Business owners: are you prepared for coronavirus?

The UK Government estimates that when the coronavirus peaks, over 6 million people may contract it and be unable to work. Businesses operating in areas / countries in lockdown have been forced to suspend their operations or find alternative means of working. Also, some businesses have experienced major challenges and cashflow difficulties on account of, for example, deliveries from China being cancelled or delayed or customers in quarantined areas failing to pay.

In this article, we consider what a business may be able to do in order to prepare for and mitigate against the disruption.

Check your contracts with customers and suppliers

A review of your contracts is strongly advised to see whether you are able to suspend or terminate the contract even though it has not been performed as a result of the coronavirus outbreak. For example, check whether the force majeure clause (assuming that your contract has one), enables you to be excused from performing the contract without incurring any liability in the above scenario. Where you are negotiating a new contract with another party ensure that the force majeure clause is fit for purpose, for example that it specifically mentions “COVID-19” as a force majeure event, or where it is not, that action taken by a government on account of an epidemic has made it no longer possible for your business to perform its obligations under the terms of the contract.

Staff

Managing staff absences

People are being advised to self isolate (stay at home and avoid contact with other people for up to 14 days) and phone the NHS on 111 where:

• they have returned to the UK within the last 14 days from a country which has been listed by the Government as a category 1 area/country (which from 9^th March includes Italy), even if they do not have symptoms;
• they have returned to the UK within the last 14 days from a country listed as a category 2 area/country (essentially certain countries in the Far East), where they  have a cough, high temperature or shortness of breath, even if their symptoms are mild;
• they have been in close contact with another person who has caught the virus.

The Chancellor, Rishi Sunak, has announced in the budget that staff will be entitled to statutory sick pay from the first day that they are off work due to the coronavirus and that employers with fewer than 250 employees will be refunded for the first 2 weeks’ statutory sick pay.

Staff with children whose schools are closed or with elderly relatives who have caught the virus may need to take time off work to look after them, in which case they may be legally entitled to some unpaid leave. There is no statutory right to have paid leave but employers might offer paid leave depending on what their employment contract or workplace policy states. The amount of time off in this scenario must be reasonable (for example 2 days), after which they could claim it as part of their holiday entitlement if needed.

Office closures

We currently remain in the containment stage of the Government’s response to the coronavirus (being the first stage of four). The Government is advising that it is not recommended that the workplace is closed if a member of staff (or member of public) with the coronavirus has recently been at the workplace. Some firms have however decided to close down their offices where this arises, in which case staff may be entitled to full pay unless their employment contract states otherwise.

Remote working

As the number of people catching the virus rises exponentially, we could be moving into the next stage of the Government’s response; the delay stage which involves school closures, cancelling or postponing large gatherings such as sports events and concerts and encouraging people to work from home. In fact, we are already seeing a gradual ramp up of restrictive measures along these lines being implemented independently.

Consequently, you may want to facilitate working from home where possible and test that your IT system (including laptops) works effectively. The ability to conduct video conferences may become essential. Consider having a trial day where employees work from home to test that the software, video conferencing and microphones work properly.

Action points:

• Make sure you understand your employees’ contractual and statutory rights and review your employment contracts and workplace policies.
• Consider, in particular, how much your staff should be paid for being absent and for how long.
• Where work may be undertaken at home, for example where a member of staff has self-isolated but has no symptoms or is only mildly affected, check your firm’s remote working policy or, if you do not have one, put one in place.
• Clearly communicate with staff what steps your company is undertaking in relation to reduce the risk of exposure in the workplace and keep them updated.
• Highlight to staff the company’s sickness policy and remote working policy.
• Ensure that you have up to date contact details for staff in the event of an emergency.

Insurance

Check your company’s insurance policy for whether it is protected against lost income due to the outbreak. Coronavirus (or COVID-19) may need to be specifically included as a “notifiable disease” and you may have to pay an increased premium for this.

Cashflow

Those businesses who may face subdued demand and temporary cashflow issues may want to consider the following:

• Take advantage of the HMRC’s Time To Pay scheme – enabling you to pay tax in instalments, where you are concerned about failing to pay your tax bill on time.
• Invoice insurance to protect your business against a customer’s failure to pay for services / goods supplied so that you are paid regardless of a change in your customer’s circumstances.
• Invoice / asset finance.

The following measures have been introduced in response to the coronavirus:

• Banks such as NatWest, Barclays and Santander are offering emergency loans to businesses.
• The Government has also announced the following in the budget:
  1. Small firms will be able to access business interruption loans of up to £1.2m.
  2. Business rates will be temporarily abolished up to the end of the year for businesses in the retail, leisure and hospitality sectors with a rateable value below £51,000.