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Over the weekend, the New South Wales government introduced new Public Health Orders. These Orders put an immediate ban on work being carried out on all construction sites across Greater Sydney. The ban applies to job sites in: 

  • Greater Sydney;
  • the Blue Mountains; 
  • Central Coast;
  • the City of Shellharbour; and
  • the City of Wollongong. 

The ban has wide-ranging implications for all construction industry participants, including principals, head contractors, subcontractors, consultants, suppliers and employees. This article explores the key impacts this ban on construction will have on your business from both a practical and legal perspective.

What Are the Restrictions?

Starting from 12.01 am on Monday 19 July 2021, work being carried out on all construction sites is to be paused. The New South Wales State government says this ‘pause’ is necessary to stop the spread of the COVID-19 Delta strain. The pause is due to last two weeks, ending at 11.59 pm on 30 July 2021.

The pause applies to construction sites where works are being carried out to erect, demolish, extend or alter a building or structure and includes civil and excavation works.

Are There Any Exceptions to the Restrictions?

There are limited exceptions. You may carry out works on a construction site during the pause if the works are an urgent requirement to:

  • ensure the safety or security of the construction site;
  • handle environmental risks;
  • ensure the integrity of critical plant, equipment or assets, that would otherwise deteriorate;
  • receive supplies which would otherwise deteriorate;
  • maintain public utilities;
  • ensure the safe operation of existing transport infrastructure;
  • to enable NSW Health to respond to the COVID-19 pandemic; or
  • be carried out because of an emergency.

Other than one of the exceptions, there is a ban on any person entering a construction site. Further, it is a criminal offence under the Public Health Act 2010 for breaching the ban, and significant penalties may apply. 

Do the Restrictions Apply to Residential Dwellings? 

There is a ban on a person visiting a residential dwelling to carry out repairs, maintenance, additions, alterations, cleaning or other trades unless work is urgently required to ensure the health, safety or security of the dwelling.

Contractors, Subcontractors and Consultants – Act Quickly! 

If you are a contractor, subcontractor or consultant, you should consider the consequence the pause may have on your ability to complete the works on time. You need to give immediate consideration to whether your construction contract includes:

  • a right to an extension of time;  
  • specific COVID-19 relief provisions; 
  • force majeure or change of law provisions; and 
  • suspension and demobilisation costs. 

Extension of Time and Delay Costs

Most contracts include a right to claim an extension of time. In most instances, you need to notify the principal of the event giving rise to the delay. In some instances, you may be required to notify within one or two business days of the delay occurring. Make sure you are aware of any time bars and other notification requirements in your contract to ensure that you make your claims within the timeframe specified in your contract. If your claim for an extension of time is time-barred, you may be exposed to liquidated damages for failing to complete the works on time.

Depending on your specific contract, you may or may not be entitled to delay costs. However, your contract may include alternative ways of claiming costs, for example, through a change of law regime. 

COVID-19 Relief and Force Majeure Clauses

More recently drafted contracts may include a specific COVID-19 or pandemic relief clause providing specific entitlements for shutdowns due to COVID-19. You should also check whether your contract includes a force majeure clause. A force majeure clause may allow the parties to suspend their obligations due to certain events outside the control of either party. Whether COVID-19 amounts to a force majeure event will depend on the relevant contract. 

Receiving and Responding to Claims

Additionally, you should be prepared to receive and respond to claims and notices from your subcontractors and suppliers on the same basis.  

What to Expect if You Are a Principal or Developer

Be prepared to receive claims and notices from your contractors, subcontractors and consultants, particularly for delays. From a contract administration perspective, ensure you are across the:

  • notification requirements; and 
  • time frames in which your contractors have to make claims. 

Note: not all claims will be for time or delay damages. You should be aware of the various ways in which your contractors may make claims.

Also, consider your upstream contracts. You may have entitlements to claim or obligations to notify.    

Impact on Employees

There are two key considerations in relation to managing your employees during this period. 

  1. You will need to ensure you are still complying with your work health safety obligations. Even your employees are not performing work, make sure your employees (and contractors) are still safe during this difficult time. 
  2. Determine whether you continue to pay your workers during the shutdown. As a starting point, you can agree to some options with your employees, like having them take annual leave, long service leave or even unpaid leave. Beyond that, you may consider standing them down. Employers may have a right to stand down their workers under the Fair Work Act, an enterprise agreement or an applicable modern award. 

It is critical that you review your rights as an employer against the correct industrial instrument. Under the Fair Work Act, an employer generally has the right to stand down an employee during a period where the employee cannot usefully be employed because of a stoppage of work, for any cause for which you cannot be held responsible for.

For example, where a site is shut down because of a government direction, it is likely this would amount to a stoppage of work for which the employer is not responsible. However, you will need to consider whether there is any other work the employees can do (i.e. any duties that they could perform from home). 

Concerned About Your Business’ Solvency?

If you are a director and have concerns about your business’ solvency, you will need to consider what options are available to you. If your company is ultimately wound up as a result of insolvency, you may be personally liable for debts incurred while your company was trading insolvent. 

Under the Safe Harbour Regime, as prescribed by the Corporations Act 2001 (Cth),  there are very limited circumstances in which a director can defend an insolvent trading claim. Therefore, if you are worried that you cannot pay creditors, you should seek urgent legal advice. Your lawyer can also help you to negotiate a suitable resolution with your creditors. 

Key Takeaways 

Public Health Orders have placed a ban on work being carried out on construction sites, with very limited exceptions. The restrictions are in place from Monday 19 July until Friday 30 July at 11.59 pm, unless extended.

Therefore, you should consider the following:

  • if you are a contractor, subcontractor or consultant, you need to act quickly to understand your obligations and entitlements under your construction contract;
  • if you are a director and have concerns about your business’s solvency, you will need to consider what options are available to you; and
  • you should ensure your employees are safe; consider whether you need to keep paying them during the shutdown.

The response to COVID-19 is constantly evolving. Therefore, a lawyer can assist you with understanding your contractual position, making or responding to claims, understanding the impact on your employees, and addressing any solvency concerns you may have. If you have any questions or concerns arising from the ban on works at construction sites, contact LegalVision’s building and construction lawyers on 1300 544 755 or complete the form on this page.

Frequently Asked Questions

What are the restrictions on construction?

The restrictions include that all work being carried out on all construction sites is to be paused. The pause starts from 12.01 am on Monday 19 July 2021 and is due to last two weeks, ending at 11.59 pm on 30 July 2021.

Are there any exceptions to the restrictions?

There are very limited exceptions to the ban. You may only carry out works on a construction site during the pause if the works are an urgent requirement.
 

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