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Business owners' top legal questions about coronavirus answered

Business owners' top legal questions about coronavirus answered
Alice Stephenson
Alice Stephenson
Stephenson Law
 

Posted: Fri 20th Mar 2020

The repercussions of the global spread of the coronavirus are already being felt with cancelled events, delayed services and unpaid invoices mounting up.

With the expected "peak" of UK cases to come in the next few weeks, the worry is that a large number of employees will soon not be able to work. Additionally, home working is likely to become compulsory where possible and needs to be managed properly and effectively.

With that in mind, we've tried to answer some of the more commonly asked questions about the impact COVID-19 is having on business. Do bear in mind, however, that the situation is constantly evolving - we'll do our best to keep up, but always check official UK government websites for the latest advice.

Payment

What should you do if you can't pay suppliers or customers can't pay you?

First, you need to check the contract for a Force Majeure clause. It gives one or both parties additional time to complete their obligations if unforeseeable events, which are completely outside their control, prevent them from doing so.

It's important to note that a Force Majeure clause will usually not allow a party to escape their obligations completely, but only for a limited period of time until the Force Majeure event has passed.

Not every contract will have one and not every Force Majeure clause will offer a solution. But if you do find a Force Majeure in the contract, here's what you need to check:

  • Whether coronavirus falls within the scope of the clause (look for "epidemic", "pandemic", "infectious disease", or some combination of these)

  • What is the effect of the clause - who has the right to rely on the clause and for how long?

  • What procedures you need to follow - are you required to give notice and when?

If there's a Force Majeure clause, and you're confident it applies to the circumstances, then comply with it - whichever side of the obligation you're on.

Failing to allow the other party to rely on a Force Majeure clause may be a breach of contract. If you're not sure of the applicability of the Force Majeure clause, then seek legal advice as soon as possible.

What if there's no Force Majeure clause?

If there's no Force Majeure clause and you really can't meet an obligation due to the coronavirus the first thing you should do is communicate with the other party. Let them know and explain the situation.

This is also a good time to seek legal advice, especially if the liability is considerable - there are other possible options which can be explored but these will very much depend on the circumstances of the contract.

Redundancies

What's the best approach if you think you might have to make redundancies?

Whilst, of course, everyone hopes things return to normal as soon as possible, it's inevitable that there will be some economic headwinds and cash flow disruption to deal with as the pandemic sweeps through the UK and the wider world.

If your business is so badly affected that you need to think about reducing employee numbers, at least in the short term, you need to carefully consider what action you take.

The government is putting together an evolving set of contingency plans and funding options for those companies struggling under the effects of the restrictions being put in place. You should explore these and seek help as early as possible to avoid getting into the position where redundancies are the only option left.

However, if things do get so bad you feel you need to make redundancies, this is a very delicate situation, which must be managed well to avoid any future claims for unfair dismissal. If you find your business in this position, you should seek legal advice as soon as possible, as there are stringent, required periods of consultation and selection procedures which must be followed.

Communicating with staff

Can you ask employees how they are feeling?

Of course you can! COVID-19 symptoms aside, homeworking can be solitary and it seems likely that this will be the norm for some time. It's really important to check in with your staff (we have the technology!), to maintain that sense of togetherness and to detect whether their mental health is being affected. There's some great guidance from Mind on this.

But data protection draws a line. The principle of data minimisation means that you can't ask for more personal data than you need. In reality, your staff are going to tell you if they're feeling iffy or you're going to pick this up through communicating with them. Asking staff to regularly complete health questionnaires and report their vital signs? Depending on the nature of your business. That's probably a step too far and you won't get away with this "because of COVID-19".

Do you need consent to collect health data about staff?

No. There are issues with consent in an employment context anyhow - the general rule being that consent is likely to be invalid given the imbalance in the employer-employee relationship.

