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Whilst the National Cabinet currently considers the construction industry as an 'essential service' for the purposes of the Government's Coronavirus (COVID-19) response, there is growing speculation regarding the potential shutdown of, or other limitations being placed on, construction sites as part of increasing COVID-19 restrictions. The Irish government has recently directed the cessation of all construction works, except where specifically related to the COVID-19 response.

In the current economic climate, the Government is understandably reluctant to place restrictions on the construction industry which comprises AUD 165 billion worth of commercial and infrastructure projects, accounting for 10% of Australia's GDP. More importantly, such restrictions would have a significant impact on the 1.2 million people (9.1% of the Australian workforce) employed by the construction industry. In fact, the Australian Financial Review has reported the shutting down of building sites could spark monthly claims of up to AUD 2 billion dollars between Contractors and Principals.

Even if the Australian Government keeps the construction industry open and without further restrictions, the industry is already experiencing adverse impacts due to COVID-19, for example due to illness of workers, significant absenteeism over concerns of contracting the virus, compliance with social distancing measures, general restrictions on travel and closure of interstate and overseas borders.

This alert considers the position faced by the Australian construction industry in the wake of the COVID-19 pandemic and examines its status as an 'essential service' by reference to the approaches taken by foreign governments. It also outlines both the key provisions of typical construction contracts and relevant common law entitlements which may be applicable to Principals and Contractors in the event that governments place restrictions on construction sites.
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