Construction in Ireland – Lexology


Sector overview

Trends, developments and prospects

What is the general state of the construction sector in your jurisdiction, including current trends, notable recent transactions/developments and future prospects?

The construction sector has experienced a sharp increase in activity in the last four or five years and current forecasts indicate that this trend is likely to continue for some time. That said, the industry has seen a handful of contractors getting into difficulty recently, not only as a consequence of the Carillion debacle, but also serving as a keen reminder of the continued importance of cashflow and the very tight margins that continue to apply in the sector. Activity has been particularly strong in the commercial sector, with significant investment also in the hospitality and leisure sectors, including the new Center Parcs holiday village in County Longford. Renewable energy infrastructure development also remains strong.

The recent introduction of sectoral employment orders (SEOs) under the Industrial Relations (Amendment) Act 2015 was an important legislative development. SEOs impose binding terms and conditions for employees in the construction sector in relation to:

  • rates of pay;
  • unsocial hours;
  • pension schemes; and
  • sick pay.

Two SEOs have been introduced to date, and it is anticipated that an SEO for the electrical sector will be announced in the near future. This is adding to the cost increases being experienced in the industry.

Legal framework

Legislation

What primary and secondary legislation governs the construction sector in your jurisdiction?

There is no overarching legislation governing the construction sector, but numerous statutes and subsidiary regulations apply to construction activities, including:

  • the Construction Contracts Act 2013, which introduced mandatory payment requirements for all construction contracts and an entitlement for parties to refer payment disputes to adjudication. A code of practice has also been published;
  • the Building Control Acts 1990-2007, the Building Regulations 1997-2014, the Building Control Regulations 1997-2014, the Code of Practice for Inspecting and Certifying Buildings and Works and the Building Control (Amendment) Regulations 2014. Along with detailed technical guidance documents, these set minimum standards and requirements for buildings. Since 2014, they also create a new regime for inspecting and certifying the design and construction of building works for residential dwellings or works that require a fire safety certificate (which applies to most commercial development);
  • the Code of Practice Governing the Conduct of Adjudications;
  • the Safety, Health and Welfare at Work Act 2005 and the Safety, Health and Welfare at Work (Construction) Regulations 2013. The act and its subsidiary regulations apply to employers and others operating in all sectors, including construction. The regulations set out specific additional duties for those involved in construction work, including design; and
  • the Income Tax and Corporation Tax (Relevant Contracts Tax) Regulations 2012, as amended. Specific tax requirements apply to those undertaking works and providing services in this sector.

Authorities

Which authorities regulate the construction sector and enforce construction law, and what is the extent of their powers?

The following authorities regulate the construction sector:

  • the Department of Business Enterprise and Innovation (overseeing the Construction Contracts Adjudication Service), which is charged with responsibility for appointing adjudicators where parties cannot reach agreement;
  • the Department of Housing, Planning and Local Government, which is responsible for planning regulation and building control regulation;
  • the Department of Public Expenditure and Reform, which is responsible for public works and services;
  • the Health and Safety Authority, which has enforcement powers in the field of health and safety, including prosecution for offences; and
  • the Revenue Commissioners, which is the central body responsible for all taxation matters.

Licensing

Project licensing

What licensing requirements and procedures apply to construction projects in your jurisdiction (eg, planning consents)?

Most development of land (including material changes in use) requires planning permission. In most cases, applications for planning permission are made to the local authority responsible for the area in which the proposed development will be situated. Applications for some large projects identified as having a strategic economic or social importance to the state can be made directly to the planning appeals board, An Bord Pleanála. In an attempt to deal with an acute shortage of available housing in some areas of Ireland, this expedited method of gaining planning permission was recently extended to include applications for certain social housing projects.

Some types of development and works are exempted from the requirement to apply for planning permission, including the addition of certain kinds of renewable energy structure to buildings (eg, biomass boilers and solar panels). However, a development cannot avail of this exemption if it requires an appropriate assessment or an environmental impact assessment.

There is also a system of ‘substitute consent’, which enables unauthorised development to be retrospectively authorised in certain circumstances.

Professional licensing and qualification

What licensing requirements and procedures apply to construction professionals, including any required qualifications?

