Laws are in place to ensure contractors and subcontractors get paid, meaning good news for subbies and bad news for the payer if not prepared. What’s more, the laws are changing meaning increased payment security for subbies and more legal red tape for construction businesses. By calling upon a construction law expert you can make sure you’re informed about relevant legislation ahead of time to avoid getting caught up in expensive and time consuming litigation proceedings.
Ensure you get paid
We understand that when you’re a one man band or running a small business cash flow is king, meaning not getting paid can mean big things to your life and that of those around you. RCR Construction is committed to ensuring you’re informed of your rights as a subcontractor so that you can resolve a sticky situation swiftly and moreover can protect yourself in future.
What You Need to Know
To get you started, here are some things you need to know about securing payment for your building services:
There's a clear legal pathway to securing payment
Contractor heel dragging on invoice payments are no more thanks to the Building Industry Fairness (BIF) reforms. With the instatement of BIF regulations, payment claims will no longer require a disclaimer that a payment claim is being made under legislation to be taken seriously. Instead, all payment claims, including any invoice, will potentially be a payment claim and should be addressed by the payer as such. This means that if the contractor has the means to pay, you can expect payment without historical delays. In the event that they are unable to pay, you can expect to receive notice of a payment schedule within 10 days of submitting your claim. So, as a whole you can look forward to much peace of mind around payment for your services.
It is illegal for a contractor to ignore a payment claim under BIF regulations
Building Industry Fairness law reforms means contractors need to up their game when paying sub-contractors. Gone are the days when pleading ignorance was bliss for contractors sitting on outstanding invoices. This is good news for contractors who are now legally entitled to a response within a reasonable time frame.
Failure to respond means a fast track to court for debtors
In the event that a debtor fails to present a payment schedule in response to your payment claim, the disputed claim may be immediately enforced in court. What’s more you won’t need to provide the debtor with notice, nor a second chance to oblige. It’s on the contractors to get up to speed with their requirements and obligations to sub-contractors.
Contractors get just one shot to submit reasons for withholding payment
Disputed payments in relation to complex claims still require a response within a set period of time as outlined by the law. What’s more, that response must contain all reasons for withholding payment. All reasoning and/or evidence submitted thereafter is admissible. What this means is that payment claims escalated to an adjudicator can be handled as swiftly as possible and can’t be delayed by the submission of further rebuttal.
It's a legal requirement to secure sufficient funds for every building project
At the outset of every building project, funding must be secured in a Project Bank Account until payments are due. Failure to do so is illegal – a law in place to protect subcontractors from drawing the short straw and failing to be paid for the building services.
You can go above a contractor and secure payment directly from the employer funding the project
Are you a subbie commissioned to work on a building project by a contractor? Are you seeking payment for work completed as part of a contractual agreement and can prove the entitlement of your claim? If you answered ‘yes’ to all of the above questions then you are entitled to pursue money owed to you by way of a subcontractor’s charge.
A subcontractor’s charge provides you with the means to going above the contractor that owes you money and claim for payments owed to you by someone higher in the contractual chain. Once submitted, the entity funding the project must legally hold money owed to the head contractor to an amount that satisfies your claim, giving you peace of mind that money that you are entitled to is secured.
So what happens after the money is secured?
Within 14 days after you have given your Notice of Claim of Charge to the contractor, the contractor is required to respond to the claim by giving to the superior contractor or principal and to you a notice about whether they accept of dispute liability of your claim, in whole or part. In the event that liability for the claim is accepted, the project funder may be able to make a payment directly to you. In the event of dispute, court proceedings commence.
What if there is no money to be secured or an insufficient amount of money to satisfy all subcontractor claims?
Where there is no money payable and no available security, a subcontractor won’t have secured payment of the amounts owed to them. In short, a subcontractor’s charge is off the table and you’ll need to explore further options available to you for securing payment for buildings services provided.
If there is some money available but not enough to satisfy charges of all subcontractors, money will be shared between claimants in proportion to their claims.
Can I approach a subcontractors charge myself?
Technically yes, however the SCA is extremely technical and even the most minor error can void your charge and result in zero payment. It is strongly suggested that legal advice is sought to ensure you have the best chance of recovering money owed.
Useful Visual Resources
At RCR Lawyers we are all about simplifying the law for our clients, which is why we’ve created these useful visual resources for you. Check out the links below.