Source: Master Plumbers Gasfitters and Drainlayers
Subcontractors have been served up a massive win following a government announcement giving them greater financial protection if a construction company collapses.
The New Zealand Specialist Trade Contractors Federation (NZSTCF) welcomes the passing of the Construction Contracts (Retention Money) Amendment Act, which will provide vital protections for subcontractors.
NZSTCF president Grant Price says the NZSTCF has been advocating for greater protections for subcontractors for many years.
“There have been many occasions where subcontractors have been left out of pocket when a construction company collapses,” says Price. “It is pleasing the government has listened to the sector and taken action to address this issue.
“Subcontractors are a vital part of the construction industry, and they deserve to be paid for their work in a timely and fair manner.
“The new legislation provides much-needed protections for subcontractors’ retention money, ensuring that they will be paid even if the head contractor’s business fails.”
Under the new legislation, companies and directors who choose to hold retention money against subcontractors will now be required to hold retention money on trust in a separate bank account, which is unable to be mixed with other company money or assets.
Information about the retention money held must be reported to subcontractors on a regular basis, at least once every three months. Companies who fail to meet their obligations to subcontractors will face strict penalties, including fines of up to $200,000.
The changes to the retention money regime will apply to new commercial construction contracts and existing contracts if they are amended from six months after the Act is passed.
The NZSTCF looks forward to working with the government and other industry stakeholders to ensure that the new legislation is implemented effectively and that subcontractors are able to benefit from the new protections.