Early in the New Year, the ACT Government is set to impose significant changes to how contractors must tender for Territory-funded works, under its Secure Local Jobs Package. Despite concerns about the regulatory impact of these changes from the Australian Small Business and Family Enterprise Ombudsman and calls by groups such as Master Builders ACT for the amendments to be delayed, the changes will commence from 15 January 2018.
The centrepiece change is that tendering contractors must comply with the Government Procurement (Secure Local Jobs) Code 2018 (ACT) (Secure Local Jobs Code). Described by the ACT Government as ‘leverag[ing] the procurement process to ensure that the Territory is contracting with entities that are meeting their workplace standards and obligations’, the amendments in fact create new workplace relations obligations for employers, including in relation to subcontracting, inductions, information disclosure, employee representation and freedom of association.
The changes follow recent changes to the Work Health and Safety Act 2011 (ACT) (WHS Act) (commencing 1 January 2019) requiring union consultation about employee representation prior to the commencement of construction projects. The amendments will further extend the legislative reach of unions into the workplace in the ACT, with new requirements to elect union workplace delegates, provide employees with union membership forms and promotional material, facilitate payroll deductions for union fees and even bargain with unions in workplaces with no union members, which either extend (or test the limits of) the Fair Work Act 2009 (Cth) (FW Act).
Special challenges face contractors in the construction industry that tender for Commonwealth work, as some of the changes conflict with the federal Code for Tendering and Performance of Building Work 2016 (Cth) (Building Code 2016).
The package includes new auditing and inspection mechanisms (largely undertaken by private-sector approved auditors) administered by a Secure Local Jobs Registrar (Mr Andrew Parkinson) and overseen by a Secure Local Jobs Advisory Council.
The significance of these changes should not be underestimated. Contractors must act now to ensure they will be eligible to tender once the Secure Local Jobs Code commences.
What you need to know and how to prepare is detailed below.
Who does this apply to and when does it commence?
The new tendering requirements initially apply to contractors that tender for work with a Territory entity (meaning an administrative unit or territory authority) for work that is primarily for construction, building and industrial cleaning services, traffic control or security services. They do not appear to apply to such work that is indirectly funded by the ACT Government, e.g. by way of a grant etc. to a non-government entity, or for ACT-Government-owned corporations.
The changes cover any new procurements (e.g. requests for tenders etc.) commenced on or after 15 January 2019, and any new contracts entered into in relation to new procurements (other than under existing panel arrangements, standing offer contracts or public-private partnerships). After 15 January 2020, the new regime will apply to contracts entered into for any procurements (including under arrangements existing before 15 January 2019).
The Secure Local Jobs Code applies to principal contractors and subcontractors alike, but the requirement for a Labour Relations, Training and Workplace Equity Plan (see below) only applies to principal contractors.
By no later than 7 November 2019 (but an expected commencement date in mid-2019) the coverage of the Secure Local Jobs Code will be extended to any new procurements for services or works that are primarily for labour with an estimated contract value above $200,000 (with some exceptions).
What are the new tender requirements?
Under the changes, a contractor will be ineligible to tender for Territory-funded works unless:
- They hold a Secure Local Jobs Code Certificate issued by the Registrar, confirming that the contractor complies with the Secure Local Jobs Code; and
- For procurements of $25,000 or more, provide a Labour Relations, Training and Workplace Equity Plan (LRTWE Plan) (principal contractors only).
Upon the award of a tender, contractors will also be required to contract on the basis of ‘model contract terms’ (Model Contract Terms) which bind the contractor to comply with the Secure Local Jobs Code and any LRTWE Plan (among other matters).
So what does the Secure Local Jobs Code require?
Fundamentally, the Secure Local Jobs Code imposes an obligation on tendering contractors to comply with existing industrial laws (including both Territory and federal laws) and to notify the Registrar of any Court or Tribunal finding that they have breached those laws. However, it also extends employers’ workplace relations obligations, as detailed below.
