What you need to know for your business through the Covid-19 pandemic

  • Insight

11 May 2020

What started as a healthcare emergency, and remains very much a human tragedy, has rapidly transpired to be a business leadership and resilience challenge and an economic crisis of unprecedented scale.

From the outset we've been here to help seeking to provide practical and pragmatic advice through our Business Hub, with the tone being set by my earlier article on business resilience in the face of a crisis

In our future articles we will look to the medium and longer term implications for business. Here, however, we focus on the steps taken to respond to the impacts of the pandemic and steps to contain it from the perspective of a Scottish business. Our business resilience checklist provides some initial guidance on practical questions. We've rounded up all of the information you need to know to help your business be as resilient as it can be through Covid-19.

To sign up for our regular Business Hub updates, subscribe here.

We've also produced a round-up What you need to know through the Covid-19 pandemic, to help individuals and families plan more personal matters.

Financial support for business and employees

We have prepared specific guides on employer’s duties in response to the pandemic, the Job Retention Scheme (Furlough) and wider Government financial support for business. Those articles are being updated regularly.

For further information on employment law related issues, including furlough arrangements, please contact our Employment Team.

For further information on government financial support for business, including the bespoke and sector specific support which our financial support overview article does not cover contact Neil Amner.

Health and Safety in the workplace

The official position on which businesses may operate and the manner in which they may do so has evolved as the UK and Scottish governments’ responses to the pandemic has continued. Temporary regulations, which must be reviewed every 3 weeks, restricting public gatherings and non-essential business activity have been in force since 26 March 2020.

A number of amendments have now been made to protect workers and provide further guidance to employers. That has included formalising the two metre distancing rules to all businesses that remain open. If you do not take all reasonable measures to enforce those rules you could be fined or ultimately prosecuted.

The UK Government’s guidance on social distancing on the workplace can be found here - https://www.gov.uk/guidance/social-distancing-in-the-workplace-during-coronavirus-covid-19-sector-guidance#manufacturing-and-processing-businesses

The Scottish Government’s guidance is here - https://www.gov.scot/publications/coronavirus-covid-19-business-and-social-distancing-guidance/

The availability and use of protective personal equipment (PPE) in the health and care sectors and more widely have been recurring questions.

If you wish to discuss any employee or trades union relationship issues which you are experiencing, please contact our Employment Law team. If you have specific health and safety law concerns, please contact our Health & Safety Law team

Contracts

The disruption to the economy as a result of tackling Covid-19 has been unprecedented. This has left vast numbers of businesses with practical as well as financial trading difficulties as supply chains and the ability to perform contracts have been disrupted. This naturally begs the question on what your contractual rights and responsibilities are in these circumstances.

Our contract terms and Force Majeure insight article looks at some of the key questions businesses are asking and discusses some of the issues which you may need to consider in light of the current situation.

For further information and assistance on contractual matters please contact our Corporate and Commercial team.

Public procurement

The Scottish Government has produced a Scottish Procurement Policy Note (SPPN) relating to public procurement, noting that in the current circumstances public bodies may need to act quickly to procure goods and services.

As Douglas McLachlan explains in his public procurement article, the procurement regime has not been amended or relaxed notwithstanding the current crisis, however, there are existing grounds in the Procurement Rules that justify making urgent purchases.

Whether you are a contracting authority or a supplier to the public sector, please contact Douglas if you wish assistance on modifying existing contracts, use of frameworks / dynamic purchasing systems, awarding new contracts (including making a direct award), value for money concerns or with potential procurement challenges.

Company law

Although there can be some practical issues to overcome, corporate transactions are still proceeding.

Companies House is providing additional support to allow companies to meet their legal responsibilities. It will temporarily pause the strike off process to prevent companies being dissolved and give businesses time to update their records.

Although still required to apply for a 3-month extension to file accounts, if citing Covid-19 as the reason, the application will be automatically and immediately granted. It has also been stated that companies issued with a late filing penalty will have appeals treated sympathetically.

The government has announced an intention to introduce legislation to ensure that those companies required by law to hold Annual General Meetings (AGMs) will be able to do so safely, consistent with the restrictions on movement and gatherings introduced to address the spread of coronavirus. Companies will temporarily be extended greater flexibilities, including holding AGMs online or postponing the meetings.

For assistance with corporate matters, please speak to a member of our Corporate team.

