Federal Minister for Jobs and Industrial Relations Kelly O'Dwyer has hit out at new rules which enshrine union access to ACT government-funded job sites, saying small business owners needed a degree to understand what's expected of them under the new laws.
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Security, cleaning, construction and traffic companies have less than four weeks to apply for a Secure Local Jobs certificate, which requires them to submit to an audit to prove they have not underpaid their workers.
They also have to comply with a Secure Local Jobs Code, which forces bosses to give new employees union membership forms and give union officials access to their internet service, photocopiers and tea rooms.
The procurement package passed into law in October, formalising a long-running agreement between ACT Labor and Unions ACT.
But Ms O'Dwyer, a Liberal, said the code will create unnecessary uncertainty and confusion for small businesses throughout the territory.
She said the code potentially conflicts with federal laws, including the Fair Work Act 2009 and the Code for the Tendering and Performance of Building Work 2016.
“The unclear changes will makes things harder for business, particularly job-creating small businesses, putting them at risk of breaching key workplace laws,” Ms O’Dwyer said.
“Small business shouldn’t need a degree in statutory interpretation, or have to hire expensive legal teams to understand their obligations.”
Ms O'Dwyer said the ACT needed to clarify the interaction between the Secure Local Jobs Code and federal industrial relations laws to eliminate confusion for local businesses.
Her concerns echo those of local industry groups and the federal jobs department, which informed the ACT government via a submission that parts of the procurement package were incompatible with Commonwealth law.
The Australian Small Business and Family Enterprise Ombudsman, former Liberal chief minister Kate Carnell, has also expressed alarm at the code, saying it imposes an "added and unreasonable" cost on small businesses by adding an extra layer of red tape.
"The choice to make compliance with the code a mandatory prerequisite for tendering with the ACT government creates a conflict with another goal of the ACT government in procurement - that of supporting local businesses," Ms Carnell said.
"This occurs as local businesses are disproportionately small businesses, which will be disadvantaged compared to larger national companies."
ACT Employment Minister Rachel Stephen-Smith has previously rejected criticism that parts of the code were invalid and said the territory government was conscious of the need to avoid conflict with federal laws.
While elements of the code have been softened, it is believed basically all businesses that do Commonwealth and territory work will need an exemption.
Companies that want an exemption will need to be audited to prove their claim is genuine.
The audits are expected to cost about $600 for a small business every 18 months.
However unions say the code is required to prevent wage theft and exploitation occurring with taxpayer money.
A school cleaning company was found to have underpaid its migrant workers in Canberra last year, with allegations some cleaners were owed $25,000.
The union also raised concerns about subcontracting in Canberra's security industry last year, with secretary Lyndal Ryan describing the situation as a "race to the bottom".
How the code works
All companies tendering for ACT government work, including from the Office of the Legislative Assembly, the Canberra Institute of Technology, Suburban Land Agency and the City Renewal Authority, will eventually have to become code-certified.
They must be audited in order to apply for a certificate, which can last up to 18 months.
So far, 18 approved auditors have been appointed, and the registrar's office has received its first audit reports, although only one certificate has been issued as of December 14.
Companies have to provide two years' worth of payroll tax returns and tax office data, as well as evidence of superannuation scheme payments as part of their application for a certificate.
Secure Local Jobs Code registrar Andrew Parkinson will be able to ping companies for a number of other industrial relations infractions.
Instances of extreme or serious non-compliance with the code can result in a penalty of 100 points, which means an immediate cancellation of a company's certificate. Those instances would include providing false or misleading information on a statutory declaration, intentional disregard for the law and falsifying or concealing documents.
Failing to produce documents requested by the registrar can also lead to the cancellation of a certificate.
If a company does not notify the territory of an adverse ruling against them by a regulatory authority, they could lose 50 points and have their certificate suspended. Repeated non-compliance with the code can also result in a suspension.
Isolated breaches of industrial relations laws, such as failing to provide payslips or pay appropriate overtime rates, can incur a loss of five points, or penalties like increased auditing and a reduced period of certification.
If a company loses 100 points in a two-year period, their certificate can be cancelled or suspended.
In determining points incurred, the registrar can take into account whether the company is a repeat offender or whether the infractions occurred against a vulnerable worker, such as someone who has a disability, is aged under 25 or is on a migrant visa.
If a certificate is cancelled during the middle of an ACT government job, the spokeswoman said the registrar and the territory entity managing the contract will work together to determine a suitable course of action, which may include termination of the contract.
"Cancellation of code certificates is expected to be rare. In the unlikely event of significant or repeated breaches, where cancelling a certificate is warranted but would result in substantial costs and disruption to a government service or project, the registrar would have the option of placing a condition on the certificate," she said.
"This would only be valid for that contract. This could be for a limited period of time to enable a new procurement process to be undertaken."
Industry concerned about 'vexatious complaints'
Anyone can make a complaint to the registrar about allegations of non-compliance.
Master Builders ACT chief executive Michael Hopkins said this left the process open to abuse by unions keen to exploit the code as part of enterprise bargaining negotiations.
“Local businesses regularly report that unions use safety laws or their infamous MoU with the ACT government to prosecute other agendas such as driving union membership or as leverage to sign union enterprise agreements,” Mr Hopkins said.
“To combat this tactic it is important that the new procurement code contain a fair and transparent complaints process, including a presumption of innocence, to avoid vexatious complaints and an unfair imposition on small businesses.”
However Unions ACT secretary Alex White said most complaints would be reviewed by independent auditors, with safeguards to stop frivolous complaints.
"The Secure Local Jobs Code simply requires companies tendering to the ACT government to obey the law," he said.
But Mr Hopkins said confusion over the code meant many small and family businesses will go into the Christmas break uncertain about 2019.
“The MBA is concerned that the ACT government will put a hold on new tenders for several months while government prepares for the new laws. This would starve local business of new work, leading to more insecure work - the exact outcome these laws are trying to avoid,” he said.
Mr White said the new rules meant there was a "level playing field for good local businesses to win tenders, create local jobs and promote safer workplaces".
