According to a recent survey of the Scottish Chambers of Commerce, only half of Scottish businesses have contingency plans in place to cope with the potential impact of swine flu. So what should such plans cover and what legal issues arise?
Performance of Contracts
If the effects of the swine flu pandemic become more severe, you may find that your organisation is unable to fulfil its contractual obligations, or you may suffer a loss because your suppliers cannot fulfil theirs.
Under normal circumstances, a claim for damages for breach of contract could be a possible remedy. However, if it is clear that the contractual failure was principally caused by the flu pandemic, a claim for breach may not be feasible.
Most commercial contracts include "force majeure" clauses. These provide that major unforeseeable events outside the control of the parties can allow them to avoid their obligations under the contract. These clauses often set out in advance what is to happen if certain events occur.
Alternatively, it might be argued that the doctrine of frustration applies. Frustration is the occurrence of an event that the law recognises as excusing further performance of contractual obligations.
Whether an argument based on force majeure or frustration would ultimately be successful would be for the courts to decide.
It may be prudent to review your organisation's key contracts if you believe that there is a risk that pandemic flu could cause a breach so that you can assess whether you can bring a claim for damages against a supplier or whether you are at risk of a claim against your organisation. Where you fear serious disruption from a contractual failure by a key supplier or other contractor, it may be worth discussing your concerns with the supplier or contractor at this stage, rather than waiting until events overtake you.
Many organisations have business interruption insurance that is designed to protect the business against loss of earnings resulting from the interruption of business caused by an insured peril. This will, of course, always be subject to the policy provisions and you should check the wording of your organisation's policies, as it is likely that most policies will not provide cover in respect of pandemic flu.
Although business insurance might make provision for certain types of interruption to business or for the incapacity of key personnel, the policy might also limit the insurer's liability, either by including thresholds above or below which you can not claim or by policy excesses, or exclude liability for losses arising from a public emergency.
The advice from the Association of British Insurers is:
- Businesses should focus on planning for the impacts of swine flu e.g. unavailability of key personnel; and
- Shop around for the best deals on business interruption cover.
In light of the high profile of swine flu at the moment, it might be that cover for any form of pandemic flu will be difficult and/or expensive to obtain. In any event, you should check the terms of your organisation's insurance policies carefully in order to establish where the organisation stands in the event of interruption caused by swine flu.
During the time of peak absence, your organisation may be able to arrange for some staff to work remotely using the organisation's existing IT systems. Although there are clear advantages to this, you should act now to check that your organisation has sufficient capacity for the anticipated increase in the number of simultaneous connections.
It may also be prudent to remind staff of the organisation's data security policy in relation to memory sticks and laptops etc., as there may well be an increase in the quantity and scope of data being taken out of business premises by staff.
If staff have to use their own PCs at home, you need to make sure that your organisation has an adequate policy for virus scanning data that will be re-used within the organisation as a significant number of home PCs do not have the level of virus protection that is found in most work places.
If the spread of swine flu continues as recent press reports have suggested, many employers are likely to be affected by staff absences at some point over the next few months. Indeed, staff absence is likely to be one of the effects of the pandemic that has the most significant impact on organisations. Staff may be absent because they are unwell or because they need time off to look after relatives who are sick. There may be problems caused by disruption to childcare arrangements and by school closures. You need to be aware of the possible impact of staff shortages on your organisation and you should consider how you would cope with wide scale staff absence.
- Cover for key staff
You may find that key members of staff are absent and steps should be taken to try to reduce the impact of this. This might involve providing training to other members of staff, who could stand in on a temporary basis until the key member of staff returns. You should make sure that employees who are asked to deputise for key staff members have all the information they need to take over the appropriate duties. Staff may also be able to work from home, where this is possible and appropriate to the business.
- Additional duties/roles
If your organisation experiences wide spread absences, it might to be necessary to ask members of staff to take on additional duties in the short term to ensure that the organisation continues to function. It would be useful to identify members of staff who can undertake a number of different duties. Although an employee's role and the duties they are expected to undertake are often detailed in their contract of employment, and the terms of that contract cannot be altered without the agreement of both employer and employee, if it becomes necessary to ask employees to take on other roles and duties on a temporary basis, this is unlikely to be considered as a formal change to the employee's terms and conditions requiring agreement. It may well be that an employee's terms and conditions of employment are sufficiently flexible to allow for undertaking a number of roles or additional duties. Employees have a duty to act in their employer's best interests and assisting with, and being flexible in relation to, emergency measures should be seen as part of complying with that duty.
- Working Time Regulations
You may also have to ask staff to work additional hours to make sure that the organisation continues to operate. The Working Time Regulations generally prohibit employers forcing workers to work more than 48 hours a week on average, but many workers agree to opt out of the Regulations and to work beyond this limit. Any such agreement must be in writing and signed by the worker. The agreement can be for a specified period or for an indefinite period and a worker can cancel the agreement by giving at least 7 days' notice. Although an employer who breaches the Regulations can be prosecuted for doing so, it seems unlikely that this would occur in light of the exceptional circumstances caused by the swine flu pandemic. Similarly, a worker can lodge a complaint with an employment tribunal in an attempt to enforce his rights under the Working Time Regulations, but in considering such an application, an employment tribunal would take into account the emergency situation caused by the pandemic.
- Emergency Leave
Employees are entitled to take a reasonable amount of time off from work to deal with emergencies. The statutory right is for "reasonable" time off to care for a partner, child or parent. An employee is also entitled to take reasonable time off to care for another household member or someone who relies on the employee for the provision of care, for example an elderly relative. The amount of time off that can be classed as "reasonable" is not laid down, but, in most cases, this will be no more than a couple of days in order to allow the employee to make alternative care arrangements. An employee taking time off to deal with an emergency must confirm when he or she expects to return to work, unless it is impossible for them to do so. Employees are not automatically entitled to be paid for this time off.
- Limiting the spread of swine flu
As an employer, you are entitled to advise employees that they should stay at home if they are sick with flu like symptoms and have reason to believe they may have been exposed to the swine flu virus. Employers are also entitled to send home any employees who display flu like symptoms. In order to prevent the spread of swine flu, staff should not return to work until they are advised to do so by their doctor or nurse.
- Avoiding abuse of the situation
Many employers will be concerned about potential abuse of the swine flu outbreak by the "worried well" or otherwise, and employers are entitled to point out to staff that abuse of the situation, just as with any other misleading behaviour or deception, would be a disciplinary offence.
The key to dealing with the effects of the swine flu pandemic on your organisation is to plan ahead and for both employers and employees to be as flexible in their attitude as possible.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.