New Zealand to lift almost all COVID-19 restrictions

New Zealand Prime Minister Jacinda Ardern announced Monday that New Zealand will lift almost all COVID-19 restrictions on Tuesday.

New Zealand has no active cases currently, and no one has tested positive in the past 17 days. Further, no one has been hospitalized for COVID-19 in 12 days. It has been 40 days since the last community transmission.

Ardern also noted that elimination of COVID-19 is a sustained effort. She stated:

We almost certainly will see cases here again, and I do want to say that again—we will almost certainly see cases here again. And that is not a sign that we have failed; it is a reality of this virus. But if, and when, that occurs, we have to make sure—and we are—that we are prepared.

Travelers entering New Zealand must quarantine for 14 days upon entry, and Ardern continues to encourage social distancing. Further, Arden encouraged businesses to post QR codes so citizens are able to track where they have been with New Zealand’s COVID Tracer app.

The New Zealand government is now turning their focus to jobs and economic recovery.

 

Law Firms in SE Asia inching back to the office

The COVID-19 outbreak has severely disrupted normal life in Southeast Asia, forcing a big chunk of the region’s workforce to work from home, lawyers not exempted. But as the number of cases subsides in certain countries, and governments attempt to bring economies back on track, offices are beginning to reopen.

However, law firms say that given the potential for another spike in cases of this highly contagious disease, no reopening approach can be too cautious.

Patrick Ang, managing partner of Rajah & Tann Singapore, says that the firm has a slew of social distancing measures in place, which were enhanced during the circuit-breaker (Singapore’s term to describe its lockdown) period

.“We are maintaining a two-team segregation system, so that even if a lawyer needs to go to the office, he should only be in the office according to the schedule. In addition, we have temperature checks, health declarations, staggered hours, seating one metre apart, and a maximum number of people in the office at any one time,” Ang says.

Voicing similar thoughts is Indonesia’s Assegaf Hamzah & Partners (AHP) which plans on reopening the office around mid-June.Bono Daru Adji, AHP’s managing partner, says that the firm will be implementing social restriction measures in the office including “dividing our lawyers and business professionals into two segregated teams based on their current seating arrangement to ensure that there is a minimum of one-meter distance between each person.”

“We will also be limiting the number of people inside common areas. Further, a staff member will measure the body temperature of each person attending the office and those using public transport must bring a pair of spare clothes to change into before entering the office,” Adji adds.

Spanish Firm Testing Staff For COVID-19 upon Office Return

Spanish heavyweight Uría Menéndez is testing all of its staff for COVID-19 as a preliminary step before returning staff to its offices in Spain.

Two people with knowledge of the situation told Law.com International that the firm is paying for staff to be tested, ahead of what another person described as a “prompt reopening”.

Uría confirmed that it is testing all its members in all locations, and said that the results will influence any reopening decisions. 

“According to the results, during the next weeks the most appropriate measures will be taken, always prioritising the health of all members of the firm,” a firm spokesperson said in a statement.

The firm added that the preference is for its people to continue with remote working for the time being.

Commenting on the current legal market in Spain, a partner at an international firm based in the country said it is not “business as usual” and that office re-openings will help bring a sense of normality.

Earlier this month, Law.com International revealed that several major Spanish firms, and international outfits including Hogan Lovells, were eyeing how best to return staff to offices.

Changes to Business Law, COVID-19

Germany’s lower and upper houses of parliament have passed the federal government’s package of measures designed to tackle the crisis surrounding the coronavirus and assist others in overcoming its economic impact.

The coronavirus pandemic is having a substantial impact on the overall economy. The Gesetz zur Abmilderung der Folgen der COVID-19-Pandemie (Act to Mitigate the Effects of the COVID-19 Pandemic) introduces major legal changes. We at the commercial law firm MTR Rechtsanwälte can report that these changes also affect business law.

The scope of the measures ranges from short-time allowance (Kurzarbeitergeld), loans and rescue funds, to changes to insolvency law and company law. In addition to preserving the business and jobs as well as ensuring liquidity, it is necessary for companies’ decision-making capacity to be maintained.