However, when it comes to health data (which falls within the definition of "special categories of personal data" under the GDPR), you need to have a lawful basis for collecting it (called an 'Article 6 ground') and you need to satisfy a further condition (called an 'Article 9 condition').

In terms of Article 6 grounds, the most relevant is where the processing is necessary to comply with a legal obligation (Article 6(1)(c). Employers owe a duty of care towards staff when it comes to their health and safety including: under the Health and Safety at Work etc. Act 1974, which establishes the general duty of care; and the Management of Health and Safety at Work Regulations 1999, which, among other things, requires employers to assess risks on an ongoing basis and implement effective health and safety measures to protect staff.

In terms of Article 9 conditions, the most relevant is where the processing is necessary to carry out obligations and exercising rights (of both the employer and staff) in an employment context.

Although the government's guidance is that employers should use their discretion around the need for medical evidence to reduce the burden on GPs.

In life and death situations, you may need to rely on the vital interest ground and condition.

Again, the keyword is "necessary" - don't ask for more personal data than you really need.

Do you need to provide any notices to staff?

Your staff "fair processing" or "privacy" notices should already contain information about the need to collect health data in certain circumstances and the legal grounds and conditions relied upon you for doing so. If they don't, then now would be a good time to update them and share them with staff. If they do, a reminder never hurts.

Can you tell other staff members if a colleague contracts COVID-19?

Word is likely to spread quickly anyway, particularly in smaller organisations, but as an employer, you have a duty to keep any information about any staff member's health status confidential. This doesn't mean that if you still have staff in the office, you shouldn't warn them that a colleague has contracted COVID-19, but you don't really need to name them.

Sick pay

What should you do about sick pay?

It looks like there's going to be a considerable number of people who are going to get ill with the coronavirus or who are going to have to care for sick family members or children whose schools have closed. Both employer and employee are going to have to be flexible and constructive, so dialogue will be vital.

In terms of sick pay, your employment contracts may have sick pay provisions, which you'll need to comply with. Additionally, UK statutory sick pay (SSP) is a legal minimum amount of sick pay (currently £94.25 per week) available to all employees who earn more than £118 per week.

After changes announced in the recent UK government Budget, SSP for Coronavirus will be handled differently to normal SSP. Employees will be eligible from day one rather than day four, and will be eligible not only if they are sick, but also if they're self-isolating for the designated period. You should accept that those who self-isolate with symptoms may not be able to obtain a doctor's note under the current circumstances.

Helpfully, the UK government also announced that small businesses with fewer than 250 employees will be able to reclaim the SSP they have to pay out for Coronavirus, for up to two weeks per employee.

All of these changes to SSP are still being finalised, but you should comply with them now, and keep an eye out for further announcements from the Department of Work and Pensions.

Homeworking

Are there any data protection risks of homeworking?

Any change in circumstances, which require people to work in a different way is likely to heighten data protections risks.

Data protection law requires you to implement appropriate technical and organisational measures to ensure the security of personal data, which includes the confidentiality, integrity and availability of such data. In terms of what is "appropriate", this depends on the nature, scope, context and purposes of the processing of personal data by you.

Can you monitor what staff are doing with their time?

This is a tricky one. Some organisations may feel like they have been forced into trusting their staff to work diligently from home. Putting trust to one side, it's clear that no two people are the same and while some staff members will thrive from working at home, others may struggle and be less productive.

Data protection law doesn't prevent employee monitoring per se. However, any kind of monitoring must be necessary and proportionate.

Alice, the author of this post, is offering small business owners free 30-minutes consultation. You can connect with her through her Enterprise Nation profile. You can find our more about the government support that's available and advice and offers on Enterprise Nation's coronavirus hub.

 
Alice Stephenson
Alice Stephenson
Stephenson Law
 
We are a specialist, independent law firm doing things differently. Adept, adaptable, commercially minded and customer-focused, we provide common sense support to clients in the area of law we are excellent in – commercial contracts
 

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