How to shield your business from the impact of COVID-19

What issues need to really be dealt with? How can you best protect your employees and make sure that your business will withstand this stress test unscathed? Find a short overview below.

Employee protection

1. Which preventive measures should employers introduce?

• Keep abreast of up-to-date and factual information and keep your employees informed about (i) proper hygiene and sanitation practices to lower the risk of infection, (ii) how to proceed when returning from the affected regions (iii) what to do when symptoms of an infection with COVID-19 occur.
   
• Provide workplaces with disinfectants and recommended protective gear (antibacterial gels, specific types of respirators, etc.).
   
• Consult in advance with your medical service provider how to proceed if employees suspect that they may have become infected (quarantines, emergency medical check-ups and other measures to avoid the spread of the disease).
   
• Consider cancelling or limiting any business trips into the affected regions.
   
• Consult the situation and any possible measures with trade union representatives, employee councils and OSH (occupational safety and health) specialists. 
   
• Review your labour-law documentation regarding the adjustment of shift schedules and mandatory leave.

2. How to react if an employee is displaying infection symptoms (high fever above 38°C/100.4°F, respiratory distress), especially if they’ve just returned from an affected region or may have otherwise come into contact with the virus?

• Recommend that employees immediately contact their physician or your company’s medical service provider.
   
• If infection continues to be suspected after medical consultation, affected employees should avoid contact with others. Consider agreements to perform work from home (home office), invoking obstacles to work, mandatory vacations (in compliance with minimal advance notice requirements), agreements on unpaid days off.

3. Which measures to enact in case of increased employee absences?

• Take preventive measures to assure operations with a limited work force.
   
• Adjust shift and vacation schedules (in compliance with minimal advance notice requirements).
   
• Order employees to work overtime.
   
• Rescind already approved vacations.

Effects on contractual relationships

• Inspect the conditions of your significant contractual supplier and customer relationships, in particular pertaining to acts of nature (force majeure), possibilities to prematurely cancel agreements, and any related contractual penalties. This should include your insurance policies (Do they cover risks from production losses/damages?) and loan agreements (as these might include penalties when economic performance indicators change).
   
• With your business partners, update each other about the fulfilment of your mutual commitments. As soon as you assert that you will not be able to fulfil any kind of obligation, inform your business partners without undue delay and ask for an adjustment of contractual conditions or the termination of the obligation.
   
• Should delays or cancelations of supply deliveries be expected, try to cover such outages through deliveries from other suppliers. Do not take on new orders unless you have assured yourselves that you will indeed be able to deliver, as you have a preventive obligation to avoid damages.
   
• Liabilities may cease to exist because of a subsequent impossibility of performance/delivery due to an act of nature. However, the current situation pertaining to COVID-19 cannot be regarded an act of nature. At the same time, a performance or delivery cannot be deemed impossible if it can be carried out (i) under difficult conditions, (ii) with increased costs, (iii) with the help of others, or (iv) after the given deadline. Business partners must be informed about any extinguished liabilities without undue delay.
   
• Liabilities for damages may be discharged if it can be proven that the fulfilment of an obligation was temporarily or permanently prevented by an unpredictable and insurmountable obstacle, i.e. an act of nature. Such an obstacle must have arisen prior to any delays in the obligation fulfilment. 
   
• Do not expect that any of your liabilities will be extinguished or discharged, as the burden of proof will be on your side and most likely subject to litigation. Contractual relationships can be altered in various ways or may be bound by other/foreign legal orders which may not allow for the cancelation or discharge of liabilities and obligations. 
   
• In case of questions, please do not hesitate to contact your KPMG engagement team or turn to Martin Hrdlík, Partner of the law offices of KPMG Legal or Barbora Cvinerová, KPMG Legal’s labour-law expert.