Court rules against Hutchinson

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Court rules against Hutchinson for Discriminating against non-union EBA company

This case highlights an all too common industry practice in which contractors refuse to engage subcontractors that don't have a union Enterprise Bargaining Agreement (EBA). While the practice is unlawful under the Fair Work Act 2009 (Cth) it is commonplace in the construction industry.

The practice is a result of primary contractors seeking to keep the ‘industrial peace’ on their construction sites by not attracting the ire of the unions. Often contractors, delegates and organisers will put a great deal of pressure on subcontractors and their employees to implement a union EBA and/or claim that the site is a ‘union site’. This practice is unlawful.

Pressure includes; getting an employer to sign a union enterprise bargaining agreement and/or forcing employees become members of the union.

A Hutchinson contracts manager and a team leader were found to have taken adverse action against a subcontractor it refused to hire because its enterprise agreement wasn't endorsed by the CFMEU. Individually they have been fined almost $2,000 each for the part they played in their employer's contraventions.

While Hutchinson Builders was only fined $25,575 for the contravention they do now face the prospect of being sanctioned by the Federal Government for breaching the Building Code 2013. This would potentially lock them out of millions of dollars of government contracts for a period of up to 12 months.

The judge accepted that maintaining "industrial harmony" was a factor in determining which company Hutchinson engaged, he noted that there were problems with this approach because there is the "potential for improper practices to creep in" to the disadvantage of subcontractors.

The judge further commented that for small subcontractors a major pathway to growing their business is to be awarded contracts from large construction companies like Hutchinson. If the only way in which they can break into those circles is to have made an agreement with the CFMEU, then the whole fabric of our industrial relations system will disintegrate.

Director of the Fair Work Building and Construction inspectorate Nigel Hadgkiss confirmed that five other employers are currently before the courts to defend similar allegations of discrimination and adverse action against subcontractors.

It is often the case that these matters are difficult to prosecute due to a lack of evidence or a fear of being cut out of this work by contractors in response to raising a dispute.

What conduct should subcontractors to look out for?
Specifically, subcontractors should be watching out for statements, emails or assertions from the contractor that the subcontractor requires a union EBA in order to work on the site.

In the above case the contracts manager blatantly contravened the Act by writing to the subcontractor stating:

“Jason, thank you for your time invested in the project. Unfortunately, without a union-endorsed EBA, we will not be able to engage C & K Tiling.”

Subcontractors should look out for, and keep communication records of, this type of conduct when it occurs; whether it is a union organiser or contractor.

Is anyone regulating this behaviour?
One such government department that is particularly interested in the behaviours of unions is the Fair Work Building and Construction inspectorate (FWBC). They are responsible for ensuring cooperative, productive and lawful workplace relations in the building industry.

They will conduct investigation and audits of alleged contraventions of:

This conduct may be come from union organisers, delegates or from other building industry participants like other contractors in the Hutchinson Builders case.

They will take interest in conduct like:

How to contact the FWBC?

Hotline: 1800 003 338
7:00am - 5:00pm Monday to Friday
Online enquiry form

The FWBC will also accept anonymous information and tipoffs to types of conduct. However, this may only guide their monitoring, it won’t necessarily be sufficient to result in prosecutions.

What if a subcontractor wants to take their own action?
Legal advice and assistance might be appropriate particularly if there are allegations that union conduct amounts to a secondary boycott or they are engaging in a pattern of behaviour that is in breach of the Competition and Consumer Act 2010.

MEA recommends that you contact the Workplace Relations team in the first instance to seek guidance on 1300 889 198.