Coronavirus (COVID-19)

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Coronavirus and the Law: Insights for SMEs

Learn about some of the legal considerations small businesses may want to explore in light of how your employees and operations may be affected by coronavirus.
Coronavirus and the Law: Insights for SMEs

Updated on 04/08/2020

Keeping up to date with the latest coronavirus guidelines and advice can be challenging. Perhaps even more challenging, though, is maintaining an awareness and understanding of all the legal implications coronavirus could have on your workplace.

Emergency measures such as the Job Retention Scheme and changes to commercial leasing laws have been implemented incredibly quickly, and this poses two key risks to business owners:

  1. Business owners may not be aware of the new legislation, and therefore not know how it could affect their operations.
  2. Legal grey areas may exist where new law, such as furlough law, may be incompatible or create areas of ambiguity when compared to existing law, e.g. the Employee Rights Act (1996).

To help you keep on the right tracks, in this article we’re going to take a look at some of the key processes and strategies you may want to consider to help avoid any legal complications as you lead your business through this difficult period. In this article, we’ll cover key information around commercial leasing, safety measures, and staffing laws.

1. Commercial tenants cannot currently be evicted due to missed payments

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It goes without saying that small businesses have been hit particularly hard by the aftermath of coronavirus. Having to introduce new cleaning measures, social distancing monitoring and operate workplaces with a reduced capacity of either staff or customers is incredibly tough, and SMEs often don’t have large cash flow reserves to depend upon when times become hard.

If a business is unable to meet its rental payments on a commercial lease under normal circumstances, it could well result in an eviction issued by the property owners. Under the extreme circumstances created by coronavirus, however, the government decided to ban the eviction of companies from commercial properties until June, initially. This was later extended until late September, which could potentially relieve some stress for owners of struggling small businesses.

What should I do if I’m concerned about missing commercial lease payments?

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Aside from doing the obvious; trying to make your business as successful and safe as possible, it may be worth actually opening up a conversation with your landlord to work towards a solution.

The likelihood is that your landlord wouldn’t want to evict you. It’s possible that through discussions with your landlord, it may turn out that they would rather renegotiate your contract in the short-term than have a vacant property. With prospects for some start-ups seeming gloomy under the current conditions, meaning less demand for commercial properties, it may be worth trying to work with your landlord to constructively renegotiate your rental agreement if your business is struggling under the current conditions.

2. Safety should be your number one priority

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We’re sure you’ve heard this already but we’d like to outline some of the legal reasons, as well as the moral reasons, that safety should be your number one priority.

Business owners have a legal responsibility to enforce coronavirus measures to keep both customers and employees safe. That means implementing the correct safety measures as outlined by the government, which include social distancing and thorough cleaning routines.

Not only would it be disadvantageous not to follow safety measures due to the risk of either yourself or your valuable team members falling ill, but the reality is that you’re also liable (as a business owner) if you choose to subject the public or your team to avoidable danger. This is made clear in the Health Protection Regulations 2020, which states that an officer (business owner, director, etc.) who does not comply with legal requirements to close down a business during mandatory lockdown or implement safety measures ‘is guilty of the offence and liable to be prosecuted and proceeded against and punished accordingly’.

It’s unclear exactly what the penalties are on a case-by-case basis, but it’s clear that there can be legal repercussions, such as significant fines, to anyone found to be in breach of health and safety law for not managing the risks of coronavirus in their business.

On a more personal note, the stress of worrying for your colleagues if they were to fall ill from working in an environment that you could have made safer could be crippling. So, it’s best to stick to the government guidelines and work hard to ensure that your workplace is as safe as possible. Some actionable steps for business owners include:

  • Updating your business’ ‘safety in the workplace’ policy to ensure that you’re meeting all of the official requirements that promote workplace safety. Exactly which measures are required may change from time-to-time, so it’s worth frequently checking the Government’s latest guidelines.
  • Sharing your business’ safety policy and important government updates with your wider team via email. By showing leadership in this area and ensuring there is complete visibility over the steps your business is taking to promote safety, you may encourage others to be more safety-conscious, and build trust amongst your employees.
  • Seek further advice if you’re unsure of the specific health & safety measures you may need to implement. Check out this step-by-step guide to workplace safety if you’re feeling any doubts about your own practices.

Some quick examples of workplace safety measures worth looking into include having a robust working from home policy that sees your employees feeling comfortable and safe, providing your team with PPE (such as masks, sneeze screens or gloves) if you’re in the office, and limiting the capacity of staff allowed in the office at any one time to make social distancing rules easy to follow.

