Sub Contractors across New Zealand have welcomed the passing of the Construction Contracts (Retention Money) Amendment Act, which will provide vital protections for subcontractors.
The new legislation, announced by Minister for Building and Construction Megan Woods, will require companies and directors who choose to hold retention money against subcontractors to hold it on trust in a separate bank account. The retention money will be unable to be mixed with other company money or assets, and information about the retention money held must be reported to subcontractors on a regular basis.
The changes will also introduce strict penalties for companies who fail to meet their obligations to subcontractors. Companies and directors who breach the retentions regime will face fines of up to $50,000 and $200,000 respectively.
“Subcontractors are often the first to miss out when a construction company becomes insolvent, so we welcome these new measures to protect subcontractors’ retention money,” said Tina Wieczorek, SARNZ CEO. “We welcome the increased security measures now in place to protect specialist tradespeople and their earnings. These changes improve the transparency of how retention money is identified and managed, and will hold companies accountable for failing to meet their obligations. Subcontractors, including Scaffolding, Rigging and Rope Access trades, have experienced losses when construction companies go bankrupt, and retentions are not safeguarded. The new legislation helps prevent such incidents, giving subcontractors more confidence in their work and providing a safer environment for their business operations.”
The new legislation will apply to new commercial construction contracts and existing contracts if they are amended from six months after the Act is passed.
Paul Cunningham, SARNZ President and Director of Cunningham Construction Ltd states “These protections are well overdue and provide subcontractors across all trades with the peace of mind that any retentions held are dealt with responsibly by the main contractors.”
“It also provides small to medium businesses within the Scaffolding, Access and Rigging sector the confidence that in the event of client insolvency there are measures in place as well as an enforceable insurance policy to protect our businesses and eliminate this unnecessary business risk we all face. As the SARNZ president and as a business owner I believe this new legislation is a positive step forward.”
“We thank Minister Woods for her efforts to support the subcontracting industry and for recognizing the important role subcontractors play in the construction industry, and we look forward to working with the Ministry of Business, Innovation and Employment to ensure the new legislation is implemented effectively.”
ENDS
Media contact: Tina Wieczorek – [email protected]
Note:
The Construction Contracts (Retention Money) Amendment Act will introduce new measures to protect subcontractors’ retention money, including requiring companies and directors to hold retention money on trust in a separate bank account and introducing strict penalties for breaches of the retentions regime. More information is available on the Ministry of Business, Innovation and Employment’s website.
