Dáil Éireann Debate, Tuesday - 12 November 2013
153. Deputy Clare Daly asked the Minister for Public Expenditure and Reform his plans to protect subcontractors whose companies are jeopardised by the main contractor failing to pay their invoices in a timely manner, undermining the viability of these companies and threatening the jobs in them. [47805/13]
View answer154. Deputy Clare Daly asked the Minister for Public Expenditure and Reform his plans to protect subcontractors in cases of large State contracts where the main contractor is fully paid, but leaves subcontractors unpaid jeopardising these smaller companies and their employees. [47804/13]
View answerI propose to take Questions Nos. 153 and 154 together.
Under a public contract the contractual relationship is between the public body and the main contractor. A public body has no contractual ties with a subcontractor engaged by a main contractor. Any contractual relationship is exclusively a matter between the main contractor and its sub-contractor.
The general issue of policy relating to payments between businesses is a matter for my colleague Richard Bruton TD, Minister for Jobs, Enterprise and Innovation. The rules governing prompt payment have been transposed into Irish law by the European Communities (Late Payment in Commercial Transactions) Regulations 2012 (S.I. No. 580 of 2012). This legislation acts as a deterrent to late payment by establishing a clear expectation in law that payment will be made according to agreed terms. It lays down specific deadlines for the payment of invoices and establishes a right to compensation in the event of late payment in all commercial transactions, whether they relate to public or private transactions.
The enforcement of contractual rights, including any rights and obligations provided for by the Regulations, is a matter for individual suppliers. If the purchaser refuses to pay prompt/late payment interest and compensation to the supplier, then the supplier can seek their own legal advice on the matter. The supplier can also decide not to pursue prompt/late payment and compensation from a purchaser if he/she so wishes but is legally entitled to claim where such payment would apply. I am informed by the Department of Jobs, Enterprise and Innovation that the Regulations do not provide for any enforcement role for that Department in respect of these matters.
I would add that I am keenly aware of the difficulties being experienced by sub-contractors in this current economic climate. In this regard, my colleague, Minister of State Brian Hayes TD worked with Senator Fergal Quinn earlier this year on the development of the Construction Contracts Bill which was enacted on 29 July 2013 (Construction Contracts Act No 34. 2013).
The Act seeks to address the issue of non-payment to construction contractors who have completed work on construction contracts by setting minimum standards for the payment provisions in construction contracts (whether the contracts are written or otherwise). In addition, if a payment dispute arises, then the Act also provides for a swift and cost effective adjudication process. This will provide a route for sub-contractors to achieve redress in the event that non-payment occurs.
The Construction Contracts Act (relating to construction Contractors and sub-contractors) operates outside the Prompt Payment Legislation, in that the Construction Contracts Act provides further protections on prompt payment, but, the Prompt Payment legislation does apply to contractors and sub-contractors also.
The Action Plan for Jobs 2013 contains commitments in respect of a Code of Conduct on Prompt Payments to improve cash flow for business and to take steps to enhance awareness of the need for prompt payments by all elements of business. This Code which is currently being finalised by the various business representative bodies with the support of the Department of Jobs, Enterprise and Innovation, is aimed at improving cash flow between businesses and also helping address the culture of late payments in Ireland.
In addition my colleague, John Perry, T.D, Minister for Small Business recently announced a national Late Payment Information Campaign, which will start on the 9th December in Dublin before being rolled out to other parts of the country early in the New Year.
