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PLC Construction: does the royal wedding bank holiday entitle a contractor to an extension of time?

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Summary: A client recently raised this question in the context of a project using the NEC3 ECC.

It throws up a number of issues including whether the bank holiday: 

  • Is a change in law.
  • Is a Compensation Event under clause 60.1(19).
  • Entitles employees to an additional days holiday.

Is the proclamation that the royal wedding is to be bank holiday a change in law?

Bank holidays are governed by the Banking and Financial Dealings Act 1971 (as Matt Molloy mentioned is his blog post last year). Section 1(3) allows the Queen to proclaim a special day to be a bank holiday under the Act. This proclamation was approved by the Privy Council on 15 December. What is not clear is whether the proclamation is, in itself, a change in the law. The answer is probably yes, but the typically vague NEC3 wording does not help. 

Is it a Compensation Event under 60.1(19)? 

This provision entitles a contractor to time and money for an event that prevents him from completing the works by the date on the accepted programme, provided that: 

  • neither party could have prevented it; and
  • an experienced contractor would not have allowed for it at the contract date, as it would have been unreasonable for him to have done so.

The wording of clause 60.1(19) is broad. Even so, it is not clear to me that one additional bank holiday would give the contractor grounds to claim. 

Do the contractor’s/sub-contractor’s employees have the right to take 29 April as an extra day’s leave?

The basic position is that there is no general right to take a bank holiday as leave. Whether an employee has the right to do so is regulated by the terms of his (or her) employment contract.If the contract specifically lists the public holidays that he/she is entitled to take, the answer is probably not. If, on the other hand, it entitles them to “X days’ leave plus public holidays”, it is likely that 29 April will qualify as an extra day’s leave. Other contracts of employment may state that the employee is entitled to “X days’ leave inclusive of all public holidays”. Again, where this is the case, the employee is likely to be able to take 29 April off, but the overall holiday entitlement will not change. 

So where does this leave us?

Fixing 29 April as an extra bank holiday may well be a change in law. Even if it is not, it may be an event that falls within the scope of clause 60.1(19), provided that the contract was entered into before the Queen’s proclamation. Even so, the extent to which the contractor will be entitled to time and money may depend on the employment terms of various individual employees… and let’s not lose sight of the fact that we are only talking about one day. 

A couple of other comments: first, clause 61.3 requires the contractor to notify a compensation event within eight weeks of becoming aware of the event. This is obviously intended to operate as a condition precedent to his entitlement. The contractor will have been aware of the bank holiday by 15 December at the latest, so time is running out. 

Secondly, even if the contractor notifies in time, it is difficult to see how the compensation event would be assessed in the forward-looking way required by ECC. 

What about the position under other contracts?

This may well be different. Typically, JCT contracts include as a Relevant Event the exercise by the government of a statutory power that “directly affects” execution of the works. The proclamation is clearly the exercise of a statutory power, but it is difficult to see how it directly affects the works. In any case, under JCT it is clear that the contractor is only entitled to an extension of time for a Relevant Event if the Works will be delayed beyond the Completion Date. This is likely to be very difficult to demonstrate. 

Contrast this with the position under NEC, where a compensation event entitles the contractor to an extension of time regardless of the impact on the Completion Date, so long as “planned Completion” is affected.

This blog was first published by PLC Construction as part of our regular construction blog series in which we share our practical experiences of working in construction and engineering and give our opinion on the current and future legal developments that shape and will shape the industry. Please select the link for other PLC Construction blogs.

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