To ensure that important decisions can still be taken in times of crisis, the federal government has also strengthened the capacity of businesses, cooperatives, homeowners’ associations, as well as other associations, to act and make decisions. Moreover, stock corporations will now be able to hold virtual annual general meetings.

To ensure that companies remain able to act and make decisions, the legislation provides for new ways of conducting annual general meetings in stock corporations (Aktiengesellschaft, AG), commercial partnerships limited by shares (Kommanditgesellschaft auf Aktien, KGaA), mutual insurance companies (Versicherungsvereins a.G., VVaG), and European companies – also known as a “Societas Europaea” (SE for short) – shareholders’ meetings in limited liability companies (GmbH), general meetings and representatives’ assemblies in cooperatives, and members’ meetings in associations. In the case of the AG, KGaA, and SE, for instance, it will be possible to participate in the annual general meeting online without the need for authorization pursuant to the articles of association. The legislation also allows annual general meetings to be held remotely.

Furthermore, it will be possible to reduce the notice period to 21 days. The board of directors will be able to arrange advance payments on the net profit, even in the absence of provisions to this effect in the articles of association.

The annual general meeting is to be held within the financial year, which represents an extension to the previous eight-month deadline. Since virtual annual general meetings without compulsory attendance are uncharted territory, the risk of legal challenges will be largely excluded.

The plans also feature comparable measures to facilitate virtual meetings and decision-making mechanisms that take place outside of meetings for associations and cooperatives.

Germany’s Federal Financial Supervisory Authority, the BaFin, is also revising its supervisory role in response to the circumstances brought about by the coronavirus pandemic, including, for example, with regards to the disclosure of financial circumstances when grading creditworthiness, as well as with respect to obligations pertaining to conduct and information in securities trading.

Lawyers with experience in the field of business law can offer advice.

https://www.mtrlegal.com/en/legal-advice/business-law/corona-and-business-law.html

US Legal Industry Shed 64,000 Jobs in April

To the surprise of no one, the April jobs report from the U.S. Bureau of Labor Statistics showed massive employment losses, totaling over 20 million positions for the month, and legal jobs were no exception.

The legal sector showed a net loss of 64,000 jobs—a decline dozens of times larger than the fluctuations normally seen by the industry. The overall unemployment rate across industries stands at 14.7%, according to BLS data, higher than any time since the Great Depression.

The report on Friday showed 1,097,006 people working in the legal industry, including attorneys, paralegals, legal secretaries and others. The figure is down by 50,000 jobs from this point last year.

Updated numbers for the prior month saw the overall job market lose over 700,000 jobs in March, with the legal industry showing a loss of 1,700 jobs.

But that was before COVID-19 had a full month of stay-at-home restrictions to bolster its devastating economic effects.

Pandemic-related cost-cutting measures at major legal employers—big law firms most prominently—have been accelerating since they began in March, with April and early May bringing increasing reports of furloughs and layoffs.

Some large firms, such as Mayer Brown and Hogan Lovells, have managed to get by thus far with pay cuts and dividend deferrals. But others, such as Nixon Peabody, Goodwin Procter and Sheppard, Mullin, Richter & Hampton, have all made substantial staff cuts to go along with pay reductions for attorneys and staff.

The last time the legal industry went through an acute economic crisis, during the Great Recession, layoffs were the norm. For now, many large firms are still opting, when they can, to enact pay cuts, hour reductions and furloughs instead.

Unlike during the Great Recession, though, the direct impacts of the pandemic are spread across every industry, the flurry of austerity measures has happened quickly, and there isn’t a clear path forward to recovery.

Mixed messages at the federal level, differing local situations in states and municipalities and the possibility of months or more of uncertainty over economic conditions put businesses, including law firms, in the unenviable position of trying to plan for something they can’t see.

Many of the geographic areas in the U.S. that were hit hardest initially by COVID-19, such as New York, Detroit and Seattle, have seen success in slowing new cases, but they are rising elsewhere. That could drive major regional variations in when demand will ramp back up and whether a return to the office is possible. With regard to the latter, it doesn’t seem firms are in that much of a hurry.

