NEC ECC: Compensation Event - PM Rejection due to Time Bar

We (the Contractor) have raised a Compensation Event for a public holiday (bank holiday) which was notified by the State earlier in the year.

The Compensation Event was raised and no response was received according to the ‘period of reply’ (being 2 weeks). We then notified the PM of the outstanding response and again received no response within 2 weeks (61.4).

We then notified the PM that in accordance with the Contract, the CE was deemed Accepted. Subsequently the PM responded a week later notifying us that the CE was rejected as the Contractor did not raise the CE within 8 weeks of becoming aware (61.3).

If we are in fact time barred, would the CE stand as the PM did not provide his response in accordance with the Contract (effectively time barring himself) irrespective if the Contractor raised the CE in time or not?


What clause did you notify the compensation event under?

Usually CE’s notified under 60.1 (1), (4), (7), (8), (10), (15) and (17) cannot be time barred as these events arise from the Project Manager or Supervisor giving an Instruction.

I cannot see how you could raise a CE as a public holiday declared by the State is not provided for in Clause 60 as a CE, unless you were instructed by the PM to work on that day, in which case he should have asked you for a quotation. You respond according to 62.3. when ask for quotation.
You referenced 61.4, which is not an instruction related event. It is an event which must meet the 5 bullets
an event which
…arises from a fault of the contractor
…has not happened and is not expected to
…has not been notified within the time scales (61.3) 8 weeks.
…has no effect on Defined cost, Completion or Key Date, or
…which is not any other compensation event.
Any of the above.

The “treated as acceptance” in this clause only refers to the event being accepted as a CE and instruction to submit quotations. From here you had 3 weeks to do so (62.3). The PM now has 2 weeks to decide. If nothing, you need to wait another 2 weeks (from failure to respond). Only then is both the CE and the quotation treated as accepted.

Not sure if you followed this time-line.

Just a note: The PM cannot be time-barred. Failure to respond results in Acceptance in some clauses and is also an “inaction” which is grounds for dispute resolution to be lodged to the Senior Representative within 4 weeks (W1 option)
In W2 - bank holidays are excluded from time calculations.

A similar situation has previously occurred in England for the celebration of a royal occasion such as in 1977, 1981, 2002 and 2012. These were declared by a Royal Proclamation, which meant that they were added as bank holidays in those years.

I am not sure how your additional public (bank) holiday is formally recognised and whether this constitutes a change in the law and also whether secondary option X2 forms part of your contract, which would decide if the matter constitutes a compensation event,.

Without option X2, I presume the working hours and times are stated in the Works Information / Scope. If it just refers to ‘public or bank holiday’ without expressly stating what these days actually are then there is no change. If it does specify actual days then the matter would be a change to the Works Information / Scope, so constitute a CE under clause 60.1 (1).

The ‘time bar’ issue relates to when you notified the matter, regardless of what response you did or didn’t get. I can’t comment on this specifically as I am not aware of the particular circumstances and times.

One issue to consider, however, is what difference this actually makes. Whether a worker is entitled to take the day as paid leave would depend upon their contract of employment, which is regulated in England by the Employment Rights Act and working time directive.

This is one of those matters where it would probably be a good idea to discuss the ‘different ways of dealing with the CE which are practicable’, providing the PM does actually accept this as a CE of course.

The Compensation Event was notified under Clause X2: Changes in the law. The public holiday is considered a non-working day by the state. Effectively we have applied for the Compensation Event to claim an extension to the Completion Date (we are currently in delay) and therefore mitigate potential damages as well as claiming necessary under the SSCC.

We understand that X2 may be notified by the Project Manager and so should not be time barred. The PM is of the understanding that we became aware of the Event 10 weeks prior to notifying therefore substantiating his reason for the time bar approach.

In terms of the CE periods for reply, the PM has failed to respond in accordance with the timeframes and so contractually the CE is Accepted (i.e. Extension of time of 1day) and the Quotation is to be generated for acceptance. Is this correct?


It seems like the primary issue is whether you notified within 8 weeks of becoming aware of the event. Option X2 states that the Project Manager ‘may’ notify, which is a right not an obligation (as in shall). I suppose the matter is at what point in time would you have been aware of the change in law and so when would the 8 week period have started. The PM has obviously decided that it was 10 weeks prior to your notification, although under NEC3 it is when you became aware of the event, which then raises a further question as to ‘who’ in the Contractor’s organisation is to become aware to start the 8 week clock ticking.

I would suggest giving an early warning bu notifying the matter (it would presumably meet at least 2 of the stated bullet points under clause 16.1) and then discuss the matter at a risk Reduction meeting, which requires the attendees to ‘seeking solutions that will bring advantage to all those who will be affected’. Set out your position with regard to the 8 week notification period and hopefully discuss in a sensible manner with the PM. They may not change their decision but a discussion face to face is preferable to a series of communications, which will probably only ‘entrench’ opinion on the matter.

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As this compensation event was not accepted by the Project Manager or an instruction given by him for you to provide a quotation, and assuming you have not provided a quotation, you cannot rely on clause 62.6 or 64.4 as the CE effectively doesn’t exist and there is no quotation for you to reference if you did try to issue notice under any of these clauses.