Directors’ Duties and Insolvency

The UK government has announced an intention to legislate to temporarily ban the use of statutory demands and winding up orders against companies which cannot pay their bills due to coronavirus. It has also announced a change to legislation to enable UK companies undergoing restructuring to continue trading.  This will include enabling companies to continue buying supplies such as energy, raw materials and broadband during the rescue process.

The new legislation announcement also provides for the temporary suspension of wrongful trading provisions from 1 March 2020 for three months. This is to allow directors to continue trading without the threat of personal liability. Our article on Practical protection for directors during times of financial difficulty provides further details.

The Coronavirus (Scotland) Act 2020 which came into force on 7 April 2020 includes temporary changes which extend debtor protections under the law relating to personal bankruptcy law in Scotland.

For further information on these issues, please contact Katrina Lumsdaine.

Charities and the third sector

At this time when the demand for third sector services and support grows daily, the survival of our third sector has never been so critically important. At the same time, the sector is facing a great many operational and compliance challenges.

Our insight guide on help for the charity sector outlines funding support available and guidance on the practicalities of continuing to operate as best you can and on new and innovative ways which demonstrate good governance, even if you cannot carry out your services and activities as before.

For further information, please contact Victoria Simpson

Construction

The Scottish Government position during the lockdown period has been that the construction sector and its supply chain is considered a non-essential business sector, except where supporting an essential sector. The latter refers to the Critical National Infrastructure (CNI) which includes energy, communications, transport, water and waste.

All non-essential sites were advised to close, apart from in exceptional circumstances where they were critical to lives and safety, and capable of working in a way that was fully consistent with social distancing advice. Where CNI sites are operating, regulations require all reasonable measures to be taken to ensure that a distance of two metres is maintained between persons on site. Our insight Health and Safety in the construction sector during Covid-19 gives further information.

The guidance has recently been updated to allow essential maintenance and repair (but not improvement) of buildings, including private homes and commercial properties. It states however that routine maintenance should be deferred.

As the business and political dialogue moves towards steps to ‘reopen’ the economy, our article on health and safety in the construction sector explains employers’ duties on sites that do operate.

For contractors, their customers and supply chain, there will of course be financial and contractual consequences of the site closures and other disruption. Whilst the general contractual issues referred to above will have a bearing, the specific mechanism and procedures of your construction or engineering contract or professional appointment should be applied. Our Construction team can assist you with that.

Commercial Property  

With the exception of those premises needed for ‘essential’ purposes, business premises across the UK are now closed – including most office, retail, leisure and hospitality properties. That does not mean to say that property law questions have not arisen for these or other premises.

The compulsory lockdown closure of business premises leaves many questions for owner occupiers but yet more still for tenants and landlords; not least on their respective rights and obligations under leases of closed premises, which our managing your Scottish business premises in lockdown article addresses along with our Landlord and Tenant FAQs.

We have continued to support our commercial property clients throughout the current crisis. We have been progressing due diligence on purchase, sale and finance deals and we continue to negotiate leases and property management transactions. Whilst the Applications Register at the Registers of Scotland has been closed, interim measures have now been put in place to provide a legal framework to allow certain transactions to settle, provided settlement complies with the Government restrictions enabling us to complete urgent deals.

For assistance with your commercial property issues, please contact our Commercial Real Estate team.

Planning and environmental law

Many businesses have innovated and changed their business model in response to the pandemic and the lockdown. Ordinarily, some of these changes would have required planning consent for change of use. The Chief Planner, however, has written to all Scotland’s planning authorities to make clear the Scottish Government’s view that planning authorities should not seek to exercise their discretion on enforcement action which would unnecessarily restrict public houses and restaurants providing takeaway services on a temporary basis during the current exceptional circumstances.

Similarly, the Chief Planner has indicated that planning authorities should take a positive approach to their engagement with food retailers and distributors, as well as the freight industry, to ensure planning controls are not a hard barrier to food and other essential item deliveries or to store opening hours over the period of the coronavirus.

There has been concern that planning permissions may expire because developers are unable during lockdown to undertake the ‘material operation’ steps required to preserve a planning permission. The Coronavirus (Scotland) Act 2020 effectively (subject to qualifications) extended the lifespan of permissions and the period for submission of applications for approval of matters specified by conditions in a permission. Similarly, building warrants holders can now seek an unconditional extension to their warrant for nine months.

The Scottish Government have also published two sets of Regulations to ensure the resilience of the Planning System and to allow it to continue to function. These deal with pre-application consultation, local review bodies, EIAs and energy consents.

