No Retention Policy

The withholding of retention is an outdated practice which is unnecessary in the modern construction industry. 

The best guarantee of quality lies in the choice of a competent and qualified supply chain which is committed to seeking to attain the highest applicable standards in health and safety, training and technical performance.

The Fair Payment Campaign recommends that, whilst contractors are free to negotiate their own respective
contractual terms, they do not accept cash retentions.



M - Make it your policy
M - Make it your policy
M

At the outset of a project, inform the client that you are working for that you do not accept cash retention in accordance with the No Retention Policy

You can write to the client using the following letter:

When signing the contract, make sure the cash retention clause does not apply by either striking it out or writing '0%' in the appropriate box in the articles.

O - Obtain details of the client's policy
O - Obtain details of the client's policy
O

If a contractor insists on withholding cash retention, ask for a copy of the main contract retention provision to determine whether the project client is withholding retention

Clients are increasingly recognising that cash retentions are an outdated practice and they no longer withhold retention from their supply chains. The Governments in England, Wales and Scotland have publicly stated that, where retention is not withheld from the main contractor, it should not be withheld from sub-contractors in the supply chain.

You can find out the position on retention under the main contract by writing to the contractor or project client:

N - Negotiate an alternative
N - Negotiate an alternative
N

Highlight to your client that cash retention is no longer the best guarantee of quality and there are better forms of security that you can offer such as a retention bond

A retention bond is an agreement between you, your client and a third party known as a surety provider, which acts as a guarantor between the two parties. The bond agreement states that in return for your client not withholding cash retention, the surety provider will undertake to pay your client up to the amount that they would have had by way of cash retention should you fail to carry out the works or remedy defects.

E - Evaluate other options
E - Evaluate other options
E

If your client will not negotiate, consider whether you are prepared to offer a discount in return for no cash retention

Although there is increasing recognition that retentions no longer work, contractors can be reluctant to accept alternatives due to the impact that this will have on their cash flow. However, offering a discount in the sub-contract sum equal to the value of the retention may persuade a contractor not to withhold retention. Alternatively, you can try negotiating a reduced rate of retention which is only deducted from the last few payments rather than throughout the works in return for the discount.

Y - Your decision
Y - Your decision
Y

If the answer is ultimately 'no', decide whether you are prepared to work for a client that withholds cash retention from you.

More and more Specialist Contractors are choosing not to work for clients that withhold retention and the collective weight of Specialist Contractors saying ‘no’ as part of the No Retention Policy is changing custom and practice.