Construction firms here will soon be able to seek relief for higher foreign manpower costs from their contract partners if their workers’ salaries have been affected as a result of Covid-19-related measures.
This will be done through an amendment to the Covid-19 (Temporary Measures) Act Bill that was introduced in Parliament on Monday (May 10).
Under the amended law, affected contractors, including sub-contractors, may apply to the authorities for an assessor to adjust the contract sum to take into account an increase in foreign manpower salary incurred between Oct 1 last year and Sept 30 this year due to reasons relating to Covid-19.
Part 10A of he Covid-19(Temporary Measures) Act has come into operation on 6 August 2021. Part 10A provides a framework for parties to construction contracts to apply for relief from their contractual counterparties if they are affected by an increase in cost of work permit holders due to the Covid-19 events such as border control quotas set by Government limiting the inflow of foreign workers.
Part 10A Critieria
COTMA Part 10A (which commenced on 06 August 2021) allows contractors in eligible contracts to apply to an independent Assessor. The Assessor has the power to adjust the contract sum of eligible construction contracts taken into consideration of the increase in foreign manpower salary cost incurred anytime during the period from 01 October 2020 to 30 September 2021 (both dates inclusive).
Criteria:
- Construction contracts entered before 1 October 2020
- Contract must not have been terminated(or notice of termination given) before 10 May 2021
- Construction works under the contract must not have be certified as completed as at 10 May 2021
Contractors must show proof of reasonable attempts to negotiate with their clients before they can apply to an Assessor.
Part 10A Application Procedure
Party A must first apply to the Registrar for the Appointment of an Assessor.
- The prescribed application period is from 6 August 2021 to 14 October 2021
- The application must be made via Form A
Response from Registrar
If the Registrar is satisfied with the application, he/she will end to Party A the following:
- An acknowledgement of receipt of the application; and
- A response to the application via Form D or the electronic location at which the Form D may be obtained.
Notifying respondents
Party A must serve a copy of the application and the Registrar Response to the following parties within two working days after the date Party A receives the response
- Party B and any other party to the contract, and any assignee thereof; and
- Any person who is Party A’s guarantor or surety, or who has issued any performance bond or equivalent.
Party A must then, within two working days after the service of the copy of the application and the Registrar Response to the above parties, submit to the Registrar a declaration in Form C of such service.
Application fee
Once the relevant parties have been notified and the Form C declaration has been submitted, the Registrar will inform Party A of the application fee and the payment procedure. The application fee is based on the increase in the amount of foreign manpower salary costs incurred (the amount of foreign manpower salary costs incurred because of a COVID-19 event minus the amount of foreign manpower salary costs that would have been incurred in a circumstance without COVID-19
Refer to this table to ascertain the fee payable for an application.
Once the prescribed application fee is paid the Registrar will send a notice of the appointment of an Assessor to Party A and inform the date and place for the hearing if applicable.
Response from respondents
If Party B wishes to contest an application, they must submit to the Registrar a response to the application via Form D no later than five working days after being serve the copy of the application and the Registrar Response by Party A.
The response must also be served on:
- Party A and any other party to the contract, an d any assignee thereof; and
- Any person who is Party A’s guarantor or surety, or who has issued any performance bond or equivalent.
Assessor’s determination
The Assessor will them determine whether:
- Part 10A is applicable to the case;
- Party A had made a reasonable attempt to negotiate with Party B;
- There has been an increase in the amount of eligible foreign manpower salary costs;
- It is just and equitable in the circumstances to adjust the contract sum; and
- The quantum of the adjusted amount.
Other Forms (only to be submitted when applicable):