Updated legal guidance during Covid-19 outbreak

Updated legal guidance during Covid-19 outbreak

David Clifton and Suzanne Davies analyse the effect of government restrictions on, and economic support for, the restaurant sector arising from the coronavirus crisis.

In the space of just one extraordinary week – 16 to 23 March – the UK moved from a) the prime minister asking everyone to avoid restaurants and other social venues, through b) the imposition of emergency powers to enforce closure of nearly all hospitality and leisure premises, to c) an instruction to the British people to stay at home with the police empowered to enforce compliance and to disperse gatherings of more than two people.

In that same tumultuous week, Kate Nicholls, CEO of UKHospitality – who has been working ceaselessly to protect the interests of the sector – has had good cause to move from describing the prime minister’s first formal statement as a) “catastrophic for businesses and jobs” and b) likely to lead to “thousands of businesses closing their doors for good, and hundreds of thousands of job losses” to c) welcoming the government’s emergency economic intervention, described by the chancellor of the exchequer as “unprecedented in the history of the British state”.

Economic support

The government has issued ‘COVID-19: Support for businesses’, providing information about the package of measures announced by the chancellor. Available on the gov.uk website, it gives details of:

  1. The Coronavirus Job Retention Scheme, under which HMRC will reimburse 80% of “furloughed workers” wage costs, up to a cap of £2,500 per month
  2. The deferral of VAT and income tax payments for three months until 30 June 2020
  3. HMRC’s ‘Time to Pay’ service, pursuant to which businesses concerned about payment of their outstanding taxes should seek help with a view to achieving HMRC’s agreement to instalment payment arrangements, suspension of debt collection proceedings or cancellation of penalties and interest for late payments
  4. A Statutory Sick Pay relief package for small and medium sized businesses (with fewer than 250 employees as at 28 February 2020) under which they will be able to obtain a refund of up to 14 days’ statutory sick pay for those off work because of COVID-19
  5. A 12-month business rates holiday for restaurant businesses and all other retail, hospitality and leisure businesses in England, meaning that they will incur no liability to business rates for the year to 31 March 2021
  6. Small business grant funding of (a) £10,000 for all businesses in receipt of small business rate relief or rural rate relief or with a property that has a rateable value of £15,000 or less or (b) £25,000 for retail, hospitality and leisure businesses where the rateable value is between £15,001 and £51,000
  7. The Coronavirus Business Interruption Loan Scheme offering loans of up to £5m (interest-free for the first 12 months and with a government-backed 80% guarantee on each loan) for small and medium-sized businesses (details of which are on the British Business Bank website)
  8. The Covid Corporate Financing Facility, a new lending facility from the Bank of England to help support liquidity, intended to help larger businesses bridge coronavirus disruption to their cashflow.

Rent payments under commercial leases

Grave fears that rent demands made on the 25 March quarter day would result in many immediate business failures have been allayed to an extent by a moratorium, the effect of which will be to suspend until 30 June 2020 the right of a landlord to bring a business tenancy to an end by way of re-entry or forfeiture of the lease. This is a complex area of law and any tenants facing threats from non-co-operative landlords should seek specialist legal advice now, because the moratorium will not get rid of the consequences of non-payment of rent. It merely postpones those consequences.

Employment guidance

We have referred above to ‘furloughed workers’ in the context of the Coronavirus Job Retention Scheme. For this purpose, employers need to designate affected employees as ‘furloughed workers’, notify their employees of this change and submit information to HMRC about this.

It is essential that employers talk openly and honestly with all employees about the consequence of any proposal to change the terms of, or to terminate their, employment (whether for redundancy or otherwise). In all such cases, (a) the terms of the existing contract of employment will need to be firmly borne in mind and (b) the consultation process leading to any change in those terms or termination of employment will need to be thoroughly documented. If in doubt about any aspect of the above, employers should seek urgent specialist employment law advice. They might also find it helpful to read the ACAS ‘Coronavirus Advice for employers and employees’, available online.

Licensing issues

To answer some remaining questions:

  • Annual licence fees must continue to be paid, failing which premises licences will lapse
  • Subject to the government not imposing further restrictions, planning rules have been relaxed to allow takeaway food and drink from restaurants not previously providing it, but operators should check to ensure that (a) compliance with the Food Standards Agency’s guidance on distance selling, mail order and delivery and (b) no licence conditions prevent them from doing so and that their premises licence authorises the provision of late night refreshment if they want to supply hot food and drink after 11pm
  • Operators should notify their licensing authority they are cancelling any temporary event notices they cannot now use if they want to retain their remaining quota of TENs
  • It must regrettably be borne in mind that premises licences lapse on an insolvency of the premises licence holder occurring, although in such circumstances, steps can be taken within a limited period of time to resuscitate the premises licence
  • Once enacted into law, the Coronavirus Bill will allow local government meetings (including those at which licensing hearings may take place) to be conducted by videolink as virtual meetings.

If in doubt about the licensing consequences of any action or inaction associated with coronavirus, do please feel free to contact us.