Construction based legal issues

Construction manager holding building plans with four different tradesmen behind himDepending on the type of work that you do, there may be specific legislation which relates to your particular trade. As just one example, plumbers and heating engineers who install and/or service gas appliances must be registered with the Gas Safe Register and must follow specific regulations when they work on gas installations. Trade associations can be a good source of information about specific rules and regulations.

There is a range of other legislation which may apply to your construction business, particularly in the areas of health and safety and employment law. Some of the work that your business carries out may also be subject to building control legislation, particularly if you undertake general building work.

The following is an outline of some of the areas which may well be relevant to you.

What licences does a construction based business need?

Depending on the type of work that you do, there may be specific licensing requirements. As just one example, plumbers and heating engineers who install and service gas appliances must be registered with the Gas Safe Register. Trade associations can be a good source of information about specific licences that you may need for your type of work.

Building waste

If you are going to transport building waste (which is classified as a controlled waste), you will need an upper tier certificate of registration as a waste carrier (or just 'waste carrier' in Scotland). This is issued by the Environment Agency in England, Natural Resources Wales, the Northern Ireland Environment Agency, and the Scottish Environment Protection Agency (SEPA) in Scotland. It currently costs about £155 for the initial registration fee and a further renewal fee of about £105 every three years. Note that a single licence is issued to your business covering all of your waste transporting vehicles.

Note that any business which produces 500kg or more of hazardous waste at a premises in Wales within a 12 month period must register with Natural Resources Wales as a hazardous waste producer. If you produce 500kg or more of hazardous waste at a single customer's site (or at any other site which you do not own or occupy) then it is up to the owner of that site to register. If you remove the hazardous waste from your clients' sites, and this amounts to 500kg or more in total for a 12 month period, then your own premises or depot must be registered as a 'service premises'. You can find out more about hazardous waste producer registration on the Gov.uk website.

Asbestos

If you think that you may do any work involving asbestos (this might include removing old insulation, wall cladding and partitions, for example) you may need a licence from the Health and Safety Executive (HSE) Asbestos Licensing Unit - or from the Health and Safety Executive Northern Ireland (HSENI). Further details are available on the HSE and HSENI websites.

An alternative to undertaking licensable work yourself is to contact a licensed asbestos specialist - this is a more realistic option for many construction businesses which only occasionally need to deal with asbestos. However, you still need to be aware of your obligations under asbestos safety legislation.

Other licences, permits etc

You should also be aware of the following:

  • skips placed on a public highway require a Skip Permit from the local authority. Certain conditions may be attached to the licence. Normally the skip hire company will arrange the necessary licences, but it is worth making certain of this
  • before erecting a scaffold on or over a public highway, you are obliged by law to obtain a permit from your local highway authority. Some local authorities also require you to obtain a scaffolding permit before putting up a scaffold in a public place. If you use a specialist scaffolder, they will often take responsibility for arranging any scaffolding permits needed. For more information, contact your local authority planning department or environmental health department
  • if you pay sub-contractors for work done within the Construction Industry Scheme for taxation (CIS) then you must register as a contractor with HM Revenue & Customs (HMRC). More information is available on the HMRC section of the Gov.uk website
  • if credit terms are offered to customers you will need consumer credit authorisation from the Financial Conduct Authority (FCA)
  • businesses which keep records of individuals' personal details - perhaps for finance purposes - may need to register as data users with the Information Commissioner's Office (ICO). From May 2018 the General Data Protection Regulation has introduced additional protection for personal data
  • if your business operates goods vehicles with a gross plated weight of more than 3.5 tonnes (or unladen weight more than 1,525 kg for unplated vehicles) then it will need a goods vehicle operator licence in England, Scotland and Wales. A 'restricted category' licence should be sufficient. In Northern Ireland you may need a goods vehicle operator's licence from the Transport Regulation Unit (TRU) of the Department for Infrastructure (DfI). More information about goods vehicle operator licensing is available on the Gov.uk website - and from the DfI in Northern Ireland

If you offer an insurance backed warranty - even if you make no extra charge for this - then you may be covered by general insurance legislation administered by the FCA. Businesses whose activities are covered by the legislation need to be either directly authorised by the FCA or an 'appointed representative' of a principal FCA authorised insurer. It's worth noting that the National House Building Council (NHBC) Buildmark warranty scheme isn't covered by this requirement.

Voluntary certification

Many would-be customers and particularly main contractors will want to satisfy themselves that your business does good quality work using suitable materials. One way of demonstrating your commitment to quality is to gain certification for your workmanship. Various different certification schemes exist, including the Construction Skills Certification Scheme (CSCS), the Quality Mark scheme, British Standards Institution (BSI) 'Kitemark' licences and the ISO 9000 quality standard.

