Coronavirus Act 2020 – how might this impact your business?

Phil McDonnell | Associate Partner | Law | PMcDonnell@uk.ey.com

Chi Lam | Manager | Law | CLam2@uk.ey.com

In a departure from our usual commercial and technology focused topics, we will be bringing you some ‘guest editors’ in the coming days/weeks as we all grapple with the diverse legal implications of the current COVID-19 pandemic.

In this blog, Phil McDonnell and Chi Lam consider the headlines from the new Coronavirus Act 2020.

This note is not intended to provide an exhaustive list of issues. Nor should it be relied upon as legal advice. Please do contact us if you require legal advice on any specific issues.

Background

Having been fast-tracked through Parliament, the Coronavirus Act 2020 (Act) received Royal Assent and came into effect on 25 March 2020. The Act contains emergency powers and relaxes a number of regulations to enable public bodies to respond to the COVID-19 pandemic.  These powers are in addition to other powers the Government already possess to deal with emergencies related to public health, social security and other issues of public policy interest.

These powers are generally broad and cover a wide variety of areas – so here are a few key things which businesses should know about the Act.

Powers in respect of events, gatherings and premises

The Act introduces powers to enable the Government to prohibit or restrict events and gatherings, and to close premises. These more general powers are in addition to those already held by the Government under the Public Health (Control of Disease) Act 1984 which we have already seen being used widely with the recent police-enforced lockdown in the UK.

As well as closure of premises, the Secretary of State may also issue other directions, requirements or restrictions, such as controlling access to and from the premises or limiting the number of people allowed in.

Even where businesses are not directly ordered to close their premises, they may still be affected if key contractors, suppliers and customers are ordered to close.

Protection from forfeiture for business tenancies

For business tenancies, the Act introduces provisions temporarily restricting landlords’ ability to enforce re-entry or forfeiture for non-payment of rent until at least 30 June 2020.  It does not at the date of writing restrict forfeiture for other events of default.

Notwithstanding this, the Government’s intention appears to be to encourage landlords and tenants to take a more collaborative approach to managing rental obligations. It is worth landlords bearing in mind that in respect of premises which are forced to close during these uncertain times, they may find it hard to quickly find replacement tenants willing to take up such premises. Therefore, where it is possible for landlords to have  discussions with tenants to defer, reduce or suspend rent payments to help avoid tenant insolvency, it may ultimately be in the interest of both parties.

Potential suspension of port operations

If there is a shortage in Border Forces, as a result of coronavirus, causing insufficient resources to secure the border, port operations (including airports) may be temporarily suspended (in full or partially). The suspension of port operations may disrupt supply chains, as the import and export of goods, including food and medicines, are delayed.

Businesses who may be directly affected by any suspension of port operations will want to look very closely at the terms of their contracts with suppliers and customers in this regard. It is also important to be aware of any back-to-back terms with related contracts.

Financial assistance to industry

The Act disapplies the statutory limit on the amount of Government financial assistance for industry in relation to assistance which is coronavirus-related.  Subject to State Aid rules, this provides greater scope for the Government to provide industry support.

Powers in respect of potentially infectious persons

Under the new Act, public health officers, constables and immigration officers may direct, or remove, potentially infectious persons to a place suitable for screening and assessment.

A public health officer may require a potentially infectious person to remain at the place for screening and assessment purposes for up to 48 hours. Where the screening confirms a person is infected, or was inconclusive, further requirements or restrictions may be imposed. This includes isolating the person at a specified place or restrictions on the person’s movements, travel activities and contact with other persons.

Clearly if employers, staff and others are isolated or retained in certain locations, this may affect business continuity (depending on how dependent businesses are on the physical presence of those individuals who are isolated or retained, and the facilities available to allow those individuals undergoing isolation or retention to carry on working – to the extent they are fit and able to do so). Businesses are encouraged to prepare contingency plans in the event that any key individuals are required to be retained or isolated for a period of time.

Statutory sick pay

The Act enables the Secretary of State to make regulations to allow employers, who have made statutory sick payments to employees unable to work due to COVID-19, to recover some or all of those payments from HMRC.

Volunteering

The Act enables volunteers to take unpaid leave.

Individuals are able to apply for emergency volunteering leave. The leave is unpaid although certain amounts for travel and loss of income will be compensated. The length of leave is limited to 2, 3 or 4 consecutive weeks in a 16-week period.

Emergency volunteering certificates are issued by an appropriate authority (which includes county or district councils) certifying that the individual has been approved and will be acting as an emergency volunteer in health or social care from, and for the period, specified in the certificate.

Further information

If you have any questions in relation to this note, please do get in touch with us.