COVID-19 | Construction hibernation? The impact of Stage 4 restrictions on construction projects

20 August 2020
Andrew Denehy, Partner, Melbourne Daniel Middleton, Partner, Melbourne

On 16 August 2020, the Public Health Commander issued the Workplace (Additional Industry Obligations) Directions (No 4), Workplace Directions (No 3) and Area Directions (No 7) (collectively, Directions), which provide much needed guidance on the potential impact of Stage 4 restrictions on construction projects in Victoria.

Although the various government websites and daily press conferences provide very useful guidance, the Stage 4 restrictions have changed significantly since they were first announced and full details of these changes are difficult to locate and not in all respects consistent with the websites. This article provides an easy reference point and a snapshot of key requirements that apply to construction projects as they currently stand.

When do the Stage 4 restrictions take effect?

The Directions commenced on 11.59pm on Sunday, 16 August 2020 and end at 11.59pm on Sunday, 13 September 2020.

Where do the Stage 4 restrictions apply?

The Stage 4 restrictions apply to all 31 municipalities across Greater Melbourne.

What are the relevant Stage 4 restrictions for construction sites?  

Different restrictions apply depending on the size, nature and stage of the construction project. For full details of the restrictions, please refer to the Directions published on www.dhhs.vic.gov.au (as amended from time to time).

These restrictions are summarised below:

 Early Stage Land Development Site Large-Scale Construction SiteSmall-Scale Construction Site
Type of Construction ProjectAn "early stage land development site" is all civil works undertaken in open air, large greenfield sites that are associated with and preparatory to construction of multiple individual residential dwellings or industrial or commercial development on that site (including site remediation and site preparation works, construction of utilities and construction of roads, bridges, stormwater/flood management works and trunk infrastructure) (ESLD Site).A construction site is a "large-scale construction site" if it is:
  • for construction of a building where a planning permit has been issued in relation to the site for a building that is greater than 3 storeys tall (excluding the basement);

  • the site size is more than 1,500m2 floor size (inclusive of all floors);

  • construction of premises that is predominantly for office use, or that is the internal fit-out of a retail premises;

  • construction of a premises that is predominantly for industrial or large format retail use;

  • construction of dwellings on an ESLD site associated with a large-scale residential development (for example, a retirement village) provided that a single entity is responsible for construction; or

  • construction of a building, warehouse or physical structure on an ESLD site associated with an industrial or commercial development.
A construction site is a "small-scale construction site" if it is not a "large-scale construction site" or an ESLD Site.

This category is likely to cover:
  • home renovations provided the property is fully vacated; and

  • construction of a dwelling on part of an ESLD site after subdivision occurs.

Density requirements 1A maximum of 10 workers per hectare at any one time. A maximum of the higher of:
  • five workers; and

  • 25% of the large-scale construction baseline daily workforce.


The baseline daily workforce is calculated based on the daily average number of workers on the site across the project lifecycle as derived from the site's resourcing plan as of 31 July 2020.
A maximum of five workers (excluding the site supervisor) at any one time.
Restrictions on movement between sites 2Employers must limit movement of all workers between multiple work premises other than:
  • specialist contractors who can move between three construction sites per week; and

  • exempt workers.
Employers must limit movement of all workers between multiple work premises other than:
  • specialist contractors who can move between three construction sites per week; and

  • exempt workers.
Employers must limit movement of all workers between multiple work premises other than:
  • supervisors who can move between multiple small-scale construction sites;

  • specialist contractors who can move between three construction sites per week; and

  • exempt workers.
Working from homeEmployers must not permit a worker to perform work at the construction site where it is reasonably practicable for the worker to work at the worker's place of residence or another suitable premises.
Other requirementsEmployers must:
  • ensure there is a compliant High Risk COVIDSafe Plan and Personal Protective Equipment Plan in place;

  • comply with record-keeping obligations;

  • comply with face coverings and cleaning requirements; and

  • comply with the density quotient and signage requirements.

Penalties apply to all ‘workers’ and ’employers’ (including those who own, operate and control the construction site) who fail to comply with the Stage 4 restrictions in relation to construction sites. This extends to contractors, principals and others with control over the construction site (for example, managing agents). Unlike the occupational health and safety legislation, it appears that owners are unable to delegate their duties to those with control over the site.

Failure to comply with a Direction without a reasonable excuse may attract up to 120 penalty units (approximately $20,000) in the case of a natural person or 600 penalty units in the case of a body corporate (approximately ($99,000).

What are the relevant Stage 4 restrictions for essential maintenance and repair works? 

Other forms of construction work are only permitted in limited circumstances.

  • For work premises, critical maintenance and safety works (including to satisfy environmental obligations) is permitted in accordance with the Restricted Activity Directions (Restricted Areas) (No 8). This applies regardless of whether the work premises are classified as “Permitted Work Premises” or “Closed Work Premises”.
  • For residential premises which continue to be lived in, emergency repairs are permitted in accordance with the Stay at Home Restrictions (Restricted Areas) (No 12). During the stay at home period, residents must not allow contractors to enter their home to perform construction work unless that work is urgent and essential. The DHHS website suggests this extends to urgent repairs which must be undertaken to keep members of the household safe, to prevent members of the household from injury, to prevent property damage or damage to goods, or for urgent repair to an essential service (for example a water connection or internet service).

Penalties apply to any ‘person’ who fails to comply with a Direction without reasonable excuse. This is likely to extend to contractors who perform unauthorised work and anyone who permits unauthorised work to be carried out on their property in contravention of the restrictions.

Failure to comply with a Direction without a reasonable excuse may attract up to 120 penalty units (approximately $20,000) in the case of a natural person or 600 penalty units in the case of a body corporate (approximately $99,000).

How does this impact on existing construction projects?

Construction contracts should be reviewed on a case-by-case basis to determine whether the contractor is entitled to additional time and/or costs in connection with Stage 4 restrictions. This needs to be examined in the overall context of the project, noting that Stage 4 restrictions may not necessarily cause a delay on the critical path if a major construction project is still in the design phase, or a preliminary phase where less than 25% of the baseline daily workforce would otherwise be on site.

If you require assistance navigating the Directions, get in touch with our Property Team.

 

For details of all our COVID-19 tips and updates, visit the Gadens COVID-19 Hub.

 


Authored by:

Andrew Denehy, Partner
Daniel Middleton, Partner
Rachel Ong, Associate

 

 


1 The density requirements do not apply to workers where it is reasonably practicable for those workers to work from home, undertaking emergency repairs and maintenance, carrying out cleaning requirements or assurance activities required under the Directions or suppliers or workers transporting supplies to the construction site where those workers are only on the construction site for such period of time as is reasonably necessary to deliver the suppliers to the construction site.

2 The restrictions on movements do not apply to exempt workers (i.e. specialists who provide safety services or those required to meet minimum statutory obligations or requirements, for example, auditors, building inspectors or surveyors).

This update does not constitute legal advice and should not be relied upon as such. It is intended only to provide a summary and general overview on matters of interest and it is not intended to be comprehensive. You should seek legal or other professional advice before acting or relying on any of the content.

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