To EBA or Not to EBA? That Is the Question

The Federal Government’s new Building Cooperative Workplaces Bill 2026 (the Bill) was recently put before parliament, said to address the Fair Work Commission’s ballooning caseload, including the growing wave of AI-generated claims, and amongst other things a procedural oddity created by the Coles Supply Chain Pty Ltd v Milford decision.

The Bill restores the Commission’s ability to resolve matters quickly and in particular, get on with resolving the dispute at hand. Few will mourn the change.

One of the Bill’s proposed amendments however appears to have flown almost entirely under the radar and for anyone chasing Federal government work, may prove the most consequential part of the Bill.

Section 354 of the Fair Work Act currently prohibits discriminating against an employer because of the industrial instrument covering its employees. In practical terms, the Commonwealth cannot lawfully prefer a contractor because it did or didn’t have an enterprise agreement of a particular type (e.g. with or not with a union), without exposure to adverse action claims.

Two new subsections 354(2A) and (2B) seek to relax the current position as follows:

• Where the Commonwealth is procuring goods or services or making grants, it may now lawfully preference employers whose employees are covered by an enterprise agreement or a particular kind of enterprise agreement that covers an ‘employee organisation’ (e.g. union).
• Notably, the exemption applies down the “Commonwealth contractual arrangement chain”, meaning the exemption could have broad coverage, but also, incidentally, require head contractors to apply the same preference to their subcontractors. For the construction industry, one expects that would reach deep into the supply chain.

The Bill’s explanatory memorandum frames the proposed change as incentivising enterprise bargaining, to sit alongside the government’s broader push toward well-governed enterprise agreements with appropriate structures and inclusions: think modern slavery processes, WGEA-style reporting and general corporate social responsibility inclusions.

The Bill also enables the Minister to expand the exempt circumstances by legislative instrument, so the boundaries can theoretically move without Parliament necessarily having to pass another Act.

But, why? Well, it is clear that the Commonwealth and now the States, with the Olympics pipeline front of mind, are favouring well-considered, balanced enterprise agreements, with the focus on what the agreement contains. The Bill has not yet passed but is expected to without much resistance.

Contractors take note as this is an important update that appears to have, largely, flown under the radar.

What this means for you

• The Bill has not yet passed but is expected to without much resistance.
• If you chase Federal government work, note the exemption applies down the Commonwealth contractual arrangement chain.
• Head contractors may be required to apply the same preference to their subcontractors.

For advice on how this applies to your business, contact the Drayton’s team.