Employer's Risks: FIDIC Clause 17.3 Notice Guide
This guide walks through FIDIC Clause 17.3 — the list of Employer's Risks under the 1999 Red Book — and Sub-Clause 17.4, which sets out what the Contractor actually recovers when one of those risks damages the Works or delays completion.
War, an Employer's early occupation of finished sections, a design the Employer's own personnel supplied — these sit outside the Contractor's control, but FIDIC does not treat them the same way. Six of the eight named risks pay Cost only; two pay Cost plus profit. Getting that wrong means the notice either under-claims or over-reaches. This guide covers what the eight risks are, why the entitlement splits, and how to draft a notice that survives scrutiny.
What Clause 17.3 Covers
Sub-Clause 17.3 of the 1999 Red Book lists eight events and circumstances the Contract treats as Employer's Risks — meaning the Employer, not the Contractor, bears the consequences if one of them damages the Works, Goods, or Contractor's Documents, or delays completion:
- War, hostilities (whether declared or not), invasion, or act of foreign enemies
- Rebellion, terrorism, revolution, insurrection, military or usurped power, or civil war within the Country
- Riot, commotion, or disorder caused by persons other than the Contractor's Personnel
- Munitions of war, explosive materials, ionizing radiation, or radioactive contamination, except as attributable to the Contractor's own use
- Pressure waves caused by aircraft or other aerial devices travelling at sonic or supersonic speeds
- Use or occupation by the Employer of any part of the Permanent Works, except as stated in the Contract
- Design of any part of the Works by the Employer's Personnel, or by others for whom the Employer is responsible
- Any operation of the forces of nature that is Unforeseeable, or against which an experienced contractor could not reasonably have been expected to take adequate preventive precautions
The first five sit close to Force Majeure or Exceptional Event territory — war, terrorism, radiation — but Clause 17.3 treats them as risk allocation for damage to the Works, separate from the broader relief from performance under Clause 19 (1999) or Clause 18 (2017). The last three are mixed: unforeseeable natural forces is another shared, no-fault risk, while the Employer's own use of the Works and Employer-supplied design are things the Employer itself did or chose, not external catastrophes.
Key Takeaway: Employer's Risks cover eight distinct events. Six are shared, no-fault risks — war, terrorism, riot, radiation, aircraft pressure waves, and unforeseeable natural forces. Two — the Employer's own use of the Works and design supplied by the Employer's Personnel — are risks the Employer created directly.
The Entitlement: Time, and Sometimes Profit
Sub-Clause 17.4 sets out the consequences, and the entitlement is not a single figure that applies across all eight risks the same way.
If the Contractor suffers delay from an Employer's Risk event, or incurs Cost rectifying loss or damage one of them caused, the Contractor is entitled — subject to notice under Sub-Clause 20.1 — to an Extension of Time under Sub-Clause 8.4. That part is uniform. Cost recovery is where the clause splits. War, terrorism, riot, munitions and radiation, aircraft pressure waves, and unforeseeable natural forces give Cost only — shared, no-fault risks that neither party profits from putting right. The Employer's use or occupation of the Works, and design provided by the Employer's own Personnel, are different: the Contractor recovers Cost plus reasonable profit, commonly cited at around five percent. These two are not shared risks — they are things the Employer itself did, so it is treated as at fault in a way it is not for a riot or a radiation leak it did not cause.
Key Takeaway: Every Employer's Risk event supports an Extension of Time. Cost recovery splits: war, terrorism, riot, radiation, aircraft pressure waves and unforeseeable natural forces get Cost only. The Employer's own use of the Works and Employer-supplied design get Cost plus reasonable profit, because those two are risks the Employer created rather than shared no-fault events.
When to Notify
The notice mechanism runs through Sub-Clause 20.1, the same procedural gateway that governs every FIDIC claim. The Contractor must give notice within 28 days of becoming aware, or when it should have become aware, of the event or circumstance giving rise to the claim. A prudent timeline:
- Day of awareness — log the precise event, the sub-paragraph of 17.3 it falls under, and why
- Within 28 days — formal notice under Clauses 17.3, 17.4 and 20.1, stating whether time, Cost, or Cost plus profit is being claimed
- Within 42 days — detailed particulars, including the classification evidence for the specific sub-paragraph relied on
- Monthly thereafter — updates for as long as the loss, damage, or delay continues to develop
Some Employer's Risk events are a single moment — a pressure wave, an act of occupation. Others run for weeks — an extended occupation, an unresolved security incident. Where the event is ongoing, the 28-day clock still starts when the Contractor realises it will affect the Works, not when the event ends. Waiting to see how bad it gets before notifying is the most common way a 17.3 claim is time-barred.
Key Takeaway: The 28-day clock runs from awareness of the event's effect on the Works, not from when the event ends. An extended occupation or an ongoing incident still needs a notice within 28 days of the Contractor realising it will cause delay or Cost, followed by updates as the position develops.
Evidence You Need
A Clause 17.3 claim is won or lost on these evidence trails:
- Classification evidence — which sub-paragraph of 17.3 applies, and the specific facts that fit it. This decides which entitlement is available before anything else is considered
- Loss or damage records — photographs, site diaries, and a damage assessment showing what was affected and to what extent
- Act-of-Employer evidence — for a use-or-occupation or design claim specifically, the date and area the Employer occupied, or the design document and who at the Employer's side issued it, since this is what unlocks profit on top of Cost
- Cost records — rectification cost, labour, plant, and materials actually incurred, kept separate from the ordinary cost of the Works
- Programme impact — an analysis linking the event to specific delayed activities, not a general assertion that the programme slipped
Classification evidence is the step Contractors skip most often — "the Employer moved in early" feels obvious in the moment. Written down and pinned to the correct sub-paragraph, it tells the Engineer which entitlement applies before the Cost figures are even discussed.
