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Extension to the Coronavirus Job Retention Scheme

HM Treasury has announced that the Coronavirus Job Retention Scheme (the ‘furlough scheme’) has been extended from 31 May 2020 to the end of June. See here for details.

The Chancellor said he would keep the scheme under review and extend it further if necessary.

The announcement comes two days after the Treasury caused much consternation with the wording of its direction to HMRC regarding the operation of the scheme, which in certain key respects contradicts the current published government guidance, and in others is at best ambiguous. I am in the course of digesting that document and preparing a blog in respect of its ramifications.

For our observations on the main aspects of the Scheme, and a link to the government’s current published guidance, click here.

For our regularly-updated wider guidance for employers on the impact of the virus outbreak, click here.

The Coronavirus Job Retention Scheme - Fourth Version of Guidance

The government has published the fourth version of its guidance on the Coronavirus Job Retention Scheme (“the Scheme”). The full guidance for employers is here and that for employees is here.

The date, when an employee has to have been on the employer's payroll in order to be subject to the Scheme has, subject to the below, changed from 28 February to 19 March 2020 – the date just before the Chancellor announced details of the Scheme. However, this is subject to the important qualification that there must also have been an RTI submission to HMRC on or before 19 March notifying it of payment in respect of the employee - so many employees who commenced employment after 28 February but by 19 March will still miss out.

It is still the case that employees who have been made redundant, or otherwise have been dismissed or have resigned, can only be re-employed and furloughed subject to the Scheme if their employment ended on or after 28 February (and this applies even if they have not been re-employed until after 19 March).

For our regularly-updated wider guidance for employers on the impact of the virus outbreak, click here.

For advice on any of these issues, call us on 0800 294 5927 or click here to make an on-line enquiry.

The Coronavirus Job Retention Scheme - Third Version of Guidance

The government published its third update to guidance on the Coronavirus Job Retention Scheme (“the Scheme”) late on 9 April. The full guidance for employers is here and that for employees is here.

Frustratingly, this does not include any clarification as to whether an employee can be on holiday whilst furloughed under the Scheme without “breaking” the period of furlough. We comment on this at the end of our commentary on the Scheme, which has been updated to incorporate the below points, which is accessible here.

The main areas of developments are as follows.

Sickness

Previous guidance stated that employees who are off sick and are entitled to statutory sick pay (“SSP”), or who are self-isolating in circumstances where they qualify for statutory sick pay, could not be furloughed under the Scheme until the relevant absence had ended. This has changed. The updated guidance states that employees who are off sick can be furloughed just like any other employee, and if that is done, a relevant employee will no longer receive sick pay and will be treated as a furloughed employee.

The guidance also states in relation to employees who become sick whilst furloughed that they retain their statutory rights, including their right to SSP, and this means that furloughed employees who become ill must be paid at least SSP, but it is up to employers to decide whether to move these employees on to SSP or to keep them on furlough, at their furloughed rate. A qualifier to this, which the guidance does not acknowledge, is that if the employer has placed the employee on furlough by agreement, it can only switch the employee on to sickness absence if that is in accordance with the agreed terms. For example, if the employer has committed to keeping the employee on furlough until 31 May (when the Scheme is currently due to end), it will be in breach of contract if before then, without agreement, it treats the employee as being on sick leave.

The guidance states further that:-

If a furloughed employee who becomes sick is moved onto SSP, employers can no longer claim for the furloughed salary. Employers are required to pay SSP themselves, although may qualify for a rebate for up to 2 weeks of SSP. If employers keep the sick furloughed employee on the furloughed rate, they remain eligible to claim for these costs through the furloughed scheme.

Therefore, if a furloughed employee whose furlough pay is less than the level of their entitlement to SSP (£95.85 a week from 6 April, and previously £94.25 a week) falls sick, the employer must pay them not less than the equivalent of their full SSP entitlement, albeit that it is the employer’s choice as to whether to:

  • end furlough and pay actual SSP (and recover this to the extent that it is able) or
  • continue furlough and recover under the Scheme 80% of the amount paid.

