What is the most important thing employers should do from a health and safety perspective?

Our advice to you here is simple. It will depend on the circumstances surrounding your debt but for the most part, unless it is crystal clear that there has been a debt outstanding long before Covid-19 and there was an inability to pay prior to the Covid situation we would recommend that you hold off issuing any further petitions until after the 31st December. Unless the criteria set out above is met, a judge is likely to exercise their discretion leniently and could dismiss the petition. This could also lead to cost consequences which would adversely affect you.

We are happy to discuss individual cases to assist creditors at this difficult time, however, generally any cases proceeding to petition would be the exception as opposed to the rule. Even if presenting a winding up petition is not available for now, there may still be other forms of legal proceedings that you can use to collect money owed to you, like county court proceedings.

This will be dependent upon the how the leasehold structure is set up for each relevant building, but it may be the local authority. We would be happy to provide further advice in relation to specific buildings if you contact us separately with the relevant details and documents.

In the event that the contractor is displaying one or more of the above signs, then it is worth considering the following actions to protect the employer’s position as far as possible:

• Closely monitor the financial and on-site performance of the contractor in order to assess the likelihood and timing of potential insolvency
• Ensure all bonds, guarantees and collateral warranties have been obtained under the building contract, and if not take steps to obtain them immediately
• Consider the terms of any guarantees to ensure that the guarantor’s obligations are not inadvertently discharged
• Bonds may require adjudication to have been commenced (or even completed) prior to insolvency so as not to be stayed pursuant to insolvency laws
• Carry out an audit of the on-site plant, equipment and materials, and evidence this (for example with photographs and written records)
• Ensure that copies of all relevant documentation have been obtained, for example drawings, specifications and anything required to comply with CDM requirements. If not, take steps to obtain these
• Review the payment position under the building contract, including whether any over payments have been made to the contractor which should be reclaimed, what retention is held or has been released, whether any payment notices may be necessary, and whether there are rights of set-off which should be exercised
• Check whether the involvement of any third party is required, for example funders, landlords, tenants or purchasers who may have rights in relation to the building contract and how it is administered
• Review the terms of the building contract relating to contractor insolvency – hopefully the parties will be fully aware of the building contract terms and have been administering it correctly to date, but if it has been hiding in a draw then now would be a good time to dust it off and ensure familiarity with the relevant provisions!

In general. there is often a stick or twist decision.  If the employer chooses to financially support the contractor (for example by agreeing different payment arrangements), this may help to keep the contractor solvent and more likely to complete the project, but it also exposes the employer to greater risk if the approach is not successful.  Conversely, withholding payments  from the contractor may make insolvency a self-fulfilling prophecy.  The precise advantages and disadvantages of the approach will be dependent on the specific circumstances of each case.

You must exercise reasonable care in assessing status and making a status determination, considering what the position would be if the contractor was engaged directly by the end user client instead of via a PSC.

Status is usually determined by looking a number of factors and how they apply to the contractor’s working arrangements. This is a difficult exercise that is usually carried out by employment and tax lawyers and it is full of grey areas. We have a toolkit that can help you navigate this process which Paul will tell you more about at the end of the session.

The key factors used to determine status  are:

• Control:
  • How much control does the end user client have over the contractor in terms of working arrangements (hours, place of work) and how the work is carried out? Or is the individual contractor able to determine how and when they work and without direct supervision of the end user client?
• Personal service:
  • Is the contractor required to perform the services personally without the right to send a substitute? If there is a right to appoint a substitute is this subject to end user client approval?
• Mutuality of obligation:
  • Is the end user client obliged to provide the contractor work with a mutual obligation on the contractor to accept that work?

The Government has announced a £750 million funding package for charities to ensure they can continue their vital work during the coronavirus outbreak.  This is for a 3 month period and further specific funding may be made available.

Charities which are businesses can also access the Government’s Coronavirus Business Interruption Loan Scheme (CBILS) – Please see our Funding and Finance FAQ’s.