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Construction legislation: 11 things to watch out for in 2016

There are a number of pieces of legislation and guidance set to affect construction this year. Here are 11 you need to look out for.

There are a number of areas of legislation, guidance and practice that will impact the construction industry in 2016.

Here is a brief round-up of what to expect this year:

Small Business, Enterprise and Employment Act 2015

The move towards increased transparency of payment terms and the protection of the supply chain continues with an upcoming statutory duty on companies to publish a half-year detailed report on their payment practices.

The duty to report is currently set to apply from April 2016 although government guidance on the content of this has not yet been published.

Build UK’s payment group is currently working to jointly agree a standard, workable, interpretation of the format of the payment report.

CIS compliance test

New regulations are expected to come into force on 6 April 2016 relaxing the compliance test for a subcontractor to be permitted to receive payments gross under the construction industry scheme (CIS).

These will improve the operation, and reduce the compliance burden, of the CIS.

National Minimum Wage and National Living Wage

As part of the July 2015 Budget, the government announced that it would introduce a premium over and above the National Living Wage for workers aged over 25.

The first premium, in April 2016, will be set at 50p, which will result in a higher National Minimum Wage of £7.20 for older workers.

Modern Slavery Act 2015

The Modern Slavery Act 2015 requires commercial organisations with turnover of over £36m to issue a formal statement each year recording action taken to ensure their business and supply chains are free from slavery and human trafficking.

There is a transitionary period for compliance. The first organisations required to comply will be companies whose financial year end is on or after 31 March

Insurance Act 2015

The Insurance Act 2015 comes into force on 12 August 2016. It introduces a duty of “fair presentation” of risk.

Disclosure must be made in a reasonably clear and accessible manner. Representations of fact must be “substantially correct” and representations of expectation or belief must be made in “good faith”.

The Enterprise Bill requires that insurers pay all claims within a “reasonable” time or be liable for damages.

Building information modelling

In 2012, the UK government stated that all government projects would be required to operate at BIM level 2 by 2016.

The Scottish government recently followed suit with a 2017 deadline.

In February 2015, the UK government published Digital Built Britain, setting out its blueprint for implementing BIM level 3.

This is likely to require new BIM protocols for dealing with information and new contracts, including paperless contract models.

European Single Procurement Document (ESPD)

The ESPD is intended to reduce the administrative burden for tenderers.

It will allow all businesses to electronically self-declare that they meet the necessary regulatory criteria or commercial capability requirements.

Only the company that wins the contract will need to submit all the documentation proving that it qualifies for the contract.

Persons with significant control

From 6 April 2016, unlisted UK companies must take reasonable steps to ascertain and record, in a dedicated register, details of each individual who exercises control or significant influence over the company – known as persons with significant control, or PSCs.

Health and safety offences

New sentencing guidelines for health and safety offences came into force on 1 February 2016.

These continue the recent trend for increasing fines as well as taking a harder line on what constitutes offending behaviour.

They include fines of up to £10m and unlimited fines or custodial sentences for directors and senior managers if found guilty of consenting, conniving or neglect in the commission of the offence by the company.

Corporate criminal liability

Last year the courts approved the first deferred prosecution agreement (DPA) in relation to the corporate offence of failing to prevent bribery under the Bribery Act 2010 and the Serious Fraud Office brought the first charges against a corporate for the same offence. This trend is likely to continue, and in February 2016 Sweett Group was ordered to pay around £2.35m for a serious breach of the Bribery Act 2010.

Draft legislation has been published for a proposed new corporate offence of failing to prevent the facilitation of tax evasion. If enacted in its current form, a company would be criminally liable if persons associated with it facilitate tax evasion.

Gender pay gap

Draft regulations published in February 2016 aim to address the gender pay gap by imposing mandatory reporting of pay data for employers with more than 250 staff.

A consultation is under way and the regulations are expected to come into force in October 2016.

Shona Frame is a partner, and Billie Bingham is a senior associate, at CMS

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