Principal contractors must only engage subcontractors which hold Secure Local Jobs Code Certificates, and must also require subcontractors to enter into contracts reflecting the Model Contract Terms. Prior to the engagement of a subcontractor, the principal must also provide ‘details’ of the subcontractor to the Territory. It is not entirely clear to what end that information will be put, but it might be to enable advice in relation to the subcontractor to be provided by employee representatives on the Secure Local Jobs Advisory Council, which could then be taken into account in assessing any tender.
Information disclosure and union rights of entry
Principal contractors and subcontractors alike must provide physical addresses, working hours and details of a contact person(s) for work sites to the Registrar prior to work commencing, to facilitate union rights of entry under the FW Act and WHS Act. Any change must be notified within 14 days, with the information maintained by the Registrar and accessible upon the request of a union entry permit holder.
The Model Contract Terms also require contractors to allow persons nominated by the Territory to enter sites to undertake education and awareness activities in relation to the Secure Local Jobs Act, except where it would conflict with a Commonwealth law. For example, where contractors are also covered by the Building Code 2016, this power would not extend to requiring union officials to enter sites.
Union workplace delegates / employee representatives
If two or more employees so request, a contractor must facilitate the election of a union workplace delegate or employee representative (whichever is requested). Consistent with existing protections under the FW Act, elected union workplace delegates / employee representatives are protected from any discrimination or adverse action by virtue of their role, and are entitled to a range of additional benefits, including but not limited to:
- Reasonable paid time during normal working hours to provide information to, seek feedback from or consult with the employees which elected them regarding workplace relations matters;
- Reasonable paid time to attend union training (for union delegates) or other relevant training (for employee representatives);
- Reasonable paid time to represent employees which elected them in the Fair Work Commission; and
- Reasonable access to the contractor’s facilities (including telephone, facsimile, photocopying and internet facilities, as well as meeting rooms and areas where employees meet) for the purpose of carrying out their representative role.
What is ‘reasonable’ for the above purposes is unclear, and something that will need to be worked out in practice once the Secure Local Jobs Code commences. In facilitating elections of union workplace delegates, contractors will need to be careful that they do not inadvertently misrepresent that employees are required to disclose whether they are a member of a union, contrary to the FW Act.
Inductions must detail the contractor’s employment policies, employment conditions, ‘lines of authority and accountability’, as well as health, safety, emergency and security procedures.
In addition, a contractor must ‘understand and respect’ employees’ rights in relation to freedom of association. The Secure Local Jobs Code prescribes that this will be met if all new employees are informed of their right to join (or not join) a union and provided with union membership forms and promotional material. Under the Model Contract Terms, the Territory may also require union workplace delegates or employee representatives to attend inductions.
In complying with these obligations, contractors will need to ensure that they do not fall foul of FW Act prohibitions on employers inducing employees to become union members.
Where an employee joins a union, the contractor must allow for payroll deduction of union membership fees.
In amendments that extend employers’ good faith bargaining requirements under the FW Act, where bargaining is occurring, employers must:
- Provide employees with opportunities in ‘paid time’ to meet with bargaining representatives;
- ‘Regularly’ meet with bargaining representatives; and
- Not hold meetings with employees without allowing bargaining representatives a reasonable opportunity to attend.
Controversially, while the Secure Local Jobs Code indicates that employees are free to choose their own bargaining representatives, it nevertheless requires contractors to allow unions to participate in enterprise bargaining negotiations even where the contractor does not employ any union members – a contractor only has to employ persons eligible to be union members in order for the union to have a right to sit at the bargaining table. This appears to contradict the policy of the freedom of association provisions in the FW Act, which entitles persons to associate, or not associate, with unions.
Although the terms of the Secure Local Jobs Code are unclear, there is also a suggestion that employers will be required to commence negotiations for an enterprise agreement, which contractors’ arguably have a workplace right not to do. If the ACT Government were to exclude a contractor from tendering on the basis that they refused to commence bargaining, it could arguably amount to unlawful adverse action contrary to the FW Act, for which compensation could be sought.
