Amendment to Reporting on Payment Practices and Performance Regulations approved

Following consistent advocacy by ECA, the amendment to Reporting on Payment Practices and Performance Regulations has been approved, representing a long-awaited win for ECA Members and the wider construction industry.

For more information about payment practices see articles The Reporting on Payment Practices and Performance (Amendment) (No. 2) Regulations 2024, Fair payment practices for construction and Progress on poor payment practices.

This amendment will enhance transparency in retention procedures with qualifying businesses obligated to publicly disclose details on their payment practices. From 1 March 2025, when the changes come into effect, large businesses will be required to report the following metrics:

• the percentage ratio of the amount of retention that is withheld from the company by its clients, which the company holds back from its suppliers.
• the percentage ratio of the amount of retention that the company withheld from the total value of payments made to suppliers as a proportion of the amount paid to suppliers during the reporting period.

This overdue reform addresses a critical issue in the construction sector: late payments, which disproportionately affect small businesses with limited financial reserves. These metrics will directly benefit small and medium enterprises by providing better information about a company’s retention payment practices.
This increased transparency is expected to incentivise large businesses to adopt fairer payment practices.

Rob Driscoll, ECA Director of Legal and Business said:

“Both the Commons and the Lords approved another significant milestone in the fight for fairer payment on behalf of ECA Members. At first, making large firms to report on their retentions may not seem much, but it will expose the size and nature of the problem of retentions abuse, allowing use to pave the way for an industry and Government agreed solution.

“We’ve been working towards these steps for a long time, which includes liaising with ECA’s equivalent in Australia and New Zealand for inspiration to motivate reform in the UK.”

To learn more about ECA’s work toward creating a fairer business landscape, visit this page. ECA’s Business Policy & Practice team has produced guidance and templates to support Members with payment practices and offers a free Member Helpline to answer your queries, find out more here.

This article appears on the ECA news and blogsite as 'Landmark amendment to Payment Practices approved' dated 26 January, 2025.

--ECA

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