000 (irrespective of its proportion of the total construction project value). On these projects, the principal contractor must ensure that the WHS&R Management Plan includes a fitness for work policy that addresses the following matters: 1. How those on site will be required to comply with the relevant fitness for work policy (i.e. through contract or some other enforceable means). 2. The use of an objective medical testing method/s to detect the presence of drugs or alcohol in a worker's system and outline the detection method/s to be used on the project. 3. The requirement that all of the following substances are tested for: (a) (b) (c) (d) (e) (f) (g) Alcohol; Opiates; THC: Cocaine; Benzodiazepines; Amphetamine; and Methamphetamine. 4. That a person who returns a positive result for any of the substances listed above will be deemed not to be fit for work (in respect of each substance listed above, subject to testing detectable levels, there is a zero level tolerance). 9

10 5. How a person who returns a positive result will be prevented from performing work until they can prove they are fit to return to work, and other processes that will apply in the event of a positive result or deemed positive result (i.e. a failure to submit to a test). 6. The requirement that, as a minimum, frequent and periodic testing (at least once per month) of the workforce (both construction workers and site office workers) will be as follows: (a) (b) where there are less than 30 workers on site at least 10% of the workforce; where there are 30 to 100 workers on site a minimum of 5 workers per month; and (c) Where there are greater than 100 workers on site a minimum of 10 workers per month. 7. Procedures for the selection of personnel to be tested (including staged selection across a worksite or random selection for testing if the entire workforce is not to be tested in a testing round). 8. Procedures for the targeted testing of higher-risk activities, voluntary testing and for-cause testing. 9. How workers who attend for work affected by drugs or alcohol will be counselled and assisted, apart from any disciplinary process that might apply. In response to representations from Ai Group, between October 2015 and 1 February 2016 the FWBC implemented a 3 stage process for implementing the new drug and alcohol testing requirements for principal contractors,. 10

11 FAIR WORK BUILDING AND CONSTRUCTION RECENT ALERTS FWBC has very clear requirements as to contractor obligations under the Building Code Companies have recently been reminded of: Notification Obligations to the FWBC: o All industrial action, or threatened industrial action, must be notified as soon as practicable. o Any breach or suspected breach of the Building Code must be notified within 21 days. Contractual Obligations and Code Compliancy: When entering into contracts for building work, be aware that engaging in conduct that is not code compliant but permitted by a contract is not a defence to a Building Code 2013 breach. Good Faith Payments : Contractors providing good faith pay rises outside the scope of enterprise agreements may be in breach of the 2013 Code. Companies and subcontractors who are approached with a request to enter into a good faith arrangement should report the matter to FWBC. AMENDMENTS TO THE FW ACT GREENFIELDS AGREEMENTS In November 2015, a heavily amended version of the Fair Work Amendment Bill 2014 was passed by Parliament and came into operation. The amendments address the problem of unions having too much bargaining power in greenfields agreement negotiations. The amendments: Extend the good faith bargaining obligations in the Act to greenfields agreement negotiations; and Give an employer the option of lodging a greenfields agreement with the FWC if agreement has not been reached with the union/s after six months of negotiations. 11

12 4 YEARLY REVIEW OF AWARDS CONSTRUCTION AWARDS All 122 modern awards are being reviewed in the FWC s 4 Yearly Review of Awards. The FWC has allocated each of the 122 modern awards to one of four major groups. The proceedings relating to individual awards are continuing. Ai Group is taking the lead role amongst employer groups and is devoting extensive resources to protect and promote Ai Group Members interests. In 2014 and 2015 exposure drafts were issued by the FWC for the awards in Groups 1 and 2. These awards have been the subject of several rounds of submissions and Full Bench hearings. At this stage, none of the awards have been finalised. Exposure Drafts for the awards in Group 3 were issued in late 2015 and January 2016, with submissions due in March Exposure Drafts for Group 4 Awards are due to be published shortly. The construction awards have been allocated to Group 4, including the following awards: Building and Construction General On-site Award 2010; Joinery and Building Trades Award 2010; Electrical, Electronic and Communications Contracting Award 2010; Plumbing and Fire Sprinklers Award 2010; and Mobile Crane Hiring Award 2010 There are a number of matters which various parties are seeking to have amended in the construction awards as set out in the FWC s summary of proposed variations. The main CFMEU claims for the Building and Construction General On-site Award 2010 are: Clause 14 Casual employment The CFMEU proposes to add a new provision to address the situation where a casual employee is required to work for more than one engagement per day. The provision would provide that unless the 2nd engagement is continuous with the first engagement (taking into account the unpaid meal break and in which case the ordinary hours would be deemed to be 12

