Top 5 Challenges with Contractor Compliance
March 27, 2019
We know staying on top of contractor compliance can be frustrating and time consuming. There are obligations on both builders and contractors to provide relevant business details before engaging for work. Depending on which state you are in various penalties may apply for incorrectly engaging contractors. From HIA Member feedback, we have compiled a list of the Top 5 Challenges with contractor compliance and advice to overcome these barriers.
- What documents do I request from my contractors?
If you are a builder it is important that you are collecting all relevant documents from your contractors as a risk management process, so should an incident occur onsite there is a chain of responsibility. In NSW you should be collecting:
How do I know the documents and details are compliant?
- ABN and GST Registration Details
- Construction Induction White Cards
- Public Liability Insurance
- Workers Compensation Insurance or Personal Accident & Sickness Insurance (depending on whether they are have employees or are a sole trader)
- Professional Indemnity Insurance (for consulting professional services)
- NSW Department of Fair Trading Licence (Trades)
- SafeWork NSW Licence (High Risk Work, Asbestos, Demolition) – if applicable.
If you have received all relevant documents from your contractors, you should also undertake your due diligence to ensure the information is compliant. If the document has been issued by an authority or licensing body you may be able to undertake an online search to verify that the document is compliant. Helpful online search registers include:
Some documents you need to manually check. For example insurance. Is the ‘insured’ the correct name of the subcontractor? It is not uncommon for the ‘insured’ to be the individual but the business is actually a company!
The contractor is not registered for GST?
Once your new contractor has provided you with their ABN, you can undertake an ABN Lookup search where you will be able to identify if they are registered for GST. As per www.business.gov.au, if a business does not reach the financial year GST turnover threshold of $75,000 they may not be required to register for GST. Although this still may be complaint, please be aware when receiving invoices that the contractor is not adding GST.
The contractor entity structure is inconsistent across their provided documents?
Over a period of time a contractor businesses can undergo a corporate transformation from a Sole Trader, to a Company, to a Trust. When checking your contractor’s documents it is important to ensure that the correct entity is listed on all relevant documents. For example, if the contractor entity structure is a Company, but their Public Liability Insurance Policy is listed in their previous Sole Trader entity name, this would be considered non-compliant.
There are also different licence requirements depending on the entity structure. Ensure that a subcontractor that operates under a Company or Partnership business structure has a contractor licence in that entity’s name. They should not be providing a contractor licence that is only in the individual’s name. Companies and Partnerships have to have a nominated supervisor for licensing purposes.
The contractor is not licenced for the type of work they are engaging in?
It is important to verify that the work the contractor is undertaking is covered under their licence class scope of work (this is generally applied to trade contractors). Through the licensing body search portal, you can verify the licence class of the contractor and also view any restrictions and conditions on their licence – this may impact the work that you have engaged them for.
Through identifying these Top 5 Challenges with contractor compliance, HIA has created a contractor management solution specifically designed for the building and construction industry; HIA TRADEPASS.
HIA TRADEPASS – Contractor Management Solution
HIA TRADEPASS is a simple, easy to use, online system to manage your contractors’ business information and documentation. It gives you peace of mind knowing that your trade contractors' business information and registrations are up to date and have been verified by industry experts.
For more information and to view our HIA TRADEPASS Explainer Video please see www.hiatradepass.com.au.
If you would like a HIA TRADEPASS Demo please contact HIA TRADEPASS.