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Coronavirus - Commercial law overview - the UK

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  • Coronavirus - Contractual issues
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Our last briefing from the Commercial team at Eversheds Sutherland looked at business continuity planning and the possibility of new regulatory measures cutting across the ability to conduct business.  This briefing updates you on UK Government preparations as at 4 March 2020.

Now a notifiable disease

Following similar designations by the Scottish and Northern Ireland devolved administrations, the UK Government has now declared the outbreak of COVID-19 as a notifiable disease. This designation has various implications; one being that health care providers are placed under a legal responsibility to tell health officials of suspected cases immediately and another being that businesses may now be able to claim under commercial insurance cover that provides for compensation on cancellations resulting from a designated notifiable disease.  Of course the precise wording and terms of any insurance cover will still need to be reviewed, particularly as some policies exclude specific diseases but the possibility of insurance protection has been increased by this declaration. Click on this link to read further Eversheds Sutherland insight from our Insurance team.

UK Government action plan

The UK Government issued on 3 March their action plan to deal with this outbreak. Key points for business are:

  • the plan is light on detail, with the emphasis being on responses needing to evolve as the situation develops. We should not assume that this proposed action is set in stone but that the Government’s actions will adapt to the situation as data becomes more complete. As such, it gives little away in terms of future regulatory measures the UK Government might take
  • the current emphasis is on containment, particularly in the field of guidance given to individuals returning from areas of reported infection, with self-isolation currently the primary means suggested to contain the disease. The plan is to detect early cases and prevent the disease taking hold in the UK for as long as reasonably possible and delay the spread so that if it does take hold, it is pushed away from the winter season where infectious flu is more prevalent. If containment is not achieved and the next phase is reached, possible action will be restricting large scale gatherings, school closures and encouraging greater home working, but there is no suggestion as of yet of direct restrictions on private business operations
  • the UK Government is clear that, as data is still emerging, the impact on business is still uncertain but in what they call a “stretching scenario”, up to one fifth of employees may be absent from work. This figure could be used by businesses to help their own contingency planning by basing it on an assumption of an absentee rate of 20% across the board, although a more granular approach will be needed to reflect the impact on particular operations in particular locations or if key personnel are missing
  • effectively responding to the outbreak requires the “active participation of a well-informed public and all service providers”. In this sense, all businesses are expected to play their part in containment and education
  • there are and will continue to be enhanced health measures at ports, including the requirement for a declaration to airport authorities from direct flights arriving into the UK to state that all their passengers are well prior to landing, with a similar requirement for vessels arriving from foreign ports
  • the Department for International Trade is said in the action plan to be “support[ing] British companies facing disruption due to the Coronavirus” although the current detail of this appears to be limited to dissemination of information on UK consular and visa services and accessing existing UK Export Finance facilities. There are no recent updates on the Department for International Trade’s own webpage relating to COVID-19 support.

What happens if the outbreak becomes a severe prolonged pandemic? 

The action plan sets out in very broad brush terms how the UK Government will escalate its response. This phase might result in certain care and support services being reduced temporarily whilst resources are shifted to dealing with the outbreak and other critical infrastructure services planning to minimise impacts that could disrupt daily services on which the UK depends. For businesses facing short term cash flow issues as a result of a drop in demand, there are no new measures suggested, only a suggestion of using the existing HMRC’s mitigation system “Time to Pay” system. As this is offered on a case by case basis, it is difficult to see this as a reliable mitigation strategy. In terms of future regulatory measures, the action plan only refers to the Government “considering legislative options, if necessary, to help systems and services work more effectively in tackling the outbreak”. There is nothing in this action plan to suggest that the Government is considering the type of emergency measures put in place in China. However, the Government has confirmed that their plans will need to adapt as the situation evolves.

Eversheds Sutherland coronavirus hub

This is one of a series of briefings by the Commercial team at Eversheds Sutherland on COVID-19.  Click on this link to access our other briefings.