What should I do if contractor insolvency occurs?
In the event that the worst happens and contractor insolvency occurs, there are a number of steps which the employer should take immediately:
- Confirm that insolvency has actually occurred and the type of insolvency (for example liquidation or adjudication) – actions taken based on rumours can have adverse consequences
- Secure the site and carry out an audit of the plant, equipment and materials present – this may extend to changing the locks on site in order to prevent overzealous contractors and sub-contractors seeking to return and take what they see as their possessions. The building contract may contain a provision that these are the employer’s property, but they can be difficult to recover if they are not within the employer’s possession – possession is 9/10ths of the law!
- Ensure that there are adequate insurance and health and safety arrangements in place for the site – these would usually be dealt with by the contractor and therefore may no longer be in place, so alternative arrangements may be required
- Ensure that any further payments to the contractor are stopped pending a more detailed review
- Consider whether any off-site materials have already been paid for and can be secured. This can however be difficult in practice where the materials are not physically within the employer’s possession
In addition, there are also a number of further actions which the employer should consider in the slightly longer term:
- Investigate the options available and ascertain the cost of completing the works to assist in deciding how best to proceed
- Consider whether termination of the contractor’s employment under the building contract is required, and if so take the necessary steps in accordance with the building contract
- Consider whether there are any bonds or guarantees in place upon which the employer can rely, and if so assess their terms as to whether and how to make a claim
- Make arrangements to complete the works – as a general rule of thumb the cost of completing the works may increase by around 30% if it is necessary to get a replacement contractor
- Consider whether direct payment to subcontractors is possible or desirable
- Although we would say this(!) we would strongly recommend taking legal advice, as insolvency and its implications are complex and it is easy to inadvertently fall foul of the various different requirements
Related FAQs
A claim for indirect discrimination is the most likely risk here. The first point to make is that the decision to review duties is being made based on the growing amount of medical evidence that the BAME community is being disproportionately adversely affected by the COVID 19 pandemic compared to other ethnic groups. The key is to ensure that blanket policy decisions are not taken, nor should assumptions be made about the risk to each individual concerned. Decisions should only be made on an individual basis with an open dialogue with the individual concerned. You as their employer, need to ensure that the individual feels listened to and heard; that this is not just a tick box exercise.
Consider having a working group which has an overview of the policy decisions being made. That working group should contain representatives from across the staff groups including staff side, but importantly, representatives from different ethnic backgrounds to ensure the important voices are heard. Accountability should be built into that group. This group should also be a safe environment for staff to raise concerns about their health and safety and safe systems at work.
No. No action need be taken in relation to the demand but we would advise against presentation of a petition based upon any Statutory Demand issued between 1 March 2020 and the end of the restrictions. As you may be aware, with Winding Up there is no requirement to issue a Statutory Demand notice before proceeding so this is unlikely to create too many issues – click here to see whether you should issue petitions on other grounds.
There is nothing to prevent statutory demands being served at this time. However, there may be limited benefit as it cannot form the basis of a future winding up petition.
Employers who have apprentices on fixed-term contracts due to end during the pandemic should discuss arrangements with the apprentices including whether an extension to the contract can be offered to allow them to complete their apprenticeship.
The General Medical Council (GMC) have published guidance online for doctors during this time of uncertainty.
Alongside this, their website displays guidance for temporary registration to approximately 15,000 doctors, who left the register or gave up their licence to practise in the last three years.
These clinicians have been contacted to assist with the growing pandemic, outlining the process they would follow and informing them of their right to opt-out. The Secretary of State for Health can ask the GMC to grant such registration under Section 18a of the Medical Act 1983, in an emergency.
Yes probably in our opinion, even if you are not considering taking any formal action against them. Ultimately if a doctor is suspended this could be considered as causing them reputational damage and it therefore is correct that they are afforded the protections (in particular in relation to keeping exclusion/suspension under review) of MHPS. Under Part V of MHPS there is provision for excluding practitioners if they are a danger to patients and they refuse to recognise it or if they refuse to co-operate. It doesn’t refer to a particular risk for the practitioner themselves, but it would appear logical that it would apply.