Under the Building Control Act 2007 it is an offence to use the title of ‘architect’, ‘building surveyor’ or ‘quantity surveyor’ without being registered on the respective statutory registers. These registers are operated by the Royal Institute of the Architects of Ireland (RIAI) and the Society of Chartered Surveyors Ireland (SCSI) respectively. Individuals may be entered into these registers only if they have qualifications accredited by the RIAI and SCSI and the necessary training and experience required by the act.

The title of ‘engineer’ is not included in the act. Although a register is operated by Engineers Ireland and individuals need a qualification accredited by Engineers Ireland in order to use the title of ‘engineer’, it is not an offence to use this title without registration.

Do any special rules and restrictions apply to foreign construction professionals?

Regulation 7(1) of SI 139/2008, which transposes into Irish law the EU Directive on the Recognition of Professional Qualifications (2005/36/EC), sets out that any evidence of formal qualifications issued by a competent authority in a member state – and which is recognised to be of an equivalent level and confers on the holder the same right of access to or pursuit of a profession – will be treated as evidence of formal qualifications in Ireland.

Numerous international agreements for chartered engineers have been negotiated between Engineers Ireland and engineering professional bodies in Australia, Canada, Hong Kong, New Zealand and South Africa. Chartered surveyors from non-EU countries who are registered with the Royal Institution of Chartered Surveyors (RICS) can also register with the Society of Chartered Surveyors Ireland (SCSI) and enter onto the statutory register.

Project structures and relationships

Project structures

What corporate/formal structures are available for construction projects in your jurisdiction? What are the advantages and disadvantages of each? Are any structures explicitly prohibited?

Generally speaking, no specific corporate structures are preferred or prohibited for undertaking construction works or providing professional services. The only exception arises in the context of project supervisors appointed under the Safety, Health and Welfare at Work Act 2013, which prohibits unincorporated joint ventures or partnerships from being appointed to these roles.

Relationship management

Are there any special considerations for managing relationships with:

(a) Joint venture partners (where applicable)?

When dealing with an unincorporated joint venture, it is important to ensure that each partner has joint and several liability under the contract. For special-purpose joint venture vehicles, adequate security (eg, parent company guarantees from the key shareholders) should be sought, since these vehicles typically have little or no assets.

(b) Contracting government entities in public-private partnerships (or other construction projects with a public element)?

Typically, the entity engaging in a public-private partnership will be a government department or semi-state body, usually referred to as the contracting authority.

(c) Subcontractors?

Subcontractors are typically limited companies, but may also be sole traders. Increasingly, for specialist subcontractors, these may be incorporated outside of Ireland, and particular care must be taken to ensure that there is adequate security (eg, either through the contractual arrangements and use of performance bonds, or ensuring secured assets within Ireland). Such specialists often require advance payments for which appropriate bonds should be sought.

(d) Architects, designers, engineers and any other related professionals?

Most professionals are now limited companies, and similar considerations apply to checking the financial standing of the counterparty as would apply to any contract entered into with a company. It is important to ensure that insurance arrangements – notably including professional indemnity insurance – are adequate for the project in hand.

(e) Any other relevant parties typically involved in construction projects?

Care must be taken to ensure payment security when contracting with the client or employer, as an increasing array of investment vehicles are now involved in development and other construction works.

Contracts and performance

Standard contract forms

What standard contract forms are used for construction projects in your jurisdiction? To what extent do parties deviate from these standard forms?

There are different standard forms for private sector work and publicly funded works, as well as UK international forms which are frequently used, all with amendments to accord with the requirements of the client and project and the peculiarities of the Irish construction sector and Irish legislation.

In the private sector, a distinction is made between contracts for use for building works and those for engineering works.

For building works, the two principal forms of contract used for the appointment of the main contractor are issued by the Royal Institute of Architects of Ireland (RIAI). Both are in the traditional form, where the employer is responsible for the design of the works. The most recent edition was issued in 2017, although earlier editions of these contracts can still be found in use and it is quite common for bespoke amendments to be made.

The RIAI, in conjunction with the Construction Industry Federation, has also issued a form of subcontract for use with the RIAI standard form of contract. Again, it is quite common for bespoke amendments to be made.

