Construction Act – some facts

Legislation introduced in May 1998 to make sure bills are paid on time.

A certificate details how much firms they will receive by a set date plus an explanation of why any money may be withheld.

Why are people still arguing about it?

Like all laws, it’s not perfect and has been through a series of reviews.

What changes do people want?

Depends who you are. Main contractors are generally happy with the Act, while subcontractors want it beefed up.

Why are the subcontractors unhappy?

Trade contractors believe bigger firms have been avoiding paying bills by hiding behind ambiguous wording in the original Act.

Why is the system not working?

Some firms get round the Act by inserting ‘pay when certified’ clauses in contracts. They will only pay suppliers when work has been signed off by an architect, surveyor or engineer. Subcontractors can put in a bill which is then ignored. Smaller firms then only have the option of putting up with it or going to adjudication.

What are the new proposals?

To ban ‘pay when certified’ clauses so main contractors could have to pay subcontractors before they are paid by clients.

Any other major reforms planned?

In adjudications, the right to a hearing will apply to oral as well as written contracts. Costs will also be fairly divided so main contractors cannot threaten to lump adjudication expenses on suppliers. It will also be made easier for firms to suspend work during a payment row.

What happens now?

Government officials are wading through consultation responses from opposing sides of the industry before new legislation is drawn up to amend the Act. The latest reforms are set to be announced in next month’s Queen’s Speech.

Will this mean the end of pay rows in construction?

Dream on…