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The Risks of Unlicensed Contracting – Penalties – Part 1

The Risks of Unlicensed Contracting – Penalties – Part 1
November 20, 2019 Lucasw

If you work in the building industry in QLD, you would most probably need a licence. Operating a building work without a licence is not just illegal and unethical; it can also cost you more than what you expect. To shed some light on the matter, we will investigate what the risk of unlicensed contracting is. We will also explore what the unlicensed contracting fines are, and what other penalties or costs you can incur.

What Classifies as Building Work?

To make things clear, we must first identify which specific work falls under the scope of building work. The Queensland Building and Construction Commissions Act 1991 defines building work as any of the following:

  • The erection or construction of a building
  • The renovation, improvement, alteration, repairs, or extension of a building
  • The provision of lighting, ventilation, heating, air conditioning, drainage, water supply, or sewerage in connection with a building
  • Any site work, which includes the construction of retaining structures, related to the construction work
  • The preparation of plans or specifications for the performance of building work
  • Contract administration and management carried out by a person in relation to the construction of a building

In detail, these administrative tasks concerning building work designed by a person include the following:

  • Preparing tender documentation, and calling and selecting tenders
  • Preparing and assisting the person’s clients with the preparation of the contracts
  • Preparing other necessary documents for the person’s clients or building contractors
  • Arranging and conducting inspections and meetings on-site.
  • Processing payment arrangements
  • Arranging for certificates to be issued, such as government-issued certificates
  • Advising the person’s clients about what are allowed under the contract

Moreover, the following building safety measures and building inspections are also in the scope of building work:

  • Fire protection work
  • Conducting site testing and classification before the erection or construction of a building on the site
  • Carrying out a completed building inspection
  • The inspection or investigation of a building, and the provision of advice or a report, for the following: (i) termite management systems, and (ii) termite infestation in the building.

If an individual or a company carries out any of the work above, either directly or indirectly, then they must hold a licence. The Queensland Building and Construction Commissions (QBCC) is the governing body that issues and regulates licences.

What is the Risk of Unlicensed Contracting?

Section 42(1) of the Queensland Building and Construction Commissions Act 1991 clearly describes the risk of unlicensed contracting. These would include fines and penalties for carrying out building work without a licence. It is stated that, unless exempted under certain conditions, a person must refrain from carrying out building work unless the person holds an appropriate contractor’s licence in line with the building work. Otherwise, there will be significant implications for the unlicensed individual who engages in unlawful building works.

Serious Unlicensed Contracting Fines

The QBCC is more than a mere warning to intimidate you if you’re doing unlicensed building work. There are actual and serious penalties and fines that you will face for each event of an offence.  The QBCC has the authority to penalise you of the following unlicensed contracting fines:

  • For your first offence: a maximum of 250 penalty units*, amounting up to $32,637.50.
  • For your second offence: a maximum of 300 penalty units*, totalling up to $39,165.
  • For your third and succeeding offence: a maximum of 350 penalty units*, amounting up to $45,692.50 or one year’s imprisonment.

*Following the recent amendment made in 2018, one penalty unit in Queensland is worth $130.55. Now, the sum of fines may seem insignificant, especially if you have sufficient resources for it. However, the list of penalties does not stop there.

Other penalties and costs

Aside from fines and imprisonment, other penalties are waiting for unlicensed contractors who are doing building work. Perhaps the next significant penalty is the possibility of obtaining no income. Under Section 42(3) of the Act: “a person who carries out building work in contravention of this section is not entitled to any monetary or other consideration for doing so.”

Moreover, you also would not get paid for the following:

  • The amount you paid in supplying materials and labour for carrying out the building work
  • The allowance for your own labour
  • The profit you make for carrying out the building work

Clearly, practising without a licence would cost more on you. Not only will you get penalised, but you would also lose your hard-earned money.

The implications of engaging in unlicensed building work

These acts and regulations are not just simple documents. There have been cases where an unlicensed individual engaged in business work and had suffered heavy consequences. Take, for instance, the case of Mr. Yongwoo Park. He contracted with Betaland Pty Ltd to conduct building work at his residence. He paid half the amount upon the construction on his property. He was supposed to pay the other half after completion. As it turns out, Betaland is not licensed, and not surprisingly, the building work is defective. It prompted Mr. Park to terminate the contract.

Since it is required for contractors to be licensed, it was Betaland, and not Mr. Park, who initially breached the contract. Mr. Park, therefore, has the right to terminate the contract. Meanwhile, the unlicensed contractor would not only face a fine of $23,009.30 that must be paid within twenty-eight days. They must also return the entire amount that Mr. Park paid and include additional costs.

Avoid unlicensed contracting fines and other penalties

Learning from this case, both parties needs to validate the credibility of the building work through a licence. The client must check if the contractor has the appropriate licence.

To help you with verification, you may check the contractor’s licence on this link. The contractor, on the other hand, must see to it that their licence is valid and renewed. In these ways, disastrous consequences will be prevented.

 

To get qualified, or if you have any questions, contact us on 1300 656 498.

 

 

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