Engineers Ireland, formerly the Institute of Engineers Ireland (IEI), developed standard forms of contract for use on civil engineering works based on the Institute of Civil Engineers forms used in the United Kingdom. There is both a third and fourth edition of this resource in circulation, although the third edition remains most commonly used. There is also a standard form of subcontract for use with the IEI third edition.

An alternative form of contract for use in the public sector, based on the public works contract and supported by the main industry bodies except the RIAI, is also being developed and is likely to be launched in the coming months.

The use of UK and international standard forms of contract is increasing, and is prevalent in certain sectors. The International Federation of Consulting Engineers form is probably the most commonly used international form in Ireland in the energy and water/wastewater sectors, but both the New Engineering Contract and Joint Contracts Tribunal forms are being increasingly used across various sectors.

In the public sector, a suite of standard forms were introduced in 2007 for publicly funded works, covering both civil engineering and building, and including both traditional and design and build forms, as well as forms for smaller projects. These standard form contracts are mandatory for all public works and works receiving up to 50% of their funding from public moneys. Two standard forms of subcontract have been produced for use with the public works forms of contract.

Definition of ‘construction work’

How is ‘construction work’ legally defined?

There is no specific definition of ‘construction work’, although different legislation does provide definitions for the application of the regulations in question. The Construction Contracts Act 2013 and the Safety, Health and Welfare at Work (Construction) Regulations 2013 have adopted similar definitions and define ‘construction work’ as “the carrying out of any building, civil engineering or engineering construction work”, subject to limited exclusions. The act also defines ‘construction contract’.

Governing law

Are there any rules or restrictions on the governing law of construction contracts?

The parties to a construction contract are not generally subject to any restrictions or rules in relation to choice of governing law (subject to the caveat that local jurisdictional regulatory requirements will always be enforced and observed). It is not possible to contract out of the Construction Contracts Act 2013.

Formalities

Are construction contracts subject to any formal requirements?

No, although the general rules relating to the execution of documents should be observed.

A construction contract can be executed under hand or as a deed. Where a document is to be executed as a deed by an Irish company it must be executed under seal. Subject to the provisions in a company’s constitution, the signatories need not be present when the seal is affixed.

Mandatory/prohibited provisions

Are there any mandatory or prohibited provisions in relation to construction contracts?

The Construction Contracts Act 2013 applies to most construction contracts in Ireland and parties are not permitted to contract out of its application. Under the act, any party can refer a payment dispute to adjudication at any time.

The act also requires that construction contracts provide for the amount of interim and final payments or for an adequate mechanism by which to determine when payments become due and in what amount. A payment mechanism must ensure that the parties can ascertain:

  • the amount of each payment; and
  • the timing of each payment.

Where a construction contract is silent on minimum payment provisions (or, in the case of subcontracts, includes less favourable conditions than those set out in the schedule to the act), then the minimum terms included in the schedule will be deemed to form part of the contract. Main contracts may include payment periods that exceed those periods included in the schedule.

The act prohibits ‘pay when paid’ clauses, except where the party further up the contractual chain is insolvent.

Implied terms

Can any terms be implied in construction contracts?

The general rules governing the implication of terms by the courts also apply to construction contracts. Terms can be implied to give effect to statutory requirements as well as the presumed intentions of the parties.

A number of implied terms specific to construction contracts also exist, many of which relate to design and quality and are closely aligned with the law of sale of goods. The existence or otherwise of specific implied terms within a particular contract will be judged on a case-by-case basis; where there is a comprehensive written contract, there may be very little scope for the implication of any terms.

Two implied terms commonly held to apply to construction contracts are:

  • that an employer impliedly agrees to do all that is reasonably required on its part to bring about completion of the contract and not to hinder or impede the contractor in carrying out its obligations; and
  • that a contractor will be required to carry out work with all proper skill and care in a good and workmanlike manner.

Risk allocation

How are risks typically allocated between parties to construction contracts?

Risk allocation can vary quite widely and will significantly depend on the contractual structure chosen for delivering the project (eg, traditional or design build or other variations). The contractor will be expected to assume greater risk for various matters, including design and ground risk, if appointed under the design and build contract. As in the United Kingdom, fitness-for-purpose obligations and their implication into construction contracts has recently become a hot topic for negotiation.

Limitation of liability

How and to what extent can parties to construction projects contractually limit or exclude their liability?

