Coronavirus Business Legal Help

What reliefs are available for small businesses?

There are several reliefs available for small businesses based in England.

Nurseries and businesses in the retail, hospitality and leisure sectors (which are based in England) may be eligible for a business rates holiday. For more information on eligibility, visit the GOV.UK guidance on the Expanded Retail Discount and Nursery Discount.

All businesses and self-employed people in financial distress and with outstanding tax liabilities may also be eligible to receive support with their tax affairs through HMRC's Time to Pay Service. Support is arranged on a case-by-case basis and is tailored to individual circumstances. If you have missed a tax payment or you might miss your next payment due to Coronavirus (Covid-19), you can call HMRC's dedicated helpline: 0800 024 1222. If you're worried about a future payment, you can call HMRC nearer the time.

On 5 January 2021, the Government announced a one-off top-up grant for retail, hospitality and leisure businesses worth up to £9,000 per property, to help them through to the spring. These one-off payments will be granted to closed businesses as follows:

• businesses with a rateable value of £15,000 or under: £4,000 

• businesses with a rateable value between £15,000 and £51,000: £6,000

• businesses with a rateable value above £51,000: £9,000 

 

What loans are available to support small businesses?

The Recovery Loan Scheme has replaced the Coronavirus Business Interruption and Bounce Back Loan schemes. Eligible businesses will be able to borrow between £25,000 and £10 million to help support recovery and drive growth. The scheme opened on 6 April 2021 and is expected to come to an end in December 2021. Eligibility criteria for the loan are that the:

• business must be trading in the UK

• business has been affected by the pandemic 

• business would be viable were it not for the pandemic 

• business is not in insolvency proceedings

 

What is the Kickstart Scheme?

The Kickstart Scheme is a fund intended to subsidise six-month work placements for people on Universal Credit aged between 16 and 24, who are at risk of long-term unemployment.

Under the scheme, the Government will cover the cost of 25 hours' work a week at the national minimum wage (£8.20 for those aged 21 to 24, £6.45 for those aged 18 to 20, and £4.55 for those under 18) for each ‘kickstarter’ job. Employers can top up these payments if they wish. For more information on the Scheme, and eligibility requirements, read the GOV.UK guidance, Apply for a grant through the Kickstart Scheme.

You can now apply for the Scheme online. The Scheme is expected to run until December 2021, but the government retains the option to extend it where necessary.

 

What support is available for the arts?

In 2021 the Government announced a £700 million of spending will be allocated to support the arts, culture and sporting institutions as they reopen.

 

VAT cuts

The Government has announced that from 8 July 2020, VAT will be reduced to 5% (as opposed to the previous 20%) for tourism and hospitality businesses.

This VAT-cut will apply to a variety of businesses including: eat-in or hot takeaway food from restaurants, cafes and pubs, accommodation in hotels, B&Bs, campsites and caravan sites, attractions like cinemas, theme parks and zoos.

This VAT cut will last until 30 September 2021. After September rates will increase to 12.5% until March 2022 to help businesses adjust to paying standard rates of 20% again.

Is my business covered by my insurance policy?

If you have a business insurance policy that covers pandemics and government-ordered closure, you should be able to make an insurance claim against that policy. The government and insurance industry confirmed on 17 March 2020 that advice to avoid pubs, theatres etc is sufficient to make a claim.

Insurance policies differ significantly, so businesses are encouraged to check the terms and conditions of their specific policy and contact their providers. Most businesses are unlikely to be covered, as standard business interruption insurance policies are dependent on damage to property and will exclude pandemics.

Contact your insurance provider to check whether your business is covered. It might be that you would not be covered under current guidance, but could be covered if the guidance from the government changes or the situation escalates.

What policies should employers have in place now? 

Make sure you have adequate policies in place so that employees know how you are dealing with sickness, working from home and health and safety. You can make a health and safety policy, working from home (also known as a flexible working policy) and sickness policy with Rocket Lawyer. If you need to make redundancies or dismiss employees it is advisable to have these policies in place and to follow ACAS guidelines. Ask a lawyer for redundancy advice or make your Redundancy policy with Rocket Lawyer.