13 continuous) then the 2nd engagement is to be treated as a recall and paid at overtime rates in accordance with clause 36.3 of the award. Clause 19 Minimum wages The CFMEU proposes that clause 19.3 be varied to include all of the relevant allowances in the hourly rate calculation to reflect the fact that employees can be engaged as daily hire or weekly hire (i.e. include the airconditioning industry and refrigeration industry allowance, electrician s licence allowance and the in charge of plant allowance in clause 19.3(a); and including the refractory allowance and carpenter-diver divisor in clause 19.3(b)). Clause 20 Expense Related Allowances The CFMEU proposes the insertion of a new communications equipment allowance for employees required to use 2 way radios, walkie talkies, mobile phones, tablets, etc., during hours of work. Where such equipment is provided by the employee the employee must be reimbursed the cost of providing the equipment or alternatively the employer may elect to provide such equipment. Clause 24 Living away from home distant work The CFMEU proposes that this clause be updated to make the entitlements clearer; to reflect the current costs of accommodation and meals; to better reflect modern means of transport; and in light of alleged recent evidence on the health, safety and welfare impacts of long periods working away from home. Clause 28 - National Training Wage - The CFMEU proposes that clause 28.2 be varied to provide for competency based wage progression through the stages similar to that provided for three year apprenticeships (but keeping the civil construction traineeship wage rates). LABOR S PROTECTING AUSTRALIAN WORKERS BILL The Labor Party recently introduced the Fair Work Amendment (Protecting Australian Workers) Bill 2016 into Parliament. The Bill reflects a policy position which the Labor Party recently announced. 13

14 The Bill creates new criminal offences and increased civil penalties for certain breaches of the FW Act. The Bill would: Clarify that the FW Act applies to all employees irrespective of their status under the Migration Act 1958; Require the Fair Work Ombudsman (FWO) to publish a Fair Work Information Statement containing information for employees about their rights under the FW Act, the relationship between workplace laws and the Migration Act 1958, and the right of overseas workers to seek redress for contraventions of workplace laws; Provide additional protection from adverse action taken against an employee who questions whether a workplace right exists or whether they are an employee and not an independent contractor; Introduce a reasonable person test in determining whether an employer has engaged in sham contracting, to replace the current recklessness test ; Give the Court the power to make orders requiring directors of phoenix companies to pay unpaid wages and other employee entitlements when a company of which they are a director is phoenixed; Increase the maximum penalties available for certain breaches of the FW Act; Give the Federal Court the power to make an order disqualifying a person from managing a corporation (within the meaning of the Corporations Act 2001) for a certain period in relation to certain civil contraventions of the FW Act if the Court is satisfied that disqualification is justified; and Introduce new criminal offences carrying penalties of imprisonment for two years or 240 penalty units or both for conduct that involves the use of coercion or threat in relation to certain provisions of the FW Act or in relation to a temporary overseas worker. 14

15 On 4 April Ai Group has made a submission to a Senate inquiry into the Bill. Ai Group s submission highlights that the Bill addresses only a few of the recommendations of the Productivity Commission Inquiry into the Workplace Relations Framework. The submission argues that a balanced approach needs to be taken to the implementation of the recommendations, rather than implementing those that benefit workers without addressing those that would improve productivity and flexibility for businesses. The submission expresses strong opposition to criminal penalties for employers. The FW Act already contains a regime of substantial civil penalties of up to $54,000 per breach, with unlimited damages able to be awarded in some circumstances. Criminal penalties are not warranted. They would impose a substantial barrier to entrepreneurship, investment and employment. WAGE OUTCOMES UNDER ENTERPRISE AGREEMENTS On 8 April 2016 the Department of Employment released its report on Trends in Federal Enterprise Bargaining for the December quarter Average Annualised Wage Increases (AAWI) for agreements approved with the FWC in the December 2014 quarter are detailed in the following table: Industry Sector or Type of Agreement AAWI (%) in Dec 2015 Change from September 2015 (%) All sectors 3.0 Down 0.4 Private sector 2.9 Down 0.6 Public sector 3.2 Up 0.2 Construction 3.8 Up 0.1 Single enterprise non-greenfields 2.9 Down 0.5 Single enterprise greenfields 2.6 Same 15

16 REPEAL OF ROAD SAFETY REMUNERATION ACT AND ABOLITION OF ROAD SAFETY REMUNERATION TRIBUNAL Road transport is used extensively to transport materials and products in the construction industry. The Commonwealth Parliament has passed legislation repealing the Road Safety Remuneration Act 2012 (RSR Act) and abolishing the Road Safety Remuneration Tribunal (RSRT). Ai Group has worked very hard on numerous fronts to achieve this outcome. Following strong Ai Group representations to the Federal Government and Crossbench Senators, on 18 April 2016 the House of Representatives and the Senate passed the Road Safety Remuneration Repeal Bill This Bill repeals the RSR Act and abolishes the RSRT. The Governor-General gave Royal Assent to the Bill on 19 April 2016 and it came into operation at midnight on 20 April The Act and Tribunal were set up in 2012 by the former Labor Government in response to an industrial campaign by the Transport Workers Union of Australia. Ai Group opposed the establishment of the RSR Act and RSRT in 2012 and ever since we have argued for its abolition. Ai Group has successfully argued that paying contractor drivers more or differently will not improve road safety. The focus needs to be on measures that are widely recognised as improving road safety such as the recently implemented Heavy Vehicle National Law, the National Heavy Vehicle Regulator, improved roads, improved compliance, and use of technology. The Federal Government has decided to re-allocate the $4 million dollar annual cost of the RSRT to the National Heavy Vehicle Regulator. The RSRT made the following two orders, both of which ceased to have effect on 20 April: The Contractor Driver Minimum Payments Road Safety Remuneration Order 2016 (2016 Order); and The Road Transport and Distribution and Long Distance Operations Road Safety Remuneration Order