More security for construction subcontractors
Published: 28 May 2020
Subcontractors will have greater certainty, more cashflow support and job security with new changes to retention payments under the Construction Contracts Act.
A recent review of the retentions money regime showed that most of the building and construction sector is complying with the Act. However, there is more work to be done to protect subcontractors in two particular areas - firstly, to prevent co-mingling retention money with working capital, and secondly to provide clear, regular and useful information on where and how retention money is held.
The changes include:
- introducing a new offence and penalties for company directors and firms who don’t comply with their responsibilities,
- strengthening how retention money is held to prevent firms from dipping in to retention money to use as working capital,
- requiring those holding retention money to issue a transparency statement stating how much is being held and where.
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