Coronavirus (COVID-19): What are the legal issues for businesses affected?

The onset of the Coronavirus (COVID-19) has had a profound impact around the world and caused disruption to most facets of daily life.

This includes cancellation of public events, unprecedented ‘work from home’ arrangements, restrictions to international travel, prohibitive social distancing and quarantine measures, and closure of public services.

Businesses that have relied on international commerce for their supply chain, have been particularly challenged as countries grapple with closure of national borders and hibernation of the world economy.

In considering how Coronavirus (COVID-19) may affect your business, you should consider the following legal issues:

Employee – Employer Relationships

Review your employment policies and employment contracts to ensure that current policies in place are suitable for new workplace dynamics created by COVID-19, then consider if changes should be made to policies relating to: [1]

• leave;

• flexible work;

• overseas travel; and

• absenteeism.

If you are encouraging staff to work from home, you should consider what resources employees need to be effective while working from home. This should assist you to streamline work functions during this crisis.

Protect your Business

Review your current commercial contracts with your customers and suppliers.[2] Common contractual terms, that may raise disputes during this pandemic period, include terms such as:[3]

• force majeure;

• extensions of time;

• liquidated damage; and

• notice requirements.

A common issue arising from the pandemic is the reliance on ‘force majeure’ clauses. The term, ‘force majeure’ literally means ‘unstoppable force’, but at lawdoes not have a standard meaning and therefore, it is important to review each clause in this category carefully before attempting to avoid an agreement.

Some agreements have lengthy force majeure clauses and definitions while others will provide that parties can terminate or suspend a contract due to a list of factors specified in the clauses.

Otherwise, you may need to rely on the common law doctrine of frustration.

Risk Management

If you have a policy in place, you should review and ensure your business is ready and able to reduce the risks arising from government mandated restrictions.

Factors to consider when reviewing risk management policies, include:

• creating a safe work environment, particularly if your team are working from home, this remains your responsibility as an employer;

• optimising revenue;

• reducing or deferring expenses;

• reliance on alternative supply/substitutes if relevant imports are affected;

• contacting financiers to discuss what financial support may be available; and

• reviewing your insurance policies and their coverage.

How can DSA Law help?

If you have a commercial legal issues, please Contact Us or one of the Commercial Lawyers at DSA Law on (03) 8595 9580 so we can assist you with your concerns.

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[1] To read more regarding leave entitlement, you can find out by reading the article, “How does the Coronavirus (COVID-19) affect employees’ leave entitlements. “

[2] To read more regarding defaults and statutory demands, you can find out by reading the article, “How does Coronavirus (COVID-19) affects Defaults and Statutory Demands.”

[3] To read more regarding frustration and force majeure, you can find out by reading the article, “How does the Coronavirus (COVID-19) affect Retail Leases.“