Contractors sometimes request financial caps on liability or exclusions of certain heads of liability altogether, although many construction contracts have unlimited liability. The parties are generally free to agree whatever they choose in relation to excluding liability, and large construction contracts often contain a separate cap in relation to delay damages.

It is standard for consultants to seek to limit their liability under professional appointments. In addition to caps on liability and specific exclusions, a consultant might also seek to limit the time within which a claim can be brought. Net contribution clauses, often included in collateral warranties, are sometimes resisted by employers.

Liquidated damages

How are liquidated damages typically calculated and to which liabilities are they usually applied?

The traditional test is whether the amount payable on a breach is a genuine pre-estimate of the loss that the innocent party may incur in the event of a breach. If it is not, the clause is a penalty and will be unenforceable. This follows the principles laid down in Dunlop Pneumatic Tyre v New Garage (1915).

In Sheehan v Breccia (2016) the Irish High Court rejected the more lenient approach of the UK Supreme Court in Cavendish Square Holding BV v Talal El Makdessi (2015).

Liquidated damages are usually applied to delays and performance shortfalls.

Force majeure

How are force majeure clauses treated in your jurisdiction? Is there a legal definition of force majeure events?

The doctrine of force majeure does not exist in Ireland and force majeure clauses are not generally found in standard forms of contract. However, parties may include such provisions, and they are often found in bespoke or international contracts.

General performance obligations

What are the general performance obligations of contractors and employers?

Contractors must do the work they have been contracted for with all due proper skill and care, and in a good and workmanlike manner. If they must supply materials under the contract, there is generally an implied term that these materials will be reasonably fit for the purpose for which they will be used, and of good quality.

There is an implied warranty that the work as completed will be reasonably fit for purpose if:

  • the employer makes the purpose of the works known to the contractor;
  • the contractor holds itself out to perform such works; and
  • the employer then relies on the contractor’s skill and judgement.

Contractors may also have an obligation to warn of any design defects which they believe to exist and which they should, as ordinarily competent contractors, suspect to exist. This obligation will depend on the nature of the contract and the surrounding circumstances.

The performance obligations of employers include doing all that is necessary to bring about the completion of the contract.

Project delays

How are project delays typically handled? Do any set rules, restrictions or procedures apply in this regard?

Extension of time mechanisms are included to allow time for completion to be extended when events occur for which the contractor is not responsible. Delays for which the contractor is responsible are generally linked to liquidated damages, which are normally fixed by the contract at a stipulated rate per day or week. In Ireland, any amount payable by way of liquidated damages must be a genuine pre-estimate of the loss that the innocent party may incur in the event of a delay.

Where the time extension mechanisms cannot be operated or are prevented from operating by the acts of the employer, time may become ‘at large’ and the contractor will be required to complete the works within a reasonable time.

Contract variations

To what extent can the parties make variations to the contract? Do any set rules, restrictions or procedures apply in this regard?

Construction contracts contain detailed clauses that permit variations to the works (including omissions). Absent such provision, there is no common law right to this effect, and variations will not be permitted. Variations to the terms of the contract will be governed by the express terms of the contract (which may require variations to be in writing, for example).

Termination

What are acceptable grounds for the termination of a contract?

Termination rights are generally governed by the terms of the contract, typically for breach of material obligations or insolvency. A party may also have a common law right to terminate a contract, in addition to those stated in the contract, for:

  • a repudiatory breach;
  • a fundamental breach; or
  • a breach of a condition.

Remedies for breach

What remedies are available for the breach of construction contracts?

The principal remedy will be damages; however, other remedies may arise under the express terms of the contract or at common law, including termination. It is usual for certain heads of damage resulting from a breach to be expressly excluded or limited.

Financing

Types of financing

What types of financing are used for construction projects in your jurisdiction? Which are the most common? Are there any restrictions on available financing methods?

Construction projects are typically funded by way of a senior secured loan, typically sourced from:

  • domestic financial institutions;
  • foreign financial institutions; or
  • non-bank lenders, including private equity funds.

There are no restrictions on who may provide financing or on what type of financing is provided. While domestic lenders are regaining their risk appetite following the downturn in the sector in the early part of the decade, foreign lenders – including both traditional banking institutions and niche non-bank lenders – have been quick to exploit the opening for new providers of finance in the Irish construction market.

