Media release from government 30 March 2023
Changes have been made to legislation to give subcontractors the confidence they will be paid the retention money they are owed should the head contractor’s business fail, Minister for Building and Construction Megan Woods announced today.
“These changes passed in the Construction Contracts (Retention Money) Amendment Act safeguard subcontractors who are often the first to miss out in the event a construction company becomes insolvent,” Megan Woods says.
“While it is not a requirement to hold retention money, many head contractors choose to withhold part of their payment to specialist tradespeople for up to 12 months. This is one way to help ensure building work is done right first time, and acts as an insurance that the subcontractor will return if there are any defects.
“The changes made today provide important protections for subcontractors so they can be certain their payment is kept safe, can’t be used for any other purpose, and will be paid out should the head contractor’s business fail.”
Companies and directors who choose to hold retention money against subcontractors will now be required to hold retention money on trust in a separate bank account, which is unable to be mixed with other company money or assets. Information about the retention money held must be reported to subcontractors on a regular basis, at least once every 3 months.
Read here for full media release
CCCANZ wishes to acknowledge the huge amount of work of Grant Price and the Specialist Trade Contractors Federation.