Although it's not mandatory for operators of plant machinery to hold a skills registration card, it's a good way of showing that your business complies with the requirement under the Health and Safety at Work Act for plant operators to be suitably trained. More and more contractors, clients and sites only permit plant operatives who hold a valid skills registration card or 'ticket'. There is a small charge for each card issued, plus of course the cost of the training itself. Training costs vary depending on the individual's experience, the nature of the particular qualification and the provider.

The industry training board CITB offers one of the best known card schemes, the Construction Plant Competence Scheme (CPCS). You can find out more about the CPCS on the CITB website.

The Buy with Confidence - Trading Standards Approved scheme is participated in by a growing number of local authorities and allows businesses like builders to demonstrate their commitment to operating in a legal, fair and honest way.

Building Regulations

This is a general term for different pieces of legislation in England and Wales, Scotland and Northern Ireland. Certain aspects of your work may be covered by Building Regulations. Details of the Building Regulations are available from the Stationery Office and from Stationery Office suppliers. Information is also available on the Planning Portal and the Department of Finance (DoF) Northern Ireland websites.

The environment

Environment protection legislation covers all aspects of waste, pollution control and environmental management and makes provision for the handling, transport and disposal of building, demolition and excavation waste. Special provision is made for hazardous waste products.

More information about many different aspects of environmental management is available on the Gov.uk website.

REACH regulation

If you use chemicals in your business activities you may be affected by regulations referred to as REACH - this stands for the Registration, Evaluation, Authorisation and Restriction of Chemicals. Check with your supplier that the chemicals you use have been correctly pre-registered or registered. You can find out more about how REACH may affect you on the HSE website.

Health & safety, fire

Some key areas where health and safety regulations affect your business, particularly if you employ staff, include:

  • working at height (the Work at Height Regulations apply to both employers and self-employed workers)
  • lifting heavy items
  • working with potentially hazardous materials and substances (such as solvent-based products)
  • use of electrical equipment (power tools and so on)
  • use of drilling and cutting equipment
  • access to first aid equipment
  • adequate provision and use of protective clothing and equipment
  • reporting of any accidents and injuries at work

You must comply with workplace health and safety and fire safety legislation.

Employment legislation

Anyone employing staff must comply with employment legislation. Important areas of legislation include:

Recruitment and employment contracts

Pay and pensions

Working time: hours, leave, flexible working

Employment policies

Sickness and sick pay

Maternity, paternity and adoption

Discrimination

Managing home workers, remote workers, lone workers

Discipline and grievance

Dismissals and redundancies

Employment tribunals

Consumer protection

Most people have heard stories about 'pushy sales people' and there is consumer protection legislation to protect customers from unscrupulous sales tactics. Legislation covers areas such as 'cooling-off periods' to allow customers time to think about whether they really want the items that they have agreed to buy, accurate price marking and bargain offers being genuine, contracts being fair, goods and services being of adequate quality and so on. Make sure that your own products, sales techniques and terms of trade meet all the necessary legal criteria - this should go without saying in a sound business!

Under regulations which cover customer disputes and resolution, you'll need to be able to give your customers details of a certified 'alternative dispute resolution' provider for your industry sector. And you'll need to inform them about whether or not you intend to use that provider in the event of a dispute.

There's detailed information about consumer protection legislation and fair trading on the Trading Standards Business Companion website. Information is also available on the Gov.uk website.

Other matters

If you think that your business is likely to do work on public highways, or on listed buildings and those located in conservation areas, then it would be useful to become familiar with relevant legislation including local planning regulations and any local bye-laws. Your local authority planning department and highways department should be able to advise you on these matters.

Sources of further Information

Most trade associations can advise their members about regulatory issues that affect them.

The employing people section of the Gov.uk website includes information and guidance on all aspects of employment legislation. Information for businesses in Northern Ireland is available on the NI Business Info website.

Insurance for a construction based business

When you start up in business you will need insurance cover. Contact an insurer and explain exactly how the business will operate. They will then be able to recommend what cover you should have. This might include:

  • employer's liability
  • public liability
  • professional and contract indemnity
  • product liability
  • legal expenses cover
  • unfixed materials, plant and equipment on site
  • combined property
  • motor insurance (for business vehicles), possibly with cover for goods and equipment carried in your vehicles
  • personal cover - including accident and injury, loss of earnings and so on
  • business interruption
  • premises, premises contents (if you have any premises - if you run the business from home and store tools and materials there, be sure to notify your existing household insurer)

When taking out personal and employer's liability cover it is particularly important to give precise details of the types of activity that you and any staff will be engaging in. Be prepared to answer questions about the type of work you will be doing, where you will be working, the type of materials and equipment you will be using, the height at which you will be working, your health and safety policy and so on.

Business insurance policies for construction firms can be very costly and it would be a good idea to get some quotes at an early stage in your planning. Shop around to obtain the best cover at the most affordable price.

Some construction industry trade associations offer specialist business insurance services to their members at discounted rates.

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