Of course, if the employer elects to treat a period as sickness absence less than 3 full weeks after furlough commenced, it will forfeit the right to recover any payments under the Scheme in respect of that period. Similarly, employers considering their options in these circumstances who wish to place employees back on furlough after the period of sickness absence should take into account whether the renewed furlough will be able to run for at least a further 3 weeks, taking into account the end date for the Scheme.

Shielding

Previous guidance stated that employees who are shielding in line with public health guidance, or who “need to stay home with someone who is shielding” can be subject to the Scheme “if they are unable to work from home and you would otherwise have to make them redundant”. It would have been surprising if an employer actually had to demonstrate that such an employee would otherwise have been made redundant in order for the entitlement to funding to arise, as that is not an express requirement for any other employee who is furloughed. Nevertheless, this caused a great deal of uncertainty.

This has been addressed, as the updated guidance states under a heading ‘Shielding Employees’ simply that:-

Employees who are unable to work because they are shielding in line with public health guidance (or need to stay home with someone who is shielding) can be furloughed.

The guidance also states elsewhere that:-

Employers are also entitled to furlough employees who are being shielded or off on long-term sick leave. It is up to employers to decide whether to furlough these employees.

It is noted that this part of the guidance goes on to state:-

If a non-furloughed employee becomes ill, needs to self-isolate or be shielded, then you might qualify for the SSP rebate scheme, enabling you to claim up to two weeks of SSP per employee.

It should be remembered, however, that employees do not qualify for SSP by virtue of shielding. Entitlement to SSP is explained here.

TUPE

It has been confirmed that a transferee employer can apply the Scheme to employees who transferred to it under TUPE after 28 February – which will be subject to the proviso that they were on the transferor’s payroll on 28 February.

It has not been made clear, however, whether transferees are to have the right to access transferors’ payroll records for the purposes of determining the historic pay of furloughed employees on variable pay that is necessary to determine payments to be made under the Scheme.

Further, it has not been stated that the period of furlough will be deemed to be continuous as between the transferor and the transferee. This will be important to the extent a pre-transfer and/or a post-transfer period furlough is shorter than the 3 week period necessary to be subject to the Scheme.

Restrictions on working

It is now stipulated that furloughed employees cannot work for organisations that are “linked or associated” with the employer, as well as not working for the employer itself. The terms “linked” or “associated” are not defined, however. It seems logical that this will include –

  • any group company, in the sense of any subsidiary or holding company of the employer, and any subsidiary of a holding company of the employer, with “holding company” and “subsidiary” having the meaning in section 1159 of the Companies Act 2006; and
  • any associated employer within the meaning of various pieces of employment legislation, where one organisation is a company of which the other (directly or indirectly) has control or both are companies of which a third person (directly or indirectly) has control.

But what about organisations which have a lesser level of common ownership?

For our regularly-updated wider guidance for employers on the impact of the virus outbreak, click here.

For advice on any of these issues, call us on 0800 294 5927 or click here to make an on-line enquiry.

Planning & COVID-19

We have already published a blog and updated our website on this matter and the planning industries responses to the current crisis and in those articles we said how quickly things were changing. The planning industry is proving to be agile and responsive.

I was due to have a telephone conference with a barrister on Thursday last week, but it had to be changed at short notice due to the fact that the High Court had sprung on him an emergency hearing for an injunction at very short notice which needed to be conducted by telephone, hence I had the opportunity to write another brief blog on how the system is responding.

  • The government has now issued regulations for English local planning authorities to hold virtual public meetings, by phone or video link or other technological means during the current lockdown.
  • In England and Wales, separate legislation has been introduced for temporary Permitted Development Rights which will allow local authorities or health service bodies in England (and in Wales the NHS or any developer acting on its behalf) to use their buildings for public health emergency purposes without seeking Planning Permission during the crisis caused by the pandemic. This different wording and criteria in both sets of regulations highlights the continued divergences between the English and Welsh Planning systems.
  • One planning committee, in Waltham Forest, has already granted Planning Permission for a major - 750 home – residential development scheme at a virtual planning meeting. With such a large development it is possible that some of those who might otherwise have wished to object to such development may feel aggrieved at the mode of determination. They may feel that the Council’s process is undemocratic, although there is a counterargument to be put that such virtual meetings might also allow people to attend remotely to observe and possibly participate in proceedings when previously they might have been at work or otherwise unable to attend in person.

