The six law changes contractors must know about this month

A raft of legislative and policy changes kick in over the next few days that will have a direct impact on construction businesses.

Much has been written about the red-diesel ban and the increase in National Insurance payments, but did you also know about sustainability-disclosure requirements and prompt-payment thresholds?

Shona Frame, partner at law firm CMS, said there was plenty for contractors to get up to speed on.

“A number of these changes will add either cost or an administrative burden,” she said.

“But this will be justified on the basis that these changes are largely driven by the sustainability agenda, which sits at the heart of government policy, or by an increased focus on health and safety.”

Here’s our round-up of six big changes you should know about this month.

1. PPE duties extended to cover more site workers

British employers’ duty to provide suitable personal protective equipment (PPE) to employees will be extended to cover more workers from 6 April.

Under the Personal Protective Equipment at Work (Amendment) Regulations 2022, all people defined as ‘limb (b) workers’ must be treated the same as those with employment contracts in terms of PPE.

So-called limb (b) workers generally have casual or irregular arrangements to carry out duties for reward without the same commitments or rights as employees.

The law change means their risk must now be assessed and then suitable safety gear – whether that is goggles, hard hats or any other item – provided to them free of charge. Such equipment must be compatible, maintained, correctly stored and properly used following adequate training and instruction.

Self-employed workers remain outside the scope of this law. But the Health and Safety Executive warns that precise employment status can only be defined by a court or tribunal, and urges all firms to consider whether the change applies to them and their workforce.

2. Red diesel banned for construction vehicles

Despite a concerted effort by the industry, including a last-ditch letter from 15 trade bodies to chancellor Rishi Sunak, it has today (1 April)  become illegal to pour red diesel into the fuel tanks of vehicles and machinery used for construction purposes in the UK.

This means contractors have to find alternative fuel sources or buy regular white diesel – which comes with a tax of almost 58 pence per litre (ppl) rather than the rebated 11ppl attached to its dyed cousin.

National Federation of Builders chief executive Richard Beresford has warned consumers to prepare for rises in construction costs and house prices as a result of the law change.

Plant that already contains the rebated fuel can still be used, but contractors have been urged by trade bodies to maintain good records and keep fuel receipts, invoices, hire contracts and driver time sheets.

For more information, see CN’s breakdown of everything construction companies need to know about the red-diesel ban.

3. More timely payment of subcontractors required to win government work

The amount of late payment the government will tolerate from its suppliers has reduced.

Under the terms of Procurement Policy Note 08/21, bidders for contracts with Whitehall departments worth more than £5m per year now have to prove they have settled 90 per cent of invoices received in a defined period within 60 days.

Furthermore, if they have not paid 95 per cent of bills within this timescale, companies will have to provide a compliant action plan showing how they will get to this higher figure.

The latest rules today (1 April) replace an earlier policy of allowing bidders to proceed with just 85 per cent of invoices paid promptly and a suitable proposal for improving.

Electrical Contractors’ Association chief executive Steve Bratt welcomed the change when it was announced last year, saying prompt payment was “critical” to maintaining healthy supply chains.

4. Climate disclosure requirements for big companies

Listed firms with more than 500 employees will have to disclose information related to climate change in their annual reports for the 2022/23 financial year, which begins in a few days’ time (6 April).

Details required under the Companies (Strategic Report) (Climate-related Financial Disclosure) Regulations include a description of governance arrangements for assessing and managing climate-related risks and opportunities.

In-scope companies will also have to set out what targets they use to manage climate-related risks and realise climate-related opportunities, as well as performance against those ambitions.

UK-based parent companies are asked to report on global operations, considering immediate and long-term factors affecting their various locations of operation and their supply chain.

5. Windfall tax kicks in on homebuilding profits

Companies making more than £25m a year in profit from building and selling homes in the UK will have to pay a new windfall tax from 1 April.

The Residential Property Developer Tax, included in the Finance Bill 2021-22, forms part of the government’s response to the Grenfell Tower tragedy and seeks to collect money from big firms in the sector to put towards the cost of removing unsafe cladding.

Figures in guidance released by HM Revenue and Customs suggest the levy – set at 4 per cent on all relevant profits above the £25m threshold – will bring in more than £1bn over the next five years.

Helen Coward, partner at law firm Charles Russell Speechlys, said “teething issues” may be expected as the sector works out “exactly how the tax will work in practice”.

“Affected taxpayers – and especially those on the margins of being caught by it – will hopefully have already considered how the new tax affects their business and how best to manage the additional burdens of compliance,” she added.

6. Minimum wage and National Insurance increases

A raft of changes to minimum-wage legislation will result in pay rises for all staff on rock-bottom salaries.

The National Living Wage, enforced by the government for workers aged 23 or over, increased from £8.91 to £9.50 an hour today (1 April). The greatest proportional rise goes to apprentices, whose minimum hourly pay just jumped almost 12 per cent to £4.81.

For full details of all the changes, see information released by the Low Pay Commission.

Meanwhile, National Insurance contributions will increase on 6 April, as the Treasury raises cash to overhaul the UK’s health and social care systems.

Employers and employees will each pay an extra 1.25 per cent. See full details in the government guidance.

Leave a comment