For further information on planning law matters, please contact Alastair McKie.

SEPA has stated it expects everyone it regulates to make their best endeavours to meet their environmental obligations. If a regulated business is unable to meet all its obligations under SEPA’s licence, permit or other authorisations because of these exceptional circumstances, SEPA has stated it expects the business to:

1. prioritise compliance with conditions that directly protect the environment over those that are indirect controls or more administrative in nature;

2. alert SEPA as early as possible if it believes it will be unable to meet any obligations and work closely with SEPA on making choices and finding solutions; and

3. keep a clear record of choices made and actions taken.

SEPA has also published a series of regulatory positions and guidance covering finfish aquaculture, milk, radioactive substances, waste management, packaging, whisky and hand sanitiser production.

Please contact Neil Amner for further details on these and other environmental law matters.

Logistics – licensing

In addition to the planning relaxation referred to above, the Senior Traffic Commissioner has issued temporary guidance and directions aimed at supporting operators so that essential services can continue, either through the supply of goods, transportation of waste products or public transport.

This guidance includes providing for grants of temporary written exemptions to allow restricted licence holders (owner operators) to operate for hire or reward, for existing licence holder to temporarily use more vehicles than the licence authorises or for someone who does not hold a licence to use a goods vehicle for hire or reward or in connection with a business. Operators can also seek a period of grace in relation to changes in financial standing. Maintenance, inspection, transport manager and bus service changes are also covered.

DVLA has confirmed that lorry or bus driver licence renewal applications should still be submitted before the expiry of the current licence, however, the requirement for a medical report for drivers aged over 45 to accompany the application has been waived. If the application is successful, a 1 year licence will be granted. 

Lorry and bus drivers can drive while their licence is being renewed so long as they: have not been told by their doctor or optician that they should not drive; had a valid licence; only drive under the conditions of the previous licence; are not currently disqualified; were not disqualified as a high risk offender on or after 1 June 2013. Additionally, their renewal application must be less than a year old and their last licence not revoked or refused for medical reasons.

For further information on these matters, please contact Neil Amner.

Civil litigation and dispute resolution

The Scottish Courts have been closed for all but emergency cases involving criminal or child custody matters. Following some initial cases, there are now steps being taken to allow more widespread use of electronic documentation and virtual proceedings of cases which have already begun, although the timescale and breadth of reopening of the Courts has yet to be confirmed.

In the meantime, our disputes lawyers continue to advise clients, progress preparation of cases and negotiate settlements always with an eye to the bigger picture, particularly the financial consequences of litigating or equally in choosing not to.

We can meet virtually to assess the dispute, advise you on the legal steps and give focused and pragmatic advice on the likely solutions and outcomes, from negotiation to a fully defended court case. We act in a wide range of claims, whether it involves unpaid debt; contractual disagreements; litigation around Brexit; negligence claims; questions around insolvency; health and safety issues; construction disputes; white collar crime or any other business issue, we have the expertise and experience to help.

Please contact our Dispute Resolution team for assistance.

Alternative Dispute Resolution and Mediation

With the Courts and Tribunals closed there will be situations in which parties to a dispute need to be able to resolve the matter and can move on. In such circumstances it is possible to arrange for a dispute to be resolved via mediation using an independent mediator. This can apply right across the range of disputes that arise, from family matters, to property disputes and commercial relationships.

Our Partner Alun Thomas is currently chair of Scottish Mediation who are launching a new online mediation service to help those parties looking to find an agreed solution to their problems. Alun will be happy to help any client looking to find different ways to resolve their issues.

Data Protection

With the move to remote and virtual working, questions naturally arise about how data is being handled in the extraordinary circumstances we are in.

Our data protection briefing by Fiona Killen considers the key issues which businesses and other service providers are asking about; including health information, consequences of home working and shielding arrangements and the Information Commissioner’s approach to such issues. We've also produced an update on The extension of freedom of information timescales.

If you have any data protection concerns please contact Douglas McLachlan.

We’re here to help

We’re here to help through the Coronavirus pandemic and beyond, this article and our update What you need to know through the Covid-19 pandemic, gives individuals and business leaders useful information to help them navigate through challenging times.

We are also offering pro-bono 20 minute assessments for clients and new customers who would like to speak to one of our lawyers. You can contact us here or speak to one of our Business Resilience Team. You can also subscribe to our Business Hub updates below.