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Research Shows Subcontractors Still Not Being Paid

20th April 2015

PJE International, construction law specialists, have conducted a survey to investigate payment practices within the industry and found that in spite of new regulations, subcontractors are still being underpaid by main contractors to the extent that three out of five subbies are not receiving full payment.

Also, is has been highlighted that more than 40% of subcontractors in the construction industry accepted a short-payment on 50% of their work. The most alarming discovery of the survey revealed that 10% of the participating subcontractors are under the impression that payment can simply be withheld without justification.

According to the new Construction Act, all construction contracts made after October 2011 include a mandate that states that main contractors must issue a 'pay less notice' if they are unhappy with the final bill. This must be issued within a certain timeframe determined within the contract itself and must also include:

  • Reasons in detail for the withheld funds

  • Clear calculations to show the discount

  • The new value that the main contractor is prepared to pay

Manager of PJE International, Peter English said, "If the main contractor doesn't comply with the correct formalities with withholding or pay less notices, the subcontractor is put in a very strong position to recover whatever amount is disputed."

Although subcontractors accept that substandard work is liable to scrutiny and quite rightly so, it appears that throughout the industry there is what has become almost standard practice to withhold payments, even when the subcontractor has carried out a perfect job. Awareness needs to be raised within the construction industry to ensure that this issue is reduced.

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