 

Can we insist on employees to self-isolate?

Employers have a duty to protect the health and safety of their workers. This could extend to insisting on self-isolation for a recommended period, particularly if individuals have returned from a high-risk area defined by the FCO, regardless of whether they are displaying symptoms. The decision to require self-isolation should not be discriminatory and should be carried out with the rationale of protecting the health and safety of the wider workforce. Staff may or may not be able to work from home during this period, depending on the extent of any symptoms and/or the nature of their role.

Requiring someone to self-isolate may be in breach of the employment contract, but if the rationale for such action is to protect the health and safety of the wider workforce and/or in response to UK government guidance, then the employer’s duty in respect of health and safety is likely to triumph.

 

Is an employer responsible for employees’ health and safety whilst they are working from home? 

An employer is responsible for protecting the health and safety of employees working from home. It’s good practice for the employees themselves to conduct a self-assessment of the risks associated with working from home. The assessment must identify the hazards that may harm those working without supervision and employers must find ways to manage these risks in order to comply with health and safety rules. 

Where the employee is a new or expectant mother, the employer must also account for risks to the child in addition to those to the mother. Where equipment is provided by the employer as part of the employee’s work, the employer is only responsible for the equipment supplied. 

Employers should provide appropriate training and supervision and keep in contact with employees regularly while they work from home. It is also crucial for employers to inform employees of their health and safety policies and employees must cooperate with their employers on these rules and report all employment-related hazards. Read Health and safety for employees working from home during the Coronavirus (COVID-19) crisis for more information. 

Create your Temporary working from home policy with Rocket Lawyer.

 

When should employees and workers return to work?

From 19 July 2021, people in England will no longer be asked to work from home and employers will be able to start planning a safe return to the workplace. It is recommended that employers have a gradual return to the workplace (ie employees working in the office 2 days a week and working from home for the remaining 3 days per week).

Employers should ensure that the workplace is safe for staff (eg by requiring staff to wear cloth masks and requiring frequent and thorough handwashing) and that they comply with any sector-specific guidance. For more information read the government’s guidance, Working safely during coronavirus (COVID-19).

Where a worker has Covid-19 symptoms (however mild) or someone in their household has symptoms of Covid-19, then the worker should not leave their house to go to work. Such workers (along with their household) should self-isolate and not return to work.

Before reopening a business, employers must conduct a Covid-19 return to work risk assessment and share the results with their employees. All reasonable steps must be taken to minimise the risk of infection.

Do we need to pay employees if they are absent from work?

If an employee is prevented from working because they are genuinely unwell or sick, then the company's normal sickness policy should apply.

If you have asked your workforce not to come to work but to work from home, they should also be paid as normal.

Where an individual is not unwell but is prevented from working because they are, for example, in self-isolation, quarantine, or stranded abroad, or they have otherwise been advised to stay at home as a result of medical or UK government advice and are unable to work remotely, there is no legal right to be paid for the time off. However, ACAS and the Secretary of State for Health have advised such absence to be treated as sick leave under the company’s sick pay policy.

Statutory sick pay (SSP) will be payable to eligible workers, although the UK government has announced a series of measures to relax the ordinary rules in light of the Covid-19 outbreak. New legislation has been passed allowing SSP to be paid from the first day of absence (instead of day four) in certain circumstances. For this to be the case, an employee must be unable to work either because they have Coronavirus or because they are self-isolating and:

• they must be eligible for SSP

• their first day of sickness absence must be on/after 13 March 2020

• they must be off work for more than 4 consecutive days

Small employers (those with under 250 employees) can recover SSP from the UK government for up to 14 days per person under the Coronavirus Statutory Sick Pay Rebate Scheme.

As of 26 August 2020, the SSP rules have been amended to cover those self-isolating in advance of an operation. Workers who have been notified by a registered medical practitioner that they are to undergo a surgical or other hospital procedure, and have been advised to self-isolate in advance, are eligible for SSP for the period of self-isolation up to 14 days. Workers who are able to work from home while self-isolating in these circumstances are not entitled to SSP, but should be paid their normal wages.

