This article provides a summary of the principal provisions of the Coronavirus Act relevant to business. The Coronavirus Act details some of the emergency powers and measures taken by the government to address the crisis.
Initial results from the British Chambers of Commerce’s first coronavirus business impact tracker reveal that the ongoing pandemic impact is wide ranging and deep – here’s our update on the Coronavirus Act’s main powers and measures aimed at helping us through.
The chamber’s report shows thata majority of businesses are reporting a significant decrease in their revenue, 62% of firms have three month’s cash in reserve or less and 44% of respondents expect to furlough at least half of their workforce imminently.
The Coronavirus Act 2020 details some of the emergency powers and measures taken by the government to address the crisis. The act became law on 25 March 2020 but please note some provisions have not yet been brought into force, pending further regulations.
This article provides a summary of the principal provisions of the Coronavirus Act relevant to business.
Employment provisions (sections 8-9; 39-44; Schedule 7)
The provisions impacting employment are wide-ranging and numerous, including:
Modification of the statutory sick pay regime
The act ensures that SSP is payable from the first day of sickness or self-isolation, funded by HMRC. Employers with fewer than 250 employees (determined based on number of employees employed as at 28 February 2020) can reclaim some or all SSP paid for the first two weeks of any coronavirus related sickness from the state. Proof of incapacity is not required for the first seven days and thereafter proof can be obtained from NHS 111 online.
The creation of emergency volunteering leave
This enables emergency volunteers for health and social care purposes to take unpaid time off work and be compensated for their loss of earnings. Any worker, save for some explicit exceptions (including if the employer has less than 10 employees), is entitled to undertake this leave provided they provide their employer with at least 3 working days’ notice in writing and first obtain an emergency volunteering certificate. The leave can be for a period of two, three or four consecutive weeks. There are additional protections for such volunteers in respect of return to work and their terms and conditions. Emergency volunteers are entitled to be compensated for loss of earnings, travel expenses and subsistence.
Food supply provisions (sections 25-29)
Businesses in or closely connected to the food supply chain can be required under the act to supply information relating to disruption or the risk of disruption. Whilst there are various data protection provisions to protect against harmful disclosures of personal data, there is a significant financial penalty (up to 1% of that company’s qualifying turnover) that can be imposed should the Secretary of State find that such information has not been disclosed without a reasonable excuse.
The relevant sections of the act are not yet in force, as they await the appointed day, but should be on the radar of food supply operators going forward and all levels of internal management should be alerted to the disclosure requirements.
Inquests (sections 30-32)
The Act suspends the requirement to hold an inquest with a jury where it is suspected that the death was caused by COVID-19.
Suspension of port operations (section 50; Schedule 20)
The act confers powers upon the secretary of state to direct port operators (those responsible for port management) to suspend operations in part or in full if there are insufficient resources (UK Border Force) to adequately secure the border. This can include directing arrivals into those ports and the wider UK to locations where there will be sufficient Border Force resource to carry out the required security checks. Failure to comply with a relevant direction without reasonable cause would constitute a criminal offence.
The impact upon supply chains and business immigration for UK businesses are potentially significant, especially if ports are closed in full if and when the pandemic intensifies. Whilst these powers are governed by safeguards to ensure fair, responsible and proportionate use, businesses should begin to consider contingency planning on these aspects, especially if their operations are particularly exposed to port operations.
Control of events, gatherings and the use of premises (sections 51-52; Schedules 21 and 22)
The government (including devolved administrations) are afforded new powers under the Act to close or restrict access to premises (defined widely as any place including vehicles, trains, vessels, aircraft, etc.) to prevent gatherings and events taking place – failure to comply with these provisions constitutes a criminal offence punishable by a fine. Corporate bodies can be guilty of an offence together with any office of the company who consent to or connived in the failure to comply. There are also wide-ranging powers to restrict the use of premises exercisable by the secretary of state for health, including closing premises, restricting entry, the number of persons allowed in the premises, the purpose for which a person is in the premises, etc.
The act also confers powers on public health officers, police and immigration officers in relation to people reasonably suspected to be potentially infectious, to those who have COVID-19 or even to those who have been in an infected area within the previous 14 days. These powers include the ability to enforce screenings and assessments, to require persons to remain in isolation and to restrict movement.
Courts and investigatory powers provisions (sections 53-57; Schedules 23-27)
The act expands the availability of video and audio links in criminal proceedings. For almost all proceedings, the act also allows the court to direct that those proceedings be conducted as wholly video or audio proceedings, and be broadcast to allow public access. Unauthorised recording of such proceedings is a criminal offence. For civil proceedings, there is a practice direction and judicial protocol making clear that remote hearings may be conducted in private if broadcast is not practicable.
