Do construction contracts help create the conditions for modern slavery in the industry, asks James Sargent.
James Sargent
Construction, as the work of the Chartered Institute of Building has highlighted, is extremely vulnerable to modern slavery. While the UK has taken great strides to combat modern labour exploitation, cases still crop up alarmingly frequently, one earlier this week.
By its nature, construction is an easy market to target, with complex, far-reaching global supply chains creating a perfect breeding ground for exploitation of vulnerable people, particularly those in low skilled jobs.
However, one topic which perhaps isn’t considered enough, is what part do the contracts we use in construction play?
At the heart of every project is a series of contracts which connect the employer, main contractor and their various suppliers together. Whether the contracts are JCT, NEC, or even bespoke contracts, one element always remains the same; each tier of the project will seek to amend the contract to suit its own needs: limit the risk it is exposed to, apportion liability elsewhere and obtain cost certainty from the party it has contracted. That party will pass down those same risks and liabilities on to its own suppliers, and so on down the chain.
Undoubtedly, this environment leads to companies procuring at the cheapest price possible, without giving proper thought to where materials are sourced or who is supplying the labour.
How do we change this mentality? The answer could simply lie in the use of ‘fair contracts’. The NEC was introduced as an alternative to the ‘traditional’ JCT, which focuses on liabilities and risk. Instead, the NEC was intended to be a ‘fairer’ contract which both requires and enables a more proactive and collaborative approach.
NEC clause 10.1
This is demonstrated best by the much fabled and some might say infamous clause 10.1 of the NEC3:
“The employer, the contractor, the project manager and the supervisor shall act as stated in this contract and in the spirit of mutual trust and co-operation.”
Clause 10.1 is intended to be front and centre of both the NEC3 and the NEC4 suite of contracts (in a slightly amended format in the latter).
The interpretation and meaning of this clause has been the source of much debate. In effect, clause 10.1 imposes the obligation of “good faith” into the contract and therefore governs how the parties should behave and operate when performing its duties under the contract. This clause does not go so far as to require the parties to act in a manner which jeopardises its own self-interest, but it does mean that everything from assigning risk, making payments and overcoming problems on site must be done in the “spirit of mutual trust and co-operation”.
Provided that both parties buy into this method of working together, it is far more likely that the project will be a success for all involved. This is the ultimate aim of the NEC contracts. By promoting a collaborative approach, the NEC seeks to prevent the ‘blame game’ from developing.
What does this mean in respect of modern slavery? Quite simply, by promoting a more collaborative working environment, the NEC limits the chances of unexpected costs or damages being passed down to subcontractors, prompting them to pick cheaper options, which can lead to decisions such as employing labour from dubious agencies or sourcing materials unethically.
The NEC is far from perfect, owing in part to the fact it is widely accepted as being administratively burdensome. But, as awareness grows of moral issues such as environmental impact, modern slavery, bribery and corruption, NEC’s collaborative culture may be seen as a sensible way of reducing the likelihood of unethical practices.
In the meantime, construction companies should ensure their contracts contain detailed anti-slavery provisions, which encourage all staff to adopt an ‘ask and check’ approach. If we continue to ignore this problem, then we are all complicit in it. And if we take a little longer when drafting, reviewing or negotiating contracts to consider what is ‘fair’, rather than what is the ‘safest’ option, we may help reduce or even eliminate modern slavery from the industry completely.
James Sargeant is a junior associate at construction law specialist Quigg Golden.