Generally speaking, the planning market, which tends to be ancillary to the property industry, seems to be holding up quite well with the current arrangements which are being put in place. The Planning Portal has introduced a COVID-19 business continuity plan to ensure it can maintain 'operations, service and support functions'. This goes hand in hand with ongoing government guidance. We are also starting to wonder how councils and developers will address the impact of delay on projects, which will necessitate flexibility on both sides, possible variation of conditions and planning obligations, as well as the Community Infrastructure Levy (CIL) regulations, but that’s a blog for another day.

We will continue to provide brief updates for clients as developments like this emerge, as they undoubtedly will in the coming days and weeks, but in the meantime please let us know if there is anything we can do to assist you or provide clarification on how you can participate and respond to planning issues.

The Coronavirus Job Retention Scheme - Further Update

The government last published updated guidance on the Coronavirus Job Retention Scheme (“the Scheme”) on 4 April.

The House of Commons Library, which issues briefing notes for MPs, issued FAQs on the Scheme on 8 April. It does not say anything new, but it provides a useful summary of the Scheme. For our updated observations on all of the main aspects of the Scheme, taking into account the contents of this blog, and links to the government’s current published guidance, click here.

The latest government guidance still provided no details as to how employers will claim payment under the Scheme, other than that HMRC is to set up a portal by the end of April, and it still said nothing on the key issues of how holiday and furlough inter-relate or the application of the Scheme in a TUPE situation.

However, although we await confirmation via further updated government guidance, there is more to report on these points.

Holiday

Given that we are about to go into the Easter weekend, I comment first on the question of whether an employee can be on holiday whilst furloughed under the Scheme without “breaking” the period of furlough.

If the answer to that question is “no”, then as a period of furlough must last for at least 3 weeks in order for it to qualify for the Scheme, if Good Friday and/or Easter Monday, or any other days within 3 weeks of an employee having commenced furlough, are treated as holiday, a relevant employer will not be able to claim payments under the Scheme for the period preceding the holiday.

Although guidance published by Acas originally stated that it was “not practical” for employees to take holiday whilst on furlough, its guidance has now been amended to read:

If an employee or worker is temporarily sent home because there’s no work and the employer intends to claim for their wages under the Coronavirus Job Retention Scheme ('furloughed'), they can still request and take their holiday in the usual way. This includes bank holidays.

Employees and workers must get their usual pay in full, for any holidays they take.

However, it is not known whether this merely reflects the view of Acas (i.e. their guess is only as good as anybody else’s) or whether they have received an indication from the government or HMRC as to how the Scheme will operate in this regard. Also:-

  1. Note that Acas state that an employee can request to take holiday: what if they prefer to not do so, and to keep the holiday (including that would otherwise have fallen on a bank holiday) back to use at a later date?
  2. Query whether, if employees can (one way or another) take holiday without breaking the continuity of furlough, the Scheme will require that employees must receive full pay, or whether an employee’s entitlement to holiday pay will be subject to the general law – which has its complexities (see further below).

To add to the mix, it is reported that HMRC customer support has responded to an enquiry on twitter as to whether the Easter bank holidays will break furlough as follows:

If an employee is on holiday or has a scheduled bank holiday whilst on furlough, they are entitled to still receive this holiday. Employers must ensure that any employee on holiday or a bank holiday is paid their full salary for that holiday.

This is consistent with the Acas guidance, but leaves the same questions posed above outstanding.

The state of uncertainty on this issue is reflected in the FAQs issued by the House of Commons Library, but these developments do provide cause for hope that there will be further government guidance clarifying that holiday can be taken during furlough.

