Vic: Government attacks on workers' rights in disarray

The Victorian state government's attack on building unions is in disarray after the Federal Court ruled it had broken federal workplace laws by threatening not to use big builder Lend Lease on the new Bendigo Hospital project.

The decision by Justice Mordy Bromberg is a major blow to the Coalition's anti-union agenda and its bid to slash building costs on big projects by destroying workers' rights.

In a related case involving a small recycling firm, the government was also found by Justice Bromberg on Friday to have used coercion to try change a workplace agreement. The Victorian government now faces the prospect of being fined for its breaches of the Fair Work laws.

The cases were mounted by the Construction, Forestry, Mining and Energy Union. CFMEU state secretary John Setka described the decisions as a ''win for democracy''.

Justice Bromberg ruled that the government had discriminated against Lend Lease workers by threatening to not use the builder. The workers, he ruled, were entitled to the ''benefits'' of a four-year agreement struck between the builder and the CFMEU, which had been approved by the Fair Work Commission.

In November 2012, the powerful construction firm Lend Lease was banned from all state government work because its agreement had placed restrictions on the use of outside labour and allowed the flying of union flags.

Under the state government's unlawful code and guidelines that took effect in July 2012, any builders that signed union-friendly deals risked being prevented from bidding for publicly funded work.

Mr Setka said the government's rules were finished. ''It's dead in the water, they can have a code but they can't breach federal law and that's what they did,'' he said. ''For them to get done for coercion and adverse action, they ought to be ashamed of themselves.''

Mr Setka said the case involving the $630 million Bendigo Hospital showed the ''fallacy'' of claims that union agreements cost the community more. In April, the government awarded the contract to build the hospital to a consortium that included Lend Lease as builder, despite it being banned. It had been ranked well ahead of its rival bidder during the tender process.

Slater & Gordon industrial lawyer Marcus Clayton, who acts for the CFMEU, described the judgments as a ''significant blow'' to the government's code that would allow construction workers to ''retain the positive benefits they have fought for and bargained for.''