Coronavirus & Your Business: Valuable Tips for Business Owners

What is Coronavirus?

It is alleged that Coronavirus was first reported in the Chinese city of Wuhan in December 2019 and was declared as a public health emergency of international concern by the World Health Organisation on 30 January 2020. The virus is highly contagious and has impacted multiple countries in a very short period of time. Multiple travel and business restrictions have been imposed by countries across the globe to control the spread of the virus which has adversely impacted businesses all over the world[1].

How can businesses deal with the impact of Coronavirus?

Due to travel and business restrictions imposed by a number of countries, many Australian businesses are facing trouble in importing and exporting goods. Businesses should take the following steps now to try to mitigate the financial impacts of Coronavirus:

  • Assess their financial position and consider their working capital requirements along with staffing arrangements to deal with the losses. Business owners must look for alternative sources for the supply of goods. Good communication is essential in assessing who will be affected by the travel bans or additional expenses to business both now, but more importantly, into the future.
  • Develop strategies to deal with business stakeholders such as customers, banks and landlords. Businesses must ensure that they have enough funds to pay loans and fixed overheads on time. In this regard, initiatives should be considered to negotiate the term of loans with lenders. Businesses may be able to invoke force majeure terms (“act of god” terms) in their loan documents if lenders are unwilling to negotiate.  Similarly, if your business is facing trouble in paying rent, you must communicate with the landlord and seek to reduce the rent payable during the crisis, perhaps with the assurance of increasing the rent when situation improves. If there is a force majeure clause in the lease, it may be able to be invoked if the landlord is unwilling to reduce the rent in discussions with you.

What can businesses do if any of their employees are affected by Coronavirus?

Coronavirus can also affect business if employees are either infected by the virus or restricted due to travel bans. The following actions can be taken by employers in these circumstances:

  • In the case that an employee is sick having contracted Coronavirus, the employee should take their accrued personal leave, as in the case of any other illness. The employee should provide medical certificates authenticating the illness. However, if the employee remains absent for longer periods, leave may become unpaid. Businesses should not terminate any sick employee as this could amount to unlawful termination by the employer. Employers can quarantine their employees (i.e. directing employees to self-isolate at home) to ensure the health and safety of all its employees.
  • In the case that an employee is restricted in travelling to work due to a travel ban, employers must check details relating to the travel ban via reliable sources and enquire how the travel ban affects their employees. Employees can use their accrued annual leave balance in these circumstances, while employers can hire temporary staff and contractors to work in place of the affected employees. Employers should communicate with the affected employees regarding their approximate date of return. Employers should abstain from terminating employees who are absent due to temporary travel bans. This will likely expose employers to high risk of employment law related claims and may be deemed to be harsh, unjust and unreasonable.

The Australian Government has recently announced an economic response of $17.6 billion to protect the country’s economy against the financial effects of Coronavirus. The economic response is aimed at maintaining confidence of business owners and the public in general, supporting investments and keeping people employed and engaged in our economy. It is designed to help small business manage short-term cash flow challenges and aims to provide support to individuals and assistance to the most severely affected in our community.

At Burke Lawyers, together with our partners, are qualified to assist in legal advice and services relevant to the medical and allied health industry, both in Australia and the U.S.  For more information, please contact Meghan Warren or Rosy Dean (nee Rosy Roberts) on +61 3 9822 8588 or email our team HERE.

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