Construction finance is typically a side-by-side funding model, with borrowers required to provide minimum equity contributions as a precondition to drawdown.

Due to the relatively high-risk nature of construction finance, this debt comes at a higher price than secured real estate financing. Lenders also require a complete suite of security – covering all contracts with construction contractors, subcontractors with design responsibility and key professionals – together with accompanying collateral warranties. Credit agreements for construction finance frequently provide for conversion to real estate investment finance once the development has reached practical completion, resulting in:

  • a consequent reduction in applicable interest rates; and
  • an extension of security to the fully constructed development, including rent flows or disposal proceeds deriving therefrom.

Security

What forms of security are used in construction project financing?

Typically, funders will take security assignments of the core construction documents (eg, the construction contract, professional appointments and performance bonds) as well as seeking collateral warranties from the principal construction parties, with the right to step into the contracts if the borrower defaults. Funders may also seek security over any retention moneys held by the borrower.

Payment

Methods and timing

What are the typical methods and timing of payment for construction work? Are there any restrictions on ‘pay when paid’ and ‘pay if paid’ provisions? Do any other rules, restrictions or procedures apply?

All construction contracts contain mechanisms for interim payment (typically monthly), or – occasionally – payment on the basis of achieved milestones. The Construction Contracts Act 2013 also now requires all construction contracts (subject to limited exceptions) to include:

  • an adequate mechanism for determining the amount to be paid to a contractor;
  • the period for interim payments; and
  • when payments will fall due.

Where a construction contract is silent on minimum payment provisions (or in the case of a subcontract, includes less favourable conditions, such as longer payment periods than those set out in the schedule to the act), then the minimum terms in the schedule will be deemed to form part of the contract.

The act also provides for an additional procedure whereby the contractor (or subcontractor) can formally issue a payment claim notice seeking payment of a sum to which it considers itself entitled (and the basis of the same). Where the amount is contested, the employer (or main contractor) has 21 days to respond, setting out the amount that it proposes to pay and the reasons why it differs from the amount claimed. The response must also set out the basis of the calculations. Where the parties cannot agree the payment amount by the payment due date, the employer must pay the amount stated in the response. A response has only to be submitted if a payment claim notice is issued by the contractor.

The act also prohibits ‘pay when paid’ clauses, save where the party further up the contractual chain is insolvent.

Non-payment

How can the contractor secure itself against non-payment by the employer? Under what circumstances can the contractor suspend work for non-payment?

Section 7 of the Construction Contracts Act puts the right of suspension for non-payment on a statutory footing. The act allows a party which has not been paid by the date the payment falls due to suspend work, provided that a written notice has been delivered to the employer at least seven days before the proposed suspension is to take effect, specifying the grounds on which suspension is proposed. The right to suspend work ends immediately on payment of the outstanding amount by the employer or when a notice of adjudication is served.

How can subcontractors secure themselves against non-payment by the contractor? Under what circumstances can subcontractors suspend work for non-payment?

Section 7 of the Construction Contracts Act puts the right of suspension for non-payment on a statutory footing. The act allows a party which has not been paid by the date the payment falls due to suspend work, provided that a written notice has been delivered to the employer at least seven days before the proposed suspension is to take effect, specifying the grounds on which suspension is proposed. The right to suspend work ends immediately on payment of the outstanding amount by the employer or when a notice of adjudication is served.

On what grounds can payments be withheld?

The Construction Contracts Act prohibits ‘pay when paid’ clauses, thus payments can no longer be withheld where the paying party is awaiting payment from a third party. An exception exists where the ultimate paying party (typically the employer) is the subject of insolvency proceedings. The act does not prohibit ‘pay when certified’ provisions.

The right to withhold or set off moneys may be expressly set out in the contract, or common law entitlements of set-off or abatement may apply. Construction contracts may allow moneys to be withheld for defective works or permit employers to withhold payments where a contractor fails to fulfil its subcontract payment obligations or where core documents such as bonds or collateral warranties have not been provided.

Unless limited by the terms of the contract, the common law right of set-off also gives parties to a construction contract the right to withhold payments.

Insolvency

Contractor insolvency

What recourse is available to employers in the event of the contractor’s insolvency?

