What has happened?

The Federal Minister for Industrial Relations has issued the first exclusion sanction under the Code for the Tendering and Performance of Building Work 2016 (the Code) for a failure to comply with safety obligations.

MCP (Aus) Pty Ltd (MCP) has been banned from tendering for, or being awarded, Commonwealth funded building work for a period of 1 month.

Background

The 2016 Code requires every Code covered entity to comply with work health and safety laws to the extent that they apply to the entity in relation to building work.

A breach of that obligation is a breach of the Code.

Where a breach of the Code occurs, the Code covered entity must notify the ABCC of the breach, and the steps proposed to be taken to rectify the breach, no later than 2 working days after becoming aware of it. The entity then has a further 14 days to notify the ABCC of the steps taken to rectify the breach.

The ABC Commissioner must then decide whether to refer the breach to the Minister with recommendations as to whether a sanction should be imposed.

If a breach referred to the Minister results from a failure to comply with work health and safety laws, the Minister must impose an exclusion sanction on the Code covered entity unless the Minister is satisfied that it would not be appropriate in the circumstances because of the nature of, or factors contributing to, the failure to comply.

The maximum exclusion period that can be imposed under the Code is 12 months.

In the past, exclusion sanctions have been imposed on entities for breaches of industrial relations requirements of the 2016 Code (and its predecessors), such as the prohibition on displaying ‘no ticket, no start’ signs on worksites. However, until now, no exclusion sanction has been issued for a breach of work health and safety requirements.

 Exclusion sanction imposed on MCP

The Minister has excluded MCP from tendering for, and being awarded, Commonwealth funded building work for 1 month.

MCP breached the Code as a result of it having contravened the Work Health and Safety Act 2011 (Qld) (WHS Act) in relation to an incident on the Toowoomba Second Range Crossing road project in which a 60 metre boom on a concrete pump toppled over. No one was injured in the incident.

As a result of that incident, MCP was charged with an offence against section 32 of the WHS Act for breaching its primary duty of care under section 19 of the WHS Act. It pleaded guilty and was fined $50,000 and ordered to pay $1,600 in costs.  No conviction was recorded.

Consistent with an alert issued by the ABCC in 2018, in which the ABCC warned the building industry that it monitors court outcomes for proven contraventions of safety laws, the ABC Commissioner referred MCP’s admitted contraventions of the WHS Act to the Minister.

In its press release, the ABCC noted that: “MCP made full admissions before the Court, and fully cooperated with the ABCC, took positive steps to remediate its conduct and satisfy the regulator that it had provided a measure of voluntary rectification.”

Despite that, and the fact that no one was injured in the incident, the Minister did not view the imposition of an exclusion sanction as being inappropriate.

What does this mean?

Clients involved in construction works should be aware of the potential commercial implications and reputational damage that may result from any breach of statutory and contractual safety obligations.

The exclusion sanction imposed on MCP highlights:

• the potential commercial and reputational implications for Code covered entities who fall foul of work health and safety laws; and
• that voluntary rectification of the issues which give rise to breaches of work health and safety laws, and active co-operation with the ABCC, may not be sufficient to prevent an exclusion sanction being imposed.

It also serves as a reminder to all Code covered entities that any guilty plea, or finding of guilt made by a court, in a safety prosecution will need to be reported to the ABCC within 2 working days.

If you are in any doubt as to your obligations under the Code, including whether an event needs to be notified to the ABCC, please ensure that you seek legal advice as a matter of urgency.

Dominic Fleeton
Partner
+ 61 3 9958 9616
[email protected]

Liam Fraser
Partner
+ 61 7 3071 3113
[email protected]

John Makris
Partner
+ 61 2 9169 8407
[email protected]