In 2017 the ICI v MMT case discussed the liabilities in the NEC3 ECC contract. in his judgement, at pp 127 - 140, Mr Justice Fraser outlined why the PM cannot be an employee of the Employer without an express provision stating that they were permitted to do so.
This is in contrast to the guidance notes which on p. 10 states that it can be someone from the employers own staff.
Do we now need to place a Z clause in to the contract allowing the Employer to have an employee in the Project Managers role? judging from the aforementioned case this would appear to be the case?
In direct answer to your question I would say that there isn’t a need for a Z clause for appointing someone from the Employer’s staff as the Project Manager. Although there is no express right of objection to an appointment, the Employer is required to act in accordance with the principles at clause 10.1 (and 10.2 of NEC4), which must also extend to taking responsibility for the appointment of a PM who acts ‘inappropriately’.
The commentary at paragraph 131 distinguishes between the Employer and a ‘senior and professional person within (the Employer’s) organisation’, suggesting that such an appointment could be made where the PM is sufficiently capable of acting impartially.
The act of appointing Henk Boerboom, an employee of ICI’s parent company, was perfectly legitimate under the contract, notwithstanding the questions regarding the ‘proper appointment’. It is clear in this instance, however, that the intention was to engineer a situation to try and force MMT into liquidation, which was considered to be a better financial outcome for ICI. Consequently the intention was never to act as stated in the contract and in a spirit of mutual trust and cooperation.
In some contracts the ‘employer’ and the ‘entity’ administering the contract are one and the same, as is the case under the NEC ECS form, although it is clear under this form that the arrangement is known about at the time of entering the contract, which addresses the argument at paragraph 134, as this is how the contract intends to operate, although there remains some ‘anomalies’, such as the procedure at clause 90.1.