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Post-Lockdown Considerations: Delivering your business from intensive care

08 June 2020 #Corporate #Commercial


The Government has now committed, albeit loosely, to an economy stabilising initiative. Despite the often contradictory scientific and medical advice, come 1st July the majority of non-essential retail will be able to reopen to the public. They will, however, not be opening up to the same world they closed their doors to back in March. How we go to work, how we conduct business and how we interact with each other has likely changed forever. Over the next few months’ it will be crucial for businesses to devote adequate time not only to the reopening process, but to the stimulation and assessment of their changed business needs. With that in mind, this article aims to disclose some practical considerations for businesses looking to navigate the post lockdown landscape and implement positive changes that will only come from intense self-assessment.

Outstanding commitments

For businesses who have reduced their output or even suspended it entirely, a key step in reviving the business will be understanding which of their contractual rights have been preserved. At the same time, they will need to communicate and collaborate with clients to find a mutually agreeable way to deal with the challenges created by business standstill.

Government guidance on this matter was published in early May, a summary of which can be found here. The guidance is generic and non-statutory, stressing the need for “responsible and fair behaviour where possible”. As a starting point, the following practical steps should be taken at a bare minimum:

  • Check your contracts carefully and comply with any notice provisions and other requirements.
  • Ensure that you reserve your existing rights under the contract. Any attempts to collaborate should be on a without prejudice basis and subject to contract; and
  • Be mindful of the need to engage with third parties such as insurers, funders and the supply chain before reaching any agreement. 

Suitability of premises

Many businesses have found that one small silver lining from the lockdown was their ability to continue to function in some form having adopted a remote-working situation. Many will now favour this approach albeit while sacrificing some of the benefits that come with physical interaction. In addition, through assessment of company direction, certain elements of production or aspects of services that were suspended due to an inability to function may remain so. In other words, suspension may turn into expulsion.

Business will have to decide if their premises now suits their business needs. In most cases there will have been regular correspondence between landlords and tenants throughout this period of lockdown and an abundance of considerations will need to be assessed when business is able to restart. With a more remote staff, change in output, social distancing and health considerations all at play, a company’s current working environment may no longer be suitable or even financially viable.

We discussed the Government’s pending code of practice that aims to give clarity and reassurance to high street businesses and landlords over rent payments here. In summary, a new working group has been established within the commercial rental sector in order to encourage fair and transparent discussions between landlords and tenants over rental payments during the coronavirus pandemic, guidance on rent arrear payments, and the treatment of those that are sub-letting or suppliers. This is one of a number of initiatives we can expect to be announced as and when businesses return.

Corporate Considerations

Given the often drastic nature of the changes that have been forced upon businesses due to the pandemic, it is unlikely their governance and corporate documents are prepared for, or have been acclimatised to, a less traditional means of conducting businesses. Practically, companies will need to consider the following:

  • Is the business set up to conduct board or general meetings electronically?
  • Do the company’s articles of association allow for the above, or impose too onerous a condition on the use of written resolutions?
  • Do they only allow for wet ink signatures that may not be easy to procure if business is being conducted remotely?
  • Filing requirements – is the company up to date? The Registrar for Companies House has confirmed its reluctance to extend the 21 day registration period.

By way of an example, whilst many companies will always have conducted board meeting digitally, others may be faced with more digital-resistant directors. Procedurally, where Board meetings are conducted electronically, express consent must have been sought in advance, arrangements must be in place that enable everyone to see or hear the other directors, and minutes are to be circulated to all following conclusion. Crucially, companies should use this time to reflect and adapt. In review of their articles of association, it is likely that other items may be purged or amended that better represent the companies post-lockdown ideal.

Employee concerns

Whilst addressing social distancing, concerns regarding hygiene and commuting by public transport are likely to be the most pressing issues. With reduced demand or business interruption, it may be that staff size will have to be considered. It is therefore no surprise that, according a recent survey, two thirds of the global workforce are experiencing high levels on anxiety around job security.

Where the mental health of the workforce is low it will have an impact on productivity, absenteeism and a business’s ability to attract and retain key talent. Research suggests that work anxiety often stems from a lack of leadership and/or understanding of the needs of the business. Openness and honesty are great forms of motivation especially when a challenging period of change is on the horizon; two way dialogue addresses the needs of both parties. Scrutinize both pre-lockdown and during-lockdown employee activity, identify the issues and communicate them to colleagues.

Where your business has taken advantage of the government’s furlough scheme, it may be necessary to consider the roles of those employees. Assess how you may retrain or redeploy those workers, potentially on a part-time basis. With sweeping changes comes administrative edits too. This is a great opportunity to update policies, rewriting them to reflect an updated working approach, future business conduct, and to incorporate the necessary health and safety requirements.

 

 

Clarkslegal, specialist Corporate lawyers in London, Reading and throughout the Thames Valley.
For further information about this or any other Corporate matter please contact Clarkslegal's corporate team by email at contact@clarkslegal.com by telephone 020 7539 8000 (London office), 0118 958 5321 (Reading office) or by completing the form on this page.
Disclaimer
This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full General Notices on our website.

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Jacob Montague

Jacob Montague
Trainee Solicitor

E: jmontague@clarkslegal.com
T: 0118 960 4613
M: 0790 9964 585

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Corporate team
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