In the meantime, it remains prudent that in order to preserve funding, unless and until the government confirms that the position is to the contrary, employers ensure that no days during furlough (including bank holidays) will be treated as paid annual leave if this will, or might, be contrary to the Scheme – whilst reserving the right to reinstate as holiday any days which were treated other than as such because of this proviso in the event that the government confirms that this is not contrary to the Scheme.

To the extent employees are to take holiday whilst furloughed, absent any special provisions related to the Scheme, the extent of the holiday pay entitlement will depend on the contract of employment or, as regards the element of it which constitutes part of an employee’s minimum entitlement to 5.6 weeks’ holiday under the Working Time Regulations, if more favourable, then as provided for under those regulations.

TUPE

It has been reported that David Johnston MP emailed HM Treasury with an enquiry as to the application of the Scheme in a TUPE situation, and that it replied on 6 April that:

…employers that have undertaken a TUPE transfer or a similar transfer after 28 February are eligible for the Coronavirus Job Retention Scheme.

Hopefully, therefore, we can expect further updated guidance from the government to the effect that employees who were on a transferor’s payroll on 28 February and who subsequently transferred, or transfer, to a new employer under TUPE can be furloughed under the Scheme.

If so, then;-

  1. Will it also be clarified that for any period of furlough which commenced less than 3 weeks before the transfer, the transferor can claim payment under the Scheme even though transferring employees will not have been on furlough with the transferor for 3 weeks?
  2. Will the transferee be provided with the right to access to transferor’s payroll records for the purposes of determining the historic pay of furloughed employees on variable pay that is necessary to determine payments to be made under the Scheme?

The operation of the Scheme

On 8 April, senior representatives of HMRC appeared before a parliamentary select committee to answer questions around the Scheme. Their answers included the following:

  • The portal is to be open on 20 April and the first payments should be made on 30 April.
  • Live testing on the portal started on 8 April with a small number of employers.
  • Guidance is to be published within the next week which will enable employers to get their first claims ready for 20 April.
  • Employers will be able to make one claim per pay period – weekly, if they operate weekly payroll, or otherwise monthly.
  • Employers will be able to submit claims up to 14 days ahead of pay dates and the aim will be for HMRC to make payments within 4 – 6 working days of receiving claims.
  • There are no plans to extend scheme to the employees who started after 28 February.
  • There is to be a hotline for employees who are made to work whilst supposedly furloughed under the Scheme to report employers.
  • HMRC will investigate employers for possible breaches of the rules of the Scheme. If there is evidence of breaches of rules, employers’ claims won’t be paid out and in appropriate cases there could be criminal prosecutions for fraud.

For our regularly-updated wider guidance for employers on the impact of the virus outbreak, click here.

For advice on any of these issues, call us on 0800 294 5927 or click here to make an on-line enquiry.

COVID-19 Guidance Relating to Apprentices

The government has published further guidance for apprentices, as well as for employers, training providers, end-point assessment organisations and external quality assurance providers in the context of the virus outbreak. The full guidance is here.

Some of the main points are as follows:-

  • It confirms (although this was already apparent) that apprentices on furlough can continue their training without this jeopardising funding under the Coronavirus Job Retention Scheme, as long as they do not provide services or generate revenue for their employer.
  • It encourages training and assessment to take place remotely.
  • It states that extensions will be granted, where appropriate, to the timetable for assessments.
  • It provides for breaks in learning and explains how they should be recorded.
  • It confirms that the Treasury will not be pausing apprenticeship levy payments for employers.

The Coronavirus Job Retention Scheme – Further Details

The government published update guidance on the Coronavirus Job Retention Scheme (“the Scheme”) on 4 April.

