We must agree on what counts as an emergency

Businesses must understand their rights and obligations in circumstances of delayed or failed performance ‘beyond their control’, say Alison Rochester and Rebecca Nicholson

The UK government believes that up to a fifth of the workforce may be off sick during the peak of a coronavirus epidemic. It remains to be seen whether coronavirus will affect that volume of people, but there are already clear signs of how it is disrupting the dayto-day operations of businesses in the UK and rest of the world.

Many businesses are quite rightly starting to review their key commercial contracts to assess their risk exposure and understand their rights and obligations in circumstances of delayed or failed performance. A key provision within contracts will be that which excuses performance for events beyond a party’s reasonable control. In the Uk,wecommonlyadoptthefrench term – force majeure – to describe such events.

Force majeure translates as “superior force” and has no recognised meaning in English or Scots law. Whether or not coronavirus (or the actions taken to prevent its spread) constitute a force majeure event capable of excusing performance will therefore depend on how force majeure is defined in your contract and the facts and circumstances surrounding the delay or failure.

While identifying whether the event is in fact one of force majeure is necessary to understand whether performance is excused, it may not be the end of the story. There will likely be specific requirements that must be complied with around notifying the other party of the force majeure event. There is also usually a requirement for the affected party (or both parties) to take reasonable steps to reduce or avoid the effects of the force majeure event.

Furthermore, the consequences of invoking force majeure provisions vary. In addition to excusing a party’s performance, force majeure clauses may also remove a party’s liability for the failure or delay, or ultimately result in termination of the contract. While force majeure provisions are helpful tools in extreme circumstances, they can be very onerous for the affected party to comply with and can have significant longer-term consequences.

Turning to workforce issues, employers should familiarise themselves with UK government advice, focused [at time of writing] on self-isolation to prevent the spread of the virus. The closure of premises is not currently recommended, even where there is a confirmed case involving an employee or member of the public. However, employers have a duty of care to employees,whichincludesadutyto keep work premises safe. Employers may choose to close or restrict access only to business-critical functions. Disaster cascade protocols and remote working capabilities should be reviewed.

Organisations should also look at updating business travel policies as a matter of urgency. Travel to a Category 1 area should be cancelled, and travel to Category 2 countries should only be authorised in business-critical circumstances. Some employers are going a step further by restricting all but essential travel and attendance at conferences and events, within or outwith the UK.

The ‘containment’ phase of the UK government action plan could include school closures and encouraging remote working. Employers should ensure employees are able to log on at home and have adequate facilities to do so. If schools close, employees will be entitled to unpaid time off under regulations that provide breathing space to allow working parents to deal with an ‘emergency’.

If a school closure is prolonged, however, it arguably stops being an emergency and the onus will be on the employee to organise alternative childcare. However, taking an overly narrow view of what counts as an emergency is likely to be counter-productive.

If the workplace is closed as a precautionary measure, and staff are unable to work remotely, they should be paid as normal. Those who are ill or self-isolating will be entitled to statutory sick pay (SSP), or any enhanced sick pay offered by the employer. SSP is normally payable from the fourth day of absence. However, the UK government has announced emergency temporary legislation, which means SSP will be paid from day one. If the spread of the virus accelerates, imposing a ‘no-pay’ position could be overly strict, and affect staff morale. Employers should be understanding but consistent in their approach.

Employers should communicate all policies, practices and arrangements clearly. They should also consider how to communicate information about a confirmed case to ensure confidentiality is maintained and any communication is in line with GDPR obligations, as data concerning health is ‘special category data’.

Alison Rochester is a senior associate, trade and commerce; Rebecca Nicholson is an employment solicitor, Shepherd and Wedderburn