Contractual Advice During a Pandemic

Introduction

While many of us are worrying about the strain on healthcare and making arrangements for childcare, many of the same people are also worried about how to keep their businesses functioning and critical projects on-track while caring for staff.

It can feel overwhelming; we get it. As a consultancy, we are perfectly equipped to deliver advice to our clients from anywhere in the world.

We understand your needs, and we want to support you. This article is intended to spark thoughts about the vulnerabilities and challenges your organisation might be currently experiencing or could face in the not too distant future.

How you choose to deal with the impact of Coronavirus (“COVID-19”) may differ depending on where you sit within your industry and supply chain. The impact will also be different depending on where you are in your project and how you are performing to programme.

Your concerns will naturally be different if your project is in execution, or if you are bidding for your next job. For our clients’ bidding on new projects, the added uncertainty brings a little more edge to the competition; this could be in your favour, we can help you plan how. Accordingly, our advice may differ depending on several things, but a few points probably hold true no matter where things stand:

Your contracts

1. You might want to know the answers to questions such as, will COVID-19 give an automatic right to claim a Force Majeure (“FM”) event under my contract?
   
   Possibly, but we would need to review the contract. FM does not refer to a legal doctrine in English Law, it is a contractual term. The World Health Organisation (“WHO”) has issued a formal statement raising COVID-19 to pandemic status, this may help us to interpret FM clauses.
   
   Our first question to you will be to ask you provide the contract documents. We will need to ascertain whether it is drafted on bespoke terms or is a JCT, NEC or other standard form contract.
   
   Our advice will depend on the contract drafting and the particular circumstances causing the FM Event, the impact to the project and whether or not the effects are continuing. It is unlikely there will be an automatic right to relief.
   
   You will most likely be required to submit detailed written particulars to your counterparty for their assessment. The type of relief you may be entitled to may vary too.
   
2. It is imperative that you submit formal written notice to your counterparty (sometimes referred to as an “Early Warning Notice”) citing any events which have impacted (or could possibly impact on) your ability to deliver under the contract and to then keep relevant parties updated.
   
3. Failure to submit notices in accordance with the contractual process (i.e. within 7 days of becoming aware of FM event), may mean your right to claim has time-barred and your entitlement to claim may be lost.
   
4. The position may differ again in relation to your finance documents; it would be prudent to check what the position will be should your project be impacted.

Is now the time to raise a claim?

1. You are likely to see a surge in claims being made, for many reasons; some may just be giving early warning of future claims. You will need to assess the written particulars submitted and provide a timely response to your counterparty.
2. Have you exhausted all escalation routes? It might be time to ask an Adjudicator to be appointed.

Business Funding

The UK Government has announced new measures to support business, such as:

• The Coronavirus Business Interruption Loan Scheme
• The Covid-19 Corporate Financing Facility
• The Small Business Grant Funding

We suggest you seek professional financial and tax advice to ensure you are aware of all the financial support available during this period of disruption.

Help For Self Employed
The UK Government has also announced support for employers, employees and self-employed. This support includes a Coronavirus Job Retention Scheme and changes to the Statutory Sick Pay rules.

Employers will be able to apply to HMRC for reimbursement for furloughed employees through an online service anticipated to be up and running towards the end of April.

The government is also increasing access to Universal Credit for self-employed or low earners, these claims should be made by the individual directly. The government wants to achieve "parity of support" between the different parts of the UK workforce, however, salaried and self-employed workers are being treated differently. As an employer your treatment of employees and contractors will differ.

Keep checking government and HMRC websites for advice on eligibility as this area continues to evolve. We can help answer queries you have around the contracts you have in place with the individuals you engage. Further to this, you may wish to seek specific employment legal advice in relation to lay-off, short-term working provisions and redundancies.

Working from home

It is likely some of your workforce will be working from home…

1. This means you may need to develop home working policies and consider the Health and Safety implications for your employees.
   
2. Are there any insurance implications to this?
   
3. Ensure your technology supports this, that it protects against cyber threats and maintains data privacy. It is likely your contracts will contain obligations for you to keep personal data and other information confidential and secure. Further, is your organisation in compliance with the General Data Protection Regulation (“GDPR”) and the Network and Information Security Regulations (“NIS”)? Businesses operating in the UK may also be subject to other laws, regulations, industry rules and the common law.
   
4. BWL Consulting can help provide a health check on all of these concerns.

Workforce impact

How well do you know your workforce?

1. Are they an employee or contractor? If a contractor, IR35 reform has been postponed until 6 April 2021. This still might have an impact on your workforce and hiring practices as well as your business plan for next year.
   
2. Are all staff keeping healthy or will you be restricted in terms of resourcing capacity and expertise? Key contracts may demand key personnel.
   
3. Do they need a visa to work? If so, you may need to monitor visa situations. The UK Home Office have issued a number of concessions aimed at assisting those impacted by the spread of COVID-19.
   
4. Anxiety is contagious – and companies set the culture; are your staff being enabled to perform? One way of making sure is by bringing your company guidance and governance documents up to date.

Procurement / supply chain considerations

1. Where are you buying your material for your key contracts? Marble from Italy? Machinery from China? What are your contractual commitments, remedies and rights of relief. Time to dig out that contract… where is it again .. anyone?
   
2. Other companies within your supply chain may be at risk of insolvency, you may have to diversify to add resilience.

Record-keeping

Maintain good records of project progression against the programme. Your QS,Planner, delay analysis expert and, ultimately, your lawyer will thank you for it; and your claim will be more likely to succeed as a result of it.

1. Stick to the contract process for Variations.
2. Raise Variation proposals before starting any work.
3. If in doubt, it’s good to talk to us, to the Project team, the Site manager - and it’s even better when you submit Notices in writing.

We’re here to help you navigate the contract and draft documents, as may be required. So now you know, there is no magic piece of legal advice that fits all.

What we can do, is listen to your project / contract concerns, review your contractual documents and provide bespoke advice for your circumstances.

This might involve: advising you on ways that you might be entitled to seek relief under your contracts for time or cost; preparing claims for damages; setting and implementing strategies to mitigation risks to ensure business continuity; or any number of things that can assist you.

We can be a sounding board, helping you to shape business processes to navigate through these uncertain times. We also have an excellent network of legal experts that will also be at your disposal.

For those of you feeling unwell in quarantine, we wish you a speedy recovery. For those providing essential services, our heartfelt thanks. To those working remotely, we hope to help you where we can. For all those reading, stay safe and look after each other (and your contracts!).

For immediate advice and or support, please contact.

Name: Karissa Krikken
Role: Head of Commercial & Construction Law
Phone: 02030 112 661
Mobile: 07960 203 813
Email: karissa.krikken@bwlconsulting.co.uk

Find more information, visit our Construction Consultancy Services page. Our experts cover a range of services, including:

• Contract review
• Contract Negotiation
• Dispute Management