The UK government also announced that Employment Support Allowance (ESA) will be available to the self-employed, and to workers whose earnings are too low to be eligible for SSP, if they are affected by Covid-19 or self-isolating due to UK government advice. ESA rules have also been relaxed so that payment is from day one of absence (instead of day eight), and to remove the need to attend a jobcentre to claim.

You may want to consider a temporary enhancement to the company sickness policy in order to incentivise people to remain off work, as insufficient sick pay provision risks individuals reporting for work. Any such changes should be kept under review and adapted as circumstances change.

 

What is the Coronavirus Statutory Sick Pay Rebate Scheme?

The Coronavirus Statutory Sick Pay Rebate Scheme enables employers to reclaim SSP which they pay to current or former employees for periods of sickness starting on/after 13 March 2020. Employers are eligible for this scheme if they:

• are claiming for an employee who’s eligible for sick pay due to coronavirus

• had a PAYE payroll scheme that was created and started on or before 28 February 2020

• had fewer than 250 employees on 28 February 2020

Employees can be on any type of employment contract, including full-time, part-time, agency, flexible or zero-hour contracts.

Where an employer pays more than the statutory rates of SSP (‘enhances’ or ‘contractual’ sick pay) they can only claim for the current rate amount.

Repayments under this scheme will cover up to two weeks of sickness, starting from the first day of sickness, provided that the employee was unable to work because:

• they have Coronavirus; 

• they are shielding at home;

• they are isolating at home because they live with someone who is self-isolating due to having symptoms;

• they self-isolate because they are in a 'bubble' with someone in a linked or extended household that has Coronavirus symptoms; or

• they are isolating at home because they have been told by the NHS Test and Trace that they have been in contact with someone who has Coronavirus

Employees do not have to provide a doctor’s fit note for employers to make a claim.

Please note that where an employee is self-isolating because of being in a 'bubble' with someone who has Coronavirus symptoms, SSP will cease to be payable if the person with symptoms tests negative for Coronavirus.

The online service through which to reclaim SSP is now available on the government website. 

Employers should make sure to keep records of SSP payments for three years.

 

Can I make staff redundant?

It may not always be appropriate to make staff redundant completely.

You may wish to adopt flexible measures instead, for example, short-time (a reduction in hours) and lay-off working, or furloughing your employees or relying on the Job Retention Scheme. If you do need to make redundancies ensure to follow the correct procedure. For further information and to make redundancy letters, read Redundancies . Alternatively, Ask a lawyer for workforce reduction advice. 

 

What does lay-off mean?

Lay-off is when an employer takes an employee off work and off pay for at least one working day. It is used as a response to lack of work, and as an alternative to making redundancies. For more information, read Lay-offs and short time working.

Check your employment contracts to see whether you are allowed to implement short-time and lay-off working. If they are currently not in the employment contract, you can get the employee's express consent to vary or change the contract to allow for lay-offs. You can use a Change to employment terms letter for this purpose. For further information read Changing employment terms.

There is a statutory scheme for lay-offs, but usually, a lay-off clause in the employment contract is required in order to implement this or with the consent of the employee.

 

How long can an employee be laid off for?

There’s no limit for how long an employee can be laid off or put on short-time. An employee could apply for voluntary redundancy and claim redundancy pay if it’s been:

• 4 weeks in a row
• 6 weeks in a 13-week period

 

What is the lay-off pay entitlement and short-time working payments?

Employees should get full pay unless the contract allows unpaid or reduced pay lay-offs.

If the lay-off is unpaid, employees are usually entitled to guarantee pay.

 

What is short-time working?

Short-time working is similar to lay-off, but rather than providing no work, the employer provides some, reduced, work. Less than half a normal week's work and pay will trigger the statutory short-time working protections for employees, subject to eligibility requirements.

