COVID-19 (coronavirus): summary of key legislation and guidance affecting the UK construction industry

Dentons

A round-up of the key legislation, guidance and measures issued to help the UK construction industry deal with the effects of coronavirus (COVID-19). Government and industry guidance is being updated regularly. 

Extraordinary legislative measures to deal with COVID-19
Dealing with an extraordinary crisis The World Health Organisation declared the coronavirus (COVID-19) a global pandemic on 11 March 2020. The UK government first issued its Coronavirus Action Plan on 3 March 2020, setting out plans for a phased response in line with clinical and scientific advice. Parliament has since fast-tracked a range of legislation measures to enable the government to carry out extraordinary measures to contain COVID-19, including the national "lockdowns" starting from 24 March 2020.
The Coronavirus Act 2020 The Coronavirus Act 2020 was given Royal Assent on 25 March 2020. While several of the Act's key sections apply across the UK (see section 100), its application in devolved nations should be checked in each case (see, for example, the Coronavirus (Scotland) Act 2020 which came into force on 6 April 2020). Intended to "significantly enhance the ability of public bodies across the UK to provide an effective response to tackle" the virus epidemic, the Act covers five key areas:
  • increasing the available health and social care workforce (e.g. enabling recently retired NHS staff and social workers to return to work);
  • easing the burden on frontline staff (including local authorities' care workers) and allowing key workers to perform more tasks remotely and with less paperwork, and enabling suspension of individual port operations;
  • introducing measures to contain and slow the virus (e.g. reducing social contact, strengthening police and immigration quarantine powers);
  • managing the deceased with respect and dignity; and
  • supporting people (e.g. by easing Statutory Sick Pay entitlements) and supporting the food industry.
The Health Protection (Coronavirus, Restrictions) (England) Regulations 2020 SI 2020/350 The Health Protection (Coronavirus, Business Closure) (England) Regulations 2020 SI 2020/327 came into force on 21 March 2020 and required the temporary closure of premises selling food or drink for consumption on those premises. These regulations were then replaced with The Health Protection (Coronavirus, Restrictions) (England) Regulations 2020 SI 2020/350 which introduced a far wider closure of the premises of non-essential commercial businesses and restrictions on gatherings and individual movement. These regulations came into force on 26 March 2020, will be effective for six months and include enforcement provisions which give the police powers to fine those in breach.

Similarly, The Health Protection (Coronavirus Restrictions) (Wales) Regulations 2020 came into force in Wales on 6 April 2020, The Health Protection (Coronavirus) (Restrictions) (Scotland) Regulations 2020 came into force in Scotland on 26 March 2020 and The Health Protection (Coronavirus, Restrictions) (Northern Ireland) Regulations 2020 came into force in Northern Ireland on 27 March 2020.

The Secondary Legislation Scrutiny Committee is considering statutory instruments (SIs) (subject to parliamentary procedure) that are being laid to tackle the coronavirus pandemic. It has created a new page to track all SIs arising from the Coronavirus Act and their subsequent reports on them. This webpage provides a running list of the instruments that have been laid in Parliament.

Guidance for employers and businesses on coronavirus (COVID-19) The government updated its guidance on social distancing in the workplace on 7 April 2020: Guidance for employers and businesses on coronavirus (COVID-19). The guidance outlines practical steps which employers may find useful where employees cannot work from home. (You can read our commentary on this guidance here: Updated UK guidance on social distancing at work). Sector specific guidance for the construction industry was included here. More on this below under "Site operation during COVID-19".
Differing legislative approach to COVID-19 in the devolved administrations It is important to note the differences between the legislation being enacted in the devolved administrations. Check the applicable instrument in each case.

The Federation of Master Builders (FMB) has provided useful links here.

Site operation during COVID-19
Guidance on site closures – summary There was some recent confusion in the construction industry as to whether construction sites should be shut down. Additional guidance has since been introduced including that set out below but, without a specific order from the government to close, every project must be assessed on a site-by-site basis in accordance with the specific guidance issued by the devolved governments. This is not an easy exercise, particularly for those businesses operating sites in two or more of the devolved administrations as the approach to site closures is different.

The following is some of the guidance issued but, in the case of each site, follow the guidance of the applicable devolved administration.

