NEC3 ECC option E - Immediate demobilisation of resources

Our contract is an option E contract with a rates schedule. The Employer issued us a Project Manager’s Communication instructing us to immediately (by the next day) demobilise 50% of the work force.

We now need to pay out the notice periods of the employees and the Employer does not accept any costs during this time. Can they do this and do I have a claim for the costs incurred to pay out the employees notice periods?

While the actual amount will depend on the contract reason, every reason includes amount A1 as articulated in clause 93.1.

The third main bullet is for “other Defined Costs reasonably incurred in expectation of completing the works”.

Without knowing the specifics of their employment contracts, I would have thought that the cost of employing people in expectation of completing the works is a Defined Cost as, to avoid this cost, you would have had to terminated their employment contracts early before you got the termination instruction.

This was not a termination of contract or de-scoping instruction but a resource demobilisation instruction. Would clause 93.1 still count?

Sorry, I assumed it was without reading the question properly. The answer is ‘it depends’. If the Employer was giving the work to another contractor, then you might well have a claim for partial termination under contract law as you have the contract to do the works.

To answer the original question - now that I have read it properly - People 12(f) of the SCC is for “severance related to work on this contract”. If they were employed for this contract, then the whole payment would be ‘related to work on this contract’ and if they had spend an equal time on another, then 50% etc.

Anyway, it is quite clear from the wording of the contract that the Employer has got it wrong !