Legal implications of COVID-19 on your UK business
All right hello, everybody, this is. Emma Yellin, on from the, finish British Chamber of Commerce, on, behalf, of. Ourselves. The Norwegian, Chamber of Commerce and the Danish UK Association. I would like to welcome you all to this webinar. On. The legal implications of kovat 19 on your UK, business, hosted, together with our member gowling. If. You, have any issues, with your. Audio. Please. First remember, to check your own internet, connection, and your, audio settings and. If there's still some issues please, let, us know in the chat function, that you can see on the bottom of your screen. We, will be doing a Q&A. At the end so, during the presentations. Please. Feel free to ask your questions you can send those in through, the Q&A box at the bottom and please, make sure that you actually send your questions, that you want answered through, the Q&A instead, of the chat function. And, then. This webinar will. Cover, first. Off we. Will have Jonathan, Chamberlain from gowling. Covering. The topic how UK employers, can deal with the special circumstances. Next, up we'll have amber Strickland, talking about how employers can discharge their duties to, protect the health and safety of employees who, are working from home and those who cannot work from home and then. Finally. We'll have Julian pallet talking, about directors, duties in these, testing, times and, um. Now. I'm hoping most, of our attendees. Will have joined, us so I will pass, on, the. The. Mic to, Jonathan. To start, us off. Thank. You, I'll. Just give, it a second, for my, slide. My, one and only slide, he'll be pleased to hear to, load. Good. I'm. Going to be talking about three, things about the scheme, what. Are the basics. I suspect. That you'll be familiar with those by, now but I think it's worth just recapping. So, we, know what it is been talking about then. We're gonna move on to what. Are the key things that. You. As an employer, need. To do to take advantage of. This. Scheme and then. Let's. Talk about the, issues that that we as a law firm are seeing. Coming, out of this in practice and, since. It's been announced I can. Say that, this is about, 70. Percent of the work that the, team, here are doing is around, queries, coming, out of this scheme and. The reason for that going back to the first point and I'm looking, at the basics, is, is, this. We're. All looking, at this, from, the perspective of, of, our employees, what. Does it mean. For. Them. Really. What, this is is a. Tax. Reimbursement scheme, or a rebate, scheme effectively. What. The government have announced, is. How. Employers can claim. Money from, the government and what, they can claim, they. Will actually left silent. As, to what then happens, to employees, save. That any money, that you claim. From. The, government, has. To have been spent on employees. It has to be a wash through you're not going to take a cut on the way through but. Other than that what actually happens to employees in all of this and. Have. Been left, to the basics, of the the existing. Nor and not, that. The new scheme and, that. The second point that I. Want. To make is, that. We're. All working off, HMRC. Guidance. The. Rules haven't, been published yet, so. We, don't know, what, the fine points, of detail of this scheme are going to be we can see the direction of travel we can see what the guidance says we think it's going to be very difficult for, HMRC. In the, months. Weeks to come, when hopefully, all this has passed and businesses. Are still claiming running back from the government for HMRC, to turn around say well you're not having it because of a small print in the regulations, if that, contradicts, the guidance with rather expecting, the courts to take. A view that you've talked businesses that we're going to get this money they're going to get this money but.
It Does mean that's, that they're quite a bit of the detail even, of the the, reimbursement. Element the scheme hasn't, yet, been worked out. So. With those two points. In mind. What, does the scheme actually involve whether the outline, I think is is now very, well known because, the, the headline point is, that the government will reimburse. Employers. Up. To 80%, of, an employees, remuneration. Come back to in a moment how you calculate, what their internation is up. To a monthly maximum of two and a half thousand, pounds plus. Employers, national insurance contributions, plus. The. Minimum pension, contributions, under, auto-enrollment, so. 80 percent or two. And a half thousand. Whichever. Is is. The lower and that's a number that's obviously being calculated, to. Cover. Most. Of the income for. Most. Of the workforce, of of, the UK, it's obviously not. Going to compensate higher. Earners, but. But. Your average Joe is, going to see most, of their income preserved. By, virtue, of this scheme if they're in work. Because. That brings me to the next point. About the basics this, of course applies, to people who are in work there's a separate scheme for the self-employed which interestingly isn't, some, aspects nearly as generous but well talking, about that today. And the. Reason. Why. It's for those in. Work, is. Comes back to what I was saying about this this being run through HMRC. And, through, the tax system, essentially. If you've got a PA ye code for somebody then, they qualify, as an employee under this, scheme I would with they're not really concerned with the difference between. Employees. And workers and all that sort of stuff as employment, classification. Issues if there's a PA ye code you, can claim and if, there isn't then. You. May not be able to probably. Can't the. Only reason I'm sounding hesitant, is that as well as c1 talk about issues are coming out in practice we've been asked questions, about some comments and things like that which I'll touch, on at the end. So. If. That's what the the. Fundamental. Structure. Looks like then. What, are the key things that. Employers. Must. Do to take advantage of the scheme well. Let's. Step, back a moment here if we can. Remember. What I said that this, scheme is. Primarily. About. Issues, between all money flowing, from, government. To, the employer. It's. Largely, left unsaid, what, happens, to the relationship, between employer, and employee. So. And, we've. Been positioning. Furlow in terms, that, this is good, news, you know you might otherwise be made redundant, but you can. Get on this thing called furlough, and you'll keep 80%, if, your, income up to the cap etcetera well. Just just imagine how if in normal circumstances. You were going to an employee and. You. Were going to say actually. You now only going to be baiting the scent of your income up to the cap and you're not going to have any work to do now, we'd all recognize, that it. Immediately, as, a. Employment. Giving, the employees certain rights and, you. Say to somebody you're any 80%, if you'll pay they can walk or, if they stay they. Can bring. Claims for, breach of contract or more likely, in. A, scenario unlawful, deduction for wages and they can just sit and wait whilst those are lawful deductions, rack up and at the end when, we're all going back to work normally God willing three months four months five months however long it takes and they'll just put in their claim form and say give me on my back wages now please which.
