11 December 2020
The QBCC is in the process of auditing contractors to check compliance with their obligations in respect of payment schedules under the BIF legislation. The audit program covers both builders and trade contractors.
The focus is Category 2 licensees who have not had a moneys-owed complaint or adjudication in the past 18 months. Category 2 licensees ($3 million to $12 million annual turnover) appear from the QBCC data to have the highest proportion of moneys-owed complaints suggesting that this category is at a higher risk of failing to comply with payment schedule obligations. By focusing on licensees who have not come to the QBCC’s attention recently for payment issues, they expect to be able to ascertain the underlying rate of (non-)compliance within that cohort.
The audits will be completed by 30 April 2021 – it's expected that 200 licensees will be sent notices (out of the approximate 5,000 licensees in Category 2).
From the notices that have been sent to members to date, the documents requested include the following:
- Copies of all payment claims from subcontractors who have carried out construction work under a subcontract with the licensee between 1 July 2020 and 30 September 2020. (Note: This does not include payment claims for supply of goods only, but does include payment claims for the supply and installation of goods).
- Full written contracts relating to all payment claims received as described above;
- Copies of any payment schedules issued for the payment claims;
- Bank statements which show payment of the payment claims and/or payment schedule amounts;
- Emails, letters or other documents that show when payment schedules were sent to the claimant;
- Where written contracts relating to the payment claims do not cover all terms, any documents that show oral contract terms such as:
- names of contracted parties;
- site of work;
- type of building work;
- description of the work;
- start date;
- when work is due to be completed by; and
- details of timing for payments, including:
- how often a reference date is to occur; and
- when the due date for payment is.
- Copies of emails, letters and correspondence between the licensee and the claimant regarding any disputed payment claims.
It's not yet clear to us how the QBCC will determine whether a payment claim and/or payment schedule is valid. It's an offence not to comply with the document request by the due date (maximum penalty is 100 penalty units (approx. $13,500) and/or your licence could be suspended or cancelled. The QBCC has advised us that it will take an educative approach to the audit as long as there is no serious harm to a subcontractor discovered. It's likely to be best for you to acknowledge past mistakes and to provide some evidence that you have made changes to your system to ensure future compliance though.
We recommend that members take care with identifying what documents to provide to the QBCC. Only those that have been requested should be provided to ensure that you do not provide evidence of other non-compliances. If you're unsure of what to provide, please contact our Members Legal team who can assist you in identifying the documents to be provided and also whether you have any non-compliances before you submit the documents to the QBCC. Over the past 12 months, the QBCC have been taking action (warning notices or fines) where they have become aware (through various avenues) of licensees not having contracts for building work in writing. It's important to ensure that you always have at least the following information in writing with all head contractors and subcontractors (all the way down the contractual chain) who are carrying out building work:
- the scope of the building work the subject of the contract;
- when the building work is to be completed (NB: this does not need to be an actual date as long as it is able to be determined e.g. within 20 business days of access to the site being provided);
- the amount to be paid for carrying out the building work or, if appropriate, how the amount to be paid for carrying out the building work is to be worked out;
- the parties’ agreement about retention amounts and securities to be held (NB: if no retention or security applies to the contract, then this should be stated);
- the name of the building contractor who is to be contracted for the building contract;
- the licence number of the building contractor as it appears on the building contractor’s licence card; and
- the address of the land where the building work is to be carried out.
The above matters must be in writing within the contract documents:
- before work starts if the contract price is more than $10,000 including GST;
- before work is completed if the contract price is $10,000 including GST or less; and
- if the contract price is $10,000 including GST or less and because of a variation, the revised contract price is more than $10,000 including GST, before the variation work starts.
The above items can be covered in a quote and a purchase order i.e. both documents form the written contract. This is a requirement of the Queensland Building and Construction Commission Act 1991 and it is an offence not to have the above matters in writing for all contracts for building work with a maximum penalty of 80 penalty units (approx. $10k) and 4 demerit points for both parties if they are both licensees (except a principal).
Please contact our Members Legal team if you are unsure of whether your current processes for engaging your subcontractors or your clients complies with the QBCC Act.