Litigation & Dispute Resolution

Security of Payment Reform in the Western Australian Building & Construction Industry

On 31 October 2018, the State Government’s Industry Advisory Group published its report on ‘Security of Payment Reform in the WA Building and Construction Industry’.

The Report was a response to recent high-profile corporate collapses in the building and construction industry such as Diploma and Builton, which left numerous contractors and subcontractors without payment for work performed. In addition, despite significant regulation already existing, subcontractors continue to face significant difficulties in getting paid in full and on time without legitimate cause, in circumstances where their principals or head contractors hold greater financial power.

As the industry continues to transition further away from directly employed workforces and towards greater use of external subcontract relationships, those at the lower end of the contractual chain of payment remain vulnerable. Statistical evidence indicates that the industry has one of the highest rates of insolvency and payment delinquency.

For those people who may from time to time be involved in negotiating variations, perhaps the most significant recommendation in the Report is that all contracts valued at $20,000 or more (including variations) be in writing and contain specified information, unless an exception applies such as extreme urgency. If implemented, this will significantly limit the scope for oral variations. 

Other key recommendations from the report include:

• permitting disciplinary action against builders that fail to pay undisputed or determined debts;
• introducing a demerit point system which will empower the State Administrative Tribunal to suspend or cancel registration of builders who demonstrate poor payment practices;
• granting the Building Services Board the power to exclude individuals and companies with a history of business failure from remaining registered as builders;
• implementing steps to encourage greater use of standard form contracts;(again, this means subcontractors will be protected upon insolvency of the head contractor); and
• mandating that any security withheld under a construction contract be returned no later than 12 months after practical completion.

For further information on how these changes may impact on your business please contact Chris Bailey, Special Counsel on 08 9481 2040 or chris.bailey@whlaw.com.au
 

This article is general information only, at the date it is posted.  It is not, and should not be relied upon as, legal advice.  This article might not be updated over time and therefore may not reflect changes to the law.  Please feel free to contact us for legal advice that is specific to your situation.

Work Health & Safety Update - Increased Penalties Passed in Western Australia

On 3 October 2018, the Occupational Safety and Health Act 1984 (WA) and the Mines Safety and Inspection Amendment Act 2018 (WA) (collectively the Acts) came into effect, which significantly increased the current penalties for work health and safety offences in Western Australia. 

The new penalties are intended to provide a real incentive to comply with workplace safety laws and ensure penalties meet community expectations. The most significant penalty increases include:

• by a corporation (for a level 4 offence) up to $2.7 million for a first offence and $3.5 million for subsequent offences;
• by an individual (for a level 4 offence) up to $550,000 plus up to 5 years imprisonment for their first offence and a penalty of $680,000 plus up to 5 years imprisonment for subsequent offences;
• by an employee (for a level 1 offence) up to $50,000 for a first offence and $60,000 for a subsequent offence.

The maximum penalties are consistent with the national model Work Health and Safety Act (WHS) plus a 14% increase for inflation, meaning WA now has the highest maximum penalties for workplace health and safety offences in Australia.

Upcoming changes - Work Health and Safety Bill

On 12 July 2017, the Western Australian Government announced the development of a  modernised Work Health and Safety Act for Western Australia which is based on the WHS. This Act will replace three Acts, the Occupational Safety and Health Act 1984, Mines Safety and Inspection Act 1994 and Petroleum and Geothermal Energy Safety Levies Act 2011. In July 2017, Commerce and Industrial Relations Minister Bill Johnston formed a ministerial advisory panel to advise on the development of a new and improved WHS Act, based on the national model WHS Act. The public consultation period closed on 31 August 2018. The WHS Bill is not expected to be introduced to State Parliament until mid-2019.

What steps should employers be taking

In light of these increases employers should ensure: 

• strict due diligence standards are imposed and met;
• they are taking so far as reasonably practicable, steps to eliminate the risks people are exposed to by reason of the operations of the business;
• there are regular and updated training programmes implemented for managers and employees; and
• insurance policies are reflective of the new penalties imposed

If you’d like to better understand what these changes mean for your business, please contact Leanne Allison, Special Counsel on +61 8 9481 2040 or leanne.allison@whlaw.com.au.

This article is general information only, at the date it is posted.  It is not, and should not be relied upon as, legal advice.  This article might not be updated over time and therefore may not reflect changes to the law.  Please feel free to contact us for legal advice that is specific to your situation.