Dáil Éireann Debate, Wednesday - 24 October 2018
85. Deputy John Curran asked the Minister for Public Expenditure and Reform his plans to introduce regulations, new practices or legislation to offer enhanced protection to sub-contractors that are engaged on State projects in which the main contractor ceases trading resulting in reduced or no payment to the subcontractor; and if he will make a statement on the matter. [43880/18]
Amharc ar fhreagraLegislation has already been introduced to address poor payment practices in the construction sector. The Construction Contracts Act was first introduced by Senator Feargal Quinn and enacted with Government Support in 2013. Commenced by Statutory Instrument in July 2016, it applies to all construction contracts (as defined in the Act), public or private sector, whether they are written or oral and whether they include payment provisions or not. The Act imposes minimum payment requirements and provides the necessary tools to enforce those payments between the main contractor and their sub-contractors and so on down the supply chain.
The Capital Works Management Framework (CWMF) was comprehensively updated to reflect the provisions of the Construction Contracts Act 2013 in June 2016. The CWMF includes a suite of template tender documents and contracts which public bodies must use when procuring contractors on public works projects.
The Act provides important statutory protections for subcontractors in the construction industry and includes:
- a maximum payment interval of 30 days and a requirement to honour payment requests within 30 days for sub-contractors;
- a right to suspension for non-payment;
- a right to refer a payment dispute to adjudication; and
- the prohibition of arrangements that make entitlement to payment conditional on certain events, (e.g. ‘pay when paid’ clauses, which delay payments until the payer has, in turn, been paid), which were prevalent in most forms of sub-contract.
Whilst much of the interest from industry surrounding the Act was centred on the introduction of adjudication, it is the discipline that the legislation imposes on payments that appears to be largely ignored. Arguably these are the most important provisions in the Act but sub-contractors must be proactive in enforcing their entitlements with the contractor for payments that are due.
The Act does not cut across the normal rules for company liquidation/receivership and so where this arises the only route for recovery is through the normal insolvency process. However the magnitude of the exposure that many sub-contractors currently face upon the insolvency of a contractor would not arise if the provision for payments were insisted upon and the remedies available were exercised where payment is not forthcoming.
Responsibility for administration of the Act lies with my colleague the Minister for Business, Enterprise and Innovation, Heather Humphreys T.D.
