Plant contractors group alleges state bodies are hiring ‘cowboy’ operators

Local authorities and well-known construction firms have hired contractors that were not compliant with legally binding construction pay orders, it has alleged.

The organisation wrote to Minister of State at the Department of Enterprise, Trade and Employment, Damien English warning of an “unresolved issue of enforcing the legislation around” the Sectoral Employment Order (SEO).

“At the IPCA, we have seen evidence that many firms are still paying employees cash payments for additional work and overtime. The first-hand experience we have is that employees do not want to work additional hours as they feel the additional burden of tax on overtime work.

“There is an urgent review of regulations required to protect state tax receipts, thus minimising the level of defrauding,” said the letter.

“We are hoping to hear from Revenue officials shortly, with a view to meeting them, in order for the IPCA to set out its plans to end malpractice within the construction industry.”

In a second letter last week to Housing Minister Darragh O’Brien, the IPCA insisted a legal register of construction contractors was “badly needed”, but insisted it should be run by a state agency rather than by an arm of the Construction Industry Federation (CIF).

“The IPCA would like to propose a scheme that would adequately deal with the ‘cowboys’, whereby it would end the practice of any firm or entity hiring firms that pay below the legal rate, which leads in turn to poor quality of work and the State ends up carrying the cost of terrible standards of work by these firms,” it said.

The IPCA has also directly tackled at least one local authority for hiring contractors that are not compliant with the pay rates laid down in a Sectoral Employment Order.

The local authority had, for an extended period of time, contracted plant operators that should cost more than €24 per hour for as little as €11 an hour.

In a letter seen by the Sunday Independent, the IPCA wrote to the local authority warning that it was its responsibility to “ultimately ensure that the hired contractor pays his/her employees the proper amount as set out in the SEO”.

Failure to do so would mean “penalties for both the hirer and contractor”, said the letter.

A system whereby the local authority “depends on accountants’ letters to ensure the contractor is compliant with the SEO is not fit for purpose”.

"It appears that contractors have been providing cheap labour to your local authority for years now and this means many employees have been short-changed and exploited.

"There will be an issue here about how those employees will be recompensed for the exploitation and we fully intend to pursue this through the courts if necessary.”

The organisation previously tackled well-known construction and house-building firms about contractors they have hired.

“We recently wrote to you…with regard to a contractor you have currently employed on one of your projects,” it said in a letter to one high-profile firm, threatening to report the firm if it could not confirm its contractors were compliant.

In a similar letter to a second firm, the IPCA warned that “failure by any contractor to adhere to the SEO is a breach of the law and may result in liability falling upon the developer”.

The IPCA warned the firm it will report non-compliant contractors “to the relevant authorities, including the Revenue Commissioners, the Pensions authorities, the Workplace Relations Commission (WRC) and the Competition and Consumer Protection Commission.”

In response to queries, the Department of Housing said it had recently launched the Regulation of Providers of Building Works Bill 2021, the main aim of which was “to develop and promote a culture of competence, good practice and compliance with the building regulations in the construction sector which will benefit consumers and the general public”.