COVID-19: Business Briefing - Ireland

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COVID-19: Business Briefing - Ireland

Published 6 marzo 2020

DAC Beachcroft Dublin is receiving an increasing number of client requests on Covid-19 issues. With many large employers and most of the leading insurers as clients, we are particularly well placed to advise on the appropriate measures in relation to, and possible consequences of, Covid-19. The situation in Ireland is fast developing and remains under constant review. There have already been instances of school and company closures as seen for example in the IT sector.

There will likely be an impact on profits for businesses as a result of operations being affected. Employers must remain cognisant of the legal position as it develops. This includes, potentially, legislation governing remuneration in relation to those isolating by reason of Covid-19, as being considered by a cabinet subcommittee.

A key consideration is not dissuading workers from self-isolating where appropriate while at the same time having a balanced approach that works for businesses. Government guidance, including advice on self-quarantine after travel to affected areas, is expected to be updated regularly. Guidance on arrangements for the Civil and Public Service are imminent. A number of sectors including, for example, healthcare, face particular challenges but many of these – around staff, supply chain and contingency planning – are of general application.

This briefing note sets out some of our most frequently asked questions. The answers have been kept to a very brief overview, so please use the contact details provided at the end of this document, or approach any of your usual DAC Beachcroft Dublin contacts should you have specific questions.

Dealing with a suspected case within your organisation

Can I ask staff to remain at home following travel to or via an affected country, or if they have been in contact with a person with the virus?

If an employer is aware that an employee has travelled from one of the worse affected areas or if they are aware that an employee has been in contact with a person with the virus, they are entitled to ask that employee to remain at home for health and safety reasons.

Employees who are informed of the need to ‘’self-isolate’’ or ‘’quarantine’’ for a 14 day period, who are not displaying symptoms of the virus, and who are required to stay at home for a particular period by their employer, are likely to be entitled to be paid for that period.

If it is possible for those employees to work remotely from home, then they should be required to do so, and be fully paid.

It is important to constantly monitor and highlight to employees Government updates and guidance and to take a risk-based and proportionate response to those who have travelled to certain areas or have been in close contact with those who have. In order to protect the rest of their workforce, many employers may wish to require those returning from certain areas to remain at home. Other than in exceptional cases or materially in breach of an employer’s own policies and procedures, and as long as it is paid and not done on a discriminatory basis, this is likely to be defensible.

What if an employee refuses to attend the workplace because of fears of infection?

You should offer reassurance and advise them where to find further support. It may be possible to allow employees who wish to do so to work from home or to take holiday or unpaid leave. In particular, more flexibility may be required for employees who are pregnant or otherwise at high risk for medical reasons.

However, you should reserve the right to require attendance at work as is reasonable in the circumstances and including on short notice, making it clear that disciplinary action could be taken if a refusal to attend work is unreasonable.

What pay are employees entitled to?

This depends on a number of factors, such as, whether or not the person is displaying symptoms (in which case absence can be treated as sick leave and normal employer rules are likely to apply) or whether they are fit to work but are being required to stay away from the workplace because of Government guidance or the preference of the business. If an employee can work from home, they should be paid as normal but the situation becomes more complicated where they cannot perform their usual role at home. One approach is to treat employees staying at home because of medical advice as being on sick leave, but other circumstances will arise requiring different treatment including where an employee self-isolates but is not actually ill and without reasonable justification.

However, if an employee’s pay is withheld, they may seek to insist on attending the workplace or even work elsewhere, both of which pose increased risk of spreading the virus. Employers therefore need to consider all the circumstances and the wider health and employee relations implications of not paying staff. Many employers will consider paying normal pay for a minimum period. At the same time, many employers will regard themselves of having no viable option but to withdraw pay in certain circumstances.

Employers may have to consider temporary solutions such as voluntary leave, paid or unpaid leave, or in extreme, and hopefully for most part unlikely cases, options such as lay-offs.

The approach to payment must be kept under review. Legislation is a possibility and businesses must watch the situation as it evolves and in the meantime deal with this issue on a case by case basis, as appropriate.

What else should I consider?

  • Minimise disease transmission – Consider restricting non-essential travel to high risk areas and increase the use of video conferencing to avoid face to face contact. Any travel to overseas meetings or conferences should be subject to a full risk assessment. Further consideration should be given to restricting visitors such as suppliers to the workplace who have recently travelled to countries which have experienced a virus outbreak.

