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COVID-19 layoffs must have no time limit – Shannon webinar hears

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Solicitors based in the Mid-West have recorded a surge in queries from construction companies surrounding signed contracts while employers have been advised not to give a time limit on temporary redundancies.

Legal issues pertaining to the COVID-19 were discussed at a recent webinar hosted by Shannon Chamber. Almost 80 companies attended an online presentation from Limerick City based, Holmes O’Malley Sexton (HOMS) solicitors.

Several companies in the Mid-West have been forced to let staff go. Partner in HOMS’ corporate, commercial and litigation departments, Pat McInerney advised companies that layoffs must be temporary with no time limit. While the law states that reasonable notice must be given to employees, in the case of sudden closures due to COVID-19, where many shutdowns happened suddenly, companies will not be penalised for lack of notice period.

Regarding redundancies, which can be sought after a four-week layoff, this right has been suspended during COVID-19. Where short time is being required of employees or a selected number of employees are required to return to work during the pandemic, companies need to be careful how these employees are selected.

“Companies must have robust selection criteria in place so that the employee who is being asked to work shorter hours or required to return to work, is selected based on a definitive set of criteria. The old rule of last in first out is too crude a means of selection,” he stated.

On the issue of contracts, which many companies, particularly construction companies, may have signed before the pandemic, the order to close suddenly will have had a profound impact, forcing delays resulting in many companies unable to perform their contractual obligations.

A surge in demand for advice on this topic has been noted by solicitor, Caitlín Love. “We have witnessed a surge in demand for legal advice in this area as contractors and contracting companies want to avoid claims due to being required to comply with a government order”.

She continued, “This is where the Force Majeure clause comes into play. This is a very important clause to have in a contract as it temporarily exempts one or both of the parties to a contract from their contractual obligations where an ‘act of god’ or other event beyond the parties’ control intervenes. However, in this instance, the clause must provide for pandemics. Given that this is an unprecedented occurrence, we would need assurance from Government that the pandemic can be declared as a Force Majeure. It is crucial therefore for all parties to review the wording of all contracts and to seek legal advice where necessary”.

Insurance policies must be carefully studied, Michael Murphy a partner in the firm’s litigation department stressed. He described this as “a very contentious area” as inspection is required to outline if disease is covered in the insurance.

Murphy stated, “Some insurance companies are not entertaining claims linked to closure caused by the pandemic as it’s not in the scope of infectious diseases with social distancing not a cause for cover. Some claims that will arise will be straightforward but many more will be very contentious. We could find insurance companies putting in onerous exclusions at renewal time to avoid exposure to any such repeat occurrences”.

Employers’ duties to their employees remain the same, said Robert Kennedy who joined the firm in 1994 and remains a partner in their litigation department. “The safety, health and wellbeing of employees has to remain paramount no matter where they work. This extends to protecting them from infection in instances where the company is considered an essential service. While employers cannot physically visit the home of every employee, they have a duty of care to ensure that the employee’s working environment is safe and that they are taking necessary breaks. Keeping an open line of communication will employees is key”.

A partner in the property department of HOMS, Sandra Egan commented that “engagement and forbearance” was essential on the topic of commercial tenancy. She said, “Consideration can be given to a number of options: deferral of rent, extending the term of the lease, renegotiating the terms of the lease, break clauses, or rent review provisions. Both parties may be facing cash flow difficulties so a balance must be struck as to the best way to resolve. While the Public Health COVID-19 Act 2020 has been enacted to avoid evictions for residential tenants, there is no similar provision for commercial tenancies and that’s why engagement and forbearance is necessary.”

CEO of Shannon Chamber, Helen Downes believed the presentations were “outstanding in their content and in the way the knowledge was imparted to attendees”.

Páraic McMahon is Head of News & Sport with The Clare Echo. The Newmarket-on-Fergus native also writes for national papers including The Irish Examiner, The Irish Independent and The Irish Times along with doing work for RTÉ, Today FM, TheJournal.ie and The42.ie. A graduate of Mary Immaculate College, Páraic was previously employed by The Clare Herald and Clare FM. If you have a story, tip or some feedback for him then send an email to - paraic@clareecho.ie

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