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Subcontractors seek law changes so more of them can recoup payments

Subcontractors owed millions of euro following the collapse of big construction firms have asked the Government to make changes to new legislation so more of them can recoup money they are owed, the Irish Independent has learnt.

They have written to Public Expenditure and Reform Minister Brendan Howlin asking him to make two amendments to the Construction Contracts Bill 2010, which passed through the Seanad in March.

In the letter, seen by this newspaper, subcontractors want a limit included in the bill to be removed -- this states that contracts worth less than €200,000 are not covered in the provisions of the act.

"This will ensure that the majority of subcontractors and a large number of small and local contractors will be excluded, and the bill will be of no benefit whatsoever to them," said the letter, written by Construction Industry Federation (CIF) vice-president Philip Crampton on their behalf.

The CIF estimates that 75pc of all contracts are worth less than €200,000 and one-third of its 3,000 members are subcontractors.

The second amendment refers to proposals that when disputes arise over payment, the adjudicator's decision should not be binding.

Mr Crampton claims that decisions would have to be binding for the legislation to work properly -- as is the case in Britain.


"Delayed payment being experienced because of protracted dispute resolution procedures will continue, and contractors will be left waiting for payment as before," the letter warns.

The bill is the first legislative attempt to protect subcontractors since the collapse of the construction market.

Numerous construction firms have gone bust or had to close down parts of their businesses in the past three years.

For example, when Pierse Contracting and Pierce Contracting Services went into liquidation, subcontractors were owed more than €50m.

The legislation, drawn up by former Independent senator Feargal Quinn, also requires developers to notify building subcontractors of their intention to withhold sums due to them.

Disputes that are not sorted out within 28 days would be subject to the adjudication process.

The British government introduced a similar arbitration mechanism in 1998, which Mr Quinn said he had "taken the best from, but also incorporated aspects of the systems in New Zealand and Australia".

It is understood that the regulatory impact of the bill is still being assessed.

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