    In the workplace consider installing hygiene facilities such as hand sanitisers and enhancing cleaning services. Educate staff on symptoms to look out for, and remind them about frequent hand washing and maintaining good cough and sneeze etiquette.

  • Be aware of discrimination - There have been reports of racial abuse in other jurisdictions in connection with the outbreak. It may be appropriate to remind people about their obligations to treat people with respect and of the dignity at work and other relevant policies.

  • Develop a contingency plan - The plan should include liaising with landlords as to their policies (in the event of a building needing to be vacated), facilitating remote working and strategies which deal with possible scenarios such as a reduction in business or staff shortages.

Business Impact

Directors’ duties in relation to employees

It is worth remembering that whilst directors owe their duties to the company, and not employees, the Companies Act 2014 requires that a director act in the way he or she considers, in good faith, would be most likely to promote the interests of the company for the benefit of its members as a whole and, in so doing, the director must have regard (among other matters) to the interests of the company’s employees. Therefore, were directors to (for example) be reckless as to the impact of Covid-19, there is a risk that they would be in breach of their statutory duties. As a practical matter, the board of a company will want to be able to demonstrate that it has considered an appropriate response to Covid-19 issues were they to impact on employees (for example, what should be done if an employee chooses to visit a high risk area?). Ensuring that points such as this and those raised above have been considered at the appropriate level will assist in demonstrating that the directors have discharged their duties.

Am I liable under a specific contract?

This will depend on the terms of the contract. If there is a force majeure clause, the question will be whether Covid-19 is covered. Words such as “disease” and “epidemic” will be helpful. Failing that, phrases such as “act of God”, or “supervening illegality” (such as inability to move due to a lock down) will assist, but as ever the devil is in the detail and specific facts.

Absent force majeure, parties may seek to rely on frustration of the contract. Whilst any instance will be fact specific, proving frustration is notoriously difficult, and examples where contracts were held not to be frustrated include where the event should have been foreseen (arguably given previous outbreaks), and where an alternative method of performance is possible. That said, cancellation of an expected event (as may be the case for sporting events or conferences) has in the past successfully been used as a reason to argue that a contract has been frustrated.

What if I am organising a conference or sporting event? Should I cancel it?

We already have a number of examples of events (including sporting events) being delayed or cancelled. Liability can arise for an organising company under tortious principles at common law and/or statute if an outbreak is traced to an event organised by that company and, broadly, the company fails to exercise the appropriate duty of care. Clearly, context will be extremely important – first and foremost being an understanding of likely attendees.

Do I have insurance cover?

There may be insurance cover available for some of the impacts on business. These are likely to be complex issues and will require specialist consideration of the available insurance policies. Some of the more common areas of concern are set out below.

  • Employees and Directors - there may be Employer Liability cover, and for any potential breach of an obligation on the part of Directors, there may be cover under a suitable Directors & Officers Policy.

  • Travel - where travel has been impacted, a distinction will need to be drawn between travel to destinations where there is advice from the Department of Foreign Affairs not to travel and a more general reluctance to travel due to the situation as a whole. Where there is advice not to travel a key factor will be the date on which the warning against travel was made, and when reviewing any travel policy care will need to be taken to consider whether there are any extensions (or exclusions) dealing with “epidemics”.

  • Cancellation / Business Interruption - where an event has been cancelled e.g. a sporting event or conference, there may be event cancellation and/or disruption insurance available. Care will need to be taken in reviewing any exclusions or extensions relating to infectious diseases. It will be difficult to buy new cover now given that Covid-19 will almost certainly be specifically excluded. 

Perhaps the largest impact on business will be loss of profit suffered by both global and local businesses e.g. in the hospitality industry where the absence of travellers will affect businesses like airlines, restaurants, hotels etc. and although it is possible that cover will be available under Business Interruption and Contingent Business Interruption policies there may be limitations. Although these are commonly only applicable where loss is consequent on damage to property that is not always the case, but it is probable that there will be exclusions dealing with disease related losses.

Businesses are also likely to have difficulties with supply chain arrangements which may be covered by Contingent Business Interruption cover even where the loss is as a result of a problem with a supplier or customer rather than within the business itself.

This article is restricted to matters under the laws of Ireland, and should not be relied on in place of detailed advice on any specific issue.

Authors

Sharon McCaffrey

Sharon McCaffrey

Dublin

+ 353 1 588 2554

Barry Reynolds

Barry Reynolds

Dublin

+ 353 (0)123 19647

Noreen Howard

Noreen Howard

Dublin

+353 (0)1 231 9682

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