To say these are difficult times for many small businesses is an understatement. They are “unprecedented” times, and lawyers of course like precedents. However, we are always encouraging small businesses to be proactive. We are also always encouraging you to develop strong business relationships to minimize the likelihood of disputes.
With some courts closing temporarily or being restricted in their ability to deal with disputes, strong business relationships are now more important than ever. So if you are not already, get talking.
There are many legal issues that arise from coronavirus. How for example can we maintain a safe workplace at this time? Who determines what is safe, when everyone has the same predicament?
There are also new laws being passed now faster than ever. And we wont attempt to go through them. However, we have drafted this article, legals for small businesses during coronavirus, to help you in a simple way get through the coming weeks and months. Being proactive will help enhance your chance of business survival, which in turn will help your community.
DEALING WITH SUPPLIERS
What are your legal obligations under contracts with your suppliers? For example, do you have requirements to make minimum orders? And are you able to keep complying with them? If so, for how long? If you need to change things, contact your suppliers now and start communicating with them. Ideally get a lawyer to draft any variations, but at least get any changes to your contracts in writing.
What about the suppliers’ obligations to you? Can they continue to perform their obligations? Will your supply chain be interrupted? Or has it already? Are there other sources of supply? Start communicating with your suppliers now to see how they are affected by a coronavirus, and again get any changes to contracts in writing.
Some businesses have already pivoted and sought new supplies, like the many restaurants now offering takeaway, and health practitioners delivering online. And others, have amazing stories, like fashion brands now retooling to manufacture surgical facemasks and gowns, and car manufacturers making ventilators. We know what the problem is right now, work out ways you can be part of the solution.
DEALING WITH CLIENTS/ CUSTOMERS
What are your legal obligations under your contracts with customers and clients? Can you continue to deliver your products and services as they are? If so, for how long? If you can’t deliver, or need to change your products and services somewhat eg online classes or limited stock, notify your clients and customers of the changes asap. Talk to them. If you are still open for business, tell them, and if your products and services are changing, tell them. As small business owners we are all entrepreneurs; now is the time to be creative and innovative.
Do you know your obligations in relation to refunds and cancellations? If not, have a look at the ACCC website for more information. They are constantly updating their information for small businesses and consumers during this time. Be kind, but also be wary; giving refunds when you don’t have to may not help the survival of your business. If something is canceled because of government restrictions, this impacts business and consumer rights under the Australian Consumer Law.
DEALING WITH BANKS, FINANCIERS, AND LANDLORDS
There have now been some relieving announcements; including that banks will defer loan repayments for 98% of businesses affected by coronavirus for 6 months. Nonetheless, you should still assess if you can keep making your repayments and if not discuss it with your bank. If you agree on any changes ensure that all the changes are in writing. You can stay up to date here so you know what’s going on.
There has also been an announcement that there is a moratorium on evictions for businesses impacted by rental distress due to coronavirus. You can have a look here for more information.
And there are some temporary changes of bankruptcy and insolvency laws which you may like to keep up to date with and you can find more information here.
DEALING WITH INDEPENDENT CONTRACTORS AND EMPLOYEES
If you have independent contractors or are outsourcing, have you rearranged your staffing levels? Start talking with your contractors now about whether they are needed or not, and if they are, for how long?
And perhaps the elephant in the room, are you protecting your workers from coronavirus?
You have an obligation to keep a healthy workplace during this time, and you need to ensure you can do so. This involves encouraging people to following guidelines from World Health Organisation on infection control, including cleaning hands, covering mouth and nose, and avoiding close contact with anyone with fever or cough. You also need to ensure any employees notify you of potential contraction and seek medical attention urgently; that they stay away. You can require them to provide medical certificates and medical clearances. You should do a daily risk assessment of your business operations during this time, and of course anyone that can work from home, should. There is also some great information on the Safework NSW website here.
If the government orders your business to fully shut down due to COVID-19, and your employees can’t usefully be employed, you may be able to stand them down without pay. BUT this area of law is complex. You need to be very careful and seek legal advice.
A lawyer will look at the modern award, enterprise agreement or contract of employment, and they will establish if coronavirus is the real reason for the stoppage. They will consider whether there other opportunities for the employee(s) to be useful.
If there is a slowdown, and you want to shut, you will need to keep paying your employees, but you can discuss if they will use their leave, reduce their hours, or offer redundancy. Keep in mind that paying your employees is your obligation. But there have been some innovative measures in place such as where one CEO of a company discussed what he should do with each individual employee, and they came to a solution together.
DEALING WITH THE COMMUNITY – HEALTH INFORMATION AND GIVING HEALTH ADVICE
Unfortunately the importance of collecting and disclosing personal information properly and in compliance with the Australian Privacy Principles is often overlooked at times like these. If you are in the health industry or are collecting information on people’s health you still need to comply with the Australian Privacy Principles. There is some great information about the continued privacy obligations of businesses issued by OAIC here.
And if you are providing health advice on coronavirus, perhaps on a website, or via email or socials or elsewhere, you should ensure you have adequate disclaimers in place. In many ways it is unchartered territory; you don’t want to find people relying on that advice, and making a claim against you because of it.
We all need to comply with privacy obligations in terms of collecting and disclosing personal and health information during this time.
SOME SANITY CHECKS
This is really a high level list of legals for small business during coronavirus, and the laws are changing rapidly. So please, make sure you get some current legal advice which is specific to your situation. Getting up to date legal advice is more important now than ever.
There are also some sanity checks you can do…
- Subscribe to keep updated with the government stimulus packages and any additional offers you can find (such as Facebook marketing). If it is not automatically forthcoming, make sure you make the required applications.
- Check your contracts to see if they have envisaged the scenario of a pandemic. This is usually in the form of a “Force Majeure” clause. If you can, get a lawyer to review your contracts and vary them asap, and certainly any new contracts should be written with consideration of the changed world we now find ourselves in. (Whilst the doctrine of frustration may also be applicable in some scenarios, we strongly suggest you seek legal advice).
We provide contract drafting and review services and you can read more here. Or book in for a free 20 minute consultation here.
