By Marcus Beveridge and Tina Hwang from Queen City Law
The recent worldwide outbreak of the novel coronavirus known as Covid-19 has impacted many businesses including the construction industry. It is indeed a Pandora’s box.
A worldwide health crisis of this nature is not an ordinary event, and our nation rarely gets a mandate for people to go into self-quarantine.
In addition to the difficulties many businesses already face, employers face numerous staff absences. Some public companies such as Air New Zealand have already forecasted a loss of between $35M to $75M from the coronavirus.
Forestry is reported to be down 16.4 percent and Ports of Auckland is said to have seen a 15 percent drop in shipments in February with an expectation the decrease will continue.
Unavailability of goods rise as China slows. A shortage of copper has emerged which is a major element to infrastructure of new builds as well as ordinary household goods. The Warehouse and Mitre 10 are looking for alternative suppliers as China’s delay continues.
What does this mean for the building sector?
Firstly, delays seem inevitable. How such delays will be quantified and attributed for each project will turn on the specific construction contracts.
Is this delay a force majeure or an act of God? Does it justify a variation or extension of time? Have building materials become unavailable? Have workers become unable to work?
Electrical supplies are already becoming scarce with major delays to light fittings and cables. Will there be penalties and if so, where will liability fall?
The answers will turn on the allocation of risk that was agreed when signing the construction contract, an issue examined in our prior articles.
Secondly, obligations under the Health and Safety at Work Act 2015 (“HSWA”) appear paramount. Employers, PCBUs,
site managers, and contractors should all review their health and safety policies and ensure it is appropriate and accessible to staff and visitors.
Good records including staff contact numbers, addresses, and emergency contacts will be important as well as updating the first aid kit. Employers should know whether their staff have travelled and/or been exposed to risk.
Considerations for whether workers should be given hand sanitisers, masks, better access to soap and water, as well as emergency kits should be made. The emergency kits should include water and non-perishable food just in case the staff get trapped in the building, office or workplace.
Thirdly, as of 20 February 2020, the Ministry of Health has reported that approximately 3,600 people have completed self-isolation. As of 2 March 2020, the travel restrictions were extended for China and Iran, with a further mandate that travellers coming from Northern Italy and Korea enter self-quarantine for 14 days.
This creates a confusing conundrum for many employers. What obligations do they have to employees going into self-quarantine? If employees are sick, they will be on sick leave and/or unpaid leave?
The difficulty will be workers who are not sick but have travelled or been exposed to risk.
While one must firstly look at the provisions of their own employment agreement, employers should generally consult with potentially problematic employees to review available options.
Options may include offering the employee work from home where possible and/or providing a self-contained area in the office to work.
However, this would not be pragmatic for the construction sector. There is general consensus that where there is agreement for self-quarantine, the worker should be paid unless the worker was simply staying away for fear that they may contract the virus.
Some employees may try to take advantage of this situation, so employers need to beware. There may be a continual conflict between the health and safety obligations of the employer to its staff and the general public, and the contractual obligations it has to the particular employee who may not be sick, but be forced to, or willing to enter isolation.
As of 5 March 2020, there have only been three known cases of the Covid-19 in New Zealand. There is high expectation that there will be more. Whether this will result in a pandemic here in New Zealand is unknown.
The Prime Minister may declare a pandemic and then amend other legislation, such as the HSWA pursuant to the powers under the Epidemic Preparedness Act 2006, to allow employers to take appropriate steps in such an event. However, until then, employers, contractors and PCBUs should take proactive steps to protect their workers and the general public.
It is easy to see a potential minefield of contentious issues arising in such circumstances, and companies would be well advised to adopt a strategic, proactive, nimble, flexible and compliant approach to ensure that their practices remain as robust and resilient as possible, and also so they keep their ships sailing afloat and navigate their way through what may become very turbulent seas.
If you have any construction, employment or litigation queries, please feel free to contact Tina Hwang or Marcus Beveridge at Queen City Law.