Conflict with Commonwealth laws
While the Secure Local Jobs Code must not be inconsistent with the FW Act or any other Commonwealth law, the Commonwealth Department of Small Business and Jobs has identified a number of points of conflict with the Building Code 2016 (and potential conflicts with the FW Act), which remain in the final version of the Secure Local Jobs Code. The Building Code 2016 prohibits any conduct that could be perceived as indicating that union membership is expected, including specific prohibitions on allowing union workplace delegates from participating in inductions. It also prohibits union officials from entering sites except in strict accordance with existing right of entry laws, which the Secure Local Jobs Code and Model Contract Terms could contravene.
Contractors that tender for federally-funded work can apply to the Registrar for an exemption from the Secure Local Jobs Code, but the exemption is not guaranteed and will only apply to the extent of the inconsistency with the Building Code 2016 – i.e. the rest of the Secure Local Jobs Code will continue to apply.
For procurements with a value of $25,000 or more, principal contractors must also provide a LRTWE Plan as a condition of tender.
A LRTWE Plans must relate to the principal contractor’s (and any subcontractors’) ‘workplace standards, diversity and equity’. Primarily, it must detail how a contractor will comply with the Secure Local Jobs Code, including training of senior management in its requirements and compliance by subcontractors. More specifically, the LRTWE Plan must detail how the contractor will (among other matters):
- Minimise ‘insecure work arrangements’ (including short-term and casual employment);
- Support the physical and mental health of its employees, including with any health and well-being activities;
- Promote and support diversity in the contractor’s workforce; and
- If there is an existing contractor in relation to a procurement, support the transfer of employees from the existing contractor to the tendering contractor.
For procurements valued at $5 million or more, the contractor must explain how it will advertise job opportunities to workers based in the ACT and surrounding region before undertaking recruitment more broadly, and detail what training will be provided to the contractor’s employees in order to obtain externally-recognised qualifications, including by way of internships, traineeships, cadetships or apprenticeships.
The Model Contract Terms require principal contractors to comply with any LRTWE Plan and provide the Territory with quarterly compliance reports.
It is understood that the ACT Government will be releasing a model LRTWE Plan to assist principal contractors in preparing their plans.
How do I get a Secure Local Jobs Code Certificate?
To receive a Secure Local Jobs Certificate from the Registrar, a contractor must provide a ‘current’ report from an ‘approved auditor’, i.e. an auditor approved by the Secure Local Jobs Registrar. Secure Local Jobs Certificates can only be issued if the Registrar determines that the contractor (and any associated entities) have a ‘satisfactory’ history of compliance with workplace laws. Once issued, Secure Local Jobs Certificates remain valid for 30 months.
It is understood that Secure Local Jobs Certificates will replace the existing Industrial Relations and Employment Obligations Certificates, at least for those contractors tendering for new procurements on or after 15 January 2018.
Auditing and the role of the Registrar
The amendments also include a new complaints, auditing and sanctions regime, overseen by the Registrar, with powers to impose procurement sanctions on tendering contractors.
Any person may complain in writing to the Registrar if they consider that the Secure Local Jobs Code has not been complied with by a contractor. If the Registrar has reasonable grounds to suspect that the contractor has failed to comply (noting that they cannot take action if the complaint lacks substance, was not made in good faith or has been adequately dealt with by the contractor) then the Registrar can appoint an approved auditor to conduct an audit and provide a compliance report.
Contractors must comply with any request from auditors for information and provide access to their records. Compliance information may also be requested by the Registrar directly from a contractor, with tendering sanctions imposed for failures to comply.
If the Registrar is satisfied that the contractor has not complied with the Secure Local Jobs Code, the Registrar may cancel, suspend, or impose conditions on the contractor’s Secure Local Jobs Certificate, or prohibit them from applying for a Secure Local Jobs Certificates for up to 12 months, with the effect of limiting or prohibiting their ability to tender.
Decisions about Secure Local Jobs Certificates can be appealed by contractors to the ACT Civil and Administrative Tribunal.
The Secure Local Jobs Advisory Council, made up of the Registrar, three representatives of employees and three members with ‘appropriate qualifications’ (there is no mandated role for employer representatives) is designed to provide regulatory oversight, including by producing a report reviewing the Secure Local Jobs Package within two years.
