Shortage of farm labourers: Your contractual position

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Shortage of farm labourers: Your contractual position

Shortage of farm labourers: Your contractual position

It’s no news that UK farms are facing a massive shortage of labour as a result of BREXIT, with a serious risk to harvests. If you think that your crops may be not be picked, and your deliveries made on time – a problem which will itself be exacerbated by the similar shortage of lorry drivers – then you need to look at your supply contracts with your customers. There may, to borrow from the old song, be trouble ahead.

Can I claim force majeure?

After the last 18 months you will all be familiar with the concept of force majeure (FM), which may give a penalty-free excuse for non-delivery of goods, but it’s extremely unlikely that shortage of labour will count as FM. As always, it depends on the exact wording of your contracts, but in general the definition of FM specifically excludes shortage of labour, goods, materials or utilities. So even COVID might not have given you a FM situation, but BREXIT will definitely not count as FM.

For a situation to be FM it has to be the fault of neither party, something they have no control over, and unforeseeable. The likelihood of the mass return of immigrant labour was never unforeseeable from the minute the result of the referendum was announced. So you will probably find that your contracts with your customers give you no relief, and that failure to deliver your crops because of labour shortage will put you in breach of contract. Breach of a fundamental term of the contract – handing over the crops in exchange for payment – will give your customer both the right to claim damages for their losses and the right to terminate the contract. So not only will you be compensating them for the non-delivery of this year’s crop, but you won’t have a contract for future years either. The outlook is inexpressibly bleak.

Can I claim frustration of contract?

Very unlikely. The excuse of “frustration” for a contract to be rendered null and void requires the whole purpose of the contract to be frustrated, not just one party’s ability to carry out their obligations.

What can I do?

It is essential that you talk to your customer as early as possible.

See if you can negotiate improved terms, maybe a reduction in damages, or agreement for a different delivery date, or smaller amounts. The boot is not entirely on their foot, as they need your output to fill their shelves, but the sooner you talk to them the easier they will find it to work out an alternative or additional supply, and the lower their losses will be. They are required to keep their losses to a minimum, but if you don’t talk to them they won’t have the opportunity. Whilst a contract is legally binding, any deal can be altered if the parties agree. And if you’re not certain, or are worried about what the contract means, ring us. We’re here to help.

Get in touch

If you have any queries relating to this article, or require any advice on issues you may be facing in the construction sector, please contact Derryn Rolfe