COVID-19 – new guidance for the construction sector
On the 7 and 11 May 2020, two new guidance documents were published for the construction sector. The first, by the Construction Leadership Council (CLC) is entitled: CLC COVID-19 Contractual Best Practice Guidance and the second, issued by the Government is entitled: Working safely during COVID-19 in construction and other outdoor work. We have reviewed each of these and have provided a summary below.
COVID-19 Contractual Best Practice Guidance
The overall purpose of this guidance is to encourage and assist the construction sector, at all tiers (both in the public and private sectors), to address the contractual issues arising from COVID-19 in a collaborative way. This approach has the support of the Government and encourages all parties to act fairly and reasonably when administering contracts and agreeing variations. The CLC anticipates that without this collaborative approach, the sector will suffer.
Extension of time and sharing of costs
The guidance encourages ‘employers’ (clients) to consider the granting of a suitable extension of time and the sharing of costs which are incurred arising from this unprecedented situation. Helpfully, it appends a number of pro-forma letters which can be used to facilitate this. These include letters which seek an extension of time under the event of force majeure under a JCT Design & Build contract and notifying a compensation event under NEC3/4 forms.
The document also appends a pro-forma letter drafted for the employer's use, in response to the contractor’s letter, which invites the parties to a videoconference to discuss how the situation can best be mitigated. An agenda for the ‘without prejudice’ meeting is also provided, which is designed to assist both parties in seeking to reach an agreement for the project/works to progress. The agenda includes the consideration of how the costs arising from the situation at hand should be apportioned between the parties.
Collaborative and pragmatic approach
Of course, once an agreement has been reached, that agreement is recorded in writing to avoid any future misunderstandings. This could be by way of a deed of variation, a side letter or a standalone agreement. We have advised on and drafted a number of these agreements and our experience in respect of COVID-19-related issues/discussions is that parties are taking a collaborative and pragmatic approach.
Some projects have been mothballed (at the instigation of either the employer or the contractor) on the understanding that the employer pays for some of the costs during this period. In return, the contractor’s right of termination is removed or extended. Other projects have proceeded under the new health & safety guidance and in those cases, the agreements reached between the parties reflect the new arrangements.
For new projects, we have been asked to reflect the new working arrangements and to address specifically how COVID-19 will be dealt with should further guidance or legislation be published during the construction period. All of these arrangements have been put in place in order to aid the construction sector in both the short and longer term.
In our view, this guidance document is helpful, as it encourages the parties to start a constructive commercial dialogue with the aim of coming to a collaborative agreement in order that the project can either commence or re-commence. This also provides a degree of certainty as to how the contract deals with COVID-19, without the need to resort to legal proceedings.
The CLC COVID-19 Contractual Best Practice Guidance can be found here.
Working safely during COVID-19 in construction and other outdoor work
Arising from the withdrawal of its previous “stay at home” message and the move to encouraging workers who cannot work at home, to return to work – if it is safe to do so – the Government (Department for BEIS) has published this guidance which is directed specifically at the construction sector.
This guidance is for employers, employees, and the self-employed and should be read and understood by all of those involved in the sector. Its purpose is to highlight practical considerations in order that work is, and can be, carried out safely.
All parties are required to assess and manage the risks of COVID-19 through the usual requirement of carrying out a risk assessment. This need not be in writing if you, as an employer, have fewer than five workers or are self-employed. In the event that the Health and Safety Executive (HSE) considers that employers are not taking action, it can issue enforcement notices.
The risk assessments should be shared with the workforce. For those employers with 50 or more employees, risk assessments should also be published on your website and a notice displayed in the relevant workplace confirming that you, as an employer, have followed this guidance. It is also incumbent on all clients who commission works to make sure that your contractors have carried out the appropriate risk assessment(s).
A number of subject areas should be considered as part of the risk assessment. These include: coming to work and leaving work; meetings; personal protective equipment and face coverings; and work-related travel. All of these should be taken into account in the context of the particular workplace.
Other sources of advice
This guidance should not be read in isolation - the HSE has published its own advice entitled: Working Safely during the Coronavirus outbreak – a short guide; and Public Health England's guidance is also relevant. Finally, it is very likely that revisions and updates will be issued as and when more is known about COVID-19. As always, all risk assessments should be reviewed on a regular basis.
The Government's guidance on Working safely during COVID-19 in construction and other outdoor work can be found here.
[CONTENT CORRECT AS AT 13 MAY 2020]
If you would like to discuss any of the issues raised in this article or have other concerns about the impact of Coronavirus, please contact Chris Hoar, Alan Tate or Jo Morris in Michelmores' Construction & Engineering team.
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This article is for information purposes only and is not a substitute for legal advice and should not be relied upon as such. Please contact our specialist lawyers to discuss any issues you are facing.