The Registrar (or their delegate) also has the right to enter sites to conduct educational and awareness activities, under the Under the Model Contract Terms.
How to get ready
These procurement amendments are likely to catch many tendering contractors unawares in the New Year. To ensure that contractors maintain their ability to tender, it is essential that they act quickly to:
- Obtain an approved auditor’s report (as soon as approved auditors become available) and a Secure Local Jobs Certificate;
- Redraft their policies to ensure that they reflect the requirements of the Secure Local Jobs Code especially in relation to freedom of association and inductions; and
- For principal contractors, prepare a template LRTWE Plan and subcontract suites that comply with the Model Contract Terms.
Contractors that tender for federally-funded construction work will also need to apply to the Registrar for an exemption from those parts of the Secure Local Jobs Code that conflict with the Building Code 2016, to avoid difficult choices about whether to tender only for Territory or federal work.
Meyer Vandenberg can advise and assist contractors through the above process, including by providing precedent documents and making exemption applications.
For more information contact our Employment, Workplace Relations and Safety Team:
 Australian Small Business and Family Enterprise Ombudsman, ‘Consultation on the draft ACT Secure Local Jobs Code’, 12 September 2018; https://www.procurement.act.gov.au/__data/assets/pdf_file/0003/1253424/4.-ASBFEO.PDF
 Master Builders ACT, ‘Secure Local Jobs – Final Code Released’, 23 November 2018; https://www.mba.org.au/news-and-media/article/secure-local-jobs-final-code-released/
 Under the Government Procurement (Secure Local Jobs) Amendment Act 2018 (ACT) (Procurement Amendment Act), which amends the Government Procurement Act 2001 (ACT).
 Explanatory Statement, Government Procurement (Secure Local Jobs) Amendment Bill 2008 (ACT).
 Government Procurement (Secure Local Jobs) Amendment Act 2018 (ACT), section 22F(1); Government Procurement Act 2001 (ACT), section 3.
 With some exceptions relating to media and telecommunications services, rental, hiring and real estate services, financial and insurance services, and professional, scientific and technical services, see: Procurement Amendment Act, Schedule 1; Government Procurement (Secure Local Jobs) Amendment Regulation 2018 (ACT), Schedule 1.
 Government Procurement (Secure Local Jobs Model Contract Terms) Determination 2018 (ACT).
 Within seven days.
 Using a form which is yet to be published.
 The Building Code 2016 only permits entry of union officials in strict accordance with the FW Act and WHS Act.
 FW Act, section 349.
 FW Act, section 350.
 This would potentially afford union officials rights of entry beyond those afforded under the FW Act, under which discussions with employees about workplace relations matters can only be held during breaks. This requirement is also likely to be in breach of the Building Code 2016.
 Under the FW Act a union is a default bargaining representative only in relation to union members.
 Secure Local Jobs Code, section 15(4).
 Unless compelled to do so by a majority support determination issued by the Fair Work Commission.
 Procurement Amendment Act, section 22M(4).
 Department of Jobs and Small Business, ‘ACT Secure Local Jobs Package Consultation –Submission’; https://www.procurement.act.gov.au/__data/assets/pdf_file/0005/1253426/7.-Department-of-Jobs-and-Smal….pdf
 Which would conflict with section 14 of the Secure Local Jobs Code and Model Contract Terms clause 14.
 If for example the Territory required a contractor to allow a union official to enter the site to conduct educational or awareness activities about the Secure Local Jobs Code (Model Contract Terms, clause 15) or entered during working hours to discuss workplace relations matters (Secure Local Jobs Code, clause 15(7)(a)).
 Workplace standards are defined to include collective bargaining, freedom of association, health and safety, human rights, inductions, leave, tax and superannuation, training, workers compensation and workplace delegates of unions.
 See: Government Procurement (Secure Local Jobs) Amendment Regulation 2018 (ACT).
 ‘Current’ is defined to mean issued in the last 20 business days. The approved auditor reports must be prepared in accordance with audit guidelines which have not yet been released.