CIF calls for legislation on payments as jobs put at risk

CONSTRUCTION companies, including contractors and subcontractors, are facing staff lay-offs and even closure unless legislation is enacted preventing long delays and failure to pay by those availing of their services.

The Construction Industry Federation (CIF) said it wants new laws similar to those in Britain, which will require those who enlist the services or supplies of a contractor or subcontractor to pay up in full unless exemptions have been set out in advance of the contract commencement.

It says the existing Prompt Payment Act is only of use in the construction industry when the debt is not disputed. “In construction, when the debt is disputed, all the dispute resolution procedures must be exhausted before the debt is enforceable,” it said. “In some instances it may take years to determine the quantum of payment due and many companies cannot survive long enough to await the outcome.”

CIF pointed out that in its industry work is carried out in advance of payment and a company cannot take back the goods after the event.

“Unlike most industries, payment is in arrears and parties have no effective remedy to recover non-payment,” it said, adding that as most projects involve many parties, including developers and various subcontractors, problems in payment lead to a serious “knock-on cash flow problem” down the chain of contracts.

The legislation which they are looking for would not only place constraints on the avoidance of payment, but would also involve an adjudication process to ensure an independent third party can issue a binding recommendation.

The CIF said such an adjudication process exists in Britain, and of the 18,000 adjudications since the Construction Act was introduced in 1998, only 300 have been appealed.

The legislation being sought here has been passed through the Seanád by Senator Feargal Quinn, and the CIF said it had been given a sympathetic ear by Minister of State in the Department of Finance Martin Mansergh.

He proposed that the Department of Finance engage in a consultation process with the professional bodies and key stakeholders in the construction industry prior to the next reading of the Bill on October 19, the CIF said.