Means, Look. The key thing that you, have to do here to, take advantage of this scheme is, get. The agreement, of the employee, I, mean. First, you. Should. Check their contract, to see whether you've got the right to do this but unless you, are a. Large. Factoring. Company, whose, roots go back to the 1960s. And 70s and, that's when you first started drafting your contracts of employment, I can. Pretty much guarantee, that, you won't have that right. Because. Layoffs, and and, big. Manufacturers. Would do that if there's a downturn in order then people be laid off from production line but, we haven't seen that sort of thing being written in contracts, for 30 years or more there, are some historic, ones where it still continues. But. III, I'll. Eat my hat if it's in the contracts, of many. Of the people who are listening. Here today. So. That, means that you need to reach agreement, with the employer you know in most cases, when. It's clear that the, alternative. To this is, redundancy. Then. What's. Going to happen is you're you're going to get acceptances, and but. That's not guaranteed. So. One, of the things that, for. Example is being on these recently is that, British Airways is putting, 30,000, people on furlough but. It reached a separate, deal with its pilots, that they're going to be kept on fifty percent of, their pay and. That's. Their actual pay not, the, the. Capped amount, so. That's, an. Example of an employer topping. Up the scheme and and we know from our earlier webinar that we did on this in. The week when we did a survey of those attending, that. A. Sizeable. Proportion not the majority by any means still a minority but. A sizeable proportion of employers are planning, on topping, up these payments, to to the the actual amount presumably, to make it easy for employees to look to agree. To going, and. If. You can't get agreement and, it's. A question of either you go on furlough or we. Make you redundant, and and.
You Want to put. People compulsorily. On on, furlough. Then. You, would be looking at going through a similar exercise as, you would to a redundancy. Which. Means choosing. The right people, or going through a process of consultation, now clearly in current circumstances you can accelerate that but, the basic requirements. Still. Remain. So, that's something you'll need to think very carefully about, so. If I said one of the two key things that, here, that the real takeaways, from this is consult. With your workforce about what it is that you're doing and then. When you've got the agreement of individual, employees, make. Sure, that, you document it, okay. Because. If. Later. Down the line at the moment HMRC, you're saying we're going to give you lots of money here I'll have lots of money and everybody's thinking this is a scheme. To to. Keep. The economy going and HMRC, are going to be generous. And. That's great um. I. Don't. Trust the taxman as far as like it's better and I just think that by the time this all settles down they, might be looking to try and get out of some other payments, so, let's make sure that. The, agreement. Is documented, that you can say to HMRC, this, employee, was on furlough, we. Were not paying them. Except furlough money and crucially. And this is a crucial point they. Were not doing, any work for us. None. Nada, nothing. So. That brings me on to my third point what issues are we seeing here. Coming. Out in practice, well, let's start with that one. Um. Can. Employees, do any work whilst they're on furlough no. Not, for you they can't. They. Can be, in the loop as far as workplace communications. And that's a question we've been asked you know we send our emails to our people, can, we still keep them on the list can, we let them know what's, happening yes, you can what, you can't do is oblige them to look at them you, can't oblige them, to do anything. If they choose to look at them that's fine that's their business but it's a matter of choice for them and, again that's, something you should document in, your firm billing bring it we will be sending your communications, to keep you in touch but you are not obliged to look, at them so it's quite clear that, they're not being kept on standby so that they can be recalled, in, another. Thing that we where that, is coming out can. You furlough people part time that. We want to be poor, people on. Just. Working in the mornings or just working in the afternoons, can, we claim for the rest of their remuneration and the, answer to that is no. And. Once. People are on furlough, they. Can't do any work for you therefore there. Has to be full-time. As far as the hours they worked for, you a concern, what. You can do we, think is rotate, so. A period of further it has to be a minimum of three weeks and. So. It seems to us that there's no reason in principle why you, can't if you want to if you've still got operations, ongoing, say, ok this group of employees you're on furlough now for these three weeks and then, you'll come back to work for three weeks whilst another group goes on furlough so. You could do that you could rotate on a three-week basis, but you can't do, it part-time. Another. Issue. Can employees, do any work during. This period well. As I say it's absolutely, clear that they can't do work for you it's. Not so clear but. They can't do work for anyone else it. Looks like, under. The guidance that is, permitted. But. The. Position may change when, the regulations, are actually published, we just don't know so. We are advising, people to be cautious, about, this again, I come back to the furlough, agreement. You. Should say in there you, cannot work for anybody else without telling us and us.