Other findings in Friday’s jobs report include:

  • Unemployment overall rose by 10.3% in April, the largest monthly increase since records started being kept in January of 1948.
  • Workers who identify as white had an unemployment rate of 14.2%; those who identify as Asian were at 14.5%; those who identify as black were at 16.7%; and those who identify as Hispanic were at 18.9%. With the exception of those who identify as black, the numbers are all record highs.
  • Those who were on a temporary layoff increased by a factor of 10 to more than 18 million.
  • Labor force participation rate fell 2.5% to 60.2%, the lowest recorded level since 1973, when the rate was at 60%.
  • Leisure and hospitality lost 7.7 million jobs, or 47% of the workforce.

Force Majeure and COVID-19

The impact of the Coronavirus (also referred to as COVID-19) is challenging businesses’ ability to fulfil their contractual obligations. A Force Majeure clause in a commercial contract may operate to relieve one or both parties from their obligations under the contract, without incurring liability for non-performance.

What is a Force Majeure clause?  

Most written English law commercial contracts will contain a Force Majeure clause. This clause can suspend or terminate performance obligations under a contract where an event outside of a party’s control arises, commonly referred to as ‘an act of God’, which prevents a party from performing their contractual obligations. If the clause is relied on successfully, the non-performing party seeking to rely on the Force Majeure clause will not be liable for its failure to perform the obligations under the contract. These clauses are usually located towards the end of a contract or a set of terms and conditions with the heading: ‘Force Majeure’.

Whether these clauses can be relied on to relieve the party concerned of their obligations under a contract in light of the Coronavirus pandemic, will depend on the wording of the clause, which will vary from agreement to agreement.

Is Coronavirus a trigger event?

The wording of key contracts should be checked to see if a Force Majeure clause is included. If this type of clause is included, check that ‘pandemic’, ‘disease’, ‘epidemic’, ‘crisis’, ‘government action’ or similar wording, is specifically included as amounting to a Force Majeure event. There is no standard definition of a Force Majeure event under English law.

If the contract does not include the specific wording but refers to ‘events beyond a party’s reasonable control’ this may be sufficient. Whether a party is able to successfully rely on it will depend on the precise wording, the circumstances, the parties’ intentions and how well these matters can be evidenced.

What does the clause say in relation to performance following the occurrence of a trigger event?

Does the wording in the Force Majeure clause say that the trigger event must strictly ‘prevent’ performance or, more simply, hinder performance? If the trigger event must prevent performance then the affected party must show that it is impossible, not just more expensive or generally more onerous, to perform the contract. An example of this would be the UK government banning movement of goods, and as a result a supplier under a contract is unable to deliver goods.

How to rely on a Force Majeure clause – obligations on the non-performing party.

Written Notice – It is likely that the non-performing party will have to give written notice to the other party of the trigger event and the reasons why the contract cannot be performed – this should be done despite the situation potentially being obvious to both parties. In some cases, if the requirements to notify are not followed accurately, the non-performing party may lose the right to rely on the Force Majeure clause. From a commercial perspective, early communication is sometimes key so that possible alternative ways of performing the contract can be discussed and agreed between the parties (see comments in respect of contract variation below).

Burden of Proof – The non-performing party will have to prove that the trigger event falls within the relevant clause and that the failure to perform the contract was a result of that event.

Mitigation – It is usual that the non-performing party will have to take all reasonable steps to try and perform the contract as well as it can and, very importantly, demonstrate its efforts to do so. The non-performing party should be able to explain why steps have not been taken to limit the contractual breaches, if this is the case.

Deciding whether a party is justifiably suspending/terminating obligations under a contract will depend on the wording in the contract, the trigger event(s) and the relevant circumstances. Each party should therefore keep an accurate written record of the efforts to mitigate breaches of contract, details of the trigger events(s) and any associated communications. Parties will sometimes argue about whether an event was within a non-performing party’s reasonable control and they could ultimately end up in court to decide whether the Force Majeure clause applied. In practice, it will make more commercial sense to negotiate a solution that both parties are satisfied with, where possible.

What is the effect of a Force Majeure clause? 

Depending on the wording, obligations to perform the contract could be treated as suspended until the triggering event ceases. When the triggering event does cease, the contract will be re-activated. The wording could also provide for the contract to be terminated completely if, after a certain period of time, the trigger event is continuing.

While the trigger event continues, the non-performing party’s liability under the contract for not performing the contract or delay in performance will not apply.

