MLP Law – COVID-19 – Frequently Asked Questions

Answers to some of the frequently asked questions we’re seeing across our practice areas.  If we can help and you need advice tailored to your particular circumstances, please get in touch.
 
As this is a fast moving area the advice is correct as at 24th April 2020. 

  1. Can I force employees to take annual leave during a period of furlough?
  2. What factors should I consider in deciding which employees to furlough?
  3. Can my employees on furlough leave do any work or training?
  4. What is Force Majeure and does it apply to my supplier or customer agreements?
  5. Do I need to agree a variation to an agreement in writing?
  6. Our business is struggling to pay rent as a result of the Coronavirus outbreak.  What options do we have?
  7. I have heard that our landlord cannot evict us from our business premises at present due to the Coronavirus outbreak.  Is this correct?
  8. Can I take a payment holiday from each of my suppliers?
  9. Why can’t a will be witnessed via video-conferencing or Skype?
  10. Can I still apply for a grant of probate during the coronavirus lockdown?

Employment FAQs 

Q. Annual leave – can I force employees to take annual leave during a period of furlough?

 Although the law isn’t crystal clear here, we are of the view that you can enforce annual leave during furlough, as you could under normal circumstances.  It should, however, be paid at 100% (rather than the 80% of normal salary associated with furlough), so employers should top up furlough pay during any annual leave to full pay.

To enforce annual leave you must provide double the amount of notice compared to the leave i.e. 1 week’s annual leave will require you to give 2 weeks’ notice to the employee. 
Employees are also to be allowed to carry over up to 4 weeks of their annual leave entitlement for up to 2 years.

Q. What factors should I consider in deciding which employees to furlough?

 It would appear that employers are being given huge leeway in determining which employees to furlough.  Provided an employee meets the criteria of the scheme (primarily requiring that they were on your PAYE system on or before 19 March 2020) and your reasons for choosing that employee are not discriminatory, you can tailor the benefits of the furlough scheme to suit the needs of your business.  It should be noted that records relating to employees who are furloughed should be kept for 5 years.

Q. Can my employees on furlough leave do any work or training?

 You can ask employees to help with any questions they have from team members still working. You can’t ask them to do anything that could give financial gain to the company. You can ask your employees to attend training sessions.

Corporate and Commercial FAQs 

Q. What is Force Majeure and does it apply to my supplier or customer agreements?

 A clause that allows the contract to be temporarily suspended in certain circumstances, isn’t always labelled force majeure though usually is.  Whether you have the right to exercise the force majeure clause in a particular circumstance is very strictly dependant on the exact wording of the clause.  Some refer to acts of government (or can be deemed to include acts of government) and even epidemics and pandemics. Some don’t.  If a force majeure clause failed to mention pandemics /epidemics as a force majeure event, then it is arguable that the force majeure clause would not apply. There is likely to be much discussion as a result of the Covid -19 pandemic on the construction of force majeure clauses: for instance  is a pandemic an Act of God? Our advice is that it is unlikely Corona virus will be held to be an act of God.  Unable to obtain a delivery of material due to borders closed and government enforced lockdowns can be said to be an act of Government.  In any case, a party relying on force majeure event must be subject to circumstances beyond its control  in which  no reasonable steps could have been taken to avoid or mitigate the supervening event e.g. a failure to follow COVID-19 government guidelines could be an example of a party not taking reasonable steps to mitigate risk of the supervening event. We have also advised clients to Consider Frustration (a supervening event affects the performance of the contract or the reason the contract had been put in place) and Supervening Illegality (a contract is discharged if its performance becomes illegal by English law) 

Q. Do I need to agree a variation to an agreement in writing?

 You’ve agreed, new delivery dates, timescales, pricing or the suspension of service for a month or two (subject to review).  How do you record and ensure that is formally recorded and binding on all parties?  This will depend on the terms of the original agreement.  Many (most) Agreements require any variations to be agreed and signed in writing by the parties.  In most cases if the parties behave and agree in accordance with the agreed variation then they will be deemed in high value / high risk contracts the variation would need to be put in writing and signed.  For most agreements, an agreement via email and or electronic signature will be enough.  Deeds and signatures required to be witnessed must still observe the rules of “being in the presence of”.   For most documents (except Wills and Property Contracts) doing this via video will be acceptable.  Particular formalities need to be observed for Wills and certain Property Contracts to be signed and witnessed.  We’ve attended a number of clients to witness documents using social distancing, glass doors and windows as appropriate and practical to keep all involved safe.  