Remediation and COVID-19 – Building Safety update Remediation and COVID-19: Building Safety update was issued by the Ministry of Housing, Communities and Local Government (MHCLG) and updated on 16 April 2020. In summary, construction sites in England have not been asked to close and construction work can continue if it is done safely and employers can ensure that their workers can comply with public health guidance. (See for example, Guidance for employers and businesses on coronavirus (COVID-19) and the Public Health England (PHE) guidelines). The PHE guidelines, which include frequent hand-washing and keeping two metres from others, can be found here (updated 15 April 2020). The government prioritised making buildings safe (including progressing the remediation of high-rise buildings with unsafe cladding and ensuring such buildings are safe ahead of remediation) and suggested that smaller, domestic projects can continue provided the worker/workforce remains well and without COVID-19 symptoms.
Social distancing in the workplace during coronavirus (COVID-19): sector guidance The Building Safety update was followed by sector-specific guidance in England (including for the construction industry) on 7 April 2020: Social distancing in the workplace during coronavirus (COVID-19): sector guidance. The construction element of this guidance can be found here and includes guidance that, where work goes ahead, staff should be advised "to keep 2 metres apart as much as possible" and employers "should plan work to minimise contact between workers and avoid skin-to-skin and face-to-face contact. Where face-to-face contact is essential, this should be kept to 15 minutes or less wherever possible".

This guidance also provides additional links to guidance issued by: The Construction Leadership Council (CLC) (scroll down to "Key industry guidance and support" for more specific links); and Build UK (which in turn, links to Build UK's latest Coronavirus update – Thursday 16 April 2020).

Separate guidance has been set by the Northern Ireland Executive, the Scottish Government and the Welsh Government. For example, guidance was issued in Scotland to the effect that non-essential work must stop: Coronavirus (COVID-19) construction sector guidance (effective from 6 April 2020 until further notice).

Site Operating Procedures In a letter to the construction industry on 31 March 2020, the Secretary of State for Business, Energy and Industrial Strategy (BEIS) recommended that businesses and individuals follow the Site Operating Procedures (SOP) issued by Build UK, the CLC and other bodies, and confirmed that the SOP are aligned with the latest PHE guidance.

Version 3 of this guidance was issued on 15 April 2020. These SOP are intended to protect the workforce, ensure site safety and minimise the spread of infection. Implementation is strongly advised.

Key contractual issues (such as force majeure) and avoiding disputes
Dealing with your contracts and avoiding disputes For guidance on contract issues and measures you can take to avoid disputes, see our March briefing: Dealing with COVID-19 (Coronavirus) from a UK construction perspective which covered the following issues:

 

Alternatively, get in touch with one of our construction team – see the Key Contacts.

If you are involved in a dispute already, you might want to read these briefings:

Other guidance The government has also:
  • recommended the use of the CLC's advice to industry on the temporary suspension of sites (where relevant) (30 March 2020);
  • issued frequently asked questions (FAQs) on business closures and staying at home; and
  • indicated that associated trades such as builders' merchants are arguably regarded as an essential service and indications were given that they too can stay open provided they can comply with PHE guidelines (many are focusing on their online business). The CLC's list of open builders' merchants can be found here: Finding an Open Builder’s Merchant During COVID-19.
Key industry guidance and support
Key industry bodies lobby government and issue guidance Construction industry leaders have been monitoring the crisis, lobbying the government and publishing guidance. In a letter to the Prime Minister on 17 March 2020, the CLC, Build UK and the Civil Engineering Contractors Association (CECA) made a joint statement requesting support for the construction industry, including government financial measures (such as deferring the payment of VAT and PAYE) and keeping construction sites open.

The CLC also wrote to the government on 1 April 2020 confirming that daily discussions with the leaders of construction industry bodies had led to the publication of the following:

  • the SOP (now Version 3) (see above);
  • the Safe Shutdown Process (guidance to site managers when it is deemed not possible to continue work. CLC plans to provide additional guidance on restarting work quickly and efficiently);
  • a Minimum Essential Works List (identifying what works need to be allowed to continue in almost any circumstances, such as works necessary to protect the safety of the public or assets);
  • a COVID-19 Essential Worker Authorisation Letter – which sets out to provide construction employees with the evidence that they require to be able to continue their essential work – a measure that is increasingly necessary given actions by the police, other public bodies and wider public that are not in accordance with government guidance; and
  • an appeal to the industry to donate surplus Personal Protective Equipment (PPE) to the NHS.
The letter went on to acknowledge government action already taken and request more measures, including:
  • the suspension of PAYE and CIS tax due to HMRC in April and May 2020 for various of those involved in the construction industry;
  • deferment or cancellation of Apprenticeship Levy payments due for the duration of the crisis;
  • urging public authorities to implement the guidance in public procurement rules (via PPN 02/20: supplier relief due to COVID-19)
  • further guidance for directors of micro businesses;
  • the release by government bodies of retention monies; and
  • the extension of the £25,000 SME business continuity grant scheme to the construction sector.
Various industry bodies, including the CECA, the Construction Industry Training Board (CITB), the FMB and the Construction Plant Competence Scheme (CPCS), have collaborated in producing measures to help construction businesses undergoing financial difficulties arising from COVID-19 such as relaxing the rules on skills cards which expire after mid-March until the end of the COVID-19 crisis; and making it easier to apply for/process grant claims to ease cash flow (including by freezing the need to demonstrate training delivered over a 20-week period before grants can be made).
CLC Statement on Payment and Contracts Concerned by "the management of payment in the supply chain, and the risk that clients and firms will seek to invoke contractual clauses to the detriment of other firms", the CLC has issued Statement on Payment and Contracts (8 April 2020). At a time when focus should be on the industry's survival, it calls on all businesses to continue to pay in accordance with contract terms and not to threaten to invoke penalty or other contractual notices.

