Managing the business impact of the coronavirus

Out-Law Analysis | 06 Feb 2020 | 10:18 am | 5 min. read

Business operations managers must continue to monitor the impact of the coronavirus outbreak on their employees, facilities and supply chains as decisions may need to be made quickly to take account of what is a fast-changing situation.

Coronavirus 2019-nCoV was first identified in Wuhan, the capital of China's Hubei province, in early December 2019. More than 20,000 cases of the virus had been confirmed by 5 February, predominantly in China although isolated cases have been confirmed in a number of Asian and European countries as well as the UK, US and Australia.

Almost 500 deaths had been attributed to the virus by 5 February, most of which have been of older people and people with underlying health conditions.

The World Health Organisation (WHO) declared the virus a public health emergency of international concern (PHEIC) on 30 January. However, the virus has not been declared a 'pandemic' – a term used to describe an infectious disease which has spread globally – and the WHO has not recommended any trade or travel restrictions.

Gilchrist Sue

Sue Gilchrist

Legal Director

Many employees will be able to work remotely, but accommodating these absences will be more difficult where agile working is not possible.

A number of countries have issued warnings against travel to Hubei and elsewhere in China, as well as restrictions on entry of travellers from China. The UK has advised against all travel to Hubei and all but essential travel to elsewhere in China. Some international commercial airlines have suspended flights to and from China, while the Chinese government has imposed restrictions on movement within China in response to the outbreak.

UK businesses with operations or interests in China should factor the latest advice into their continuity planning and crisis management preparations.

Business travel and employment implications

Many employers are already taking steps to avoid business travel to China and to suggest that workers based there work from home, rather than travelling into work, according to employment law expert Sue Gilchrist of Pinsent Masons, the law firm behind Out-Law. For UK-based queries, a good starting point is the China foreign travel advice page published by the Foreign and Commonwealth Office (FCO).

The UK government's guidance for workers who have been in Wuhan or Hubei is to remain at home for 14 days and not to go to work, school or public areas. The same guidance applies to workers who have been elsewhere in China and who are reporting flu-like symptoms. An employer who applies that guidance will effectively be requiring the employee to stay away from work for the safety of others.

Workers required by their employer to stay home will not be classed as being on 'medical suspension', as this is only available on very limited grounds. However, workers are entitled to be paid for any period that they stay away at their employer's request, provided that they are otherwise available and ready to work. Many employees will be able to work remotely, but accommodating these absences will be more difficult where agile working is not possible.

Workers absent through illness would be entitled to sick pay. Workers required to stay at home may have difficulty in obtaining 'fit notes', although GPs may be willing to issue these after a phone consultation in order to minimise infection risk.

Immigration implications

UK Visas and Immigration (UKVI) has confirmed that it is working on short-term operational measures for Chinese nationals in the UK who are currently unable to return to China. It is expected to issue short-term guidance this week, according to immigration law expert Joanne Hennessy of Pinsent Masons.

Hennessy Joanne

Joanne Hennessy

Legal Director

Right to work checks should be kept up to date, and verification of ongoing right to work sought from the Home Office where required.

Businesses should be mindful of workers who are Chinese nationals whose leave to remain is shortly expiring. While most will be able to extend their leave from within the UK, those who need to return home will be unable to do so for now. Right to work checks should be kept up to date, and verification of ongoing right to work sought from the Home Office where required. Individual workers should raise their situation with the Home Office and monitor any Home Office communications to avoid them appearing to be an 'overstayer'.

Employers wishing to recruit Chinese nationals from overseas should note that visa application centres in China are currently closed. These closures could significantly delay the processing of visa applications, aside from current travel bans.

UK health and safety law

Health and safety law expert Katherine Metcalfe of Pinsent Masons said that UK employers should begin by conducting a risk assessment to determine the likelihood and consequences of their exposure to the coronavirus.

Metcalfe Katherine

Katherine Metcalfe

Legal Director

UK employers should begin by conducting a risk assessment to determine the likelihood and consequences of their exposure to the coronavirus.

Employers have clear legal duties to protect the health, as well as safety, of their employees. They must also protect others who may be exposed to health risks as a result of their activities including members of the public, service users and contractors. From a regulatory perspective, the new coronavirus is classed as a biological agent under the 2002 Control of Substances Hazardous to Health Regulations. This means that potential exposure through work activities must be carefully controlled.

The Health and Safety Executive (HSE) has a section on its website dedicated to infections at work, containing useful guidance for employers. The sections on pandemic influenza and severe acute respiratory syndrome (SARS), a coronavirus which emerged in 2003, are likely to be particularly helpful in terms of conducting a risk assessment and identifying appropriate control measures.

The risk assessment should take account of the latest guidance from Public Health England and Public Health Scotland, and should be reviewed as advice changes. The level of risk will vary depending on factors such as travel and the type of work, and particularly the potential for close contact with infected individuals or body fluids. The employer must identify control measures which will eliminate or, where this is not possible, minimise the risks which emerge from the risk assessment.

Employers are required to consult with their employees about any arrangements put in place to control the risks associated with the coronavirus, and good communication will be essential to ensuring that these measures are effective.

Implications for business supply chains

Supply chains which intersect with China and other affected countries may experience significant disruption.

Francis Clare

Clare Francis

Partner

Force majeure clauses may be invoked when an extraordinary event or circumstance beyond the control of the parties prevents one or both from fulfilling its obligations under the contract.

Commercial law expert Clare Francis of Pinsent Masons said that businesses should first identify whether any of their commercial contracts contain 'force majeure' clauses which their suppliers may try to invoke, or which it may ultimately become appropriate for them to attempt to invoke themselves.

Force majeure clauses may be invoked when an extraordinary event or circumstance beyond the control of the parties prevents one or both from fulfilling its obligations under the contract. The effect of the clause is to free both parties from liability.

Under English law contracts, the term 'force majeure' is not legal one, and is therefore open to interpretation. It will very much depend on the drafting of the contract and the specific circumstances affecting performance. Where parties are unable to come to a commercial agreement, the party who wishes to rely on the clause will have to convince an adjudicator or court that their circumstances qualify.

Under the civil law of the People's Republic of China (PRC), there is a general principle of force majeure. Therefore, businesses should carefully review contracts in light of the relevant governing law to ensure that they are taking the right action.

Pay particular attention to any contractual notice requirements or duty to mitigate the impact of the force majeure event, as a failure to comply with these requirements will probably mean that you are unable to benefit from the provisions.