A statutory 'guarantee payment' is payable to employees, subject to certain requirements. The maximum payment is £29 per day for up to five 'workless' days in any three-month period, so a total maximum of £145. Part-time payments are calculated pro-rata.

An employer could choose to pay more.

For further information read Lay-offs and short time working.

 

Can I make employees take annual leave?

You are entitled to give notice to staff to take annual leave, provided there is no agreement to the contrary (eg in the employment contract). Notice must be at least twice as long as the period of leave you require them to take, eg if you require an employee to take 1 week's annual leave, you must give them at least 2 weeks' advance notice.

 

Can I ask employees to volunteer for unpaid leave or redundancy?

If you wish for employees to take periods of unpaid leave, their consent is required unless their employment contract contains a clause allowing you to place them on unpaid leave.

While it is not always appropriate to make staff redundant completely, you may wish to seek out staff who are willing to take redundancy voluntarily. 

You cannot just offer voluntary redundancy to age groups eligible for an early retirement package - this could constitute discrimination. However, an early retirement package (for certain age groups) could be one element of a voluntary redundancy offer open to all staff. For more information read Redundancy.

 

Can I reduce my employee's pay?

Employers will need to consult with staff to obtain their express agreement to these measures where the employment contract does not contain any relevant contractual flexibility clauses or short-time working clauses.

You can consider using a Furlough letter for previously furloughed employees for this purpose. For further information read Furlough, workforce reduction and managing employees. Alternatively, you can consider using a Change to employment terms letter.

You should note that the Government will support employees by providing an emergency wage package rescue plan called the Coronavirus Job Retention Scheme until September 2021.

 

What is the Coronavirus Job Retention Scheme?

This scheme is to help employers pay employee wages. Employers will be able to contact HMRC to cover up to 80% of retained (or ‘furloughed’) workers salary up to a maximum of £2,500 a month in addition to the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that wage. Employers can choose to fund the difference between this payment and employee salaries, but do not have to. To be furloughed, employees can be on any type of employment contract, including full-time, part-time, agency, flexible or zero-hour contracts. Apprentices can also be furloughed.

For further information read Furlough, workforce reduction and managing employees.

The scheme will continue until the end of September 2021 and from July 2021 onwards employers will need to contribute to furlough pay as follows:

Month	Employers’ contribution	Government’s contribution to wages
Until June 2021	National Insurance and pension contributions	80% up to £2,500
July 2021	National Insurance and pension contributions and 10% of the furlough pay	70% up to £2,187.50
August and September 2021	National Insurance and pension contributions and 20% of the furlough pay	60% up to £1,875

 

What is flexible furlough?

From July 2020 onwards, employers will be able to recall their furloughed employees part-time under the scheme (also called ‘flexible furloughing’). Employers will have to pay their employees for the hours they’ve worked while the scheme will cover their normal hours not worked (ie their furloughed days). 

Employees placed on furlough from 1 November 2020, can be furloughed on a full-time or part-time basis.

For more information, read Furlough, workforce reduction and managing employees.

 

Can furloughed apprentices continue to undertake training?

Where apprentices are furloughed, they can continue to train for their apprenticeships, as long as it does not provide services to or generate revenue for their employer.

Where training is undertaken by furloughed employees, at the request of the employer, they are entitled to be paid at least their appropriate National Minimum Wage for this time.

 

How can I recall a furloughed worker?

You can use a Furlough letter for previously furloughed employees to inform a furloughed employee that they are to return to work. This letter informs a furloughed employee when their furlough period will come to an end and when they are expected to resume working.

You should provide a furloughed employee with ‘reasonable notice’ to return to work, to allow employees to make any necessary arrangements (eg child care arrangements).

 

Can employees on furlough take holiday?

Staff members can take annual leave while furloughed. Statutory annual leave continues to accrue as normal during a period of lay-off or furlough. This is because the contract of employment will continue to be in existence during this period. Contractual annual leave above the statutory minimum (the 5.6 weeks of holiday required by the law) will also continue to accrue, unless the contract specifically provides otherwise. For example, if an employee’s contract says that they are entitled to 7 weeks’ holiday, the employer and employee can agree to (temporarily) reduce that to 5.6 weeks.

