UK: Construction Briefing - 1 October 2015

Legal changes affecting construction businesses from 1 October 2015
Last Updated: 9 October 2015
Article by Akin Akinbode, Gurbinder Grewal, Robert Turner, Alastair Young and John Woolley

1 October 2015 ushers in a number of legal changes which affect construction businesses operating in the UK. We have provided brief highlights of some of the changes below. If you need further information, please contact us using the details on the right.

Minimum rates of pay increase

The minimum rates of pay will increase. The rates will rise for adults from £6.50 to £6.70, for 18 to 20 year olds from £5.13 to £5.30 and for those under 18 from £3.79 to £3.87. For more information, see this Government link.

New employment and health and safety laws

Various sections of the Deregulation Act 2015 come into force on 1 October 2015, including the following examples:

  • Sikhs are currently excluded from those health and safety regulations that insist on safety headwear on site. From 1 October 2015, this exclusion will be extended to other working environments (with some exceptions, for example where the work itself is hazardous such as an urgent response to fire) (see section 6);
  • those in HR should be aware that the power of Employment Tribunals to make wider recommendations in successful discrimination cases (for example, that an employer retrain staff or introduce a diversity policy) will be removed from 1 October 2015 (see section 2). Tribunals will retain the power to make recommendations that benefit an individual claimant; and
  • a simpler system of apprenticeships will be introduced (see section 2 and Schedule 1).

Bankruptcy threshold increases to £5,000

From 1 October 2015, creditors will only be able to pursue bankruptcy proceedings against those unable to pay unsecured debts valued over £5,000. This represents a significant increase from the current threshold of £750. These changes were first announced by the Government in January 2015 (see the press release) and are designed to work hand in hand with changes that provide easier access to debt relief for those who are financially vulnerable. For creditors, the removal of the threat of bankruptcy for small debts will make it harder to encourage tardy or long-standing debtors to meet their payment responsibilities.

More insolvency changes: directors' disqualification and striking off

Certain provisions of the Small Business, Enterprise and Employment Act 2015 (SBEEA) relating to insolvency come into force on 1 October 2015. Of note (not least because directors' and officers' liability insurance premiums might rise) are the following:

  • the Secretary of State will have three years, instead of two, to apply for a disqualification order against a director of an insolvent company;
  • the Secretary of State will be able to apply to court for a compensation order against a disqualified director where the misconduct has caused identifiable loss to creditors; and
  • two additional grounds for bringing disqualification proceedings against directors will be introduced. In particular, convictions of offences overseas connected with the promotion, formation or management of an overseas company will be taken into account.

In addition, from 10 October 2015, the time it takes to strike off and dissolve a company from the public register will be reduced: for voluntary strike-off to approximately two months; and, for compulsory strike-off, to around three and a half months.

The overhaul and updating of consumer rights legislation

The Consumer Rights Bill becomes law on 1 October 2015. The new Consumer Rights Act 2015 overhauls consumer protection legislation in the UK, consolidates consumer law found in different legislation (such as the Unfair Contract Terms Act 1977) and defines key terms to ensure a consistent approach in this area of law. In particular, the Act:

  • applies to trader to consumer contracts (consumer contracts);
  • provides that certain pre-contract information will become part of the consumer contract;
  • establishes new statutory rights under goods contracts (applying, for example, to situations where goods are incorrectly installed);
  • establishes new statutory rights under services contracts in relation to information provided by a trader where a consumer has taken that information into account when deciding about the service;
  • sets out separate statutory rights and remedies in relation to digital content contracts (for example those relating to software or "apps");
  • establishes tiered remedies for breach of terms in contracts for goods, services and digital content (although, note, a claim for damages might still be possible);
  • replaces and adds to the current rules on unfair terms in consumer contracts; and
  • expands the list of terms which will be considered unfair including, for example, terms that allow the trader to determine the price after the consumer is bound.

For more detailed briefings on the Act by Rebecca Owen-Howes, please see:

E-filing for the Bankruptcy and Companies Court

The courts continue to update their available technology and the Bankruptcy and Companies Court (BCC) is following in the footsteps of the Technology and Construction Court (TCC) with the introduction of electronic filing for all proceedings started after 1 October 2015. Guidance to help with this process was published on 17 September 2015. For now, the BCC staff will scan the documents filed to commence proceedings but it is expected that a system will be introduced to allow documents to be filed electronically from the start as soon as the TCC's e-Working pilot comes to an end.

Other news

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More court fee increases?

Those who have issued proceedings recently will be aware that court fees increased sharply in March 2015. However, more unwelcome news awaits those seeking to resolve their disputes through the courts in that the Government wants to increase the fees further (see the Ministry of Justice consultation on court and Tribunal fee increases). For example, money claims over £200,000 will incur an issue fee of 5 per cent up to a maximum of £20,000.

Many oppose the Government proposals, not least for the following reasons: access to justice through the courts should be a right, not a question of affordability; the courts should not be used as profit centres; higher fees will dissuade potential claimants from bringing legitimate claims to court; there has been insufficient time to analyse the impact of the March 2015 increases on all relevant parties; and, finally, a further increase could well damage London's reputation as a prime centre for dispute resolution.

The Law Society has stepped up to the argument and issued a statement of objection which reflects many litigators' views. Whether the Law Society's reaction will change the Government's mind remains to be seen. To read the Law Society's response and the full statement, click here.

Damages for late payment of insurance claims

The Government published the Enterprise Bill 2015 on 17 September 2015, through which it hopes to introduce new sections into the Insurance Act 2015. A key provision will require insurers to ensure claims are paid within a reasonable time – and, if they fail to do so, they will be liable to pay contractual damages to the insured party. In certain circumstances, parties to a non-consumer insurance contract will be able to contract out of these requirements. (See the Department for Business, Innovation & Skills policy paper.)

Code for home builders

The management board of the Consumer Code for Home Builders has launched a review aimed at ensuring the Code best supports the home building industry in its efforts to maintain high standards and best practice for its consumers. Views are invited from all stakeholders before 31 October 2015. Click here for a link to the consultation.

Annual Construction Law Conference, 8 October 2015

Those in-house lawyers amongst you might be interested in attending the Sweet & Maxwell 9th Annual Construction Law Conference in association with Keating Chambers on 8 October 2015. Click here for more information.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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