What’s your Covid-19 exit strategy?

12th May 2020 Corporate

As the lockdown continues Boris Johnson addressed the nation to set out the government’s plan to ease social distancing measures and to commence with a return to the workplace for those people who cannot carry out their jobs from home, citing manufacturing and construction in particular as industries where employees should be encouraged to attend their place of work.

The pressure has been mounting on the government to set out proposals as to its social and economic strategy for the re-integration of workers into the workplace and to provide a timescale and detailed plan of what the next steps will be in terms of a relaxation of the social distancing rules and the opening of “non-essential” businesses and work spaces. Many will have been disappointed by the lack of detail in the latest announcement and we expect to see more comprehensive proposals and implementation guidance for employers and businesses over the course of the next few weeks.

Whilst people will be eagerly awaiting the further announcements from the government, the suggestion that there will be phased integration and the possibility of measures being relaxed and then tightened again in reaction to any further spread of Covid-19 means that the timing as to when we may return to the “new normal” is, and continues to be, unclear. Irrespective of this, there will be a point in time when the government support packages are reduced and the majority of employers, employees and business owners across most sectors are encouraged to commence steps to return to the workplace on a full-time basis.

Clearly any measures should only take place where it is sensible and safe to do so and the health and safety of the public and protection of the NHS; the fight against the virus must remain paramount and take precedence over economic pressures.

Guidance has now been issued setting out sector specific protocols for creating a safe working environment and we expect more measures to follow. It is important for businesses to start thinking about the measures that they may take to return to the workplace safely, build efficiencies and then thrive in the post-Covid-19 environment.

This blog sets out a few thoughts as to the challenges and issues that businesses may be looking to address within their own “Covid-19 exit strategy”.

Creating a safe working environment

Many employers and employees will be scared of returning to the workplace and for those using public transport, undertaking their daily commute. Employers will need to consider their duties and responsibilities to take measures to create a safe working environment as the government guidance is relaxed and the onus is placed on the employers to make their own decisions. Questions will be asked as to:

  1. Whether people can continue to work from home/remotely on a part-time or full-time basis?
  2. Can shift patterns or staggered working times be introduced?
  3. Should vulnerable people, or those living with people at risk, be encouraged to remain at home until it is safe to return?
  4. Can employees use alternative transport methods? Does your business cater for people cycling or walking/running to work (cycle racks and showers etc.)? Is your workplace accessible and does it offer parking if people are not using public transport?

It is advisable for employers to carry out risk assessments of their workplace, and workforce, to ensure that reasonable steps are taken to protect them. A more detailed plan as to safe working, with sector specific guidance, has been issued by the government and can be viewed here. We recommend reviewing the guidance as applicable to your sector and that you carry out appropriate risk assessments and consultation with employees. In particular, employers should consider:

  1. Deep cleaning the workplace before people return;
  2. Regular cleaning and restricted use of communal areas;
  3. One way systems and directed/restricted movement around the workplace;
  4. Restrictions around visitors to the workplace and screening of visitors where applicable;
  5. Providing employees with appropriate PPE, making available accessible hand sanitisers and cleaning products together with signage/displays reminding people of the processes to follow;
  6. If it is appropriate for people to wear masks in the workplace (whether for protection or a from a perception point of view);
  7. The spacing of the furniture/seating (as applicable) to create social distancing where possible.

Creating efficiencies and embracing change

For many, the last few weeks have not only been a test of strength, but they have also allowed businesses to adopt and test new systems and functionalities, some of which may create better long term efficiencies and lead to significant changes within the workplace and supply chain. In particular, businesses will be reflecting and looking at:

  1. Systems and technology – Are your systems robust and up to date? Do they allow you to monitor performance in real time? Do they allow people to work remotely? Have efficiencies been created that can be continued within the post-Covid-19 business environment? Can you amend systems quickly if there is a “second spike” and tightening of measures in the future? Do you need to re-evaluate your disaster recovery plans? Do you need to invest in better systems in the future?
  2. Remote working – Can people work from home efficiently on a full-time, or part-time, basis? Should this be encouraged in the future? Do you have systems to be able to monitor working from home? Do you have a remote, and flexible, working policy? Are there additional health and safety issues to consider if people are working at home on a prolonged basis?
  3. Supply chain – Is your supply chain safe? Do you need to spread risk and have alternative suppliers? Are you communicating regularly?
  4. Customer/client base - Is your customer/client base safe? Do you need to spread risk? Are you communicating regularly? Are there any cash collection issues?
  5. Meetings – Are meetings necessary – can they be done remotely? Is it necessary to travel long distances for meetings? Do you have adequate facilities to host meetings and seminars remotely?
  6. Space and the size of the workplace – Do you need the office space that you currently have? Can space be reduced with more people working remotely? Is your office/workplace in an accessible location?
  7. Social expectations and behavior – Will social behavior and expectations change as a result of the Covid-19 pandemic? Do you need to change your own policies to meet those expectations? What will your clients/customers expect – will they attend your workplace? What do your employees expect – will remote and flexible working become a key expectation? Will catering for health, safety and wellbeing be more prominent?
  8. Environmental impact – The lack of vehicles on the road as of late has highlighted the environmental benefits of remote working and travel reductions. Do you have a social and environmental policy? Will this become of more importance to your clients, employees and stakeholders? Will the government impose measures in the future with a view to meeting environmental targets?
  9. Health and wellbeing – The pandemic has highlighted how quickly health matters can impact on your business. Are you prepared if people are absent on a short-term or long-term basis? Do you offer healthcare benefits? Do you offer access to a mental health support service? Has home working had a positive, or negative, impact on health and wellbeing?