Other clauses to check and follow strictly.

Notices – This clause will usually be towards the end of the contract and headed ‘Notices’. It will provide instructions as to how to communicate matters to the other party under the contract. Typically, these clauses require written communication and will sometimes exclude email correspondence.

Variation – If both parties agree to change the terms of the contract, there are often clauses towards the end of the contract headed ‘Variation’ which dictate how the contract can be changed. Usually agreed changes must be in writing and signed by both parties to be valid.

Pricing – Some contracts may have clauses which allow for price increases where a contract can still be performed but it is more expensive to do so due to unforeseen costs.

No Written Contract or no Force Majeure clause.

In certain restricted circumstances where performance has become impossible, the law may operate to terminate the contract completely, without an option to suspend performance.

This will only apply if there is a significant change of circumstances, due to an outside event which is not the fault of either party, which makes performing the contract radically different to the original obligations of the contract.

Coronavirus Forward Planning – What Comes After Lockdown?

Part 1 Of 2: Employee Cost Savings And Alternatives To Redundancy

With the furlough scheme recently being extended to the end of June, it has given employers that have furloughed some (or all) of their workforce more time to consider their next steps. In the first of two articles on post lockdown planning, Selena Baker, Associate Director of Greenway Scott (part of the GS Verde group) looks at employee cost savings and alternatives to redundancy.

We understand that many businesses will be experiencing a reduced demand for their products or services and (as a result) lower revenue due to the impact of the pandemic, with little likelihood of any immediate improvement and uncertainty regarding when the situation will improve and what the long-term effects will be.

In these circumstances many companies will be looking to decrease costs, and considering whether they may need to make redundancies or other employment cost savings. In the first of our two part article series on steps after lockdown, we set out some of the things employers may want to consider now in terms of alternatives to redundancy.

Redundancies are costly in the short term and can have detrimental long-term effects, most notably the loss of experienced and valuable staff who might not be easily replaced and the commercial impacts in terms of public image. In the current unprecedented climate, employees may agree to various options, which they would not usually do, in order that their jobs remain secure (at least for the time being). We have listed below some alternatives to redundancy that some businesses in this position may wish to consider. When looking at alternatives to redundancy, companies need to consider carefully their legal and commercial implications (for example, some options may trigger the obligation to collectively consult) and so we would strongly suggest seeking legal advice.

Whichever of the below difficult options (or other alternatives) you consider, during this unprecedented time and difficult economic climate, it is often best to be as open and honest with staff as reasonably possible and, if possible, lead by example from the top.

Some options that employers may want to consider include:

  • Delay pay increases/ pay freeze – you could delay any pay increases to keep costs low, however, whilst there is normally no express contractual right to a pay increase (only a review), it is important to ensure there is no implied right through, for example, custom and practice. Commercially speaking, although such a step is unlikely to amount to a breach of contract if there is no such contractual or implied right, a salary freeze is often viewed by employees as, in real terms, a pay cut and so should be carefully managed.
  • Delay new starters/withdraw job offers- the impact/risk of this will depend on whether there is a contract in place (which can of course be verbal).
  • Delay/not pay any discretionary bonus – you could delay any discretionary bonuses, however it is important to be mindful that discretion in an employment context is very rarely absolute, and whether a bonus is actually discretionary (rather than an implied or express contractual right) will depend on the individual circumstances. Advice should therefore be sought on each occasion in order to avoid allegations of breach of contract.
  • Temporary lay-offs and short time working – there is no automatic right to do this, however employees can be placed on temporary lay-offs and short time working if there is a contractual right to do so. If there is not then you can seek to vary the contract via consultation and with the employee’s consent. Please seek legal advice should you wish to do this to avoid any allegations of breach of contract (potentially) rendering any terms and conditions of employment void.
  • Voluntary redundancies/temporary layoffs/temporary changes to their terms and conditions, such as reduced hours or days – you could invite staff to volunteer for voluntary redundancies/temporary layoffs/temporary changes to their terms and conditions. Some employees will be in a position financially and personally where this would suit them. It is of course important to engage with employees sensitively as this would be a hugely worrying time for them. Please see legal advice on how this should be undertaken correctly.
  • Vary terms and conditions (salary, benefits or hours of work) – this would need to be done via consultation and with express consent to the variation even on a temporary basis.