Giving. You. Our permission and you. Coming back to work and we ask you to come back to. Work, so. You have a situation where an airport. Contacted. Us and they said well there's lots of people that we, don't need because there aren't any flights coming but the local police would, really like to employ them because they've all had. The relevant criminal records database, check, so. They're easily employable by the police is it a problem if we go and let them work with the police and we took the pragmatic, view well this, is a socially, good thing. But. Make sure there's a clause in the furlough agreement, that if the regulations, say this can't happen then you can put it to a stop then and you're in quite a strong position then to argue with HMRC over any monies that have already been paid so just be careful around that I think is is. What we would, say but clearly if, people get a chance of a delivery job or a supermarket job or or or please, an NHS, job, then. We. Don't really want to stop them from from. Taking it if we can avoid, it and. Then and I. Think the last point that I want to touch, on for my start is what should we be paying people. Because. Of course, a lot of people's remuneration. Rate varies, so. What are we talking about 80%, of what, and. It's, pretty, clear that it's, 80% of what you were paying them on the 28th of February because that's the cutoff date for this. Scheme. That's, when. If somebody was in. Employment, on that date they can be furloughed, he. If you subsequently made the redundant, because of coded and now. This has come in you can hire them back and reef and then furlough them straight, away what, you can't do is, rehire, somebody, which is where the issue around Commons, has come because people say we've got people overseas. And we want to bring them back and there's no work for them for, them, there but if you do that then they come back onto your payroll quite. Possibly and once they learn UPA. Week it says after 28th. Of February you're not going to be able to claim for so. They may have to furlough in the, country, is, that. They're in but. What remuneration. They get is what are we getting on the 28th of February, if that's variable, then, you average it out over the previous 12 months if they were with you for 12 months. Or. If they only joined you. Since. The. Beginning of February say then you pray today below area, so. Those. Are some of the issues that are coming out of this but. When we did a webinar on this earlier. This week and. We did the whole webinar alert, the, this. Job retention furlough. Scheme. We. Had a hundred, and forty. Questions from, delegates, now. We were able to group those. But. But, even so. It's. Impossible. To do with everything that's coming up in this in this, Whistlestop. Tour but. I hope that gives you an. Outline. And highlight, some of the main. Things if there's one takeaway that. I want to leave you with here it's, this. Get. Your furlough agreements. Properly. Drafted reviewed. And make them as watertight as possible, Thanks. So. Just. Moving on to the next part of the work, which. Relates, to health and safety so. In, these, on my certainty circumstances. There will be a number of legal and practical issues, businesses, to deal with Jonathan's.
Just Gone through one of the biggest ones at the moment but. Health and safety of employees should, remain a top priority. How, employers, treat their employees now will have a lasting, impact on morale and loyalty, amongst the workforce, and it, could also impact, on the brand image, this. Section of the webinar focuses. On the employers health and safety GT to those employees, who suddenly find themselves working. From home for a long period of time all those. Who are unable to work from home and are still required to attend at their place of work I'll, consider. Some of the practical, steps employees, should be taking, to ensure that they discharge, their duties and, the. Adjustments, which employers can make to keep their employees, safe in, light of the increased risks, to both physical, and mental health. So, what our employer is required to, do this. Is the legal bit so bear with me. Employers. Have a duty to protect the, health safety and welfare of, their employees, and other people, who may be affected by their business, these. Duties are enshrined in legislation and. In common law, failure. To discharge, these duties could, lead to among. Other things criminal. Prosecution, or a civil, claim by employees. So. In practice, this, means employers, making sure that their employees and, others. Who are affected by their business in some way are protected. From anything that may cause harm. They. Must do whatever is reasonably, practicable, to achieve this, in. Reality, there's, nothing, special about Kovach 19, it is, just a risk which now exists. The. Legal duty in this respect is exactly, the same as it was before. Employers. Have a duty to do a risk assessment in, relation, to each of the activities that employees, undertake, and that. Risk assessment needs to cover the additional risk, associated, with pay of 19. Employers, still have a duty to ensure so, far as is reasonably, practicable but. Employees. Are not exposed to the risk associated, with, david 19, these. Risk assessments, should be kept under review, as the position, changes. So, how can employers, discharge, their duties when, employees are working from home. Employers. May well have identified, that there is a risk of catching the illness when commuting into the office and when. Coming into close contact with colleagues, in the office and as. Such they may have asked their office based employees, to work from home and indeed. The UK government, guidance, now requires, that those who can work from home do work from home. However. Changing. Later employees, work because, of the copic 19 race will. Introduce new, risks, which weren't there before so. For example, prolonged, periods of working from home who'd introduced risk of work-related, upper, limb disorders. The working from home activities, need to be assessed in the same way as other work-related activities. So. As a minimum, employers. Should carry out a risk assessment to. Identify. What could cause injury or illness to employees, working, from home, that's the hazard, decide. How likely it is that someone, could be harmed, and how seriously, that's. The risk and then. Take action to eliminate hazards. Or if, this isn't possible to. Control the risk. The, employer does not have to attend each employees, home to carry out the initial risk assessment, and any, follow-up, risk assessment, required, instead. The, risk assessment, can be conducted by the employee, from home. A home, working, whisk assessment, should check whether the home workers placement work is suitable. Much. Work carried out at home is going to be low risk office. Type work so. Anywhere assessment, will need to be tailored accordingly, it will. Need to consider things like whether, the employee has enough light to work and the temperature, of the room whether. The employees, set up on a flat surface with, sufficient, space to work comfortably. Well. In the fire alarm or smoke detector, is working correctly and, where, the flammable, materials, are being kept near an ignition source. Where. The home sockets, and electrics, are in good working order if, employees. Are using electrical, equipment, provided, by the employer, as part of their work the. Employer is responsible for, its maintenance employees. Should. Check company, equipment regularly, to ensure that it is safe to use ie, it doesn't have any obvious defect, and that. It is kept in a safe condition, that will not cause any harm to employees. Or others. Finally. The employers, policy, on VDU you should still apply when, the employees, working from home.
