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How to Protect Yourself Against Unlicensed Tradies


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When it comes to building and construction, whether it be a residential or commercial project, the costs and liabilities are considerable. Only one in 10 people visit a tradeperson’s website to check whether he or she is licensed. These statistics are quite alarming given the potential risks involved with using an unlicensed contractor, according to NSW Fair Trading

Australian Capital Territory (ACT) calls for action.

The ACT has seen significant problems recently which may be related to unlicensed contractors. For that reason, construction industry groups are now calling for a crackdown on rogue tradies. They believe that this group is the major cause of Canberra's building quality woes; they claim unlicensed contractors are undercutting qualified tradespeople, thus, delivering a substandard level of work across Canberra.

In the ACT, several trades do not require a license, and the issue is coming under fire. Waterproofers, carpenters, painters and concreters are among the group.

License Requirements

In a submission to the ACT Assembly's building quality inquiry, the Construction, Forestry, Mining, Maritime and Energy Union's ACT branch secretary, Jason O'Mara, said the introduction of license requirements for more trades would improve building quality in the ACT.

"With the majority of work performed on a modern day construction site completed by trade contractors, we believe it is important that the companies actually performing the work hold a license," Mr Hopkins said.

A licensed builder has a responsibility to ensure their work complies with the building code and that the people undertaking the work have the right skills and are properly supervised.

Most job sites see the builder engage an array of contractors as part of their workforce to cater for a range of specialised skills.

What to consider if you are the builder 

According to Bovill Risk and Insurance Consultants, on every project, regardless of precautions that are put in place, there is always the risk of damage to the building site, third-party property, or personal injury to other parties caused by sub-contractors or employees. If you are the principal builder, under your contract with the client, you can be held liable for events caused by your sub-contractors even without your involvement in what occurred.

A public liability policy provides valuable cover to you by insuring your legal liability to pay compensation for any personal injury or property damage to a third party which may arise from the contract works. Whilst the significance of maintaining your own liability policy is recognised by most builders, the importance of sighting evidence that your sub-contractors also have their own liability policy is often overlooked. Whether it be due to a lack of understanding or due to employing tradesmen with whom you have known and worked with for years, it is crucial to ensure they maintain their own liability policy.

Along with having the correct licenses, obtaining relevant registrations and insurance policies implies a certain level of professionalism and commitment to their work.

Here are some red flags to watch out for that may reveal an unlicensed contractor:

•   Failure to wear correct PPE and observe safety procedures.

•   Use of trainees and/or apprentices for skilled work beyond their skill set.

•   Failure to produce evidence of a safety management plan.

•   Hesitation to sign a written contract.

•   Presents insurance or licensing information you cannot verify.

By pre-qualifying potential contractors before giving them site access, your business can avoid costly risks. By using a sophisticated contractor management program, the process of verifying contractors’ documents will be automated, fast and incredibly reliable.

The bottom line

Any tradie who takes their work and career seriously will want to become licensed in order to validate their abilities and attract more clients. 

It is essential that both contractors and sub-contractors understand the licensing requirements attached to their individual scope of works. You can find an example of how one Queensland contractor ended up in court, and out of pocket, over a licensing issue here.

A licence or registration can be obtained in a number of ways. It may require a combination of technical qualification, experience, skills and knowledge prior to application. One step in the process of gaining your licence or registration is to complete training approved by the licensing body in your state. In some states, you may also need to participate in ongoing training workshops to maintain your licence or registration. Contact the Australian Business License and Information Service to get all the information you need to take the next step.

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