Updated 11am with ministry statement

A new law that requires contractors to be licenced is “weak and ineffective”, the country’s leading development lobby has said in its first reaction to the changes.

The Malta Developers Association said that it was perplexed by the government’s decision to not make insurance coverage a prerequisite for contractors seeking to be licenced. 

“This has rendered the new legal notice weak and ineffective and will not achieve its desired results,” the MDA said in a statement on Saturday.

Legal Notice LN166/23, introduced this week, states that all excavation, demolition and construction contractors will have to be licenced by 2025 in order to operate. During the transition period, they must obtain provisional approval from the Building and Construction Authority, which regulates the sector. 

Those caught operating without a licence face fines of €50,000 and prison sentences of up to six months.

While an initial draft of the regulations stated that contractors would need to have insurance policies in order to operate, the law introduced this week modifies that requirement.

Rather than making insurance a prerequisite, the law states that contractors must ensure works they carry out are covered by an insurance policy.

Traditionally, project developers were required to take out an insurance policy to protect against damage to neighbours but there was no legal requirement for contractors to be insured.  

Despite a growing number of construction site incidents, collapses and deaths, authorities have been slow to act to regulate the sector. The government first pledged to introduce a licencing regime for contractors in 2019, but the plan was kept on the backburner until the death of 20-year-old Jean Paul Sofia in a construction site collapse spurred authorities into action.

Five people were arrested in connection with Sofia’s death late on Friday. They include the contractor, architect and developers responsible for works at the site.

MDA slams 'unthinkable' omission

In its statement, the MDA warned that the government’s decision to not require contractors to take out insurance policies as part of their licencing requirements was a major failing.

“It is unthinkable how in the face of the recent events regarding deaths in the construction industry, the government chose not to introduce this obligation on anyone wanting to operate as a contractor,” it said.

The lobby group urged Planning Minister Stefan Zrinzo Azzopardi to amend the law, saying it was paramount to improve the quality and safety standards of the construction industry.

It said it felt so strongly about the issue that it would be urging the Opposition to file a parliamentary motion requesting that change unless the government amended the law itself.

“We need a legal framework that will ensure that only qualified and competent contractors are licenced to operate in Malta. Anything less will put the safety of the public and the contractor’s employees at risk,” the MDA said.

Ministry pushes back against MDA claims

In a reaction, the Public Works ministry said the MDA's claims were incorrect and pointed to article 5 (3) of the new law, which requires licenced contractors to ensure works are covered by an insurance policy to protect against damages. 

However, the MDA's argument is that an insurance policy should be a prerequisite for licencing, meaning contractors would be unable to legally operate unless they obtain a valid insurance policy.

A ministry spokesperson said intensive discussions with the Malta Insurance Association did not reach that point but that talks would continue to reach a solution. 

However, they emphasised that contractors would now need to show proof of insurance for each individual project before the BCA issued a  Commencement Notice, allowing works to begin. 

"A contractor with a licence caught on a construction site and does not produce the insurance policy covering the project will be in breach of the law," the spokesperson said.

The ministry acknowledged that the law does not require contractors to obtain liability insurance to protect their employees but said it is committed to introducing that requirement "in due course." 

A public consultation period had indicated that "more talks were needed particularly with insurance providers," it said. 

"The regulations that have been published follow an extensive consultation process and introduce an obligation within the sector that has never existed before," the ministry said.

"The Government will continue to work with all interested parties with a clear intention to continue to upgrade and strengthen the regulatory framework of the construction industry."