COVID-19: Impact of Government lockdown on Construction Projects and the Industry – Force Majeure or Frustration?

COVID-19: Impact of Government lockdown on Construction Projects and the Industry – Force Majeure or Frustration?

Boris Johnson has placed the country in lockdown and the Government’s instructions not to travel unless your journey is absolutely essential are part of new measures to fight the spread of the coronavirus by staying at home.

However, despite the minister for Cabinet Office, Michael Gove, saying that it was fine for construction sites to remain open, we saw that one of the major contractors, Multiplex has shut down its sites immediately. It is a matter of time before other contractors would follow suit and this will have a major impact for all stakeholders in supply chains. So, what impact will this have on parties to building and construction contracts?

Delay Claims

Construction contracts usually consist of specific circumstances which will entitle a contractor or sub-contractor to claim an extension of time to complete the works. However, the contract  such as the JCT standard forms of building contract do not list disease, epidemics or pandemics as delay events. As such in the absence of provisions to cover epidemics or pandemics in the contract, may turn to other specified delay events, such as “Force Majeure”.

Force Majeure

Force majeure is a contractual term that provides for the award of an extension of time if works are delayed due to the occurrence of circumstances beyond the control of the parties. Under English law, there is no standard or universal definition of a force majeure event, therefore one needs to look at what events the parties have included in the contract and what legal consequences they intended when the events are triggered.

Does the pandemic  in itself constitute a Force Majeure?

There is no clear cut answer to this. Any successful claim largely depends on a number of factors, including:

  • Does the contract have a provision for Force Majeure as a delay event?
  • How is “Force Majeure” defined in the contact?
  • Does the definition include wordings such as pandemics, epidemic or similar term?
  • If not, does the definition cover events which are beyond the parties’ control such as ‘acts of God’?
  • What were the intentions of the parties at the time they entered into contract?
  • Does the definition or the contract exclude events that are foreseeable?

The Lockdown and Frustration

As with Multiplex today, it is likely that many contractors and housebuilders would follow suit and close their sites in order to prevent the further spreading of the coronavirus.

It is also very likely that the pandemic and the unprecedented lockdown would have been foreseeable when the parties entered into contract. How would this impact on the construction contract or project?

The government intervention may entitle either party or both to exit the contract on grounds of frustration depending on a number of limited circumstances.

For instance, the contract may be discharged if the lockdown is intended to last indefinitely. While the lockdown announced is intended for a temporary duration and the government minister made it clear that construction sites could remain open, the performance of the contract cannot be said to be impossible. Therefore, the contract cannot be said to be completely discharged.

In terms of a claim for extension of time, depending on the contract provisions, such as whether government intervention is covered within the list delay events, the contractor is likely to succeed in his claim for an extension of time.

In these critical times, we are committed to continue providing our advisory services and all aspects of dispute resolution & adjudication services to support all stakeholders in the construction industry.

For help and advice, please contact us.

Could flexible working in the construction industry create a more diverse pool of talent?

Could flexible working in the construction industry create a more diverse pool of talent?

A new trial hopes to prove that the construction sector can successfully adopt flexible working arrangements for site-based roles.

According to the latest edition of Construction Enquirer, Bam Construct, Bam Nuttall, Skanska and Willmott Dixon will be working with consultant, Timewise, on the Construction Pioneers programme which will be tested live over a 16-month period, across a number of UK sites.

The consultant and four construction companies plan to test new ways of timetabling and managing shift patterns to discover whether flexible working can work successfully for all concerned– an arrangement which the industry has, until now, found difficult to successfully adopt.

Timewise CEO Emma Stewart said: “Many people think flexible working in the construction industry, with its long hours culture, deadline-driven mentality and physical demands, is simply impossible.

“Timewise has been working with organisations in other industries, such as the NHS and the British Retail Consortium, who face similar challenges – and seen real change take hold.”

It is hoped that the trial will help to tackle the sector’s negative culture of long hours, whilst also encouraging applications from a more diverse talent pool and helping to improve mental health amongst workers.

Andrea Singh, Executive Director of BAM Construct UK, said: “It has long been thought that making flexibility work on site is just too complicated.

“Our industry, however, has many creative teams and individuals who can solve the most challenging problems. Together we can, and will, find a solution.

“People are increasingly looking for flexible work so they can balance their home and work life for a variety of reasons.

“There’s huge benefits to be gained for people who need this flexibility in an industry which is facing severe skills shortages.”

Samantha Randall, a solicitor with Palmers who specialises in employment law, said: “Any initiative which encourages employee wellbeing and better mental health as a result of an enhanced work life balance, is to be welcomed.

“Flexible working arrangements and job share opportunities can work very successfully in any sector but to ensure that the arrangement will work for all parties concerned and to avoid any confusion, it is important that new or amended contracts are worded clearly.

“It is also worth remembering that employees already have a legal right to request flexible working and whilst an employer does not have to accede to their request they must be able to justify why it would be detrimental to the business.

“If this current trial proves to be a success, it will be increasingly difficult for an employer to dismiss a request by claiming that such working arrangements are not practical option in the construction sector.”

For help and advice with all aspects of employment law including workplace contracts and flexible working arrangements, please contact us.