Furloughed members of staff can request and take their holiday in the usual way, if their employer agrees. This includes bank holidays. Furloughed workers must get their usual pay in full, for any holiday they take, unless agreed otherwise (eg if the employer and employee have previously agreed to reduce the employee's pay while on furlough). Employers are able to claim 80% of salary paid on holiday days as taking holiday does not break the furlough period. This means that for holiday days taken by a furloughed worker, the employer must typically top up the 80% salary paid under the Coronavirus Job Retention Scheme so that the employee is paid 100% of their salary.

 

Are furloughed employees entitled to holiday on bank holidays?

If the bank holiday is a day's holiday under the employment contract, then the furloughed staff is entitled to the holiday. The furloughed staff should be paid 100% of their wage for that day.

Alternatively, employers may agree to grant a day of holiday in lieu (ie grant the employee an additional day of holiday in place of the bank holiday). If the employment contract states that bank holidays form part of the usual holiday entitlement, employers will need the employee’s consent to grant a day in lieu. 

 

What should furloughed employees be paid if they are then made redundant?

Furloughed employees who are then made redundant must receive statutory redundancy pay based on their normal wages rather than their furlough pay. This also applies to notice pay, which is where employees must be given a notice period before their employment ends.

 

Will workers on zero-hour contracts be paid if they are asked to self-isolate?

If a zero-hours worker earns over a certain average per week then they will be entitled to receive statutory sick pay (SSP) when told to self-isolate. Those zero-hours workers who currently do not meet the minimum earning requirements for SSP, will not be eligible for SSP unless further legislation is introduced unless the employer pays them voluntarily.

For further information on calculating SSP, read How to calculate statutory sick pay for zero-hours workers.

 

When will employees be paid statutory sick pay (SSP)?

Historically, SSP was not paid for the first three days of illness. The UK Government has passed new legislation allowing for SSP payment from day one of absence, for those unable to work as a result of being advised to self-isolate or because they have coronavirus. Additionally, in order for SSP to be payable from the first day of absence, employees:

• must be eligible for SSP
• their first day of sickness absence must have been on/after the 13 March 2020
• must be off work for more than 4 consecutive days

 

Are self-employed individuals entitled to sick pay?

Generally, employees are entitled to sick pay while self-employed individuals are not. This is because sick pay is paid by an employer. However, the Government intends to make it easier for self-employed individuals affected by Covid-19, to access benefits.

Those individuals on Employment and Support Allowance (ESA) who are suffering from Covid-19 or are required to self-isolate, will be able to claim the allowance from day one, instead of having to wait for seven days.

Further, the minimum income floor has been temporarily removed from Universal Credit for self-employed individuals who have to self-isolate as a result of coronavirus. The minimum income floor is an assumed level of income, which takes into account how much an individual would normally be expected to earn in a month when calculating their entitlement to Universal Credit. Not having this minimum income floor in place, means that self-employed individuals will be able to claim for the time they spend off work due to sickness.

Self-employed individuals in need of financial assistance will be able to apply for Universal Credit over the phone, without the need of attending a jobcentre. 

Self-employed individuals who do not have enough money to live on while they wait for their first Universal Credit payment can ask for an advance payment. This can be done online or through their Jobcentre Plus work coach. To apply, individuals will need to:

• explain why they need an advance

• verify their identity (either when they apply online or during their first phone appointment with the work coach)

• provide bank account details for the advance

For more guidance visit the Government website.

 

Is financial support available for self-employed individuals struggling because of Covid-19?

The Government has announced assistance for self-employed individuals affected by Covid-19, through the Self-Employment Income Support Scheme (SEISS).