This will be governed by the terms of the contract, but most construction contracts will provide for insolvency as a termination event, entitling the employer to terminate the contractor’s obligation to provide the works.

Insurance

Coverage

What mandatory insurance coverage applies to parties involved in construction projects? Is any additional coverage recommended?

There are no mandatory requirements. Commercially however, there will need to be adequate all-risks, public and employer’s liability in place, as well as professional indemnity for consultants and design and build contractors. The precise requirements for insurance will be driven by the nature of the project.

Tax issues

Liability

What tax liabilities arise in relation to construction projects?

The following tax liabilities arise in relation to construction projects:

  • corporation tax for profits, generally at a rate of 12.5% for those involved in construction;
  • relevant contracts tax (RCT), which is essentially a withholding that can be reduced to zero to ensure that contractors are within the tax net. Even if paid, it would be a credit against the corporation tax;
  • value added tax (VAT), which is normally charged by the person supplying goods or services. However, when it interacts with RCT, the person receiving the goods or services (ie, the principal contractor) calculates VAT and pays it directly to the Revenue Commissioners. The principal contractor accounts for VAT as if they had supplied the service and it is applicable to subcontractors involved in the construction industry only. 
  • tax deriving from the purchase and sale of property. Depending on the circumstances, this can be assessed as a profit (taxed at 25%) or a capital gain (taxed at 33%). On rare occasions, some profits can be taxed at 12.5%; and
  • stamp duty, arising on the purchase of land or buildings. The rate is 6% for non-residential or 2% for residential (with a value of over €1 million). 

Incentives

Are there any tax incentive schemes to promote construction and development in certain areas?

Tax incentive schemes are largely being abolished. It is very difficult for new projects to access any remaining schemes. 

Environmental issues

Environmental protection

What environmental protection legislation and regulations apply to construction projects in your jurisdiction?

The main environmental statutes relevant to construction are:

  • the Water Pollution Acts;
  • the Air Pollution Acts;
  • the Waste Management Acts;
  • the Environmental Protection Agency (‘EPA’) Acts;
  • the Water Services Acts 2007 to 2015; and
  • the Litter Pollution Acts 1997 to 2009.

Much of this legislation imposes heavy civil and criminal liabilities on those who do not comply with it when they are carrying out their activities or commit environmental offences. Directors and managers of a corporate body (eg, a company or a local authority) may also be liable for offences committed by the corporate body; company officers certainly will be made liable if they are personally involved in the management of an activity that results in a breach of the above statutes.

Air, water and waste law also provide for remedies for pollution caused to the environment generally (ie, not just to property or persons). For example, any person can sue to remedy water pollution, regardless of whether they have an interest in the waters. That person can even recover the costs of investigating, mitigating and remedying the pollution from the polluter. Local authorities and the EPA have powers under air, water and waste management legislation to require persons responsible – or deemed responsible – for pollution to clean it up or to remediate it themselves at the polluter’s expense.

Authorisation/certification

What environmental authorisations and certifications are required for construction projects and how are they obtained?

Prior authorisation is required for various activities that are liable to cause pollution to the air, water or land or to the environment in general. The authorisation may be called a:

  • consent;
  • licence;
  • permit;
  • certificate of registration; or
  • permission.

For example, discharges of trade and sewage effluents to waters must be carried out:

  • under and in accordance with a licence granted under Section 4 of the Water Pollution Acts; or
  • under an integrated pollution control (IPC) licence or Industrial Emissions Directive (IE) licence granted by the EPA.

Emissions from certain processes which have an effect on the air must be licensed by the EPA under Section 32 of the Air Pollution Acts. Licences under Part IV of the EPA Acts cover certain activities relating to:

  • the production of metals;
  • mineral fibres and glass;
  • chemicals;
  • intensive agriculture;
  • food and drink;
  • wood, paper, textiles and leather;
  • fossil fuels;
  • cement;
  • waste; and
  • surface coating.

Section 39 of the Waste Management Acts requires that licences be obtained for the disposal or recovery of wastes unless particular disposal or recovery activities are exempted from licensing requirements.

The application process for licences granted by the EPA involves first publishing in the media a notice of intention to apply; this is followed by the submission of an application form to the EPA. The EPA then issues a proposed determination, which is followed by an opportunity for objectors to make their submissions (with the possibility to request an oral hearing). The EPA then makes its final determination on the matter.

