NEC PSC: Difference between Sub-consultants and Direct staff or labour agency

In a NEC3 PSC in an appendices to the contract it sets out the payment mechanism with an uplift of 10% for “Sub-consultants” and 1.75% and 1.95% for “Direct employees and Labour Agency’s,” this is to deal with home or working office etc.

In clause 11.2(12) it states:

that “A Sub-consultant is a person or an organisation who has a contract with Consultant to provide the Services”

And Clause 24.1 states:

"If the Consultant subcontracts work, he is responsible for Providing the Services as if he had not subcontracted. The contract applies as if a Sub-consultant’s employees were the Consultant’s.

Now the Consultant has brought on so many freelance and technically qualified people from recruitment firms and they are claiming they should be paid with the higher uplift of 1.95%.

This was clearly not the intention of the drafter as all the freelance and agency rates are 20% higher than the direct employees.

Can I pay the 10% as a Sub-consultant rather than the higher uplift if all the companies and people with Ltd companies have a contract in place as clause 11.2(12) would suggest?

The payment mechanism sits at the lowest point of the contract ‘order of precedence’ with the NEC 3 PSC above.

This is a bone of contention in NEC3 which has been resolved in NEC4 i.e. are labour only people Subcontractors or people (who under the Engineering & Construction Contract are listed in People 14.

You actually quote 11.2 (12) wrongly : it is “to provide a PART OF the services”. So to determine this, you need to have sight of the subcontracts. If they make reference to them doing a bit of the main contract, then they are a Subcontractor.