Actions, Which can be taken to eliminate certain hazards, or at least reduce, the risk include. Ensuring. That employees know to take regular breaks and, giving them the opportunities, to do so, for. Those at risk of experiencing. Muscular, pains, ensuring. That support, equipment is provided like wrist support and if. Those only ones used for workspace in the home and more than one person using it the. Employee should be encouraged, to take it in terms to use that workspace, and, employers. Should consider speaking to them about how they can adapt their day-to-day tasks, to accommodate, it. So. What about those, who can't, work from home not. All employees, will be able to work from home because of the nature of their job they. Might be working on a food production, line or as part of an essential supply, chain. If this is the case in addition, to the usual risk, assessment, which has been conducted, in order to assess the risks in the workplace. Employers. Will need to consider exacting, their policies, and procedures, to, incorporate, increased control, measures to deal with the risks of pay bit 19. The. Measures which employers take will depend on, the risks identified, but. They might include, providing. Extra PPA. Ensuring. That employees are working two metres apart where possible, temperature. Checking. Employees, on arrival, at the workplace. Making. Sure employees avoid. Non-essential, travel. Avoiding. The large meetings, and relying in vidcon and other technology. Allowing. Employees to stagger, commuting, times if possible, this, may mean shifting, working. Hours, to start around either, earlier or later than usual avoid, the busiest and most crowded times, on public transport. Keep, in mind though that the changes, which are made might introduce new risks, which weren't there before, like, if employees, are required to keep 2 metres apart and, they still do their job safely especially. If this requires be increased together - for example lift. Or maneuver machinery, or heavy objects, as, always. Keep. These risk assessments, under review and update, them, if anything changes, in line with government advice, and/or. Changes in the situation. So. What about the mental well-being of your employees. Employers. Also have a duty to protect employees, physical, and mental health your. Updated, risk assessments, were most likely of highlighted, risks, to employees, mental, health, arising. Out of these extraordinary circumstances. Working. From home whilst also looking after children of school age or, working. From home with other householders, who are doing the same, working.
From Home alone and/or, working from home with far too much to. Do or too little to keep the employee occupied. Normal. Routines, will likely no longer exist and employees. May find that the boundaries between work life and home life are almost non-existent. Giving. A whole new meaning to the challenges, of achieving work wife Ellen the. Reality, is that these factors, together, with the feelings of isolation and, anxiety. And distractions. Of what is happening globally which, may well into you are likely. To have a negative impact, on, employees, mental, health and productivity. For. Those employees, who are not able to work from home they. May be facing other strains on their mental health like. Increased, worry about their or their family's safety. Employers. Also need to take steps to identify the hazards, and manage. The risks as far as is reasonably, practicable. Communication. At this time will be key, employers. Should keep employees, up to date on how the situation is, impacting, the business and, how. They are taking steps to manage the situation it should. Be consistent, honest, and as clear as possible. Ideally. There would be a central, hub where information and tips on well-being and staying. Connected is stored and a. Point of contact to employees, can approach if they have any concerns. Aside from formal, comms also. Don't forget to encourage, speaking, in general in. The office we might chat while we're making a cup of tea or just whilst walking past a colleague we. Can't replicate that so easily in the world of social distancing, but, a call to someone who you haven't spoken to you for a while may go a long way. Remember. Also that one size does not fit all and what works for one employee may not work for another, risk. Assessment, should identify individual. Needs it. Can, be as straightforward as, lying managers, or supervisors. Speaking. With employees, about how they are feeling what. Their needs are and what the employer can do to help. You, should also identify and. Protect those that are most at risk, some. Employees will find these circumstances more, difficult, than others, these. Include employees, who are new to the business those. Employees, who are not used to working from home, employees.
