As part of the Abbott government’s “Cutting red tape” reforms, the “Fair Work Principles” (Principles) will be repealed, effective from 1 July 2014.

These reforms will remove various employment-related requirements which have applied since 2009 to companies tendering for certain government contracts in excess of $80,000 (non construction ) or $9 million (construction).  Around 20,000 procurement contracts each year will be affected, at an estimated saving to the government of approximately $5 million per year for the next 10 years.

The key business impacts will likely include:

  • companies that have not previously participated in tenders because of the Principles may seek to do so after 1 July 2014, resulting in increased competition
  • companies tendering for government contracts should ensure they understand what requirements will apply before and after 1 July 2014 and review their employment or industrial arrangements accordingly.

Changed requirements

All tenderers will remain subject to the Fair Work Act 2009, modern awards and enterprise agreements and the general requirements for Commonwealth procurement.   However, from 1 July 2014, tenderers will no longer be required to comply with the Principles.  Key changes include removal of the following requirements:

  • additional declarations of legal compliance based on the Principles
  • requiring all enterprise agreement dispute resolution clauses to make provision for  arbitration by an independent third party (typically the Fair Work Commission)
  • for cleaning services, payment of set minimum rates (which exceeded minimum award rates by an average of around 25%)
  • for clothing, textile and footwear manufacturers, being accredited under the Code of Practice administered by Ethical Clothing Australia.

Status and next steps

The Department of Employment has released the Options-stage Regulation Impact Statement and will now consult with stakeholders, including the relevant unions and employer groups.  At this stage, the repeal of the Principles has been welcomed by organisations such as the Building Services Contractors Association of Australia and criticised by the ALP.