Financial assistance for industry (section 75)
The act varies the limits under the Industrial Development Act 1982 so that the secretary of state may, with the consent of HM Treasury (an important prerequisite), provide financial assistance where, in the secretary of state’s opinion, the financial assistance is likely to benefit the UK economy (or any part of it). The intended purposes of this financial assistance includes the promotion of capacity, efficiency, reconstruction, reorganisation and growth (or redistribution) of industry. That support is limited in that the total financial assistance outstanding at any time shall not exceed £12,000m (with some additional special drawing rights), the secretary of state may not acquire any shares in any assisted company without the company’s consent (i.e. this is not a licence to force the nationalisation of any company) and the financial assistance paid or undertaken to be paid in respect of any one project shall not exceed £30m (£10m in Scotland) unless the excess has been authorised by the House of Commons. The term financial assistance is broadly drafted to include acquisition of loan or equity capital, investment in a business or assets, direct loans or guarantees/insurance, although the Secretary of State must be able to demonstrate that financial assistance cannot appropriately be given in any other way.
Importantly, the act goes on to state that financial assistance which is coronavirus-related shall not count towards the £12,000m assistance limit or the £30m single project limit (together monetary limits). This designation shall be given to assistance which is made clear is ‘provided (wholly or to a significant degree) for the purpose of preventing, reducing, or compensating for any effect or anticipated effect (direct or indirect) of coronavirus or coronavirus disease’.
Town and country planning change of use provisions (section 78)
The act confers new powers upon local authorities to operate virtual meetings, including planning committee meetings, during the coronavirus ‘lockdown’. These powers are supplemented by the draft version of the Local Authorities (Coronavirus) (Flexibility of Local Authority Meetings) (England) Regulations 2020 which has been published and which is likely to come into force at some point during the week commencing 6 April 2020. The regulations will apply to local authority meetings held on or before 7 May 2021, and also cover the ability for local authorities to change the number and frequency of meetings held. As a final point, the legislation also applies to parish councils and other specified public sector decision making bodies.
Business improvement districts (sections 79-80)
The act extends the duration of business improvement districts (BID) arrangements which were in place prior to the Act coming into force and originally due to expire on or before 31 December 2020 to now expire on 31 March 2021. This additional time has been provided to allow BID and local authorities that administer the ballot process to delay that process until later this year or early next year, in order to concentrate on responding to the current emergency. This means that any levy that was payable up to 31 December 2020 shall continue to be paid up to the expiry of the extended period and will be calculated in the same way as under the original chargeable period or, where appropriate, shall be apportioned on a just and reasonable basis. This extension only applies to BID arrangements in England and Northern Ireland (as Scotland and Wales administer equivalent scheme in those jurisdictions under devolved powers).
Real estate, lease and tenancy provisions (sections 81-83; Schedule 29)
There are also extensive provisions impacting the real estate sector, notably:
Restrictions on the right to forfeit for commercial leases
A right of re-entry or forfeiture under a relevant business tenancy for non-payment of rent may not be enforced for the relevant period (currently up to 30 June 2020, but may be extended). This also impacts possession proceedings already in progress as the court cannot order possession to be given before the end of the relevant period and existing possession orders granted can be varied (upon a tenant’s application) so that possession does not have to be given during the relevant period. The act does not however yet prevent landlords from issuing a statutory demand for unpaid rent and commencing insolvency proceedings, should the demand not be met.
Restrictions on the eviction of residential tenants
The act restricts residential landlords evicting tenants from a period beginning on 26 March 2020 and ending (currently) on 30 September 2020 – this applies in England and Wales. The restriction is not a full bar, though before possession proceedings can be commenced, landlords must give three months’ notice to tenants requiring possession to be given, this period can be extended to six months by statutory instrument. There do not appear however to be any additional protections (as with commercial tenancies) for presidential tenancies in respect of existing notices or possession proceedings. Court forms are being updated to reflect this.
There was some confusion following the Act over whether construction sites could remain open. The current position is that construction sites can continue to operate but employers must comply with Public Health England (PHE) guidelines. In relation to construction, the guidelines state: ‘With the exception of some non-essential shops and public venues, we are not asking any other businesses to close – indeed it is important for business to carry on. However, you should encourage your employees to work from home unless it is impossible for them to do so. Sometimes this will not be possible, as not everyone can work from home. Certain jobs require people to travel to their place of work – for instance if they operate machinery, work in construction or manufacturing, or are delivering front line services’.
It is recommended that employers should ensure that ‘spaces in the workplace are optimised to allow social distancing to occur, wherever possible’. Whether the government uses its powers to shut construction sites will depend on how quickly the virus spreads in the coming days and weeks. The government has said these powers ‘will only be used when strictly necessary and be in place for as long as required to respond to the situation’.
The above position applies to the law in England.
As a further, more general, observation, the act includes a significant number of provisions which enable the government to enable legislation via statutory instrument in relation to the matters dealt with by the act. As with many facets and features of the pandemic, it is likely that the impacts upon and potential benefits to business that derive from the act will be subject to significant and sustained update over the coming weeks and months.
Shoosmiths continues to support clients across sector and divisions, not only on dealing with the impact to their businesses of the coronavirus pandemic, but also as they continue their conventional trading operations.Recognising the need for accurate, up-to-the minute and insightful support, we have developed a bespoke Coronavirus COVID-19 hub, which is being maintained continually and as a priority to provide guidance support and help bring together communities. This hub contains links to the insights we have authored, that highlight issues businesses need to consider and, wherever possible, provide practical guidance on how to address the issues presented and/or mitigate the potential impact on trading.