Used To have a thriving social, life with their colleagues and otherwise and employees. Who live alone, some. Employees, may not have easy access to suitable, equipment or a good environments, work from home. Special. Care should be taken to consider, and address as. Far as is reasonably, practicable the, concerns, of this. Finally. I thought. It would be helpful to let you know some of the practical ways that we at gowling have been trying to look after each other's mental health we. Don't have time to go through all of these but some specific, examples are, our. Team leaders have been telling stories of what has gone well and what has been going. Not so well in the brave new world stories. About dogs and children going crazy during conference, calls can help to boost confidence of, genius produce. Feelings of isolation and, normalize, problems, as, much as possible so, that we are feel like we're all in the same boat. We've. Provided in employees, with practical, tips about relevant, issues like how to manage anxiety or. To stay active and tactics, to promote healthy, sleep there, are plenty blogs and videos about these on the Internet we. Have also set up pastoral. Sub teams and Fredi systems, so that employees are being contacted regularly, by managers, all their peers for a quick chat and to share any problems. So in summary really, the overall, position is, that you need to continue, with your risk assessment, in. Light of the new risk of codebook 19 and, you need to keep these risk assessments, up to date taking. Into account the, physical and mental. Implications. Of this new risk. So just, to pass on to Julian now. Thank, You amber, good, afternoon everybody, and, I'm sitting, here thinking that I'm probably sitting the, bad posture in a bad light feeling. Very lonely, so. It's. A very strange time I'm. Going to talk this afternoon about duties. Of Directors, in the UK and. Health care workers on the front line in the moment fighting, cave-in nineteen, but directors, have got an equally important, task and that's keeping, the wheels turning, and helping, to minimize for, damage to the economy the. Livelihoods of our employees, had also tried to keep otherwise, viable, businesses, and. When. The crisis, passes and. Directors. In the UK have a wide range of duties under. Statute. And regulation, and Alber and Jonathan talked about some of those already, but, of course directors. Also have, statutory, duties, and common law duties, in their, capacity as officers. Of a company, and, in, particular they. Have a general, duty to promote the success of the company for the benefit. Of its members, generally and, but. They also have, to look at a non-exhaustive. List of, other matters including the. Long-term consequences of. Their decisions, and the, interests, of the company's employees and. Its, commercial, and business relationships. Which its suppliers, its customers, its creditors. Directors. Well therefore I go to have to perform a very difficult balancing. Act between, the, short term decisions, they need to protect the business including. Perhaps, prioritizing. Critical payments over non-essential, ones protecting. The workforce, but. At least may have potentially. A short-term. Impact. On the company's financial, and trading position. The, other point of directors need to be aware of is that in addition to those obligations.
Where The solvency. Of the company, is. In doubt where there's a risk of insolvency in, terms. Either of the company having a shortfall, of assets against liabilities. Or more likely in the short term simply. Not being able to pay its debts as April June the, directors, have an additional, supervening. Obligation. To look after the interests of creditors. Now. You may have heard that the government announced very very, recently, the, weekend that, they are planning to suspend. The, rules, relating to wrongful trading, in the UK and also, to bring in some form of mullet aureum to. Help with creditor, pressure. On. All the suspension, of volatile trading that's obviously helpful because. In the UK, we, have a principle, that if the directors, of a company, continue. To trade beyond. The point where they knew or ought have, known, that. The company have no reasonable, prospect with audience, a'lamin see then. If they continue, to trade and incur credit, they may be subsequently. Found to, be personally, liable for, that. Additional, credit, now. Under. The new and rules, announced, by the government and. This is going to be back dated to the 1st of March the, principle is going to be the wrongful, trading, itself will not apply so, directors. May be able to carry on trading, even where, it. Could well be said, and probably is the case for many many companies but, they're either insolvent, now or very likely to become insolvent, so, it does help electors, in the decision, to continue trading. However. And this is the battle it's and beat but all. The other rules about trading, rights remain, in place so. For German trading, where. Directors, incur credit, knowing. Actually. Knowing that it won't be repaid, or recklessly. Without any regard, to whether we can be repaid, and, that's for doing trading and directors. May be personally, liable indeed. Potentially. Criminally, liable. Also. Rules, about. Transactions. As an undervalued selling, assets still undervalued connected. Parties. Preferring. One creditor, over the other. All. Those rules will still apply but so, directors, still need to be very careful, in discharging, their duties in these difficult times and, then, the. Changes, announced do not completely, remove all the. Obligations, directors, have to creditors. We've regard to the proposed moratorium. We don't know any detail yet like much of what the government's doing they're doing it in a very fast-moving environment. Not. Quite making it up as they go along but, certainly, trying, to adapt as things develop and so, what they're talking about are two types of moratorium. The, first is a general, moratorium. Through, a fairly formal scheme, and which, has been talked about for some time and they're talking about bringing this forward now, we, don't yet. Know when, they'll be able to do this because of course Parliament's, not gonna be sitting and, secondly. Because, it's quite um there. Is a procedural, aspect to it we, don't yet know how many companies will be able to take advantage of this the. Other is a specific, Cobie 19, moratorium. Which will be far, more. Processed, light if you like it will be felt far easier to bring into play and this, will provide some protection. To companies. From creditor, pressure, without. The need to go into a formal, insolvency, process, and although. We've heard of a few high-level, cases, obviously Laura Lashley, fly. Be the regional airline and, companies, like that which, have gone into formal, administration.