The statement notes that the government is leading the way by issuing PPN 02/20 under which public sector clients are to continue to pay suppliers at risk due to COVID-19 until at least the end of June 2020 (see below).

Construction Industry Task Force On 3 April 2020, the CLC established a Construction Industry Task Force to galvanise the industry's response to COVID-19 and facilitate its communication with the government. The task force will look forward and help drive economic growth after COVID-19 has been beaten, as well as help sustain the industry through the current restrictions (see: CLC press release).

Key links

COVID-19 guidance for businesses
Guidance for businesses The government has issued advice to businesses during the COVID-19 crisis on its business support website which includes guidance on financial support, business advice, the latest on COVID-19 and wider business support (on topics such as business planning, leadership and talent, innovation and technology, and exports). Some examples of this government guidance is set out below.

Coronavirus (COVID-19): business support grant funding - guidance for businesses sets out details of the Small Business Grants Fund (SBGF) and Retail, Hospitality and Leisure Grant Fund and was published by BEIS on 1 April 2020. The SBGF is open to those in the retail, leisure and hospitality sectors. The FMB has lobbied the government to obtain an extension of the £25,000 cash grant to construction (see FMB letter, 19 March 2020).

COVID-19: financial support for businesses (published 3 April 2020) was issued by BEIS, sets out guidance for employees, employers and businesses, and includes links to the guidance for the devolved administrations: Scotland, Wales and Northern Ireland. The measures covered include:

  • a Coronavirus Job Retention Scheme;
  • deferring VAT and Self-Assessment payments;
  • a Self-employment Income Support Scheme;
  • a Statutory Sick Pay relief package for small and medium-sized enterprises (SMEs);
  • a 12-month business rates holiday for all retail, hospitality, leisure and nursery businesses in England;
  • small business grant funding of £10,000 for all business in receipt of small business rate relief or rural rate relief;
  • grant funding of £25,000 for retail, hospitality and leisure businesses with property with a rateable value between £15,000 and £51,000;
  • the Coronavirus Business Interruption Loan Scheme offering loans of up to £5 million for SMEs through the British Business Bank;
  • a new lending facility from the Bank of England to help support liquidity among larger firms, helping them bridge coronavirus disruption to their cash flows through loans; and
  • the HMRC Time To Pay Scheme.
Other financial support to note includes: The government's business support page can be found here. You might also want to read some of our briefings:
Guidance for employers relating to COVID-19 COVID-19: guidance for employees, employers and businesses helps employers provide advice to their staff (issued by BEIS and updated on 7 April 2020).
Our employment team is writing regularly about employment issues that arise on its blog: UK People, Reward and Mobility Hub. You can sign up for updates here.

To help employers track their responsibilities in relation to COVID-19, Dentons has produced a comprehensive interactive guide covering more than 60 countries. You can access this guidance here: COVID-19 Global Labor & Employment Tracker.
This tracker will be updated regularly, so continue to check back for advice as the situation evolves across markets.

Avoiding and dealing with insolvency during and after the COVID-19 crisis The government has published guidance for Getting help if your business is in distress and has introduced a wide range of measures to provide support during and after the crisis including: New Moratorium and Directors' Duties Provisions, New Rescue Administrations Protocol, Temporary Insolvency Practice Direction, Recent HMRC Guidance and a Statement from Companies House/Insolvency Service on filing Insolvency Forms by Email.

If your business is struggling, it is vitally important that you take action and seek commercial legal advice as soon as possible to protect it and your employees.

For further information on these issues, read the following Dentons briefings and get in touch with one of the Key Contacts:

Real Estate COVID-19 measures
For commentary on how COVID-19 is affecting Real Estate businesses, read the following briefings: You might also be interested in our COVID-19 Interactive Lease Tool Kit which provides guidance on some of the most frequently asked questions on the impact of COVID-19 on both existing and new leases in England, Wales and Scotland.
UK and EU procurement guidance issued
The government has issued various guidance to alleviate pressure on those involved in public contracting during the COVID-19 crisis, including the following.
Procurement Policy Note 01/20: Responding to COVID-19 Procurement Policy Note 01/20: Responding to COVID-19 (PPN 01/20), issued on 18 March 2020, was a direct response to COVID-19. It recognised that, while every project will be different, some contracting authorities might have to procure goods, services and works with "extreme urgency".

