With so many businesses having to make huge adjustments to their operations to comply with COVID-19 related restrictions, the legal issues associated with such adjustments were outlined very comprehensively by a team from Holmes O’Malley Sexton at a recent webinar organised by Shannon Chamber. The topic was so relevant that it attracted an online audience of almost 80 companies from throughout the region.
Topics discussed during the webinar included business interruption insurance, layoffs and redundancy, contracts and contentious issues that may arise, employers’ liability and, commercial tenancies. The Holmes O’Malley Sexton team, which included company partners Michael Murphy, Pat McInerney, Robert Kennedy, Sandra Egan and solicitor Caitlin Lowe, gave attendees an extremely insightful review of each of these areas.
Takeaways from the webinar included advice on the need for companies to carefully look at their insurance policy to see if it covers insurance for disease as this might indicate that they may be covered for pandemic-related business interruption.
“It’s a very contentious area,” advised Michael Murphy.
“Some insurance companies are not entertaining claims linked to closure caused by the pandemic as it’s not in the scope of infectious diseases with social distancing not a cause for cover. Some claims that will arise will be straightforward but many more will be very contentious. We could find insurance companies putting in onerous exclusions at renewal time to avoid exposure to any such repeat occurrences,” he added giving small comfort to the companies that were tuned in online.
With regard to layoffs, which many companies are being forced to do due to their being classed as non-essential or, for those who are classed as essential, reduced workflow may also lead to layoffs, Pat McInerney, an expert in this area, advised companies that layoffs, must be temporary, with no time limit. While the law states that reasonable notice must be given to employees, in the case of sudden closures due to COVID-19, where many shutdowns happened suddenly, companies will not be penalised for lack of notice period. Regarding redundancies, which can be sought after a four-week layoff, this right has been suspended during COVID-19. Where short time is being required of employees or a selected number of employees are required to return to work during the pandemic, companies need to be careful how these employees are selected.
“Companies must have robust selection criteria in place so that the employee who is being asked to work shorter hours or required to return to work, is selected based on a definitive set of criteria. The old rule of last in first out is too crude a means of selection,” he stated.
On the issue of contracts, which many companies, particularly construction companies, may have signed before the pandemic, the order to close suddenly will have had a profound impact on contracts, forcing delays resulting in many companies unable to perform their contractual obligations.
“We have witnessed a surge in demand for legal advice in this area as contractors and contracting companies want to avoid claims due to being required to comply with a government order,” stated Caitlin Lowe.
“This is where the Force Majeure clause comes into play. This is a very important clause to have in a contract as it temporarily exempts one or both of the parties to a contract from their contractual obligations where an “act of god” or other event beyond the parties’ control intervenes. However, in this instance, the clause must provide for pandemics. Given that this is an unprecedent occurrence, we would need assurance from Government that the pandemic can be declared as a Force Majeure. It is crucial therefore for all parties to review the wording of all contracts and to seek legal advice where necessary,” added Ms Lowe.
Covering the area of employers’ liability, Robert Kennedy said that employers’ duties to their employees are the same regardless of where the employee is working from.
“The safety, health and wellbeing of employees has to remain paramount no matter where they work. This extends to protecting them from infection in instances where the company is considered an essential service. While employers cannot physically visit the home of every employee, they have a duty of care to ensure that the employee’s working environment is safe and that they are taking necessary breaks. Keeping an open line of communication will employees is key,” he added.
Commercial tenancy was the final topic during the webinar with Sandra Egan outlining the key points of relevance from the landlord and tenant perspectives.
“Engagement and forbearance are essential in all instances,” she stated.
“Consideration can be given to a number of options: deferral of rent, extending the term of the lease, renegotiating the terms of the lease, break clauses, or rent review provisions. Both parties may be facing cash flow difficulties so a balance must be struck as to the best way to resolve. While the Public Health COVID-19 Act 2020 has been enacted to avoid evictions for residential tenants, there is no similar provision for commercial tenancies and that’s why engagement and forbearance is necessary.”
Thanking Holmes O’Malley Sexton for sharing their vast expertise with Chamber members via webinar, Shannon Chamber CEO Helen Downes added: “The presentations were outstanding in their content and in the way the knowledge was imparted to attendees. While time was limited and several questions raised by the attendees were answered, the Holmes O’Malley Sexton team are available to respond to any follow-up requests attendees might have. We look forward to our next webinar with Holmes O’Malley Sexton.”