Current position?
With the passing of HM Queen Elizabeth II, a large majority of individuals and businesses are having to grapple with the unprecedented event of the death of a monarch.
The UK is currently in a period of mourning and with 19 September 2022, the day of the state funeral, having been declared a national bank holiday, questions have arisen as to the potential cascading effects that may permeate through the construction industry during this period.
The Department for Business, Energy & Industrial Strategy has given notice of the upcoming bank holiday and has stated there will be no statutory entitlement to time off, leaving it as a discretionary matter ‘for discussion between individuals and their employer’.
What are the contractual implications?
ECA Members are encouraged to talk to employers and clients and to check their contracts to ascertain whether they will have a right to time and money due to any potential disruption or delay caused by the state funeral and other ancillary arrangements which may disrupt project delivery.
The obvious implications of a declared bank holiday are that it may give rise to a worker expectation that where the day is worked, workers should receive additional remuneration to compensate for the loss of a bank holiday. Members will need to factor this into the management of their business and project management administration and cost considerations.
As parties may have entered into bespoke contractual arrangements an entitlement to time and money will be dependant upon the provisions of each individual contract. However, there are some general points our Members should take into consideration.
If an employer/main contractor expressly instructs work to stop on site on the day of the bank holiday, for example, in order to allow employees to attend the state funeral or to not have loud machinery in use on site out of respect for the occasion during the bank holiday, then Members will have a strong case to argue that such an instruction constitutes a variation/change under the contract and therefore a Member (who is a sub-contractor) should be able to claim for time and loss & expense/compensation. Such instructions/directions are covered under relevant events under the JCT suite of contracts (clauses 2.23 to 2.26 of the JCT D&B and clauses 2.26 to 2.29 of the JCT SBC) and under compensation events for the NEC 3 and NEC 4 ECC (section 6).
On the other hand, if an employer/main contractor does not issue any specific instructions for work to cease on site and, leaves the decision as to whether to cease work out of respect to the discretion of the supply chain, then Members within the supply chain must be prepared to play catch up, as it will be more difficult to prove an entitlement to time and money if Members choose to forego a day’s productivity, as this is unlikely to amount to a relevant event or a compensation event.
Whilst there is no statutory entitlement to a bank holiday, an argument can be made that under the Banking and Financial Services Dealing Act 1971 a declaration of a bank holiday is an exercise of a statutory power, and as such may be a trigger for a relevant event if the scope of relevant events includes the exercise of a statutory power affecting the works.
In these instances, we would advise Members to weigh up the commercial risks of falling slightly behind on a project and having to catch up, against the decision to allow their workforce the opportunity to pay their respects on a day of national mourning.
Regardless, Members should factor in the requirements to issue appropriate notices (via the notice requirements of the contract) for extension of time, loss & expense, early warning and compensation/relevant events as may be required by the contract. Members should be aware of the adage that if you don’t operate the contract, you can’t make the claim.
We would encourage our Members to maintain an open line of communication with employers/main contractors during these times as this is an unprecedented event and there is an industry wide push for collaboration between parties.
If we have learnt anything from Covid-19, it is that clear dialogue and record keeping regarding arrangements, expectations, float, programme and cost implications will give parties the best opportunity to appropriately allocate risk and ensure that any contractual mechanisms in place are followed. This should minimise delay and disruption and ensure Members are compensated.
Members may also want to consider that where ‘dayworks’ are a contractually valid method of valuing variations or changes, these will be inherently linked to the unionised wage rates calculated on the basis of 8 public holidays in an ordinary year. This year we have had 9 bank holidays due to the Platinum
Jubilee, and if the state funeral is declared by the relevant sector agreement to be an additional bank holiday it will introduce a 10th bank holiday, leading to a potential further loss of productivity and increasing the resulting costs of employers.
Due to the proximity of the state funeral, under a best-guess scenario we are likely to see an additional day’s leave granted at normal wage rates to be used either on the 19th or before the end of 2022 at the employer’s discretion.
Member companies who are part of the JIB are advised to check the JIB website in the week leading up to the state funeral to seek confirmation of the agreed position. Non JIB Members will have discretion to enter into daywork rates negotiation and will have the option to adopt the JIB model should they wish to do so.