27 March 2020

What impact does social distancing have on the performance of your or your sub-contractor’s works?

Social distancing is a health and safety issue first and foremost. On any construction site, that is part of your CDM duties and obligations.

CDM and social distancing

As per the guidance here construction sites operating during the Coronavirus Covid-19 pandemic need to ensure they are protecting their workforce and minimising the risk of the spread of the infection.

However, the ultimate obligations of the Principal Contractor remains unchanged – they must ensure the health and safety of its workers on site and this necessarily means adhering to current Government guidance on social distancing.

What should I be thinking about when it comes to CDM and social distancing?

In these unprecedented times, though, the role of the Principal Contractor is likely to be under closer scrutiny and they should closely assess the overall safety of the project and keep an especially close eye on contractors/sub-contractors and their adherence to the Government’s diktat on social distancing. If there is the risk of the virus transmitting between contractors and employees the Principal Contractor should be ready to take action and they should seek specific and demonstrable written assurances from all contractors on the site that they have understood and actioned safeguarding measures against Covid-19.

In many ways, though, the burden is on the Principal Contractor to behave morally and appropriately, rather than take measures driven by fear, and should ensure that contractors/sub-contractors are behaving appropriately. Potential regulatory sanction should not be used as a driver to achieve outcomes but rather this is about looking after people. This is a fast moving issue and it is paramount to stay on top of the current thinking – if you do all that is reasonably practicable based on Government advice that is likely to keep you on the right side of the regulations.

Can the build team charge for the extra costs if we continue building with social distancing measures in place?

Our previous article here covers the position if the project or site gets closed down entirely.

In this article, we consider what happens if works are expected to continue and the impact of social distancing.

It is highly unlikely that the pre-existing contract covers pandemics. There are possible angles the build team can consider:

  1. Force majeure clauses;
  2. Claims for variations/changes;
  3. Suspension; and
  4. Termination

The terms of the contract will determine the routes available to a contractor.

Who pays for extra build costs on JCT contracts during the Covid-19 pandemic?

As we said in our previous article, force majeure and exercise of statutory powers may entitle a contractor (and sub-contractor) to the right to extra time but not extra money as neither are Relevant Matters.

There is no automatic right of suspension for either party due to force majeure but an employer under the Design and Build form may postpone the works (clause 3.10). Use of these rights does grant the contractor a right to claim extra time and money under clauses 2.26 and 4.21 respectively.

However, social distancing will, as a matter of simple practicality, involve a change in site/access restrictions.

Changes under the Design and Build main and sub -contract (or ‘Variation’) include the imposition of any restrictions in respect of access to the site or use of any part of the site, and limitations of working space or hours. This means that even if not directly required by an instruction, it is work which under the contract is to be treated as a Change and valued as such. This too could form the basis of a claim for an extension of time as being a Relevant Event. It is therefore arguable that if the Employer or Main Contractor should have adopted different working practices or instructed site practices such as to conform to the Social Distancing guidance, then the subcontractor or contractor can claim for the increased costs of carrying out the work in the new post Covid-19 world that we now exist in.

Even if the contract does not contain such a provision it is entirely feasible that the Employer or Contractor are under an implied obligation to issue such site and access restriction instruction/variation. In some situations, there may be an implied duty for the employer to issue a variation instruction where it is impossible, in the absence of a variation, for the contractor to complete the works: North West Metropolitan Regional Hospital Board v T A Bickerton & Son Ltd [1970] 1 All ER 1039

Importantly, if an extension of time is obtained through means of force majeure, a contractor would not be entitled to claim loss and expense since force majeure is not a ‘Relevant Matter’. Changes in law and site restrictions on the other hand may give rise to an entitlement to claim loss and expense under the Relevant Matter provisions of the contract.

Who pays for extra build costs on NEC contracts during the Covd-19 pandemic?

Compensation Events under Clause 60.1(1) of the NEC3 and NEC4 contracts gives rise to an extension of time as well as compensation f for instructions that changes the Works Information / Scope, which may be relevant; also under clause 60.1(4) an instruction given to stop work is a compensation event

Alternatively, clause 60.1(19) gives guidance about a compensation event. It is an event that:

  • prevents the completion of the whole of the works, or
  • prevents the contractor from completing the works by the planned completion date shown on the accepted programme,
    and which:
  • the Contractor could not prevent, and
  • an experienced contractor would have judged at the time of contract to have such a limited a chance of occurring that it would have been unreasonable to have allowed for it

Obviously, as it is the NEC, the proper operation of the early warning notice procedure at clause 15.1 is crucial and should be followed and any notice of a compensation event must be given under clause 61.3 within the required eight weeks period. Those time frames may well be a point of argument as to when Covid should have been identified as a possible “event” , particularly with the lack of clarity from various governments around Social Distancing and what are “essential services” regarding working on building sites.

Can I refuse to carry out works because of health and safety concerns?

In some cases there may be a dispute as to whether work should carried out or not. Legal advice should be sought as to the position taking into account whether there is a potential breach of a statutory requirement. In certain circumstances, this may give rise to rights to suspend works or even to threaten termination for breach of health & safety requirements, but this will very much depend on the circumstances and also the contract terms.

What’s the bottom line about the impact of social distancing on construction sites?

The courts and adjudicators are, in our opinion, likely to be sympathetic to all parties but perhaps we can expect some annoyance if these disputes come before them. Tolerance, reasonableness and fairness across the board in these exceptional circumstances should be the starting and ending point. We can give you guidance on how to vary your existing contracts to reflect the commercial agreements that we can help you reach. We are also here to help draft future contracts to capture a sensible balanced position for the Covid-19 world where force majeure probably won’t be a valid excuse for non-performance.

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About the Author
Lucinda Baker, Partner

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