The main points are these:-

  • It has been made expressly clear that employees can start a new job when on furlough without jeopardising funding under the Scheme.
  • An employer can reclaim 80% of not just salary or wages, but any “regular payments” that they are obliged to pay employees, including overtime payments, “fees” and compulsory (presumably meaning contractual) commission payments – up to the cap of £2,500 per month. Although not given as a listed example, this must surely include car allowance. Whilst payments for private fuel under a fuel allowance by means of a card or account directly by the employer to the supplier will be excluded (as they will not be payments to the employee), arguably where the employee pays for private fuel and is then reimbursed by the employer, these payments will fall within the Scheme.
  • Expressly excluded from Scheme funding are discretionary bonus (including tips) and commission payments and “non-cash payments”, so non-monetary benefits (e.g. cars or life or medical insurance) are not included.
  • It has been made expressly clear that salaried company directors (including of personal service companies) can be furloughed under the Scheme. A board resolution must be passed to effect this, and it must be noted in the company records Furloughed directors can still perform their statutory duties, provided they do no more than would reasonably be judged necessary for that purpose, e.g. they should not do work of a kind they would carry out in normal circumstances to generate commercial revenue or provides services to or on behalf of their company.
  • It has been made expressly clear that members of LLPs who are treated as employees for tax purposes can be furloughed under the Scheme.
  • It has been confirmed that employees can be furloughed multiple times, i.e. they can be furloughed, brought back to work, then furloughed again – subject to funding being available only for any furlough period which lasts for at least three weeks.
  • It is newly stipulated that employers must not only notify employees of their furlough status, but that they must do so in writing and keep the record of that written notification for five years.

Some areas remain unclear. Two of the main ones are these:-

  • Are employees whose continuous service commenced on or before 28 February 2020 but who transfer to a new employer after this date under TUPE covered:

For any period of furlough which commenced less than 3 weeks before the transfer, even if, taking into account a period extending beyond the transfer, it lasts for at least 3 weeks in total?

Otherwise for any period of furlough post transfer?

Unless the government expressly provides for this in due course, it would appear not, as although the rights and obligations of the employee under the employment automatically transfer, as between employee and employer, by virtue of TUPE, it will remain that the employee will not have been furloughed with the transferor from the point of the transfer and nor will they have been on the transferee’s payroll as of 28 February.

  • Can an employee be furloughed under the Scheme and on annual leave at the same time?

Guidance published by Acas states not. It therefore remains prudent that in order to preserve funding, unless and until the government clarifies that the position is to the contrary, employers ensure that no days during furlough (including bank holidays) are treated as paid annual leave such that this might prevent a period of furlough continuing unbroken at least 3 weeks.

For our updated observations on all of the main aspects of the Scheme, taking into account the above, and a link to the government’s published guidance, click here.

For my article on changes to legislation effected on 28 March relating to statutory sick pay for employees off sick or in self-isolation due to COVID-19, click here.

For our regularly-updated wider guidance for employers on the impact of the virus outbreak, click here.

For advice on any of these issues, call us on 0800 294 5927 or click here to make an on-line enquiry.

How is COVID-19 Affecting Life Within The Corporate World?

There is no corner of the UK which is not being affected in some way by the impacts of COVID-19, so it is not surprising that the world of corporate law is experiencing some changes.

With the UK population having been told to remain at home, except for a handful of reasons, a significant impact is being felt by companies as face to face meetings cannot be held. In order to carry on making business decisions and to make the necessary decisions to reflect the current economic climate, meetings need to happen.

It is considered by government that the attendance of shareholders at meetings will not satisfy the definition of “essential work”. Therefore, to follow these rules, alternative measures will need to be taken when meetings are held.

One way around this is to hold board meetings and shareholder meetings remotely.

Companies are being told to make clear in their notices of meetings that shareholders and/or directors may not attend in person and that they will be refused entry if they try to attend in person. The meeting should be held by a maximum of two people, if it is to be held physically at all, in order to establish a valid quorum, and then the voting is to be done by proxy or by the distribution of a written resolution. As this can be done electronically, this is the most convenient option and the option which creates the least level of disruption. Another option in these trying times, is to use video conferences in order to hold the meeting.

These rules are applicable to shareholder meetings, board meetings of directors and AGMs of public limited companies, but whichever bracket your company falls into, the process of decision making will be affected in some way.

It is best that you receive legal advice to ensure the validity of your decision making. Please contact the corporate and commercial team at Lanyon Bowdler if you wish to discuss this further.