Probably. Because of inside of Cobie other. Reasons as well it almost certainly, we're. Not anticipating, that, vast, numbers, of companies are going to go into formal. Installer C procedures, immediately more. Likely, they're going to try and lock all they go to try and close down their operations. You're going to try and furlough, their staff but. In some way they're going to try and survive they, get to try and avoid an, insolvency, process, and be, ready to start. Trading in once, things start, to improve. And, so these monitoring. Procedures may help but, we don't know the detail yet. So. What can directors, do you know. What are the things that directors, need to focus on, in. The meantime to, make sure they do discharge, their. Duties properly, and, it's very important that they do this because clearly, at, the moment, everybody's. Trying to do their best in very difficult very fast-moving. Circumstances. But, when the dust settle, all of this, people. Will be looking back to see what people have done to, see whether they have abused the situation. And certainly. There will be some food there'll be some some some really bad behavior, around and. Those, directors, will be walked book but. If directors. That recently, and prudently, in. The current circumstances, and do their honest best to. Abide. By their duties, in to fulfill their duties it's very unlikely, the courts are going to be receptive, to any attempt, to criticize. Or penalize, honest. Hard-working directors. Who've done their best in the circumstances. So, some practical things which directors, should focus on first. Of all good government's, hold, regular, board meetings, and, and, have. Collective, decision-making, because, it will tend to lead to better decision, don't. Treat this as a formality. Valuable. Process, base. Your decisions, on factual. Evidence on, up to date forecasts. And keep reviewing the, position. Circumstances. Are changing very fast none, of us thought three, weeks ago we'll be in this position I'm sure and, so keep. Reviewing your decisions, in the light of changing circumstances. Directors. Need to be aware of the available, support so, things. Like the furlough, scheme the, VA TN tax deferrals, are available, the. Business loans which may be available supported. By the government. There's. A lot of doubt as to whether there they, are compromise, comprehensive. Whether, they're going to be available to, companies on terms they can take, advantage. Of but certainly, directors, need to be aware of all these things and look, to take advantage, of those things which are appropriate for business to. Help the business continue, or at, least to put it in a position where we can stand still and the, way we at. The end of the current situation. One. Thing directors, do need to do is. To engage with other stakeholders, with suppliers, with, creditors, with customers, with. Pension, trustees, if you've got pension, liabilities, and. Other stakeholders. In the business at. This stage the government has not, more. To exceptions, around. Mental. Mental property, protecting, people from eviction things, like that they're, not yet intervening, in private. Contractual. Arrangements. And Jonathan's, already mentioned, that the, furlough, scheme doesn't override. Basic. Employment walking, schools so where. Directors. Need to, meet each, accommodation. With people maybe to defer payments, to deferment, payments, for example, or, to delay deliveries, things. Of this nature and. They do need, to engage with the other stakeholders. Because in many cases those stakeholders. Will have a mutual, interest or, at least some mutuality of interest, in reaching some kind of agreed. Wave forward, because for many of those stakeholders the. Failure of your business, will be a disaster, as well and. Insurance. Make sure you know where you are of your insurance, including, your directors, and officers insurance, both. In terms of any claims you may be able to make but it covers any of the losses you're suffering but also to make sure that you keep the right level of insurance in place, to. Protect your business and your employees. And. Then finally. Audit, trail keep, a record, keep minutes, of your meeting let's keep records. Of the decisions, you make and the reasons, why you take, those decisions, and the, facts you've taken into account in doing so all, this will help you should it be necessary as a later date to demonstrate. Why you did what you did why. What you did was a reasonable.
Honest. And proven thing for a director to do but, that should help protect, against any criticism, in the, future and then. Finally, and you might say I would say this wouldn't I do, take professional advice whether that's from lawyers it's. From accountants, or any, other relevant professionals. Because in discharging. Your duties, as, directors. Taking. And acting on proper professional advice, is it, the, right thing to be doing and will help you demonstrate that you've done and you've, tried, to do the, right thing in very, difficult circumstances. Looking. Forward and, we're. Going to have a lot of challenges even, when we come out of this so do keep reviewing, things and starting, to plan ahead so far as you can do. Remember, that if you defer creditors, if you defer went or v80 or, EI ye, you. Will have to pay that so there will be a wave of creditors, to be met with, an increased, level of working capital needed in the business both. For meeting, those different, creditors, but also to. Finance, any improved. Trading, once things start to get normal, and and. Bear in mind that. When we come out of this a lot of businesses will be stressed a lot of businesses. Will be risking over trading and so, you may have increased risk of your your. Counterparties, to people you trade with bailing. On you so you need to factor that into your risk planning as well. And. Also, rebuilding, relationships a, lot of relationships, will be strained during this period so start to think about how, you'll rebuild relationships in. The new world going forward because. That will be the key to. Transitioning. Successfully. Out, of the current crisis, don't. Make assumptions. Keep. Checking, what, you think is going on with, the facts as they present themselves because. At, the moment the one thing we know is any assumptions, we make are, likely, to prove. To be incorrect. I'm. Sure there'll be some opportunities, coming out of all of this so. Good luck and I hope, this has helped give some kind of route map and what you should be doing in this current, circumstances. All right thank you so much Jonathan. Amber, and Julian for your presentations. Hopefully, everybody's really enjoyed those we've, got a few questions that have come in just. As a reminder to, all the the. Attendees. If. You have any questions, please write them in the Q&A box at the bottom of your screen, not. In the chat box I saw at least one question come in through, the chat box so. If you could just copy paste that into the Q&A so we can we can go through them all um. But. Let's just get, into the question so the first one that we got. Is. Can. Directors, be furloughed and if so how, are they supposed to comply, with fulfilling their directoral, duties, if they, are not if they're, not supposed to work to, benefit the business during the furlough time. All, right I'll I'll, pick that one to. Start. And then perhaps, Julian. Can, comment. The. General. View. Is that. Directors. Who are employees can, be furloughed as. Employees. But. To the extent they need to exercise their director, all do. Is, and now. I. Think this is one which is clearly open. To abuse. In.
