Build UK is the leading representative organisation for the UK construction industry and represents in excess of 40% of UK construction. It has published new minimum standards and drafting guidance for members to incorporate into both JCT and NEC forms of contract, in an attempt to reduce the use of retentions and work towards a “zero retention” policy regime by 2025.
Contractors can now put pressure on Employers (and in turn Developers on purchasers) to accept less onerous retention clauses, by pointing to a new industry standard.
The key Minimum Standards require that:
- Retentions should only be deducted from payments made in respect of permanent works. For temporary/preliminary works such as scaffolding/demolition works, no retention should be applied at all.
- No retentions should be applied to any contracts with a starting value of less than £50,000 (increasing to £100,000 from 2021).
- Retentions should be deducted as a single sum towards the end of the construction period rather than from interim payments throughout the construction period. So no retention should be taken on any amount until works/sections have been completed, at which point only a retention of 1.5% (reducing to 1% from 2021) should be held until the expiry of the applicable rectification period.
- Any arrangements for a retention in a sub-contract should be no more onerous than those implemented in the main contract and in accordance with the Construction Act Amendment 2011, the release of retention should not be linked to the release of a retention under the main contract.