Frequently Asked Questions
We trust you will find the following questions and answers useful. Please note that these are intended to provide you with general guidance only. They do not constitute legal advice and should not be relied upon for such purposes. Please contact us to discuss your specific circumstances.
Building and Construction FAQ
1. What is the statutory warranty period for buildings works?
Under the Home Building Act 1989 (NSW), for contracts entered into after 1 February 2012, there is a statutory warranty implied into all residential building contracts, covering, amongst other matters, workmanship. The warranty is:
- 6 years for a major defect in a major element
- 2 years for other defects
The warranty period is 7 years for contracts entered into before 1 Feb 20102
Major defect means:
(a) a defect in a major element of a building that is attributable to defective design, defective or faulty workmanship, defective materials, or a failure to comply with the structural performance requirements of the National Construction Code (or any combination of these), and that causes, or is likely to cause:
(i) the inability to inhabit or use the building (or part of the building) for its intended purpose, or
(ii) the destruction of the building or any part of the building, or
(iii) a threat of collapse of the building or any part of the building,
(b) a defect of a kind that is prescribed by the regulations as a major defect.
Major element of a building means:
(a) an internal or external load-bearing component of a building that is essential to the stability of the building, or any part of it (including but
not limited to foundations and footings, floors, walls, roofs, columns and beams), or
(b) a fire safety system, or
(c) waterproofing, or
(d) any other element that is prescribed by the regulations as a major element of a building.
2. What happens when the subcontractor refuses to return to rectify works?
This could involve a number of issues and will require an examination of the facts in each case. From the perspective of a principal or head contractor it could involve a:
- Breach of contract
- Breach of statutory warranties
Section 18B(2) of the Home Building Act 1989 (NSW) states that the statutory warranties are also implied in a subcontract. Accordingly, where a breach of the statutory warranties relates to work performed by the subcontractor, the subcontractor may also be liable for that breach.
As such, principal contractors may pursue sub-contractors for defective or incomplete work which they carried out. Usually, the way this would be pursued at law would be through a breach in contract claim. It should be noted that the head contractor is still liable to the client notwithstanding any defective work carried by a subcontractor.
3. Does the builder have the right to refuse a variation?
The terms of contract will primarily govern the right to refuse a variation. The builder may have a right if the contractual requirements have not been met. For example, both parties have not signed and dated the variation to acknowledge acceptance.
4. What are my obligations when working as a project manager for an owner builder?
The project manager’s obligations include the need to:
- Hold a contractor licence s 32AA Home Building Act 1989 (NSW) (HBA)
- Comply with the statutory warranties in the HBA
- Hold insurance under the Home Building Compensation Fund (formerly known as Home Owners Warranty Insurance)
Employee Relations (as it relevant to the Home Building Industry) FAQ
5. What is redundancy under the General on Site Building Award? Is there a small business exemption?
The following are some points to consider:
- MA000020 – Building and Construction General On-site Award 2010 (“the Award”) clause 17 sets up the industry specific redundancy scheme and excludes the application of the National Employment Standards (NES) on redundancy. This is supported by s 123(4)(b) of the Fair Work Act (“FWA”)
- Redundancy is defined under the Award as a situation where an employee ceases to be employed by an employer to whom this Award applies other than for reasons of misconduct or refusal of duty
- This definition is broader than under the FWA where redundancy is only available where the job is no longer required to be done by any other person and the employee cannot be redeployed
|Period of continuous service with an employer||Redundancy/severance pay|
|1 year or more but less than 2 years||2.4 weeks’pay plus for all service in excess of 1 year,1.75 hours pay per completed week of service up to a maximum of 4.8 weeks’pay|
|2 years or more but less than 3 years||4.8 weeks’pay plus,for all service in excess of 2 years,1.6 hours pay per completed week of service up to a maximum of 7 weeks’pay|
|3 years or more than but less than 4 years||7 weeks’pay plus,for all service in excess of 3 years,0.73 hours pay per completed week of service up to a maximum of 8 weeks’pay|
|4 years or more||8 weeks’pay|
- The small business exemption arises under s 121 of the FWA which is part of Subdivision B of Division 11 of the FWA. As s 123(4)(b) expressly excludes application of that subdivision where an industry specific redundancy scheme exists, this FWA exemption does not apply to employees under the Award
6. What is an IFA? What can be varied under an IFA?
An IFA is an individual flexibility agreement. This is covered under clause 7 of the MA000020 – Building and Construction General On-site Award 2010.
Clause 7 of the Award specifies the following:
- arrangements for when work is performed
- overtime rates
- penalty rates
- Leave loading
7. When is super paid?
The Superannuation Guarantee Contributions (“SGC”) rate is currently 9.5% of wages / contractor fees paid and must be remitted to an eligible superannuation fund for:
- Employees; and
- A person who works under a contract that is wholly or principally for the labour of the person, the person is an employee of the other party to the contract: s. 12 (3) Superannuation Guarantee (Administration) Act 1992
Superannuation is dealt with under clause 32 of the MA000020 – Building and Construction General On-site Award 2010.
8. What evidence can I request when an employee takes carer’s leave?
Clause 39 of the MA000020 – Building and Construction General On-site Award 2010 refers to the National Employment Standards on Carer’s Leave.
Under s 107 of the Fair Work Act, the employee must supply evidence that would satisfy a reasonable person that the leave is taken to provide care or support to a member of the employee‘s immediate family, or a member of the employee‘s household, who requires care or support because of a personal illness, or personal injury, affecting the member; or an unexpected emergency affecting the member.
The evidence could be a doctor’s certificate but the legislation does not justify demanding a doctor’s certificate if other objectively satisfactory evidence is available.