The Sense that if a director, continues, to do pretty much absolutely, everything they were doing. Before. Then. Query. The, extent. To which they can split. Out their employee and their their director, role but, in terms of. Complying. For example with the duties, that Julian, has has, just set out then. There's no reason at all why they can't be followed. As employees. Continue. To take. Their. Cash. And deal, with. The. Issues that they've got, to deal with because, otherwise. Julian as you've made it clear bad things might happen. Yes. Thank you Jonathan I think it's absolutely right, you. Need to be very clear that in under, English law, directors. Of companies wear, two hats wise is an officer, of the company and that's. Where their directors, duties arise and the other reasons the employee so, even if I'm further as an employee. Directors. Still have to destroy the beauty services, in. Practice, have likely. To give rights to quite a few problems. May. Well be but for many businesses, they will need to find a way of paying. Their directors, to carry on working, as employees, as well as directors. As officers. Because. The, things, they will need to do to. The. Employees, the customers. I. Think one, of the things. Directors. Of companies will need to think about is do, the directors, need to carry on bullying employed and not furloughed. In, order to keep the business together and. If so how, much should they be paid and that will depend partly, on what. The business can afford, so. Yeah be very clear that the fact that there are different duties for directors, officers, and, the, things they do as employees. Okay great thanks, and then, the next question, came. In directly, for. Jonathan and it, was um can you recall people and furlough early, and if, yes, what. Are the implications on, that to the employee visa V HMRC. Slash government further, agreement. Well. This goes back to what I was saying about, making. Sure you've, got this buttoned. Down in, your. Furlough agreement, with the employee you can recall, people on furlough, early but. Bear in mind of, that fellow. Has to be for the minimum of, three. Weeks so. If you're recalling them from under, that period. Then. You're. Unlikely, to be able to claim back from, the government for any of it, it.
Won't Count as a furlough, once. You've gone after the three weeks then. You. Can. Call, them back without affecting. Your. Compensation. Payment, but. Make sure that. You. Have, agreed of the employee that that's what you can do, otherwise, you might find, employees. Who are. Spending. Their time in different parts of the country who won't be able to get in to work etc etc so, you'll. Want to have sorted that out before the whole thing starts. Okay. Thanks and next. Up, we. Had kind. Of director be criticized, under. Insolvency, legislation for, refusing, to take up a loan under the government scheme if she, or he doesn't. Want to give a personal, guarantee to. The bank to support the loan I II can, she or he his or her interests. In front of the company's interests. Well. Thank you that's a very good question and there are a lot of big questions around, the government loan schemes, but. On this particular one, there's been a lot of talk in the press about this I don't, think the government intended. That people should give personal guarantees, and of course they've they've, actually specifically. Provided. That the the, the, banks cannot ask for security, over. The directors. Own. Homes, their, private, residences, although. By taking a personal guarantee of, course a bank, could indirectly, get to. The directors. Home because, the director might need to sell their home to, pay off the personal guarantee the. Short answer to these very good question is no a director. Does not have to give a personal, guarantee and, if, the condition, of the loan is. What give. A personal, guarantee they, cannot be criticized, and, for not doing it because they, have no obligation. Under. English law to. Put their personal assets, on the line to. Support the business, the. Other thing is I think directors, need to think about when looking at these loans he's not only did I have to give a personal guarantee but, can the business afford, it because, of course these are not quiet, they are loans and, basically. The government is inviting. With its support, inviting. Directors, to, borrow money to cover losses caused, by college. And. Then repaid, out a few tickets, now some big companies, may be able to afford that but. A lot of small companies may, well say actually. We're never going to be able to afford to repay this loan even. Though it's guaranteed by the government it will be a liability. Of the company and therefore. We. Shouldn't be taking work purposes. Because the, company, can't sustain it. It's. Not a discharge. Just duties, to take a loan they can't and see. Any prospect, of being to repay. At. The other extreme of course small businesses, may say well even if we think we might be able to would we pay this, few. Years. Why. Should we bother why. Should we work for the next few years to. Pay. Off a loan that's been taken, out and. Due. To circumstances, outside. Our control and. I think these are very good questions and. Illustrates, some of the problems. That lie at the heart of, what, the government is trying to do in trying to protect the economy and yet, find. Ways of making business pay the cost of doing so so there are some big issues here. Thank. You for, that answer, and the. Next one I, think I missed just, before. Was. I think, it came in during Jonathan's. Presentation. And he was are you saying that working skin workers, can get paid work elsewhere, during. Furlough, or are you talking about furloughed, workers doing, unpaid, ie, voluntary. Work for the NHS, or the police I, think. The position in. Relation. To. There's, no issue there as, far as the scheme, is concerned. HMRC. Don't. Mind if employees are doing voluntary work as. Far as the position is between employer and employee again, I come back to the the furlough agreement, if you're it's. Okay for your employees, to, volunteer then, you should say so but. Also make it clear that you can call them back and if, that's what you anticipate. That. You're going to need to. Do so. That your employees, haven't made, commitments. Elsewhere that. It will be both practically, and legally, difficult. To ask them to break, as. Far as paid work is concerned it's.
