NEC3 Non payment by the Employer - Compensation Event with Y(UK)2

1

The NEC Guidance notes state that when using Y(UK)2 the following apply:

  • From Payment Assessment Date the PM has 7 days to issue the Payment Certificate, becoming the “due date for payment”
  • From the “due date for payment” the Employer has 14 days to make the payment, until the “Final Date for Payment”
  • Any notice to payless must be issued 7 days before the “Final Date for Payment”.

It then talks about “Right to Suspend Performance” if after a further 7 days the payment has not been made by the Employer and this being a Compensation Event (Y2.4 - S1123A). The guidance notes do not reference what the Compensation Event falls under. I assume this is a CE under Cl60.1.(18) - “A Breach of Contract by the Employer” ? Is this correct and the failure to make the payment 7 days after the “Final Date for Payment” under Y(UK)2: would constitute a “breach of contract” ? (note the guidance notes are referring to something different to Cl51.2 relating to late payment).

2

The right to suspend work due to non-payment is a statutory right under the HGCRA 1996 (as amended by the LDEDCA 2009).

Although it expressly states ‘it is a compensation event’ it isn’t one of those stated at clause 60.1 and is in addition to these. This is also the case with several other compensation events within the X-Options, including X2, X12, X14 and X15 (NEC3 ECC).

Admittedly the compensation events within the X and Y(UK) options could be better integrated within the contract, possibly by adding these as ‘additional compensation events’ in Contract Data.

3

Thanks Andrew, that’s helped greatly (TBH I was unsure whether it suited any under Cl60.1…)

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