PPN 01/20 provides guidance to contracting authorities on conducting a public procurement exercise without notice under regulation 32(2)(c) of the Public Contracts Regulations 2015 (PCR 2015), SI 2015/102. It also advises on call-offs, permitted modifications and use of the light touch regime for health and social care services.

You can read our commentary on PPN 01/20 here: UK government-issued guidance on PFI/PF2/NPD/Hub in light of COVID-19 outbreak.

Public Procurement Notice 02/20: Supplier Relief due to COVID-19 Public Procurement Notice 02/20: Supplier Relief due to COVID-19 (PPN 02/20) requires public bodies to act immediately to protect their suppliers and support them by continuing contractual payments. The guidance recognises the struggle that many suppliers to public bodies will face in trying to meet their contractual obligations during the COVID-19 outbreak. Their difficulties will also put business further down the supply chain at risk and could cause job losses.

You can read our commentary on PPN 02/20 here: Contracting authorities – act now to safeguard supplies during the COVID-19 outbreak.

  • Alongside PPN 02/20, the government also issued the following guidance. Procurement Policy Note 02/20: Guidance notes on model interim payment terms which provides a set of terms that contracting authorities can use to implement PPN 02/20 in providing contractual relief to suppliers who have been affected by COVID-19. It prevents suppliers claiming separate relief from another source of government financial support on COVID-19, thereby gaining undue advantage by claiming relief twice for the same hardship.
  • Procurement Policy Note 02/20: Contingent Workers Impacted by COVID-19 sets out a series of FAQs and provides measures that contracting authorities can implement in relation to contingent workers who have been affected by COVID-19. For example, it deals with the payment of 80% of salary (up to £2,500 per month) to contingent workers who cannot work due to sickness or self-isolation.
  • Frequently Asked Questions (FAQs) - Procurement Policy Note 02/20 collates a set of FAQs regarding the scope and application of PPN 02/20 on supplier relief and is relevant to any contracting authority in scope of PPN 01/20 and PPN 02/20.
Supporting vital service provision in PFI/PF2 contracts during the COVID-19 emergency Supporting vital service provision in PFI/PF2 contracts during the COVID-19 emergency was published by the Infrastructure and Projects Authority and HM Treasury. It makes clear that Private Finance Initiative (PFI) contractors should consider themselves to be part of the public sector response to the current COVID-19 emergency. This guidance is intended to be read alongside PPN 02/20. See https://www.gov.uk/government/publications/supporting-vital-service-provision-in-pfipf2-contracts-during-the-COVID-19-emergency.
The government is expected to publish further PPNs relating more specifically to the construction sector and notices which will amend previously published PPNs.
European response to COVID-19
Guidance on using the public procurement framework during the COVID-19 crisis The European Commission has published Guidance on using the public procurement framework in the emergency situation related to the COVID-19 crisis (2020/C 108 I/01) which sets out EU public procurement framework options for the purchase of the supplies, services and works needed to address the crisis. In cases of extreme urgency, public buyers could, for example, substantially reduce the deadlines to accelerate open or restricted procedures, consider a negotiated procedure without publication or look at alternative solutions and engage with the market. Alternatively, a direct award to a preselected economic operator could be allowed (provided the latter is the only one able to deliver the required supplies within the technical and time constraints imposed by the extreme urgency).
European Regional Development Fund projects The European Commission has issued a Coronavirus Response Investment Initiative and its proposals to enact legislation designed to help those member states in need of financial support and targeted assistance were accepted by the European Parliament and adopted by the Council on 1 April 2020. EU funds will be used on healthcare, support for short-time work schemes and to support SMEs' working capital.

The European Commission has also adopted a State Aid Temporary Framework to enable Member States to further support the economy in the COVID-19 outbreak.

EU Development Fund projects For those concerned about the delivery or development of European Regional Development Fund projects, the government (DEFRA/DWP/MHCLG) has confirmed that it is assessing the impact of COVID-19 on European Structural and Investment Funds (ESIF) programmes and is in discussion with the European Commission about how to respond to the situation as set out in the Coronavirus Response Investment Initiative (CRII) and Temporary Framework for State Aid measures.

A set of Q&As has been produced: European Regional Development Fund 2014 to 2020 Programme: Questions and Answers on COVID-19 Response (1 April 2020).

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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