Ciarán Lynch (Cork South Central, Labour)
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Question 129: To ask the Tánaiste and Minister for Enterprise, Trade and Employment the legislation in place to ensure the payment of building subcontractors on public sector and private contracts; her plans to amend legislation for the construction industry in this regard; and if she will make a statement on the matter. [37802/09]

Mary Coughlan (Donegal South West, Fianna Fail)
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I have no legislative responsibility in ensuring the payment of building subcontractors on public sector and private contracts. Payment terms in commercial transactions are determined by the parties concerned and the responsibility for the collection of those payments and general credit control rests with the selling enterprise, in the first instance.

Legislation relating to prompt payments is within my responsibility. The issue of late payments in respect of contractors and sub-contractors is addressed by the European Communities (Late Payment in Commercial Transactions) Regulations 2002 (S.I. No. 388 of 2002). Regulation (2) of the Regulations defines a "purchaser" as follows: "(a) an undertaking which contracts with a supplier for the supply of goods or services to or on the directions of the undertaking, or (b) an undertaking ("the main contractor") - which obtains goods or services from another undertaking to supply to, or

(ii) contracts with another undertaking for that undertaking to provide goods or services on behalf of the main contractor to an undertaking;"

In accordance with these Regulations, it is an implied term of every commercial transaction that where a purchaser does not pay for goods or services by the relevant payment date, the supplier shall be entitled to interest ("late payment interest") on the amount outstanding. Interest shall apply until such time, as payment is made by the purchaser.

The current interest rate applicable from 1st July 2009 is 8% per annum (that is based on the ECB rate of 1% plus the margin of 7%). That rate equates to a daily rate of 0.022%. Penalty interest due for late payments should be calculated on a daily basis. In the absence of any agreed payment date between the parties, late payment interest falls due after 30 days has elapsed. The 2002 Regulations also provide for compensation for debt recovery costs. Greater use of these provisions would assist in achieving earlier payments.

In addition, under the Regulations, the use of terms that are grossly unfair may be unenforceable and such terms may be challenged in Court on the basis of criteria specified in the Regulations. Organisations representing small and medium-sized enterprises may challenge any terms that they feel breach the above Regulations. It is open to any such organization to pursue this operation. However, I understand that this provision of the Regulations has not been availed of, to date.

The enforcement of contractual rights, including any rights and obligations provided for by the Regulations, is a matter for individual suppliers (other than to the extent that representative organisations can take actions in certain circumstances, as outlined above). The Regulations do not provide for any enforcement role for my Department in respect of these matters.

A copy of the Regulations can be accessed at the Department's website link, as follows:www.entemp.ie/publications/sis/2002/si388.pdf