Planning Decisions in a Global Pandemic

The coronavirus pandemic, lockdown measures and the need to practice social distancing will have a significant impact on the area of planning decision making, just like virtually every other area of public and private life right now.

The Rules

Determining planning applications and other planning decisions are local government functions which, despite the current crisis, still need to be made in accordance with public law rules, legislation and the Councils’ constitutions. Some planning decisions have to be made by planning committees while others, which are usually less complex or controversial, have been delegated to senior planning officers.

All local authority meetings, including full Council and committee meetings, have rules, set out by legislation relating to publicity. These include publishing the officer’s report to committee in advance of the meeting and making all documents which are relevant to the planning decision publicly available. Thanks to technology, many of these processes take place online and will perhaps be less vulnerable to disruption.

Planning committee meetings are required to be held in public with sufficient suitably trained members to make up a quorate. For certain types of decisions such as determination of planning applications, members of the public have rights to address the meeting (‘public speaking rights’).

Effect of Lockdown on Planning Committee Meetings

The laws enabling the nation-wide lockdown clearly make the usual planning committee meetings unfeasible. Regulation 6 of the Health Protection (Coronavirus, Restrictions) (England) Regulations 2020 (in force from 26 March 2020), states that “no one is allowed to leave their house except for specific reasons, which include travelling for the purposes of work or to provide voluntary or charitable services, where it is not reasonably possible for that person to work, or to provide those services, from the place where they are living”. Regulation 7 prohibits the gathering of more than two people in a public place subject to exceptions which include a gathering which is essential for work purposes. Contravention of regulations 6 and 7 are criminal offences.

While the exceptions in regulations 6 and 7 may, if there were no other means of meeting, possibly enable officers and members to meet, the regulations would definitely prevent any members of the public from attending those meetings. Since the crisis started, Councils have been preparing themselves for the obvious need for change and have mooted the idea of remote meetings. Some Councils already stream their planning committee meeting via live webcasts allowing a wider audience to attend.

New Regulations on Remote Local Government Meetings

Regulations have now been made to enable local authorities to hold meetings remotely and fulfil their constitutional and legislative requirements regarding public access. The Local Authorities and Police and Crime Panels (Coronavirus) (Flexibility of Local Authority and Police and Crime Panel Meetings) (England and Wales) Regulations 2020, contain temporary measures, which specify that the definition of local authority meetings include meetings held virtually, online, by video conference or even telephone conference calling, so long as the members attending these meetings can be heard by, and where practicable, seen by other members and members of the public.

Under the regulations, a meeting is considered open to the public if it is accessible by remote means including video conferences and live webcasting. The regulations come into effect on Saturday 4 April.

Like working from home during this crisis, there is likely to be a practical difference between voluntarily making meetings accessible to some people online and having to conduct every planning meeting remotely. Adjustments will need to be made and resources, including staff time which itself is likely to be under strain, will be required to test systems, train members and ensure that everything runs smoothly. Notwithstanding this, it is extremely useful that technology has provided a potential solution to this particular aspect of the crisis which will hopefully prevent the system from grinding to a halt.

The rate of change is dramatic at the moment and we are all on a rapid learning curve to engage with new circumstances and technological solutions. What we will find is that local planning authorities’ responses will not be consistent and that the issues surrounding the delay caused by the crisis will impact on all aspects of the economy.

Commercial Leases and Covid-19 - Points to Consider

As a result of the current Covid-19 pandemic, these are concerning and unprecedented times for both landlords and tenants of commercial premises.

Specific advice should be sought before any action is taken and our solicitors within our commercial property team based in Shrewsbury are on hand to assist you. In the meantime we have identified some general points for consideration;

Impact of the Coronavirus Act 2020

Section 82 of the newly introduced Act impacts upon forfeiture of commercial tenancies for non-payment of rent. The moratorium applies to arears incurred prior to the coming into force of the Act.

The effects of the Act are that the landlord’s right to forfeit is suspended.

It is not the case that no business will be forced out of its premises if it misses a payment in the next three months; it is simply that no business will be forced out of its premises in the next three months if it misses a payment.

