Minister of State Brian Hayes delivered on the Programme for Government commitment to legislate to protect small building subcontractors. This legislation will bring clarity to contract payment obligations, and improve the speed and lower the cost of dispute resolution. Minister Hayes noted,
“This Sector has experienced the worst of the crisis. Employment has fallen from a 2006 peak of 282,000 to just over 96,000 today. This is legislation that aims to rebuild trust within this sector, in particular for small contractors who make up half of those employed. This is necessary to return Construction to sustainable levels of activity, and so contribute to growth in the domestic economy.”
This legislation has taken two years to bring to this point. It has been subject to extensive consultation and intensive scrutiny – 49 Dáil Deputies speaking at 2nd stage – during its passage through Leinster House, and has set a precedent as the subject of a thorough Regulatory Impact Assessment. The final legislation has been honed to balance the need of robust legislation without placing an undue burden on either party to a construction contract.
The legislation provides statutory rights in respect of staged payments, payee protections in relation to delayed payments, and the right of referral of payment disputes to adjudication. The new adjudication procedure has been designed to deal quickly with payment disputes via binding decision.
The Regulatory Impact Assessment was central to bring the design of the dispute mechanism into line with good practice in other jurisdictions. This sees previous thresholds of €200,000 for private contracts and €50,000 for public contracts replaced with a single threshold of €10,000.
“This legislation is necessary to ensure that the €2.25 billion Stimulus programme and the €17 billion Public Capital Programme have maximum effect from an infrastructure and job creation perspective. The ‘Pay now, argue later’ model is a pragmatic tool aimed at keeping the wheels turning.”
Minister Hayes thanked Senator Feargal Quinn for his initiative and input into the development of this legislation, and the constructive engagement of the members of the Oireachtas Committee on Finance, Public Expenditure & Reform. The Construction Contracts Bill will be taken in the Seanad next week.