This scheme allows self-employed individuals to claim a grant for a percentage of their profits (paid in one lump sum) for the next three months, capped at a specified amount You can apply for this scheme if you are self-employed or a member of a partnership and you:

• have submitted your Income Tax Self Assessment for the tax year 2018 - 2019

• traded in the tax year 2019 - 2020

• are trading when you apply (or would be, if not for Covid-19)

• intend to continue trading in the tax year 2020- 2021

• have lost trading/partnership trading profit due to Covid-19

In addition, more than half of your income must be through self-employment and your profits from this self-employment must be less than £50,000 per year.

The final SEISS grant covers the period of May to September 2021. Eligibility for this grant is based on an assessment of the individual’s turnover. If your turnover has fallen by 30% or more you will still be eligible for 80% of your average trading profits for three months, capped at £7,500 in total. However, if your turnover has fallen by less than 30% you will be eligible for 30% of three months average trading profits, capped at £2,850.

For more information read the Government’s guidance, Self-Employment Income Support Scheme Grant Extension.

 

I’m struggling to meet my Self-Assessment payments on account. Is help available?

If you’re due to pay a self-assessment payment on account by 31 July 2020 but won't be able to make the payment by that date due to Covid-19, then you may defer payment until January 2021. As of 24 September, this period has been extended by the Government. Those due to pay up to £30,000 in tax by 31 January 2021 will be able to use HMRC's 'Time to Pay' service to pay over an additional 12 months, meaning they won't need to pay in full until January 2022.

To defer these payments, you don't need to make an application.

During the deferral period, you can set up a budget payment plan to help you pay the deferred payment on account when it comes due. You can set up a payment plan by either setting one up online (via the GOV.UK website) or calling the Payment Support Service on 0300 200 3835 (Monday to Friday, 8am to 4pm).

 

What support is available for businesses taking on apprentices?

The Government has announced that businesses will be given £3,000 for each new apprentice they hire between 1 April and 30 September 2021.

This is in addition to the existing £1,000 payment the Government already provides for new 16-18-year-old apprentices and those aged under 25 with an Education, Health and Care Plan.

My employee is on holiday in a place which has closed its borders. What do I do?

If employees have been unable to return from holiday, you could choose to pay them (on a one-off discretionary basis) or ask them to take the time as annual leave or unpaid leave. You should treat employees consistently or you may risk discrimination claims.

 

Can we stop employees from taking personal travel?
Generally, you can't prevent people from travelling for personal reasons, however, you should remind employees of the current UK government guidance and ask employees to comply with any travel advice. The FCO and the UK government have advised against all non-essential travel. 

An alternative is to make clear that if they have to go into quarantine/self-isolation on their return, and remote working is not possible, extra time off will be unpaid unless they take it as paid holiday.

As with business travel, you should consider requiring individuals to inform you about when and where they have travelled, and to keep you updated of their personal travel plans so that you can continue to monitor risk and act accordingly.

Do I still need to fulfil my contractual obligations during the pandemic?

Check to see whether the contracts containing your obligations have a force majeure clause. You may be able to rely on this clause in certain circumstances. The purpose of a force majeure clause is to excuse a party (ie allow a party to 'get off the hook') from the performance of a contract following the occurrence of an event beyond the reasonable control of the parties which prevents contractual performance or makes it impossible.

Common examples of defined force majeure events are wars, strikes, natural disasters and government actions.

To rely on a force majeure clause will depend on 

• If the clause in your contract is drafted and interpreted in a way where disruptive events linked to Covid-19 constitute a force majeure event. Some clauses in some contracts may expressly cover pandemics and epidemics, but not all of them will. Ask a lawyer if you need help interpreting your force majeure clauses. 

• If there is a causal link between the unexpected event (or the event which is beyond the reasonable control of the relevant party) and that party’s delay or failure to perform the contract. 

• The circumstances, including the list of events, the effect that the relevant event has on a party’s ability to perform a contract, and also the specific consequences on each party’s contractual responsibility when that event occurs. 

Some force majeure clauses may also require that steps to reduce the risk of the effects of the unexpected event have been taken, or that written notice is given. 

Triggering a force majeure clause may not lead to a right to terminate the contract, but simply a right to delay performance by the duration of the unexpected event.