Of course, for some businesses the options outlined above are not enough to avoid the need to make redundancies. In the second of our two part articles, we discuss when a redundancy situation arises and the general process/steps to follow including collective consultation.

The information contained in this article is for information purposes only and is not intended to constitute legal advice. Should you require support and assistance on the employment law implications of the COVID-19 pandemic, our experienced advisors will be able to provide practical advice to support your business through the process. For advice, contact our employment & HR team at employment@greenawayscott.com or call us on 029 2009 5500.

Portuguese Data Privacy Authority – Health data of employees (COVID-19)

The National Data Protection Commission (CNPD) published on its website an orientation dated 23 April on the collection of Employee’s Health Data.

Under the terms of the aforementioned guidelines, the employer cannot collect and record the workers’ body temperature or other information related to the health or possible risk behaviours of their employees. This prohibition includes any questionnaires on health data (existence of fever or other symptoms of infection) and the worker’s private life related to his health (contact with infected people, for instance).

Also according to the guidance, such data can only be collected by the occupational physician within the scope of their duties.

Thus, unless a new direction from the General Directorate of Health or a rule that is approved by the Government or Parliament, the adoption of these practices by the Employer will make them liable of an administrative offence.

The referred prohibition seemed to have been issued not taking into account the duties of the employer to protect the health of the employees and to prevent their exposure to biological risks.  Hence, in the impossibility to perform the controls by a health professional, we do not see how the referred duties could be discharged.

Ana Rita Paínho | arp@servulo.com

Rita Canas da Silva | rcs@servulo.com

India Battling to Survive Covid-19

A slipping economic growth in India was compounded with a rude jolt by the WHO declared pandemic which is threatening to wipe out many global economies. Covid-19’s sudden spike in March is wreaking havoc and in order to contain the fast spreading outbreak, India has decided to enter into a self-imposed near total lockdown of 21 days starting March 25, 2020. This has severely impacted the economy, as correctly forecasted by the Prime Minister, who chose the safety and health of Indians over anything else.  The Union Finance Minister has announced several measures to tackle the situation on ground.

Fitch Lowers Growth Rate – Fitch Ratings recently released its Global Economic Outlook – March 2020 wherein it was estimated that India’s GDP growth shall remain broadly steady at 5.1% in the fiscal year 2020-2021 following growth of 5.0% in 2019-2020. The number of confirmed COVID-19 cases in India was low at the time of preparing the report, especially given the size of its population, but was picking up and the report assumes the number of people affected will keep rising in the coming weeks but that the outbreak will remain contained. The difficulties facing the Indian economy have been exacerbated by another bank failure (Yes Bank). Fragilities in the financial system will further undermine sentiment and domestic spending. The overall financial system remains burdened with weak balance sheets, which will limit any upside to credit and growth despite policymakers’ efforts in recent months to ease stresses.

Moody’s Severe Growth Impact – Moody’s Investors Service sharply cut India’s growth forecast for calendar 2020 to 2.5% from 5.3% estimated barely 10 days ago after the government ordered a nationwide lockdown to curb the spread of the coronavirus. The ratings company estimates a 5% growth for calendar 2019. According to the Global Macro Outlook 2020-21 released recently, the 21-day lockdown announced by Prime Minister Narendra Modi would result in a sharp loss in incomes and further weigh on domestic demand and the pace of recovery. Moody’s expects a sharp rebound in India’s growth in calendar 2021 to 5.8%. “A general lack of social safety nets, weak ability to provide adequate support to businesses and households, and inherent weaknesses in many major emerging market countries will amplify the effects of the coronavirus-induced shock,” Moody’s said. Moody’s said the lockdown will ‘dampen economic growth’ in India, already facing credit availability issues. “In India, credit flow to the economy already remains severely hampered because of severe liquidity constraints in the bank and non-bank financial sectors,” it said.

