Whilst a number of large construction firms have taken the decision to close their UK sites, confusion remains in light of the government’s advice as to whether there should be an industry-wide shutdown.  The government has said sites can remain open provided workers observe social distancing.  However different cabinet ministers have since given mixed messages – including that only those workers doing “critical” work should attend site and, more recently (24 March 2020), that anyone unable to work from home ought to go to work to “keep the country running”.

What should an employer which is faced with a decision to shut down a site do?  There are two scenarios to consider:

  1. A government ordered lockdown.  Much has already been written about how this may amount to a force majeure event.  If it is, the (unamended) 2016 JCT Design & Build does not envisage an employer having to issue instructions to a contractor to suspend work.  It would be open to the contractor to seek an extension of time (as force majeure is a Relevant Event for that purpose) but crucially the contractor would not be able to make a claim for loss and expense (as force majeure is not a Relevant Matter).   
  2. The employer decides to close the site before any lockdown or other government directive.  Caution should be exercised before doing so.  Under the (unamended) 2016 JCT such a decision could be either or both an instruction to postpone the works (under clause 3.10) or a Change (under clause 3.9) both of which would put the employer on the hook for loss and expense claims by contractors as they are Relevant Matters. 

Employers are in an invidious position: on the one hand, they may want to close sites because of justifiable concerns over workers’ health and safety.  On the other, faced with an inevitable economic downturn, some employers have taken the decision to remain on site whilst they are able to do so, but with more stringent health and safety protocols in place to protect their workers.  In the absence of a government ordered lockdown, any decision to do so would carry a greater risk of claims by contractors.

These are the decisions facing small and medium sized construction firms right now.  Whilst news reports have referred to large construction firms such as Taylor Wimpey, Persimmon and Barratt closing sites, their positions are very different.  Their market strength and buying power places them in a much stronger position to resolve such disputes which might arise.   Meanwhile, smaller employers must make a call which, at best, will result in a delay to a project and at worst, could see significant claims and/or (in extreme cases), termination.   

The construction industry is in completely unchartered territory.  Decisions such as whether or not to close a site should be made carefully, with reference to the specific contractual provisions which apply and the prevailing government advice at the time.

The information in this article represents our understanding of the law in England and Wales at the time of publication.  It is not intended to serve as legal advice and readers should seek specific legal advice on the matters arising.

If you have any queries relating to how Covid-19 will affect your business then please contact our construction team on disputes@bpcollins.co.uk or 01753 279057 and we will be happy to help.

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