EMPLOYMENT Alert: Federal Building Code now requires drug and alcohol testing and policy

1 October 2015


The Building Code (Fitness for Work/Alcohol and Other Drugs in the Workplace) Amendment Instrument 2015 (Fitness for Work Amendment) will impose additional compliance requirements on contractors from 16 October 2015.  To be eligible to work on federally-funded projects:

  • any contractor must have a work health & safety and rehabilitation management system (WHSMS) that sets out how alcohol and other drugs in the workplace will be managed, on a whole of project workplace basis, to ensure that no one attends the site to work under the influence; and
  • a principal contractor must, as part of its WHSMS, have a fitness for work policy that applies to all persons engaged to perform work on the project and includes mandatory random drug and alcohol testing.

The changes will require contractors to urgently update their WHSMS to place a greater emphasis on the project-wide management of the risks presented by alcohol and other drugs.

Express whole of workplace approach to fitness for work and drug and alcohol testing

The changes to the WHSHS requirements of the Building Code from 16 October 2015 reflect a greater express emphasis on a single, consistent, project-wide approach to safety management on a project.

Some of those changes apply to the principal contractor, but most apply to all contractors, including the new requirements to spell out how the contractor’s fitness to work policy applied to all persons on site, including non-employees, up and down the line.

General requirement – All contractors and all projects

From 16 October 2015 a contractor’s WHSMS must set out, expressly, how drug and alcohol issues in the workplace will be managed to help ensure that no one on site attends the site to work under the influence of alcohol or other drugs.

In practice, the change will require a contractor to consider and clearly identify in its WHSMS at a minimum:

  • who is responsible for managing, proactively, the prevention of drug and alcohol issues and how;
  • how the contractor’s WHSMS will dovetail with the principal contractor’s WHSMS for the project, and who is responsible for ensuring that the principal contractor’s processes are:
    • well known and widely understood; and
    • routinely adopted.

What a compliant fitness for work policy must address – Schedule 3 requirements

If the value of the Commonwealth’s contribution to the project is at least:

  • $5 million and represents at least 50% of the total construction project value; or
  • $10 million (irrespective of its proportion of the total construction project value),

    a contractor’s fitness for work policy will not comply with the updated Building Code unless it:

    • applies to all persons engaged to work on the project (whether or not they have any direct, contractual relationship with the contractor); and
    • addresses expressly all of the matters prescribed by the new Schedule 3 to the Building Code, listed in the Schedule to this alert – see here.

      How will it work in practice?

      In practice, because each contractor’s WHSMS for the project must apply to all persons engaged to work on the project (whether or not they have any direct, contractual relationship with the contractor), there is every likelihood that:

      • the principal contractor will take primary responsibility for:
        • developing and communicating the single, consistent, project-wide fitness for work policy for the project, as part of its WHSMS; and
        • reviewing its operation in conjunction with contractors; and
      • as part of their fitness for work policy, contractors will:
        • adopt the principal contractor’s fitness for work policy, including its testing regime;
        • require, as a matter of contract, all subcontractors to adopt and cooperate with principal  contractor and comply with its fitness for work policy; and
        • monitor and enforce compliance by its workforce and subcontractors and cooperate with the principal contractor.

        The changes expressly prohibit a principal contractor passing to any subcontractor/s either:

        • the implementation of the testing regime; or
        • the cost of the testing regime.

          The Attachment A to the Explanatory Statement released with the Fitness for Work Amendment explains that this restriction is designed to ensure that the principal contractor remains responsible for addressing alcohol and other drugs consistently across the project.  It also encourages consistency across the project, to address risks to work health and safety on a whole-of-project basis.

          No transitional provisions

          Unlike the draft new Code that has been held up in the Senate since April 2014, the Fitness for Work Amendment to the Building Code does not contemplate a grace period for compliance or a transitional, phasing in period.  The changes take effect, in full, from 16 October 2015.

          Consequently, to ensure they remain eligible for federally-funded work:

          • contractors working on federally funded projects now must have a compliant fitness for work and drug and alcohol testing policy in place by 16 October 2015; and
          • those not working on a federally funded project should also have compliant processes in place by that time, to ensure they remain eligible for future federally-funded work.

            Consequences for non-compliance

            As for any breach of the Building Code, non-compliance with the new provisions of the Building Code may lead to:

            • a formal warning;
            • exclusion from tendering opportunities for a fixed period of time; and/or
            • a reduction of tendering opportunities for a fixed period or projects over a certain value or in a specific area or region.

              A breach or suspected breach of the Building Code must be notified within 21 days after a contractor becomes aware of it, giving contractors only very little time to ensure they are compliant with the new requirements.

              What do you need to do?

              With the introduction of the changes looming, now is an excellent time to review the WHSMS for any project.  At the very least, before 16 October 2015, prudent contractors will:

              • review their WHSMS, with a particular focus on:
                • fitness for work and drug and alcohol testing;
                • adopting the principal contractor’s fitness for work and testing regime for the project; and
                • spelling out expressly, in the WHSMS and fitness for work and testing policies, how they will work with the principal contractor for the project to ensure compliance with the updated Building Code, including in relation to the interaction of the fitness for work policy and non-employees:
                  • up the line, such as personnel of the principal contractor; and
                  • down the line, such as subcontractors directly or indirectly engaged;
              • talk with their principal contractor for the project, to understand their expectations for testing and introduction of any changes required, because a compliant testing regime is not already in place;
              • consult with their workforce, in accordance with all applicable industrial instruments, and as appropriate, their representatives;
              • make the necessary change to the fitness for work policy for the project, in consultation with the principal contractor, employees and workforce.

                A contractor with an enterprise agreement in place might also take advice about the introduction of the changes, to help manage the risk of general protections claims under the Fair Work Act.

                Before introducing new requirements for subcontractors, requiring them to undergo testing, it may be useful to consider the terms of the contract, to help limit claims of breach of contract or related damages claims.

                Particular implications for principal contractors

                Principal contractors should make use of the intervening time by:

                • reviewing their WHSMS and fitness for work and testing policies;
                • reviewing their contracts with contractors, to ensure they allow the principal contractor to introduce random testing of all personnel undertaking work on those projects if it is not already a feature of the project;
                • speaking with contractors and subcontractors about any update to the project fitness for work policy needed to remain compliant from 16 October 2015, and how to make the changes seamlessly; and
                • considering whether any contingency plans are required to ensure the project moves ahead even if the implementation of random testing present difficulties for particular contractors or subcontractors.

                  Again, advice may be prudent to ensure that the introduction of any changes does not create an unacceptable risk of general protections claims under the Fair Work Act.

                  Note: While the focus of the general information in this Alert is on contractors, the changes apply to other “building industry participants”. Any entity should obtain professional advice tailored to their particular circumstances before relying on any aspect of this general information.

                  Written by:

                  Andrew Cardell-Ree | Partner | acardell-ree@tglaw.com.au | +61 7 3338 7910

                  Stephen Silvapulle | Lawyer |  ssilvapulle@tglaw.com.au | + 61 3 9641 8906