Make your Force majeure contract termination letter with Rocket Lawyer or Ask a lawyer if you need help interpreting your force majeure clauses.

I'm a commercial tenant. Do I still have to pay rent?

Ask your landlord for a rent concession, ie a more flexible arrangement, such as a rent holiday, payment of reduced rent or monthly payments. Landlords do not have to agree to this, but it is worth trying to reach an agreement. Landlords may be more likely to agree to a rent concession in the current climate.

You could also consider making a rent repayment plan with your landlord so you formally document when any unpaid paid rent will be paid.

If your landlord does agree to a rent concession, make sure this is documented, for example, in a deed of variation, which permanently changes the commercial lease.

The government announced in March 2020 that commercial tenants who cannot pay their rent will be protected from eviction for 3 months. This has now been extended until 25 March 2022 in England and Wales. Commercial tenants will be liable for the rent after this period.

Landlords will have a right to forfeit and recover any rent arrears again from 26 March 2022 so commercial tenants should be cautious about not paying their rent at all.

 

I'm a commercial landlord. What can I do if a tenant cannot pay their rent?

The government announced in March 2020 that commercial tenants will be protected from eviction for 3 months. This has now been extended until 25 March 2022 in England and Wales. However, the commercial tenant will still be liable for the rent after this period. From 26 March 2022, commercial landlords will again have the right to forfeit and recover any rent arrears from commercial tenants.

From 25 December 2020, landlords will also only be able to enforce Commercial Rent Arrears Recovery (CRAR)  where 554 days’ worth of rent is outstanding. This is expected to remain the case until 26 March 2022 in England and Wales.

If you do decide you are willing to offer the tenant a rent concession, you should document any such agreement in a side letter that sets out the changes and for how long it will last as a temporary arrangement. 

How have insolvency rules been relaxed? 

The UK Government has announced two measures to help protect businesses during the pandemic. 

1. Temporary suspension of the wrongful trading rules

This means that directors won’t be held personally liable for failing to minimise losses where they knew (or ought to have known) that the business would go into liquidation or administration. This measure will be applied retrospectively from 1 March 2020 until 30 April 2021. Other rules regarding directors remain in force, for example, the rules on disqualifying directors. For more information on wrongful trading read Liquidation.

2. Temporary restriction on winding-up petitions 

The Government has temporarily banned winding-up petitions from being presented from 27 April onwards on the basis that the company (debtor) has failed to respond to the creditor’s statutory demand issued between 1 March 2020 to 30 September 2020.

An additional hurdle has been added to any winding-up petitions presented from 27 April 2020 to 30 September 2020 on the basis of inability to repay debts: creditors are now required to demonstrate that Coronavirus didn’t affect the debtor financially and that the debtor would’ve been unable to repay even if Coronavirus didn’t impact its financial standing

For more information on these temporary measures, read Changes to insolvency law to help businesses during Covid-19. 

 

What’s the insolvency process?

Insolvency is a general term that can apply to both individuals and companies. Limited companies which become insolvent may be put into liquidation (also known as 'winding-up'). This will result in the cessation of trading, the sale of any assets to pay creditors and being struck off from the companies register. There are two types of liquidation, which of these will apply to you will depend on your individual circumstances.

To close a limited company because of insolvency (ie where a company cannot pay their bills or where a company’s liabilities exceeds its assets), a Creditors’ Voluntary Liquidation must be used. For more information on the process, read Closing a limited company.

What is the roadmap out of lockdown?

The Government has set out a roadmap for the easing of restrictions and provisional plans to open up parts of the economy. 

From 19 July (subject to review) all legal limits on social contact are to be removed and all parts of the economy forced to close can reopen eg nightclubs. For more information, see our Prepare to reopen checklist.

 

Do face coverings need to be worn in open venues?

From 19 July 2021, the legal requirement to wear face coverings in areas that are open to the public and where they come or are likely to come within close contact of a member of the public will come to an end. Businesses will then be able to set their own rules about face coverings. For more information, read Face coverings: when to wear one, exemptions, and how to make your own.