Cabinet Office COVID-19 – Better Contractual Behaviour for Better Jobs and the Economy

Cabinet Office has released welcome new guidance, aimed at ensuring responsible contractual behaviour during the pandemic.

Cabinet Office has released welcome new guidance, aimed at ensuring responsible contractual behaviour during the pandemic. The guidance advises that responsible and fair behaviour in contracts now, in particular in dealing with potential disputes, will result in better long-term outcomes for jobs and our economy. In complex contracting arrangements, this should apply throughout the contracting chain.

Responsible behaviour now will in the long term protect businesses, supply chains and opportunities in the economy. Bad behaviour will be bad for jobs and will impair economic recovery. Cabinet Office call on all parties to consider their behaviour as part of the national response to the public health emergency.

It is recognised that parties to some contracts may find it difficult or impossible to perform those contracts in accordance with their agreed terms as a result of the impact of Covid-19 – including through illness in the workforce, the effects of restrictions on movement of people and goods, revised ways of working necessary to protect health and safety, the closure of businesses or the reduction in a party’s financial resources available to make payments otherwise due under the contractual arrangements.

Maintaining contractual performance to support the immediate response to Covid-19, protect public health, jobs and the economy, includes;

  • ensuring cashflow in those contracts is maintained, including to pay the workforce and individuals and businesses throughout the supply chain
  • where continued contractual performance is not possible or is not essential, ensuring those contracts, supply chains and markets can be preserved during the public health emergency, avoiding destructive disputes and insolvencies
  • ensuring that contractual and economic activity can be preserved and will be ready to continue in a sustainable way once the current emergency is over, supporting the restart of the economy and maximising UK productivity and growth.

Energy & Utility Skills Chief Executive, Nick Ellins, commented: “This Cabinet Office guidance is welcomed at a time when global crisis has forced many businesses to take short term survival decisions. The environmental infrastructure businesses within gas, power, water and waste management are recognised as critical industries in navigating today’s pandemic but they are also pivotal to growing our economy, maintaining affordable essential services for customers and finding the zero carbon solutions needed for the protection of our planet and society. They are a long-term industry, needing stability, predictability, joined up thinking and strong trust-based relationships between the asset owners and their delivery partners. We know that decisions taken during this crisis will impact the lives of utility workers for years to come. I am seeing great examples of utility contractual relationships, where both parties are thinking and acting to maintain the resilience of their partner. This guidance can help those who are struggling to find that balance. The reality is, under our existing model the success of the main policy, regulatory and company strategies relies on the skills, efficiencies, innovation, capabilities and sustainability of the supply chain human capital.”