With significant inflation, impending recession and a cost of living crisis, large swathes of the Great British workforce have sadly seen no alternative than turn to strike action to achieve better working conditions and pay. But strike or industrial action can have serious legal implications for local authorities, not only in relation to how best to manage essential services but also on how they manage contractors relying upon force majeure clauses to escape breach of contract. Over the next 2 minutes, we will explore the legal impact for local authorities, on how strikes are treated in force majeure clauses and how local authorities could manage service contracts whilst their contractors are experiencing strikes.
What are force majeure clauses?
Force majeure clauses are a common feature in many contracts, including those entered into by local authorities. A force majeure clause is a provision that allows a party to be excused from performing its obligations under a contract due to circumstances beyond its control. This made headlines during the COVID19 pandemic, but there are also other circumstances outside the control of either party that can make performance impossible, such as natural disasters, acts of war, and of course, industrial action.
When a strike occurs, a contractor may attempt to invoke a force majeure clause to excuse itself from its contractual obligations owed to the authority. However, whether a strike qualifies as a force majeure event depends on the specific language of the force majeure clause. Most force majeure clauses require that the event be unforeseeable and beyond the control of the parties. Whether a strike satisfies these requirements will depend on the circumstances of the strike and the specific contract in question.
Local authorities should be cautious when accepting a contractor’s purported reliance on a force majeure clause during a strike. Courts will generally interpret force majeure clauses narrowly, and the burden will be on the local authority to prove that the strike meets the requirements of the clause. Moreover, invoking a force majeure clause can be seen as an admission of breach of contract, which could have other legal consequences.
Importantly, strikes should ideally be included as part of a non-exhaustive, illustrative list of potential grounds for force majeure, and attention needs to be paid as to whether only national strikes would be acceptable grounds, and not localised strikes. The argument here being that a localised strike may be due to the Contractor’s own poor working practices which should not then excuse the Contractor from poor performance.
In addition to considering force majeure clauses, local authorities must also manage services during the strike. One strategy is to engage in contingency planning, such as hiring temporary workers or subcontracting services. However, this can be expensive and may not always be feasible. The authority would need to look at whether it is permissible for it to step into the contract to self-deliver in such circumstances, and what the consequences of doing so may be under the contract terms. Some contracts penalise step-in by the local authority.
In conclusion, strikes can have a significant impact on local authorities and the provision of essential public services. Local authorities should carefully consider the language of their force majeure clauses and be cautious when contractors attempt to rely on them during a strike. Does the clause exclude purely localised industrial action? Local authorities should also develop contingency plans and consider how to deal with essential service delivery when a contractor cannot do so. Ultimately, the best approach will depend on the specific circumstances of the strike and the contract in question. Considering and allowing for appropriate self-help remedies in advance for essential services is a must.
If your local authority is facing the challenges of contractor service delivery during industrial action, it is important to seek legal support to ensure that your organisation is navigating these issues optimally.
How can we help?
Blake Morgan has extensive experience working with local authorities and can provide expert advice on force majeure clauses, contingency planning, and negotiating with contractors.
Don’t let industrial action derail your organisation’s operations or leave you vulnerable to legal challenges. Get in touch with our specialist government lawyers today to learn more about how we can help you strike a balance between legal compliance and effective management of public services during strikes.
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