3. Find the answers to any staffing questions you may have

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Staffing is complicated and, tragically, many businesses who are struggling are finding themselves having to renegotiate staff contracts and depend upon government support. Let’s take a look at some of the updates around furlough before hopping into some tricky FAQ’s that you may not yet know the answers to around staffing.

Learn the dos and don’ts of furlough

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Aside from brushing up on your general knowledge with a guide to furlough, it may be worth keeping up to date with the latest government guidelines on how the furlough scheme is evolving and changing.

Why’s that? Well, the rules associated with furlough, (the best-known of these likely being that furloughed employees cannot undertake any work for their employer), are actually a part of UK law. Breaking them could result in an employer being reported to HRMC’s Fraud Department- which isn’t likely to yield any positive consequences for the employer in question.

New changes to the furlough scheme happen quite frequently, such as the introduction of flexible furloughing which sees furloughed staff being allowed to return to work on a part-time basis while the government continues to pay 80% of salaries for the hours they don’t work.

In light of how quickly new measures can be introduced, it may be worth setting up a calendar reminder to read through all the government advice every couple of weeks to avoid breaking any laws that you may be unaware of.

Let’s take a look at some tough questions concerning staffing, coronavirus and the law.

Does coronavirus affect statutory sick pay?

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Yes. You may be able to claim back up to two weeks of statutory sick pay for any sick pay given to employees who have been ill with coronavirus. Read more here.

Can I explore temporary staffing arrangements?

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Also yes. It’s a real shame that the reality for a lot of businesses is that they are forced to renegotiate their employee contracts due to financial struggles. If you’re in this situation, it may be wise to keep a paper trail of all communications regarding staffing matters.

Having an email-chain record of communications between yourself and your team regarding any contracts you’re having to renegotiate is a smart way of ensuring transparency and helping to resolve any contract disputes quickly (say, for example, if a tribunal were to become involved).

The sorts of staffing arrangements you could explore go beyond simply making redundancies. Instead, you could:

  • See what government support you could be eligible for
  • Explore short-term staffing arrangements
  • Consider temporary lay-offs or temporary reductions in pay
  • Use redundancies if you have no other choice

Maintaining open and honest lines of communication with your staff will likely make handling staffing challenges a little easier if you’re concerned that you may not be able to retain all of your staff in the short-term.

What are the legalities around annual leave and lockdown?

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Your responsibility, as an employer, is to uphold most workers’ entitlement to 5.6 weeks of paid annual leave per year. This comprises four weeks derived from the EU’s Working Time Directive, and 1.6 weeks from the UK’s Working Time Regulations 1998.

That said, there may be a temptation for employees to want to hold their leave until the end of the year; thinking that there’s no point using up annual leave days during lockdown. This could, naturally, lead to some complications if many employees are looking to take time off simultaneously.

The best practice for businesses, then, may be to encourage your employees to use their annual leave proportionately as the year goes by. Perhaps asking your employees to take half of their annual leave by the end of summer would be reasonable. You can also legally compel your employees to take holiday (unless their contracts specify otherwise), as long as you provide notice that is twice the length of the holiday proposed- so eight days’ notice for four days of leave.

Looking to the future

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In this article, we’ve shone a light on some of the areas of your business that may require attention for legal reasons, due to the impact of coronavirus. Probably the most important tip we’ve looked at today is to keep up to date with the latest developments in government advice and support.

If you’re able to meet all the safety requirements and eliminate avoidable risks from your workplace, you may be able to use this as a part of your internal and external communications; showcasing your hard work to make your customers and employees feel safer when doing business with you.

Please note, the information provided here has been prepared by Esme Loans Limited for information purposes only and is subject to change from time to time. This information should not be treated as advice or a recommendation of any kind. The information shown may not be comprehensive and there may be other considerations relevant to you and your business and so it is imperative that you undertake your own independent research. Esme Loans Limited makes no representation, warranty, undertaking or assurance of any kind (express or implied) with respect to the adequacy, accuracy, completeness or reasonableness of the information provided and disclaims all liability for any use you, your business, your affiliates, connected companies, employees, or your advisers make of it.

Esme Loans Limited accepts no liability whatsoever for any direct, indirect or consequential losses (in contract, tort or otherwise) arising from the use of this material or reliance on the information contained herein. However, this shall not restrict, exclude or limit any duty or liability to any person under any applicable laws or regulations of any jurisdiction which may not be lawfully disclaimed.

How could Esme help?

These are difficult times for many businesses, so it’s important now more than ever, to take good care of yourself and your team. If you’re concerned about your business being impacted financially due to coronavirus, visit our website for information about how we may be able to support you.