Contractors and builders should examine copies of all:

  • planning permissions;
  • water, waste, air pollution and IPC/IE licences;
  • waste permits; and
  • other authorisations and conditions of registration relevant to sites on which they are employed.

Conditions in various authorisations may be binding not only on the person to whom they were granted, but also on contractors and builders in their capacity as:

  • developers, producers or holders of waste;
  • occupiers of the site;
  • persons in control of the site or of materials on it; or
  • persons employed by or on behalf of, or as agents of, the owners or occupiers of the site or the persons granted the authorisation.

‘Green’ regulations and incentives

Are there any regulations or incentive schemes in place to promote the construction of energy-efficient and low-carbon buildings?

The European Union (Energy Performance of Buildings) Regulations 2012 (which give effect to the EU Energy Performance Directive (2010/31/EC)) require that a person who commissions the construction of a new building must examine the technical, environmental and economic feasibility of installing high-efficiency alternative energy systems at design stage.

The regulations require a building energy rating (BER) certificate to be secured when a new or existing building is offered for sale or let. If a new building is offered for sale or let by plans, a provisional BER certificate must be secured and later replaced by a final certificate. A building’s energy performance indicator (where applicable) must also be stated in advertisements relating to the sale or letting of the building.

Grants are available from the Sustainable Energy Authority of Ireland to facilitate the construction of energy-efficient and low-carbon buildings.

In an attempt to incentivise compliance with its provisions, the regulations also provide for enforcement and stipulate the penalties that may apply to any person guilty of an offence under the regulations.

Employment issues

Employment and labour law

What employment and labour legislation applies to construction projects in your jurisdiction? What rights and protections are provided to construction workers?

General employment legislation will apply to employment relationships in construction projects, including:

  • the Unfair Dismissals Acts 1977 to 2015;
  • the Employment Equality Acts 1998 to 2015; and
  • the Safety Health and Welfare at Work Act 2005.

More specifically, there have been two Sectoral Employment Orders (SEOs) that will affect employees in the construction industry:

  • The Sectoral Employment Order (Construction Sector) 2017 provides for mandatory terms and conditions in the construction sector, including pay, pension and sick leave. These requirements are above statutory minimums. This SEO also introduces a new dispute resolution procedure.
  • The Sectoral Employment Order (Mechanical Engineering Building Services Contracting Sector) 2018 affects an estimated 10,000 qualified plumbers and pipefitters, as well as registered apprentice plumbers and pipefitters, working in the mechanical engineering building services sector. This SEO also provides for mandatory terms and conditions including pay, working time, pension and dispute resolution.

Occupational health and safety

What occupational health and safety regulations apply to construction projects?

The Safety, Health and Welfare at Work Act 2005 and its subsidiary regulations apply to all employers. Hence, they will apply to clients, contractors, professionals and subcontractors, which will each be required to manage and conduct their activities in such a manner as to ensure – so far as reasonably practicable – the safety, health and welfare of their employees and others affected by their activities. In addition, specific duties and duty holders for those involved in ‘construction work’ (which category is broadly defined) are set out in the Safety, Health and Welfare at Work (Construction) Regulations 2013.

Employment contracts

What types of employment contract are typically used for constructions work? Are there any mandatory or prohibited provisions in relation to employment contracts?

In the construction industry, contracts for service are common (as opposed to contracts of service). It is also common for employees to be engaged through an agency; in this case a company would have an agreement in place with the agency and the employment contract would be with the provider of agency services.

Employees may also be employed by a construction company on a fixed-term employment contract. There is a statutory obligation on employers to objectively justify the rationale for the fixed-term contract. After three continuous years on fixed-term contracts, an employee becomes automatically entitled to a contract of indefinite duration unless the employer can show objective grounds justifying the fixed term.

An employer must provide an employee with a written statement of terms, including:

  • the employer’s name and address;
  • the place of work;
  • the employee’s job title;
  • the date of commencement;
  • rate of calculation of remuneration; and
  • terms relating to paid leave.

Any term that purports to exclude protective legislation (eg, maternity leave) or that creates less favourable treatment based on any of the nine discriminatory grounds is prohibited. There is also protection against less favourable treatment of part-time, fixed-term and agency employees.

