We explain the impact of the new restrictions on Greater Sydney construction sites, including practical and legal ramifications for builders and standing down workers.

Key takeouts

  • The Public Health Orders will prohibit most work on construction sites in Greater Sydney, with very limited exceptions.
  • Builders and developers will need to carefully and promptly consider their obligations under building contracts, and in respect of standing down workers.
  • The new restrictions are scheduled to be in place from Monday, 19 July at 12.01am and continue until at least Friday, 30 July at 11.59pm.

To help you navigate the new restrictions, including what work can and cannot continue, we outline the following:

  • the public health orders relevant to the construction industry, from Monday, 19 July 2021 at 12.01am;
  • an explanation of what building work is restricted;
  • a clarification of what the exemptions are;
  • a summary of the key requirements that must be met for building work that can continue;
  • the key considerations under building contracts; and
  • the considerations for standing down workers.

1. Public Health Orders

The public health orders relevant to the construction industry include:

2. What are the new restrictions?

From Monday, 19 July 2021 at 12.01am, work is not to be carried out on construction sites in Greater Sydney, except if it is urgently required for a number of limited reasons. A person must also not enter or remain on a construction site in Greater Sydney, other than to carry out the exempted work.

These restrictions apply to construction sites currently required to have QR check-in codes. The Orders define a 'construction site' as a place at which work, including related excavation, is being carried out to erect, demolish, extend, or alter a building or structure, but not work carried out in relation to a dwelling in which a person is residing.

The restrictions apply to all construction sites in Greater Sydney, which includes the local government areas (LGAs) of the Central Coast, the City of Shellharbour, and the City of Wollongong.

3. What work can be carried out on a construction site?

Work that is urgently required for the following purposes can be carried out:

  • to ensure the safety or security of the construction site;
  • to deal with environmental risks;
  • to maintain critical plant or equipment that would otherwise deteriorate;
  • to receive deliveries of supplies that would otherwise deteriorate;
  • to maintain public utilities;
  • to ensure the safe operation of existing transport infrastructure;
  • by or on behalf of NSW Health in response to the COVID-19 pandemic; and
  • because of an emergency.

The above exemptions are not defined in the Orders. Ultimately, the aim of the Orders are to limit movement of people in Greater Sydney and limit the disease burden particularly in South Western Sydney. Therefore, it is expected a very limited number of construction sites will be able to carry out work during this period.

4. What restrictions apply to construction sites that can remain open?

For work that can be carried out, existing and new restrictions and rules on construction sites will remain. These include:

  • Face coverings: Any persons permitted to be on construction sites will still be required to wear a fitted face covering over their mouth and nose (both indoors and, from Monday, 19 July 2021 at 12.01am, also outdoors);
  • No car-pooling: Car-pooling is prohibited, unless when engaged in work or in an emergency;
  • Employees who can work from home must be allowed to work from home: an employer must require an employee to work from home, unless it is not reasonably practicable to do so;
  • Restrictions on which workers can be on site: Workers from the LGAs of Fairfield, Canterbury-Bankstown and Liverpool are not permitted to leave their LGA to work on a construction site;
  • Check-in on arrival: You must take reasonable steps to ensure anyone entering the construction site checks-in, such as via a QR code; and
  • Extended building hours: Specified building work can continue on Saturdays between 7am and 5pm, and on Sundays from 9am to 5pm, but only if it is urgently required for the purposes set out above. The specified works are outlined in an order under the Environmental Planning and Assessment Act 1979 (NSW), dated 10 June 2021.

5. Key considerations under building contracts

Do I need to give timely notice of the effect of these Orders under my contract?

Depending on the terms of your contract, the current Orders may trigger rights for claiming relief under your construction contract. Contractors will ordinarily have an obligation to give timely written notice of any event that may give rise to an entitlement to make a claim for an extension of time, or additional costs. You should ensure that you give any notice on time, as a failure to do so will likely bar your entitlement to claim. Developers should consider the operation of suspension clauses under their construction contracts.

What happens if you can no longer deliver or perform under a contract?

You should consider whether the contract includes a force majeure clause. Force majeure clauses differ between contracts, and a clause may not be drafted in a way that provides relief in the current circumstances. You should also consider the doctrine of frustration to discharge your obligations under a contract. We discuss these issues in detail in our previous article: COVID-19: Force majeure and frustration of your contracts.

6. Standing down of workers

If you are required to cease operations because of the Orders, you may want to consider standing down employees without pay. You may do so under one of the following:

  • Enterprise agreements: You should check if they provide for stand down, and whether the right is triggered in these circumstances;
  • Employment contracts: Prior to COVID-19, most employment contracts did not deal with stand down. However, some employers have since updated their employment contracts to provide for stand down; and

This is a complex area and the particular circumstances of your business will need to be carefully considered.

Enterprise agreement

If you have a stand down provision in an enterprise agreement that is triggered in the current situation, you will need to follow the requirements of that clause. The consultation provision in the agreement may be triggered, but practically, consultation in this situation is going to be relatively short.

If an enterprise agreement does not cover the field on the issue of stand down, then the Fair Work Act provision may be relevant.

Employment contract

If you have a stand down provision in an employment contract that is triggered in the current situation, you will need to follow the requirements of that clause.

If an employment contract does not cover the field on the issue of stand down, then the Fair Work Act provision may be relevant.

Fair Work Act

Under section 524 of the Fair Work Act, you would need to meet the following requirements to be able to stand an employee down:

  1. the employee cannot be usefully employed in their normal duties, or performing alternative duties that would have a net benefit to the employer;
  2. there is a stoppage of work, which might not necessarily include a reduction of work;
  3. the stoppage is for a cause for which the employer cannot be held reasonably responsible – in the current circumstance, the NSW Government orders not to operate your business;
  4. the employee cannot be usefully employed, because of the stoppage of work referred to above. This is an important issue of causation.

Developers and builders should closely examine their obligations under the public health orders and consider the impacts on construction sites. You may need to give notices in a timely manner if you wish to make claims under building contracts, ensure certain requirements are met if you can continue building work, and consider the implications for standing down workers.