Sprinkler News - Bafsa

Protecting Property, Life and the Environment Newsletter No 17 Page 22
Contractual/Commercial Issues
No 10 Supports Creation of Taskforce to Tackle Retention
The Government has given the go-ahead for the creation of a taskforce to stamp out the use of retention payments in the public
sector. It will : -
Monitor progress in removing retentions on government projects and overcome obstacles.
Support the Office of Government Commerce in its attempt to reach a target of defect-free construction on 70% of
projects by next year.
Promote alternative mechanisms for government projects that reinforce team working arrangements while enhancing
payment security and avoiding the need for retentions (for instance through project bank accounts).
Put in place measures to provide small and m edium -sized firms with greater protection.
The lack of security of payment for smaller firms in construction is noted as a major obstacle to improving their productivity and
profitability, a key government aim.
Latham Group to Focus on Late Payment
Sir Michael Latham has unveiled plans to review provisions of the Construction Act over late payment and non-payment.
Latham is Chair of the review group set up last month to deal with industry concerns over late payment.
Construction minister Nigel Griffiths said he would give his full support to Latham.
The Review of the Construction Act
The 1996 Construction Act arose from Sir Michael Latham’s report Constructing the Team which was published 10 years ago.
Legislation to deal with payment and dispute resolution issues was a significant recommendation of the report.
There is now a case for looking at it again. The detail work for this review which was set up by the Government will be done
by two working groups. They will report to the main committee. The mechanism for any changes in the act will need to come
through a regulatory order, and such orders require widespread consultation and consensus.
The review will be very much on an open basis. The working groups are widely representative of clients and the supply side.
They will see all evidence submitted to the review. They can draw upon practical experience and expert legal advice. They
are required to report by the end of July with the whole operation completed by March 2005.
SEC Highlights Retentions Abuse Among Local Authorities
Most local authorise use retention monies to boost cash flow and finance capital investment, according to a survey by the Specialist
Engineering Contractors (SEC) Group.
Most local authorities however remain committed to the use of retention clauses in construction contracts.
SEC Group has condemned such misuse of retentions as downright abuse.
‘It is intolerable that local authorities should use retention monies to boost their reserves or to finance other activities. They
should be holding them in a separate trust account for the protection of sub-contractors who often lose their retention monies
as a result of main-contractor insolvency.
Racial abuse — A recent ruling will affect all employers in racial abuse cases
Laing recently lost a landmark ruling over a rac ial discrimination case that dates back to the Millennium Stadium project.
Judges at the Appeal Court in London agreed that the black construction worker at the centre of the case was entitled to seek compensation
for psychological injury in addition to the damages he had received from an employment tribunal for racial discrimination and for “injury to his
feelings”.
Laing had challenged this claim saying that it was not reasonable to expect a one-off comment to have such a profound effect.
The case hinged on an incident in 1999 when Yassin Essa was called a “balck c***” by his foreman.
Essa, who was born in Cardiff and completed as an amateur boxer for Wales, said this had led him to become depressed because his foreman
had called into question Welshness by labelling him in this way.
Essa had told an earlier tribunal hearing: ”The only thing I’d done was to be black and go to work. I am Welsh and nobody can take that away
from me.”
He told the appeal court that he believed he was entitled to seek compensation for the psychiatric injury he suffered.
The court was told that in March 2000 an employment tribunal had found Essa had been a victim of racial discrimination and awarded him
£5519 damages.
Essa took the case to the employment appeal tribunal in February last year when it ruled that he was also entitled to pursue a compensation
claim for his psychiatric injury. A decision that Laing had challenged.
The firm had apologised to Essa and had said the foreman, who “deeply regretted” the remark, was given a final warning.
Lord Justice Pill, one of the three appeal court judges said the remark in question was “grotesquely offensive” and, although the foreman said
it was a “throwaway comment made without malice”, the consequences for Essa had been devastating.
The judges rejected the appeal and ordered the case to be sent back to the employment tribunal for consideration of Essa’s claim for damages
for psychiatric injury.
The ruling will affect all employers in future cases of racial discrimination.