The Engineering Construction Industry and the use of Employment Businesses

Challenges in the Engineering Construction Industry

The main clients in the engineering construction industry have had a rough ride recently. In particular, clients operating in refining and petro-chemical face particularly challenging times, with high overheads, low demand, and negative profit margins. One UK refinery has already closed, and another's future looks very uncertain following the collapse of its sale.

Another challenge facing the industry is the dramatic skills shortage within the Construction Engineering sphere. NECC wrote in their most recent communication: "we maintain that all industry stakeholders have a responsibility to work collectively in addressing these crucial concerns, in particular to potential specialist skills shortages within the industry."

There are currently 15 Major Projects under construction or scheduled that are Category 1 sites under NAECI. Although these numbers have dwindled over the past few years, there are reasons for positivity. There are now 5 Cat 1 Major Projects that are to be confirmed, and talk of more for 2016. There are certainly reasons for optimism, with Q2 2016 a likely turning point.

A growing problem for the ECIA is Clients and Contractors using stand-alone project agreements or agreements that mirror NAECI pay structure and allowances without being formally under the "blue book".

To help combat this, From January 5th, 2015, the NJC has introduced a registration system to approve employers to use the NAECI. Any project not registered under this system may not be able to use the HMRC dispensation for radius allowances. All in-scope engineering construction activities as defined in the recently revised NAECI 1.3 will be eligible for registration.

There has been increased pressure recently for a number of Category 1 Projects to be "agency free" and contractors to avoid using agency labor. This is unnecessary as employment businesses such as Meridian are committed to full employment status on all NAECI projects, and so there should be no objections. Any employment business employee on NAECI is by definition on exactly the same terms and conditions as any other employee of the same grade.

As one of the earliest employment businesses to join the ECIA, Meridian has a proud history of working on NAECI Categorized sites across the country, with an exemplary payroll record and a good record on IR issues.

With our experience in paying "blue book" and regular attendances of the regional ECIA meetings, you can be assured any contractor supplied by Meridian will be fully compliant with the NAECI payment conditions.

In fact, we do have several clients who use us to payroll their own subcontract employees under NAECI because of our experience and expertise in the field, taking away the hassle, cost, and risk of error.

Meridian understands the importance of using local labor on Category 1 Projects. With 25 years' experience supplying to the Engineering Construction industry and national coverage of 9 offices, our clients can relax in the knowledge they will have access to one of the strongest databases of tried and tested candidates local to their site.

Contact Information:

If you have any inquiries, please contact Meridian at info@meridianbs.co.uk or call us at +44 1234 567890.