Building Industry Fairness (Security of Payment) Act 2017
The Building Industry Fairness (Security of Payment) Act 2017 (BIFA) has had a significant impact on the industry since its introduction in 2018. Despite broad ranging confusion within the industry, not all of the BIF Act applies to the industry.
There are three main chapters to the BIFA:
- Chapter 2 – Statutory Trusts (replaced Project Bank Accounts on 1 March 2021);
- Chapter 3 – Progress Payments (replaced the Building and Construction Industry Payments Act 2014 (BCIPA) on 17 December 2018);
- Chapter 4 – Subcontractors’ Charges (replaced the Subcontractors’ Charges Act 1974 on 17 December 2018).
Wood L&M Solutions can assist you in understanding the BIF Act and how it applies to your business. We can also help you to tweak your existing systems and processes to ensure compliance with as little additional effort as possible. Our extensive experience in developing and working with various software systems, as well as our director, Jason’s, technical skills in creating software tools that are user-friendly, allows us to be able to understand how you and your team work at a practical/project level and make suggestions that are unique to you and your way of working.
Labour Hire Licensing Act 2017
Labour hire in Queensland underwent a significant change in 2018 with the commencement of the Labour Hire Licensing Act 2017 (LHL Act). The LHL Act applies to all sectors and industries in Queensland – not just the construction sector. However, serious issues arise in the construction industry as many parts of the construction industry operate under a structure that falls within the ambit of the LHL Act. The fines are significant (up to $130k or 3 years imprisonment for individuals and up to $420k for companies) and impact on the entitlement of the provider to obtain payment under the contract. There are three main offences that all carry the penalty noted above:
- a person who provides labour hire services without a labour hire services provider’s licence;
- a person who engages a provider who does not hold a labour hire services provider’s licence;
- entering into a contract to essentially avoid the labour hire services licensing legislation.
We are seeing this become an excuse for non-payment under chapter 3 of the BIFA so it is extremely important that you understand how to identify a labour hire services provider and to identify whether your business is considered a labour hire services provider.
Queensland Building and Construction Commission Act 1991
The Queensland Building and Construction Commission Act 1991 (QBCC Act) has been in place for a long time, however, over that time, there have been many changes to the Act and its associated Regulations. In particular, a number of changes have been made between December 2018 and March 2021 with more likely to come. Some of the changes affect:
- licensing of contractors (builder licensees and trade contractor licensees);
- payments to head contractors and subcontractors;
- cash retention and other forms of security for head contractors and subcontractors;
- Home Warranty Insurance Scheme;
- non-conforming building products; and
- the scope of the QBCC’s powers.
Some of these changes may require a change to your standard form contracts and/or your processes for managing your contracts and payments. As fines and demerit points apply to some of these requirements, it is important that a review is carried out of existing contracts and other processes to ensure compliance. The QBCC has recently commenced pro-active audits of some licensees who have not come to their attention in the previous 18 months so it is not just about action taken on licensees who have had complaints made about them, the QBCC is auditing licensees to ensure compliance even where there has not been any complaint. The scope of the Approved Audit Program changes over time as more audits are approved and carried out.
Schedule 1B of the QBCC Act
In July 2015, the Domestic Building Contracts Act 2000 was replaced by Schedule 1B of the Queensland Building and Construction Commission Act 1991. There are some significant differences between the two pieces of legislation and, even though that change occurred a long time ago, several contracts being used by industry for domestic building work still do not comply with the requirements of Schedule 1B. It is important to understand when Schedule 1B applies and when it does not as it is not advisable that you enter a contract that complies with Schedule 1B if you are not required by law to do so. Schedule 1B is written heavily in favour of the homeowner client and places a lot of additional administrative obligations on the contractor that it is unlikely to typically do if it was not a requirement of the law.
Schedule 1B only applies to domestic building work and there are some contracts for domestic building work that are exempt from this legislation.
Australian Consumer Law
The Australian Consumer Law applies to a lot of contracts in the building and construction industry and it is important to understand which ones. It is also important to understand changes that were made to that legislation over the past few years so that it now applies to some business contracts, not just consumer contracts.
Like other pieces of legislation, some provisions of a contract may be legally unenforceable if it does not comply with the requirements of the Australian Consumer Law. Whilst unenforceability is a concern, some changes are expected to be made soon to the Australian Consumer Law which will result in penalties being imposed on the contracting parties for some non-compliant provisions. Those provisions will also apply to a broader range of contracts and businesses so it is important to also consider these future changes when considering amendments to your current contracts to avoid another round of changes when those provisions commence.
Last updated: 12 January 2022