Housebuilder giant Barratt has lost a landmark pay discount case and was ordered to repay £19,000 after admitting it had no contractual right to deduct 3% from payments to Southern Glass Services.
Specialist glazing contractor Southern Glass Services took on the Barratt group and won its adjudication case which ruled that imposing pay cuts on existing contracts without agreement is unlawful.

Barratt deducted 3% from the payments it made to the Southampton-based firm during a two year period.

Peter English of PJ English Associates, representing Southern Glass Services in its case against the housebuilder, said:'The adjudication was swift and Barratt admitted it had no evidence or any contractual right to take the 3% discount.

'Unless the contract says so, there is no entitlement under law for any main contractor or client to take a discount over and above what has been agreed in the contract.'

The adjudicator ordered Barratt to repay the discounts totalling £19,000 plus interest at a monthly rate of 8% above base. The payment was received by Southern Glass Services within three days.

Spurred on by its victory, Southern Glass Services is now urging all contractors to check payments made to them against agreed contracts and to claim their money if it has been unlawfully
deducted.

As early as December, contractors reported receiving letters from several housebuilders informing them of a new pay cut policy on some existing and future contracts.

Suzannah Nichol, chief executive of the National Specialist Contractors Council said: 'This case clearly demonstrates that the letters sent by Barratt, Bellway Homes, Charles Church, David Wilson Homes, Nicholas King Homes and Taylor Wimpey are not sufficient to allow payment deductions to be made and that adjudication is an effective means of resolving this type of payment dispute.'

'This is unlikely to be a unique case and all specialist contractors should take a very close look at payments made to them over the last few years by the housebuilders currently imposing price reductions
of up to 10%'.

Mark Entwistle, chairman of the Association of Independent Construction Adjudicators (AICA), said the unlawful deductions ruling opened the way for SME contractors to use adjudication as an effective tool in recovering payments owed to them.