Absolutely, Clear you can't do paid work for the employer during furlough, and it, isn't clear whether, you can do paid work for someone, else, it. Doesn't, appear to be expressly, prohibited. In the. Guidance although. That, there, is an ambiguity there. And that's, why our, advice. Is, the. Starting, point should be for an employee or further is you can't work for anybody else, if. You want to work for anybody else you need to, ask. Us and get our consent, and we need to be able to call you back and employers. Can take a view on that on a case-by-case basis. Of how much risk they. Are willing to bear the example, I gave of the, airport where it was, quite clear that it's. An advantage to society. At, the moment if employees who are already. Checked. For, criminal. Records can go and work for the police who are who, are short. Of people working for them at the moment and so. That. Employer we are encouraging to take a view in those particular circumstances but, other employers will, take different views. Alright, thank you and the, next one is a bit of a longer question. As. A specific. As a small, independent, school. Kindergarten, and Krash, the. Early years setting is open to all but. We have furloughed all our staff as we, are closed, we, have school staff who would like on a completely. Voluntary, basis, contact, they're chilled by agreed emails, and contacts, they. Went to choose if and, when and likewise it would be voluntary for the children's point of view as we're. Not charging fees is this allowed under furlough, as it, would definitely not, be generating. Any revenue but. Would it be classed as providing, a service, this. Would be to the children rather than a service to the business. You. Know how it's said that any lawyer can answer any, question with the words it depends. And. As. A lawyer you have to be careful, of that you you know you know we ask the question does my bum not be in this and if you reply it depend. So to answer this question without starting, off it, depends. The. Principle. Is that. They. Can't, do any work for you the kindergarten. However. If, it, looks like, that, work is carrying, on by other means, so. They, are in, fact working, with. The children but being paid. Privately. Then. I. Can. See that. HMRC. Might, look to, challenge, that. Because. Really. What's gone on here and is in effect the kindergarten. Acting, simply as an agency for the introduction, of the, provision, of teaching services, to. The, children now clearly, if the kindergarten, isn't making any money out of that, then. That's quite a hard one for the, revenue, to put but but where you've got no, owners, of the kindergarten and might also be doing this then it's gonna get a bit a bit, tricky what. I wouldn't want to say, because. It would be a hard thing to say particularly, in a kindergarten, context, where children are you know in isolation, and this is difficult enough for for. To say no you, mustn't contact, the children you mustn't have any contact, with them stay away because. That, doesn't, seem fair on children, or really, that fair on the teachers either so. So what I would say I think is is, this, and if. There's. Any question, of the, teachers getting paid work, from. The. The, children's, families. Then. For. The sake of the, the. Furlough. The, kindergarten, they, oughta make it clear that. There. Is to be no payment from, the family in, these circumstances on, a private.
Basis. And. To. Advise. The. Members. Of staff that, they. Can have limited. Contact. With. The, children. But. They should use their discretion and. Ensure. That that doesn't tip over into providing. Effectively. A virtual, childcare, service. Thank. You and we've still got about three, questions we've, got also about three minutes so maybe we can see if we can quickly. Answer all of these or than at. Least a couple one. Of our employees has, been furloughed we, ask all employees, to check in each morning, to state they're healthy or not and either. Are either working from home or relaxing at home I would, still like her to do this to make sure she's okay I presume. I presume, this is fine and ideally, I would like to compel her to do this as I want to make sure she is okay. Okay. Short, answer no you can't compel and. It's not fine it's a bit risky actually. All. Right can. I sole director be furloughed. I'd. Refer you to the answer that June. And I gave later there's a distinct earlier, other. Distinction. Between employers. Sorry. Between an individual's. Role. As an employee and their duties as a as a, director, so a, a. Sole. Director, can, in principle be furloughed. And. It needs careful management in practice, Julianne would you like to add to that. Yes. And no I mean in a sense you've answered the question that he. Stands, for this issue of working. And what, he is carrying, out statutory, duties, as an office of the company and. What he's carrying out, duties, as men for ye and I. Think the danger here of course he says a sole, director its furloughed, and gets paid under the. Scheme and, then subsequently, HMRC. Come along they'll say well actually we've. Had a look at what was going on and you're actually working through this and, you. Know you, should, have trained under a scheme and there's always a risk of us I'm afraid but, theoretically. Carrying. Out purely, statutory duties. Would. Not amount, to breach. Of the furlough, but. If it free in the, directories actually carrying. Out things, which are not specialty, duties with a part of their contract of employment then. It's. It's not furlough. All, right thank you and um maybe, you will just really quickly go, through the last question, as well and then we, will be finished, bearing. In mind the, furlough scheme is supposed to be there to prevent employers, having to make redundancies. Do. You think there is a risk of HMRC. Declining. To pay if entirely. Profitable. Employers, whose, business, isn't affected, but who might have employees, whose jobs can't be done from home decide. To furlough employees even, though in reality they. Would not have considered redundancies. Okay. I can answer this one quickly you'll be pleased to hear if the, business isn't affected by covert 19 then you're not entitled to put people on furlough that, is the test business, has to be adversely affected by by. Komak 19 now that's quite broad. The. The test doesn't go on to say it's. So that you have to make redundancies. HMRC. Hadn't set the hurdle very high at all but. For businesses, who are not, affected, by carrot 90 and. There, are businesses, of course who, are. Not. Adversely, affected, they. They'd. Seem more work at the moment an increase in demand and they.
Are Not able to. All. Right thank you so much hopefully. We've now answered, everybody's. Questions. And, hopefully. You've all enjoyed it thank you so much again Jonathan amber and Julian for all your presentations, and answers to the questions, and, I. Think. That's all from us.