Cosgrove Gaynard examine a number of FAQ's on legal matters and Covid 19 including property law queries, employment law queries, insolvency and restructing, and examinership.
We have decided to put together a brief publication covering frequently asked questions that have been raised by our clients in light of the impact of the COVID-19 pandemic. We hope you find it informative. Please feel free to share.
1. Property Law
Residential/commercial property – sale and purchases
A lot of property transactions have been put on pause however some are proceeding. This is particularly the case in residential property where people have already gone sale agreed, signed contracts and indeed have loan offers that will expire and so they do not want to go through the process of applying for a loan offer again.
This may well be of particular concern if pay reductions are coming down the line which could reduce the amount of a loan offer if a buyer has to reapply after any pay reduction.
A lot of clients are asking if they can sign documentation from home in relation to property purchases. Unfortunately, it is not that simple. Whilst e-signatures have been used for years in certain areas, it is not the norm in property matters or indeed in high value commercial deals as e-signatures come with their own challenges. In general however, electronic signatures can be used for contracts and so property purchases can be moved on in terms of signing contracts. However, wet signatures are still required for the following:
- Loan documentation
- Property deeds and mortgages
- Documents requiring a witness.
Essentially this means that in the majority of cases it would prove extremely difficult to close out on your property purchase. To add to the difficulty, law searches which are required on the day of closing are not available in every case which in itself will halt a closing until offices reopen.
However, each case does differ and so we recommend that you contact us if this is something you want to attempt to do during lockdown as it is still possible in certain circumstances.
Free use of property – healthcare workers
We have received instructions on the free use of property to healthcare workers which has to be commended and we were able to draft and execute temporary licences for the free use of property for those clients remotely.
We have received a lot of queries from commercial tenants in terms of what the position is regarding payment of rent to their landlords along with queries on other cashflow issues they are facing. In the majority of cases, landlords are coming to an agreement with tenants and we are drafting up the necessary documentation to cover these arrangements. However unfortunately this is something that has to be agreed by a landlord otherwise the terms of a lease continue to apply notwithstanding this pandemic, unless there are clauses in a lease which allow for a suspension of rent in circumstances like this or force majeure. Such clauses would not be common in a standard commercial lease.
2. Company Law
We have received a number of phone calls and emails from directors worried about their obligations during this pandemic. They are concerned about the risk of being held in breach of duty as a director. We would advise that a directors legal obligations regarding compliance do not change during this time and so a director must ensure proper books and records are kept. This is particularly the case in times like this to ensure they can ascertain the financial position of the company and make decisions to meet the challenges posed by COVID-19.
Filings are still to be made by the return dates, however the Companies Registration Office (CRO) is closed. The CRO has confirmed that all returns filed between 19 March and 30 June 2020 will be deemed to be filed on time if correctly completed, and that is something tonote.
In terms of AGM’s, companies will need to consider whether plans need to be revised on AGM’s. Advice should be obtained on methods of notice, quorums and proxies.
Insolvency & Restructuring
This practice area is probably the busiest in terms of incoming queries to the firm for obvious reasons. Whilst businesses are taking all of the necessary steps to reduce costs insofar as possible during this pandemic, it is inevitable that a number of businesses are facing serious solvency issues and with that need advice on the options available to them post Covid19.
There may be legal remedies available that you are unaware of, which can deal with the issues you are facing.The one option that stands out for clients here post covid is examinership. This is a process which allows a business to apply for court protection to allow a formal restructuring to assist with the survival of the company. Not every business will be suitable however it is certainly an option that should be explored by businesses in difficulty at this time.
Our advice to anyone worried about the survival of their business is to act now. Arrange a conference call with your accountant and legal advisors,to protect and preserve your business tomorrow.
3. Employment Law
The government has announced restrictions on travel from 27 March 2020 and so only companies which fall into exempt categories, and deemed essential services, can continue to work as normal. Otherwise employees must stay at home. This has brought about pivotal changes to all companies small and large. Those set up to allow their business to continue remotely, continue to work albeit in some cases in a reduced capacity. However not all businesses can do so and there have been large scale lay offs, short time and pay reductions.
Temporary wage subsidy scheme
The government announced a temporary wage subsidy scheme for 12 weeks from 26 March2020, which is available to employers to encourage them to keep employees onthe payroll. The application is made online through revenue.ie and the refund will be paid to the nominated bank account.
It should be noted that whilst the intent behind the scheme is to encourage businesses to keep employees fully employed, it is not a condition of the scheme and so pay reductions and short time are possible in circumstances where they are necessary.
Thereis no statutory entitlement to sick pay in Ireland and so whether an employee is entitled to be paid whilst off sick or in self isolation depends on what is contained in their contract of employment. An illness payment of €350 has been announced by the government for those temporarily out of work due to covid 19.
An employer can decide when employees take their annual leave, and this does not change with covid 19.
What if an employee does not want to attend work?
Employees may have personal issues in not being able to physically attend work such as childcare or caring for an elderly or sick relative and so agreement may be reached given the current worldwide pandemic and its knock on effect.
We are recommending employers try and come to some arrangement with employees in this regard in terms of potentially allowing them to take annual leave or unpaid leave etc.
However, whilst all requests should be considered, a refusal to work by an employee without a valid reason can lead to disciplinary procedures.
Lay-offs/ short times
Unfortunately a large number of people have had to be laid offduring COVID-19.
Whilst there should be direct provision in a contract allowing for lay offs and short time, the majority of contracts we have reviewed over the last 2/3 weeks do not contain these provisions and this is something employers will need to review in the future to ensure their employment contracts do not fall short in this respect.
Notwithstanding the lack of provision in the contracts, we have advised and drafted formal notices of layoffs and shorttime for clients which are justified measures to take to avoid redundacies and in light of the current worldwide pandemic.
Employees laid off or under short time can be entitled to payments under the Redundancy Payments Acts, however the right of an employee to notify an employer under the Acts have been suspended during the COVID crisis.