Legal issues surround subcontractor contract clause

Legality of pay policy queried


Anton McNulty

A POLICY which Castlebar Town Council were asked to adopt to safeguard subcontractors and ensure they are paid for work tendered by the Council was welcomed but question marks remain over the legality of the contract clause.
The issue was raised by Independent councillor Michael Kilcoyne who told the Council that while the Council were paying contractors for work commissioned by the Council, some contractors were not paying subcontractors who carried out the work. He proposed that a clause be inserted in future contracts which would withhold payments to contractors if they did not pay their subcontractors.
“There are bricklayers, plasterers, electricians and others who have had their money withheld by the main contractors who have been paid by Councils. It is a terrible situation that these subcontractors who employ people are being left without their money. I suggest that we enter a contract clause stipulating that the main contractor must show evidence that the subcontractors have been paid before they get their money,” he said.
The proposal was supported by his fellow councillors but they raised concerns over whether it was legally viable to do so. Cllr Frank Durcan said he agreed in principle with what Cllr Kilcoyne was proposing but did not think it was ‘legally possible’ while Cllr Eugene McCormack was of a similar view.
Labour councillor Harry Barrett said the onus was on the Council to protect the ‘workers at the coalface’ and supported the motion.
Town Manager, Seamus Granahan said he understood the thrust of the motion but also said there could be legal issues with it and they would need to consult with the Department of Finance before inserting any clause in a contract.
However, Cllr Kilcoyne said that the Council all ‘pay lip service to the self-employed’ and said that they as an organisation had a right to insert such a clause.
“We are 100 per cent entitled to put this in and I have checked this out with a barrister. We are entitled to put a clause in a contract to ensure subcontractors are paid before final payments are put in place,” he concluded.