With the beginning of a new year, we have prepared a summary of key legal issues likely to affect construction contractors in 2022. Take a look at what is on the horizon for the year ahead with bite size snippets of important changes and influences for 2022. The flyer touches on Building Safety reforms, mandatory climate related financial reporting, new residential property tax, red diesel reforms, the increasing influence of ESG, green rules and the use of technology on site.
Building Safety Bill
The Building Safety Bill (England and Wales) is expected to come into law during 2022. It will have wide ranging impacts on higher risk buildings during the whole life cycle of the building, including changes to the planning, development and occupation of buildings. Once law, it is anticipated associated secondary legislation will be introduced impacting on fire and structural safety of buildings and that the limitation period under the Defective Premises Act 1972 and Section 38 of the Building Act 1984 will be extended.
Environmental, Social, Governance (ESG)
The trend of government, funder, and procurement requirements are very firmly towards higher ESG standards. This should be of note to industry participants as construction businesses are particularly exposed to environmental considerations. Proactive businesses are likely to find it easier to bring themselves into compliance with future requirements than those that do not prioritise ESG.
Mandatory climate related financial reporting
Draft regulations related to climate-related financial disclosures have been published and will come into force on 6 April 2022, subject to parliamentary approval. They will be implemented by two sets of regulations – one for companies and another for LLPs. The draft regulations apply to publicly quoted companies with 500+ employees, banks, insurances companies and private companies and LLPs with 500+ employees and GBP 500m turnover.
New green rules
The UK is the first country in the world to set new rules for companies bidding for government contracts worth more than GBP 5m annually. Companies must commit to achieving Net Zero emissions by 2050 and to reporting on emissions such as employee commuting, business travel and distribution of waste.
The ongoing worldwide materials shortage is expected to persist into 2022. Factors such as a lack of shipping and haulage capacity, the rising costs of key materials and delays in obtaining materials will continue to impact both the timing and costs of projects. We are seeing contract terms being introduced with remedies for unavailability of materials/delays in supply chain and rights to substitute materials.
The twin impacts of BREXIT and COVID-19 have caused labour shortages of skilled workers. To simplify the process for hiring overseas workers, job applicants and existing workers can currently send scanned documents or photos of documents relevant to right to work checks via email or mobile app and checks can be carried out over video call. From 6 April 2022, the amended process will cease and standard right to work checks must be carried out. This may result in delays in obtaining the necessary approvals for workers.
Technology in construction
The amount of digital and wearable technology being used on construction sites continued to increase in 2021 resulting in vast amounts of data being generated during projects. Businesses utilising this technology should consider how to manage and protect this data, in accordance with data protection and intellectual property laws, by putting agreements in place to address the logistical and legal issues in doing so.
New residential property tax
As part of the government’s Building Safety package, from the 1 April 2022 a new 4% tax will apply to companies or groups of companies undertaking residential property development in the UK, who have annual profits in excess of GBP 25m.
From 1 April 2022, the construction industry, among others, will lose their right to use ‘red’ diesel and rebated biodiesel. From April 2022, the majority of red diesel users will need to switch to using white diesel, which will be taxed at the full rate as common road vehicles.
Use of the UK government’s modern slavery statement registry for reporting under the Modern Slavery Act 2015 is planned to be made mandatory when Parliamentary time allows. Stricter reporting requirements and harsher penalties for failure to comply will be introduced at the same time.
Ongoing employment consultations
Recent government consultations cover topics from rights to request flexible working, duties on employers to prevent sexual harassment, liability of employers for third party harassment and ethnicity pay gap reporting. These consultations are at different stages but the potential legislative outcomes could lead to signif