Foreign workers

What rules, restrictions and considerations apply to the hiring of foreign workers?

Any citizen of an EEA country or Switzerland is entitled to work in Ireland without an employment permit. The main restriction and consideration in relation to non-EEA nationals is that they must obtain an employment permit to work in Ireland. It is important to note that employment permits relate to permission to work in Ireland, and there may be separate considerations in relation to visas (ie, permission to enter and reside in Ireland).

There are nine employment permits in Ireland:

  • critical skills;
  • general;
  • intra-company transfer;
  • exchange agreement;
  • dependent/spouse/partner;
  • contract of service;
  • sport and cultural;
  • reactivation; and
  • internship.

Anti-corruption rules

Applicable rules

What regulations and procedures are in place to combat corruption, bribery, fraud, collusion and other dishonest practices in the construction sector in your jurisdiction?

The Criminal Justice (Corruption Offences) Act 2018 creates a number of new corruption offences and is designed to update the existing laws relating to bribery offences. The act has not yet come into force, and the Prevention of Corruption Acts 1889 to 2010 and the Criminal Justice (Theft and Fraud) Offences Act 2001 will remain in force until its commencement. Certain UK and international requirements may also be referred to on certain construction projects.

Best practices

What best practices are advised to ensure compliance with the relevant anti-corruption rules?

Section 18 of the Criminal Justice (Corruption Offences) Act 2018 imposes criminal liability on companies if individuals acting on their behalf commit bribery or corruption offences with the intention of benefiting the company. Best practice dictates that companies should take active steps to ensure that its employees and agents are adequately supervised. In particular, policies and procedures to combat corruption, bribery, fraud and collusion should be drafted and implemented.

Dispute resolution

Courts

What courts are empowered to hear construction disputes in your jurisdiction? Are there any specialist construction courts?

There are no specialist construction courts in Ireland; accordingly, disputes can be litigated before any civil court.

Common disputes

What issues are commonly the subject of construction disputes?

The most common construction disputes in Ireland relate to:

  • payment;
  • delays;
  • the costs associated with additional work or variations;
  • failures relating to contract administration and compliance with contractual obligations; and
  • disputes arising from unforeseen site conditions.

Statute of limitations

What is the statute of limitations for filing construction-related claims?

Under the Statute of Limitations 1957, the deadline for filing a claim in negligence is six years from the date of the cause of action. Apart from personal injury claims, which have a two-year limitation period, there is no reasonable discovery test in Ireland. Time will run from when the cause of action accrues; the recent Supreme Court decision of Brandley v Deane (2017) suggests that this will occur when any damage is ‘manifest’.

The statute of limitations for filing a claim for breach of contract is six years. If a contract is executed as a deed, this limit is extended to 12 years. Time for a claim for breach of a construction contract is generally taken to run from the date of practical completion of the works.

Contractors may continue to be liable under the express terms of a guarantee, warranty or indemnity beyond the statutory limitation period.

Mediation

Is pre-litigation mediation required or advised for construction disputes?

The Mediation Act 2017 places a mandatory obligation on parties to a dispute referred to court proceedings to consider mediation as an alternative to the courts for resolving their dispute. Parties are advised to seriously consider this alternative, as their having done so may be taken into account by the court when awarding costs. Solicitors are now obliged to advise all clients engaged in litigation to consider mediation as a means of resolving their dispute. The court will adjourn proceedings until a statutory declaration to this effect is provided by the solicitor.

Arbitration

How often is arbitration used to resolve construction disputes? What arbitration forms and institutions are typically used?

Arbitration remains the usual forum for final resolution of construction disputes, and both construction contracts and professional appointments will provide for arbitration (typically preceded by conciliation). The most commonly included institutional rules are those developed by the Royal Institute of Architects of Ireland and Engineers Ireland, although other procedures (eg, the International Chamber of Commerce procedure) are not uncommon for bigger projects. In addition, where the contract contains an arbitration agreement, the Arbitration Act 2010 will apply; this act applies to all arbitrations held in Ireland, both international and domestic. The act adopts the UNCITRAL Model Law on International Commercial Arbitration as the default framework to be applied where the parties have not agreed to an alternative procedure.

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