Louise Garcia
Withy King Solicitors
Ask the Expert: Construction sector payment issues
Louise Garcia, partner at Withy King, explores chasing payments in the construction sector.
Q. I work in the construction sector and I'm struggling to get paid. What can I do?
Money, or the lack of it, is high on everyone's agenda. Cashflow and limiting your exposure to bad debt has never been more important but the market is definitely a buyer's market; so how do you get paid?
It's always going to be a tricky balancing act but you can’t afford to be lax with your debtors; the risks are currently too high. As Rok and others have demonstrated, companies are not too big to fail.
Pre-pack administrations strip a company of the assets and leave unsecured creditors unpaid. Unfair? Possibly. But it's legal. Insolvency generally means only the banks get paid; unsecured creditors rank low on the list of those who might get a few pence in the pound.
But with or without a written contract you are entitled to be paid for the value of the work you have carried out. If your employer doesn't want to pay you on the current job you have to question whether there really is any profit in the relationship.
It literally pays to be polite but firm in the enforcement of your payment entitlements; especially now we have the New Construction Act. If your employer doesn't value or pay for your works then you can take immediate and non-controversial steps:
• Issue a Payment Notice for the amount you say you are due.
• Dispute a Pay Less Notice if you don’t agree.
• At worst, a mild threat of adjudication (a relatively speedy dispute resolution process that aims to get the money due into your account within a month) will usually start the negotiations in earnest.
You don't have to issue legal proceedings, but you really should take some steps or risk losing your rights. Yes, in doing so you might ruffle some of your employer's feathers but that's where your commercial skills come into play.
If the relationship is good it will survive an honest request for payment. If your requests are falling on deaf ears, you have to ask yourself… are you sticking your proverbial head in the sand? And if so, who are you joining? Rok’s unpaid suppliers?
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Louise Garcia
Partner,
Withy King Solicitors
louise.garcia@withyking.co.uk
01225 425731
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