The Construction Contracts Act, 2013 came into force for certain construction contracts entered into after the 25th July 2016. The Act applies to both written and oral construction contracts, although some do not fall within its remit, for example, if the value of a contract is not more than €10,000. The purpose of the legislation is to provide new legal rights and obligations on the parties to a construction contract. The Act imposes minimum contractual provisions in relation to payments, particularly the timing of payments and the parties to a relevant construction contract cannot opt out of the provisions of the legislation. The Act also prohibits the practice of ‘pay when paid’, except in the circumstance of a third party to a contract becoming insolvent.
The Act provides specific deadlines for a subcontractor to submit payment claim notices. On receipt of same, payment must be made to a subcontractor within 30 days. If a subcontractor is not paid the amount due under the contract in full and within 30 days, s/he has the right to suspend work until full payment is made. In addition, a subcontractor also has the right to refer such a payment dispute to adjudication.
The Act therefore provides important statutory protections for subcontractors in the construction industry. For it to achieve its intended purpose, it is important that subcontractors exercise their rights under the legislation to ensure they receive full payment for work carried out under a construction contract.
My Department will continue both to monitor the effectiveness of the legislation and to consult with key construction sector stakeholders as to its ongoing impact.