Key Takeaway: Classification evidence decides which entitlement is available. For a use-or-occupation or design claim, keep the paper trail that proves the Employer's own act — an occupation date, a design instruction bearing the Employer's Personnel's name — because that is what unlocks profit on top of Cost.
How to Structure the Notice
A robust notice should include:
- References to Clauses 17.3, 17.4 and 20.1 — the substantive entitlement and the procedural anchor
- The specific sub-paragraph relied on — stated by letter or description, not just "Employer's Risk" in general
- A precise description of the event — including date, location, and what happened
- What was lost, damaged, or delayed as a direct result
- Time reserved, and Cost — with profit reserved only where the use-or-occupation or Employer-design ground applies
- Confirmation of 42-day particulars — with a note that the claim may continue if the event's effects are ongoing
Specificity carries this notice. "The Employer took possession and beneficial use of the completed Substation Building on 14 August 2026, ahead of the Taking-Over Certificate and without agreement recorded under the Contract" is verifiable in an afternoon. "The Employer has been using parts of the Works" is not.
Key Takeaway: Name the specific sub-paragraph and event precisely, state what was lost or delayed, and reserve profit only where the Employer's own act — occupation or design — is the ground relied on. A notice that identifies the exact sub-paragraph moves faster than one that just says "Employer's Risk."
Common Mistakes With 17.3 Notices
- Claiming profit under the wrong sub-paragraph. Profit applies only to the use-or-occupation and Employer-design grounds — claiming it for war, riot, or radiation asks for something the clause does not provide.
- Not identifying which sub-paragraph applies. A notice that says "Employer's Risk" without saying which of the eight events it is invites the Engineer to reject it for lack of substance.
- Confusing this with Force Majeure or Exceptional Event. War and terrorism appear in both, but 17.3 allocates risk of damage to the Works while Force Majeure relieves a party from performance generally. The wrong clause weakens the claim's credibility.
- Confusing this with weather delay under Sub-Clause 8.4(c). Adverse weather has its own, separate time-only mechanism and is never an Employer's Risk Event.
- Late notice. Waiting to see how an ongoing event develops, and missing the 28-day window from awareness.
- No act-of-Employer evidence. Claiming profit under the occupation or design grounds without the specific date, area, or document that proves the Employer's own act.
Key Takeaway: The recurring errors are claiming profit under the wrong ground, failing to identify the specific sub-paragraph, confusing this clause with Force Majeure or weather delay, late notice, and missing the act-of-Employer evidence that profit claims depend on.
Frequently Asked Questions
What does FIDIC Clause 17.3 actually cover?
Sub-Clause 17.3 of the 1999 Red Book lists eight events and circumstances the Contract treats as Employer's Risks: war and invasion; rebellion, terrorism, and civil war; riot or commotion by persons other than the Contractor's Personnel; munitions, explosives, or radiation; pressure waves from aircraft; the Employer's use or occupation of the Permanent Works; design supplied by the Employer's Personnel; and unforeseeable operations of the forces of nature. If one of these damages the Works or causes delay, the Employer bears the consequences rather than the Contractor.
Does every Employer's Risk event entitle the Contractor to profit?
No. All eight support an Extension of Time where they cause delay, but Cost recovery splits. War, terrorism, riot, munitions and radiation, aircraft pressure waves, and unforeseeable natural forces get Cost only. Only two grounds — the Employer's own use or occupation of the Works, and design supplied by the Employer's Personnel — get Cost plus reasonable profit, since those are risks the Employer created rather than shared, no-fault events.
What's the difference between an Employer's Risk and Force Majeure or an Exceptional Event?
They overlap on some named events — war and terrorism appear in both — but serve different purposes. Clause 17.3 allocates the risk of damage to the Works and the resulting Cost and time consequences. Force Majeure (Clause 19, 1999) or an Exceptional Event (Clause 18, 2017) is broader: it can relieve a party from performing its obligations altogether, and in some circumstances lead to termination. Cite the clause that actually matches what happened and what relief is sought.
What is the notice deadline for a Clause 17.3 claim?
The same 28-day rule that governs every FIDIC claim applies, running through Sub-Clause 20.1: notice must be given within 28 days of the Contractor becoming aware, or when it should have become aware, of the event and its effect on the Works. Detailed particulars follow within 42 days under the 1999 Red Book, with continued updates for as long as the event's effects are ongoing.
Where did Employer's Risks move to in the FIDIC 2017 Second Edition?
The 2017 Second Edition restructured Clause 17. The Employer's Risks list is folded into Sub-Clause 17.2 (Liability for Care of the Works) rather than sitting in its own 17.3, and 17.3 in the 2017 numbering covers a different subject, Intellectual and Industrial Property Rights. Always confirm numbering against the specific edition and any Particular Conditions in play.
Authoritative Sources
This guide reflects the FIDIC Conditions of Contract and established construction-law authority. For the primary materials, see:
- FIDIC Conditions of Contract — the official contract suite published by the International Federation of Consulting Engineers, which sets out Sub-Clause 17.3 (Employer's Risks) and Sub-Clause 17.4 (Consequences of Employer's Risks).
- FIDIC 1999 Books — Commentary on Clause 17 — a practitioner commentary on Clause 17, including the Cost-only versus Cost-plus-profit split between the Employer's Risk grounds.
About the Author
Muhammad M. Jiwani is a Project Director with 15 years' experience on major infrastructure and energy projects administered under FIDIC contracts. He writes from first-hand experience serving notices and managing contractual claims on live projects.