Frequently Asked Questions

We were the contractor on an ECC contract which the employer terminated for convenience, that is for a reason other than R1 to R21. Can we expect to be paid for our people until they are re-deployed to another project under clause 93.1 (A1)? If yes, what is considered a reasonable timescale to re-deploy staff to other parts of the business and have these costs reimbursed?
If your employer terminated for a reason other than those in the contract, then the amounts due to you would be A1, A2 and A4 (see the termination table in clause 90.2). We doubt you would be able to recover ongoing people costs because there is no mention of them in these amounts. You may be able to argue that they fall within the bullet in A1, ‘other Defined Cost reasonably incurred in expectation of completing the whole of the works’, but the use of the past tense suggests this only applies to costs incurred before the termination rather than afterward – as would be the case with the people remaining. Even then, it would have to be ‘reasonably’ incurred and that will depend on the circumstances.

For example, if staff had not long been employed, you would be expected to make them redundant rather than employing them in the hope of finding something for them in future. The same would apply to all self-employed or agency staff – it would cost you nothing to stop employing them. You would also be expected to use your best endeavours to find work for employees including, for example, using them to replace agency or self-employed people elsewhere within your organisation. Also, note you would have had to meet the cost of redeployment even if the contract had run to its full term.

So, the chances of recovering ongoing people costs are slim and, even if you succeed, it is unlikely to be a lot of money.

Back to FAQs