Section 82(1) provides that:

“a right of re-entry or forfeiture, under a relevant business tenancy, for non-payment of rent may not be enforced, by action or otherwise, during the relevant period.”

Relevant Business Tenancy

A “relevant business tenancy” means (a) a tenancy to which Part 2 of the Landlord and Tenant Act 1954 (LTA 1954) applies or (b) a tenancy to which that Part of that Act would apply if any relevant occupier were the tenant: section 82(12).

Pursuant to section 23 thereof, Part 2 of the LTA 1954 applies to any tenancy where the demised premises (or part) are occupied by the tenant for business purposes.

The Relevant Period

The extent of the restriction on forfeiture of leases of business premises for non-payment of sums due from the tenant is however limited to “the relevant period”. This is the period from 26 March 2020 and ending on 30 June 2020 (section 82(12), CVA 2020). Note the period may be extended by regulations.

Consequently there is, initially a three month period of grace within which forfeiture for non-payment of rent is precluded. It is also worth noting that ‘rent’ is wide ranging and can include other payments due under the lease.

It is however important to acknowledge the limitations of section 82(1), even in the context of non-payment of rent. These are as follows:

  • The Act does not extinguish the tenant’s liability for the rent payments.
  • The Act does not extinguish the landlord’s ability to exercise any other lawful remedies available to it – for example a breach of covenant action (save for non-payment of rent).
  • When the Act comes to an end (whether from 1 July or any later date), a landlord will, if it then desires, be able to forfeit the lease for non-payment of all the accrued arrears. It is important to note that Section 82 gives a tenant just a short window (during the COVID-19 outbreak) in which it is immune from forfeiture if it fails to pay its rent, but does offer long-term relief.
  • The tenant will also not be able to rely on any acts by the landlord during the relevant period as waiving their right to forfeit for earlier non-payment.

Specific Considerations:

If you are a tenant

  • Rent

If you pay rent in accordance with a turnover clause as opposed to one based upon market rent, you may see a decline in takings for your business as a result of the recent government restrictions. Consequently you may wish to see a reduction in the amount of rent payable.

Whether this applies will of course depend upon the specific turnover provisions contained within your lease.

  • Breach of landlord covenants

If you are a tenant of a multi-let building and the landlord is required as a result of Covid -19 to close then it could be argued that the landlord is in breach of its obligation to allow you quiet enjoyment as such closure would result in a tenant being unable to gain access to the premises. A tenant is entitled to exclusive possession of the premises. If this has or is about to happen, it may be worth taking steps now in order to raise a claim later for damages against your landlord such as loss of profit accounts.

  • Break clauses

You may want to double check your lease for any break clause provisions in case you want to end your lease earlier in light of the circumstances.

  • Force majeure clauses

These are not common in leases but it is worth checking for a 'force majeure' clause which could allow you to say that your obligations in the lease are suspended because of Covid-19. Be aware though the landlord could also use these provisions if they apply.

If you are a landlord

  • Rent suspension

The law does not provide that rent suspension provisions must in the current circumstances be applied – this will be a matter for negotiation between the you and your tenant. You may decide to defer, reduce or suspend the rent for a period to avoid tenant insolvency. Any decisions of this type must be documented very carefully.

In most leases the obligation to pay the rent is only suspended, or the amount of rent reduced, where there has been "damage" to or "destruction" of the premises by an insured risk or, in some cases, an uninsured risk. Covid-19 itself does not cause physical damage to or destruction of premises, so these provisions are unlikely to be engaged. It will be a matter for the landlord to prove that Covid-19 does not fall within the definition of insured risks as provided for by the lease and it could be argued that this is too far removed in order for the tenant to make a successful claim.

  • Force majeure clauses

These are not common in leases but it is worth checking for a 'force majeure' clause which could allow you to say that your obligations in the lease are suspended because of Covid-19. Be aware though the tenant could also use these provisions if they apply.

For further advice please contact me, Lynsey Cater or Andrew Evans.