Personal Data Protection Bill – The Joint Parliamentary Committee’s (JPC) report on the Personal Data Protection Bill, 2019, will now be submitted in the second week of the Monsoon Session of Parliament. The chairperson of the committee had requested for an extension in the Lok Sabha recently, which was approved. At its constitution in December 2019, the report had to be submitted by the last week of the Budget Session 2020. The JPC had to meet to discuss the submissions that had been made to the committee, but all of that has been postponed because of the COVID-19 pandemic. Earlier, the JPC had invited comments from stakeholders on the provisions of the Bill, as reported by Asia Law Portal and pursuant to the same, the JPC received a number of submissions from various entities within the three week timeline. Most of these submissions have common causes of concern namely removing provisions relating to non-personal data, easing of restrictions on cross-border data transfer etc.

Government’s Economic Relief Package – The government announced a Rs 1.7 lakh crore relief package aimed at providing a safety net for those hit the hardest by the Covid-19 lockdown, along with insurance cover for frontline medical personnel. About 800 million people will get free cereals and cooking gas apart from cash through direct transfers for three months. The 21-day lockdown began on March 25. The Pradhan Mantri Garib Kalyan Yojana includes higher wages under the Mahatma Gandhi National Rural Employment Act (MGNREGA), Rs 1,000 ex-gratia payment to nearly 30 million poor senior citizens, widows and disabled as well as insurance coverage of as much as Rs 50 lakh each for about 2 million healthcare workers battling the disease. States have been asked to use the Building and Construction Workers Welfare Fund to provide relief to construction workers and the first installment of Rs 2,000 under the Pradhan Mantri Kisan Yojana will be frontloaded to reach 87 million farmers in April. The government said it will pay the entire provident fund contribution of those who earn less than Rs 15,000 per month in companies having less than 100 workers as they are at risk of losing their jobs. That amounts to 24% of basic pay, 12% from the employee and 12% from the employer. This will be paid by the government for 3 months. In addition, the Employees’ Provident Fund Regulations will be amended to include the coronavirus pandemic as grounds for allowing a non-refundable advance of 75% of the corpus or three months of wages, whichever is lower, from their accounts.

The Finance Minister had earlier announced a slew of measures for extension of statutory and regulatory compliances in view of the coronavirus pandemic spreading its wings and impacting the economy.

Trump: Executive Order to Extend the deadline for payments

Yesterday, 4/19, President Trump issued an Executive Order on National Emergency Authority to Temporarily Extend Deadlines for Certain Estimated Payments which authorizes the Secretary of Treasury to “temporarily extend deadlines, for importers suffering significant financial hardship due to COVID-19, for the estimated payments.”

By postponing the deadline to deposit certain duties, taxes, and fees for 90 days, we are providing much-needed relief to affected businesses,” Mr. Mnuchin said. “This will protect American jobs and help these businesses get through this time.”

You can review the details of the scope of the relief here: CSMS #42423171 – COVID-19 – 90 Day Postponement of Payment for the Deposit of Certain Estimated Duties, Taxes, and Fees.  “Significant financial hardship” is defined as:

“If the operation of such importer is fully or partially suspended during March 2020 or April 2020 due to orders from a competent governmental authority limiting commerce, travel, or group meetings due to COVID-19, and as a result of such suspension, the gross receipts of such importer for March 13-31, 2020 or April 2020 are less than 60 percent of the gross receipts for the comparable period in 2019.”

It will be necessary to provide CBP with documentation supporting a request for duty deferral demonstrating that one meets the significant financial hardship criteria mentioned above. The 90-day deferral of duties extends to a limited number of circumstances: formal entries of merchandise entered, or withdrawn from a warehouse, for consumption (including entries for consumption from a Foreign Trade Zone) in March 2020 or April 2020.

The deferral does not apply to the majority of imported goods subject to:

  • Antidumping duties,
  • Countervailing duties,
  • Duties assessed pursuant to Section 232 of the Trade Expansion Act of 1962,
  • Duties assessed pursuant to Section 201 of the Trade Act of 1974, and
  • Duties assessed pursuant to Section 301 of the Trade Act of 1974.

For specific filing instructions, please see CSMS #42421561 – COVID-19 – Payment Instructions for 90-Day Postponement of Payment for the Deposit of Certain Estimated Duties, Taxes, and Fees.

Note: If a company has a product subject to section 301 duties, but received an exclusion from 301 duties, these entries are not eligible for the 90-day deferral.