“Part of the problem is that people think there’s a level of trust in the industry and things are often done with a simple handshake,” Howell told ABC News.
“Unfortunately for the head contractor entering into that arrangement and the subcontractor agreeing to do the work – you are breaking the law in Queensland with a handshake contract.
“You could lose $100,000 without blinking.”
Tradies and subcontractors who spoke with ABC Radio Brisbane said they were currently chasing unpaid invoices for many jobs they had completed.
“Two or three months can roll by and the invoice isn’t paid and it’s the same story all the time,” said Adrian, a tradie that is based in the west of Brisbane.
“Some people don’t want to pay as they think that because you’re a tradesman they can get away with it.”
According to Howell, in many cases the size of the construction company was not the issue.
“Jobs that are being done for larger construction companies and big projects often have a more sophisticated administrative system in place so there’s a likelihood to be contracts,” Howell said.
“Smaller projects or projects where the contractor might be a smaller entity might be contracting with people they’ve been contracted with for years.
“This creates an extra level of trust and contracts aren’t written for every job.”
Although contracts are encouraged, there can be instances when one party still refuses or fails to pay.
“Sometimes they don’t have the money to pay or something has happened during the project,” Howell continues.
“Subcontractors sometimes felt like they couldn’t apply pressure to be paid in fear they wouldn’t receive further work.
“There are times when we’ve had clients who have been reluctant to take steps in those circumstances.”
According to Howell, there were systems in place to try and help people to recover payments if both parties had entered into an arrangement.
“If one party isn’t standing up to their side of the bargain, then the other party can take steps to recover payment in those circumstances,” Howell adds.
“You would like to think a negotiated outcome would be achievable, but sometimes the last resort is legal action and taking steps against someone to claim payment.”
While there is no full-proof way to be paid 100% of the time, the following tips have been highlighted as great ways to help when subcontracting:
- Always use a written contract;
- Know the contract and your rights; and
- Monitor the financial health of your superiors in the contractor chain.
Fair Work Australia encourages subcontractors to learn more about independent contracting laws, and business.gov.au also offers tools to help independent contractors minimise risks and negotiate good contracts.