Can I Still Move Home During the Covid-19 Outbreak

Last week the government issued guidance to buyers, sellers, estate agents, solicitors, surveyors and new property developers regarding moving home whilst the UK is in lockdown to fight the coronavirus pandemic. We aim to answer any questions you may have in this regard within this blog.

Will my transaction proceed?

Whilst there is no need to immediately pull out of transactions, we all must ensure we are following guidance to stay at home and away from others at all times, including the specific measures for those who are presenting symptoms, self-isolating or shielding. Prioritising the health of individuals and the public must be the priority.

If you are moving into a vacant property, or if indeed you are purchasing a buy to let property which is vacant or already has tenants in situ, then you can continue with that transaction as planned. In these circumstances we, at Lanyon Bowdler, recommend a simultaneous (same day) exchange and completion. If you are moving into a vacant property you must ensure that when carrying out removals yourself, you comply with the social distancing guidance during the moving process.

Where the property is currently occupied and no exchange has taken place, we encourage parties to delay exchange until such time as the stay-at-home measures against coronavirus (COVID-19) will no longer be in place to minimise the risks.

If exchange has already taken place and you are contractually bound to complete, we encourage all parties within the chain to do all they can to amicably agree an alternative date to move, for a time in the future when it is likely that stay-at-home measures against coronavirus (COVID-19) will no longer be in place. This may be a fixed date in the future, or it may be more appropriate for an on notice completion, with a longstop and/or Covid-19 special condition provision. This can be done by a variation of the contract but it is important that a new contract is not entered into.

Will my mortgage offer be valid?

It is important to remember when agreeing a new completion date that you ensure your mortgage offer will remain valid at the point of the revised completion date. Last week UK Finance confirmed, that in order to support customers who have already exchanged contracts for property purchases with set dates for completion, all mortgage lenders are working to find ways to enable an extension of their mortgage offer for up to three months.

We recommend you check with your lender as to whether this is automatic or whether you will be required to apply for such an extension.

It is also worth considering that should your financial circumstances change between exchange and completion i.e. you lose your job, your lender would be entitled to withdraw the mortgage offer. Finally, you should also be aware that property prices could fluctuate during Covid-19 and again this may affect your mortgage offer. UK Finance have confirmed banks will work with their customers should this happen.

Follow the guidance

If moving is unavoidable for contractual reasons and the parties are unable to reach an agreement to delay, people must follow advice on staying away from others to minimise the spread of the virus. In line with government’s guidelines, anyone with symptoms, self-isolating or shielding from the virus, should follow medical advice which will mean not moving house for the time being, if at all possible.

In the new emergency enforcement powers given to the police, which came into force last week, there is an exemption for critical home moves, in the event that a new date is unable to be agreed.

If you are looking to put your property on the market for sale this may be more challenging than usual during this period. There should be no visitors to your home.

You can speak to estate agents over the phone and they will be able to give you general advice about the local property market and handle certain matters remotely, but they will not be able to start actively marketing your home in the usual manner.

If you are thinking about selling, you can use this time to start gathering together all of the information you will need to provide to potential purchasers, and indeed we at Lanyon Bowdler are accepting instructions from clients in this regard.

If your property is already on the market, you can continue to advertise it as being for sale but you should not allow people in to view your property. We are aware that some estate agents have arranged for sellers to carry out viewings with prospective buyers by video apps. We do not recommend, however, that you exchange until such time as the stay-at-home restrictions have been lifted so that you can view the property in person.

If you have any questions or if you would like to instruct us to act on your behalf please do not hesitate to get in touch with us.

National Minimum Wage

National Minimum Wage rates are to increase from 1 April.

The National Living Wage (for over 25-year-olds) will increase 6.2% from £8.21 to £8.72.

For other age groups and apprentices the rates will increase as follows:

  • 21-24-year-olds: 6.5% from £7.70 to £8.20
  • 18-20-year-olds: 4.9% from £6.15 to £6.45
  • Under-18s: 4.6% from £4.35 to £4.55
  • Apprentices: 6.4% increase from £3.90 to £4.15

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