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Building & Construction News Alert: Building Code - a serious compliance and prosecution risk for Builders?

News Alert 22 August 2016

A recent successful prosecution by Fair Work Building and Construction (FWBC) against Hutchinson Builders (Hutchinsons) suggests significant penalties are possible for builders who are non-compliant with the Building Code (Commonwealth).

Judge Vasta of the Federal Circuit Court fined Hutchinsons $25,575.00 for discriminating against a subcontractor who did not have an enterprise agreement with the CFMEU. 

Additional sanctions are reported as being considered by the director of FWBC, Nigel Hadgkiss who has reportedly indicated he is considering making an application to the Minister, Michealia Cash to further sanction Hutchinsons. While this action may be the first of its kind the Minister can impose a formal warning but also an exclusion from tendering opportunities with the Commonwealth for up to one year.

The circumstances of the case were such that it was relatively easy for FWBC to prosecute as the elements of the offence were plainly proven on an exchange of emails between the parties, and Hutchinsons cooperated quickly with the relevant contrition once the complaint was made. 

The facts outlined described the awarding of a subcontract for tiling works with its withdrawal shortly before commencement of works, due to the subcontractor not having an enterprise agreement endorsed by the CFMEU. As such the court had no trouble in concluding that under section 15 of the Code Hutchinsons had failed to protect freedom of association.

The significance of these provisions and the prosecution is that it underlines the breadth of the possible sanctions against builders or others who fail to comply. Once a builder becomes an entity to which the Act applies (by undertaking work that can be broadly described as Commonwealth government work - more fully outlined in Schedule 1 of the Code) then by operation of the Code, that builder is subject to the Code in respect of all building work including building work that is privately funded and has no Commonwealth component. 

Nigel Hadgkiss, the director of FWBC, has reportedly warned that FWBC currently has a number of other employers before the courts facing similar allegations (Australian Financial Review, 12 August 2016).

It will be of some interest as to what further sanction might be imposed through the responsible Minister.

Tony Mylne, Partner

News Alert 22 August 2016
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