The NSW Government has proposed changes to the Building and Construction Industry Security of Payment Act 1999 (NSW) (the Act) which could be introduced as early as 2019.
If these changes are made, businesses can expect more active involvement from law enforcement to ensure they are complying with the Act.
WHAT YOU NEED TO KNOW
Many of the proposed changes could have broader implications for your business, whether you are a principal or contractors, including:
- The timeframe for payment is shortened to a maximum of 10 days after a head contractor makes a payment claim, and 20 days in the case of a subcontractor.
- All payment claims must include a statement that they are made under the Act. (This was a previous requirement and is being re-introduced.)
- The meaning of “reference date” is clarified so that there is a minimum of one reference date for every month in which construction work is carried out. It will also expressly cover one-off payments, milestone payments, and payments after the termination of the contract.
- The meaning of “serve” in section 31 is extended to “any other document” not just “notices”. This would appear to capture the way in which a head contractor serves a supporting statement on the principal under section 13(7).
Significantly, a new set of powers to monitor compliance with the Act is also proposed.
INVESTIGATIONS BY ‘AUTHORISED OFFICERS’
Currently, the Act provides only limited powers to enforce the Act.
A new Part 3A, however, will allow the appointment of “authorised officers” to monitor compliance with the Act and obtain such information or records as may be required to enforce the Act.
This means for their authorised purpose, these officers will have power to:
- Require information and records or require a person to answer questions;
- Enter business premises and examine or inspect records;
- Make copies of records;
- Seize documents or items that may be connected with an offence against the Act; and
- Issue on-the-spot fines for applicable offences.
LIABILITY OF DIRECTORS FOR SOME OFFENCES
The proposed changes will also extend liability for some offences to the directors of a corporation, which are called “executive liability offences”. For instance, the failure of a head contractor to attach a supporting statement to a payment claim served on the principal will be an executive liability offence.
This means that a director of a corporation commits an offence where:
- the company commits the offence; and
- the director knew or should have known that the offence would be or was being committed and failed to take all reasonable steps to prevent it.
Directors will therefore, among other things, need to ensure that all employees and contractors are sufficiently instructed and trained so they can comply with the relevant provisions of the Act
If this change is made, companies involved in construction projects will need to thoroughly review their practices to ensure they are taking all reasonable steps to comply with the Act.
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