Financing and support

Whilst the government support has, in large, been well received it will not continue indefinitely and it is expected that support will be reduced in whole, or in part, across all or a variety of sectors. Details will no doubt follow, however it is important to be prepared for the next steps as early as possible.

Perhaps the biggest and most successful scheme has been the government support of furloughing employee. Once furlough support ceases, many companies may not be in a financial position to be able to support re-engaging all of the workforce and may be forced to consider temporary lay-offs, pay cuts, forced annual leave and redundancies due to continuing effects the Covid-19 outbreak. It is important to remember that employers asking their employees to be temporarily laid off can only do so with the employees consent or where their contract of employment expressly permits unpaid or reduced pay lay-offs.

Due to the uncertainty caused by Covid-19, many businesses have already faced financial difficulties. In response, UK banks have provided emergency loans to businesses that have been struggling with cash flow amid the outbreak of the virus. We expect some of the loan facilities to remain available following the ease of lockdown (especially when the grants and payment holidays end) however, there will be a point in time when the measures end and businesses are expected to be self-sustaining.

All businesses, and especially those who’ve taken on additional debt, will be looking to the future and facing the difficult task of producing cashflow plans and forecasts for returning to profitability and servicing any additional debt. Multiple forecasts and plans may need to be produced with “best case” and “worse case” scenarios with regular reviews. For those who do not have sufficient financial reporting processes or personnel, it could be a worthwhile investment to engage external support or acquire a more robust financial reporting software package.

There has been a lot of goodwill between businesses in understanding the challenges faced by the Covid-19 outbreak. Cash collection will remain of paramount importance and communication with all of your debtors and creditors is vital. Businesses will need to consider when some of the concessions/allowances that they’ve received, or given to others, will end and a stricter approach to enforcement and collection may be appropriate.

Opportunities

In any crisis, there will always be new opportunities whether through acquisition, investment, innovation, joint ventures or diversifying into new markets. It is important not only for your own business, but the economy as a whole, that people start to look forward and seize the potential opportunities in front of them. Whilst transactional activity has slowed down for now, the measures taken by many businesses have allowed them to hibernate for a short period of time with a view to being in a strong position when the measures reduce. As many businesses are experiencing a quiet period of time, it is a good opportunity to put in place future growth plans and to identify the next steps and begin any relevant research, implementation or preliminary negotiations to allow your business to hit the ground running once the lockdown eases.

Legal issues 

There will be a variety of ways we can help and provide advice:

  • Employment – our employment team can assist with any enquiries relating to the furlough scheme, lay-offs, holiday pay, sickness and absence, lay-off, varying terms and conditions, temporary workers, agency staff, putting in place appropriate HR measures and policies and also ensuring that any measures don’t risk breaches of anti-discrimination legislation.
  • Commercial Contracts – our commercial team can assist with contract reviews, contract amendments and variations, and putting in place and negotiating new commercial contracts on an ongoing basis.
  • Litigation and Debt Collection – our litigation team can assist with debt/cash collection issues and contractual disputes arising as a result of the Covid-19 outbreak.
  • Banking/Finance – our banking team can assist with reviewing your existing facilities and security packages (in particular covenants) and putting in place and negotiating new banking or loan facilities.
  • Corporate – our corporate team can advise on corporate governance, structuring and directors’ duties along with assisting with any investment or acquisition opportunities on an ongoing basis.
  • Real Estate – our real estate team can assist with landlord and tenant issues, lease reviews amendments and variations and putting in place and negotiating new commercial leases on an ongoing basis.

Further information

If you want to discuss your businesses plans, please contact your usual JMW contact ​​​​on 0345 872 6666 or complete the contact form found on this page.

This article is for general guidance only and should not be used for any other purpose. It does not constitute and should not be relied upon as legal advice and reflects the position as at the time of writing (11th May 2020). We recommend that you review the daily updates and guidance issued by the government.

Our Covid-19 hub on our website is regularly updated with helpful guidance and insight in relation to legal matters concerning Covid-19. To view it please click here.

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Mark Heppell is a Partner located in Manchester in our Corporate department

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