Property and Financial FAQs

Q. Our business is struggling to pay rent as a result of the Coronavirus outbreak.  What options do we have?

 Under most leases, rent will continue to remain contractually payable in the same manner as before the outbreak.  It is also highly likely that contractually a landlord will be entitled to interest on unpaid rent under a lease.  If you are struggling to pay your rent, speak to your landlord or their agent at the earliest possible opportunity.  We are seeing a lot of landlords and tenants working together to come to a compromise which has benefits for both parties.  This could include extending the term of the lease or restructuring the rent payments in various ways.  The tenant benefits from breathing space due to lockdown restrictions and the landlord has the benefit of a tenant remaining solvent, paying rent and receiving what is owed to them under the terms of the lease.  We would advise that any terms which are agreed by a landlord and a tenant are properly documented in writing. 

Q. I have heard that our landlord cannot evict us from our business premises at present due to the Coronavirus outbreak.  Is this correct?

 Section 82 of the Coronavirus Act 2020 provides that a landlord cannot forfeit a lease (ie:  bring the lease to an end and evict a tenant) due to the tenant not paying rent at present.  Under the legislation, rent will include the annual rent, service charge, insurance rent and any other sum the tenant is liable to pay under the lease. This will remain the position until 30 June 2020, although the government will continue to monitor this timeframe as the outbreak develops. As always, there are exceptions to the rules and tenants on short leases of less than six months will not benefit from the protection afforded under section 82 of the Coronavirus Act 2020.  Landlords also do retain their other options available to them other than forfeiture, such as serving a statutory demand and litigating for the unpaid money owed.  As outlined above, we would advise you to speak to your landlord or their agent at the earliest possible opportunity to agree a compromise which works for both parties. 

Q. Can I take a payment holiday from each of my suppliers?

 In our experience most suppliers are happy to help set up a payment plan to lengthen out original payment agreements but they are not obliged to do this.  It is common and the choice is between helping and preserving the relationships where there has genuinely been a downturn in revenue for the customer(s) and protecting their own cash revenues.  Some companies are obliged to waive some enforcement options and rights such as landlords (though see above on other ways landlords may enforce the rent debt), Finance companies and Business Rates.  Even if you are not in a group benefiting from the council grants or rate reliefs it is worth asking the council to defer rate payments.

Wills, Trusts and Probate FAQs 

Q. Why can’t a will be witnessed via video-conferencing or Skype?

 There is currently no law that says witnessing a signature via video-conferring or Skype will count as “being in your presence”.  Although electronic signatures on contracts or deeds done through video or Skype are legally valid, witnessing a will is the exception.

Under the Wills Act 1837, it is not permitted to witness a Will via video conferencing facilities as both witnesses must be physically present. However, they may socially distance themselves from one another during the process as long as they are present and have clear sight of the signing process.

Q. Can I still apply for a grant of probate during the coronavirus lockdown?

Yes, you can still make applications to the probate registry during the lockdown period. With social distancing measures in place across the country, solicitors are no longer able to offer face to face appointments, however, these matters can be dealt with by telephone and postal communication.

Our specialists are still able to offer you advice and deal with your enquiries under the current circumstances. We can take instructions over the telephone, documents can be sent by post and we can also undertake a video-conference.  We will talk you through the process and what is required to get your application sorted as quickly and safely as possible. Once the application has been submitted the Probate Registry will action it and once granted, will send the sealed grant of probate to you by post.

You can then proceed to dealing with the administration of the estate upon receipt of the grant. This includes, closing accounts and collecting the funds from the estate, selling the property and paying liabilities.

If you have any questions or queries please here contact us on 0161 926 9969, or hello@mlplaw.co.uk.