How should contracting authorities work with PFI providers?

Yes, if they are paid via PAYE. This includes agency workers engaged under umbrella companies.

The furlough should be agreed between the agency (the employer) and the worker and documented in accordance with the guidance. It is recommended that the decision to furlough is discussed with end user clients. Just like other employees, agency workers cannot perform work through or on behalf of the agency while furloughed. This includes work for the client.

For agency staff working under umbrella companies, it is for the umbrella company and the agency worker to agree on furloughing the worker.

• Integration:
  • Is the individual held out as being employed by the business by having a company email address, uniform, how would they introduce themselves to customers?
• Exclusivity:
  • Is the contractor restricted from working for other organisations without the consent of the end user client?
• Length of engagement:
  • Is the contractor engaged to work on a specific project for a defined period? Or are they engaged for an indefinite period with no reference to a specific task or project?
• Pay:
  • Are there regular fixed payments or is payment on completion of specific task or commission based? Is the contractor entitled to benefits or bonuses?
• Facilities:
  • Does the contractor provide their own equipment and materials to provide the services?
• Financial risk:
  • Is the contractor personally responsible for any loss arising from their work in performing the services? Will they have to rectify unsatisfactory work at their own time and expense? Will they have the opportunity to profit from the success of a project?

A number of our clients and networks raised issues in the early stages of the Scheme around the requirement for personal guarantees to access finance under the Scheme. The Scheme has now been updated so that:

• For facilities under £250,000, personal guarantees cannot be taken to support lending under the Scheme.
• For facilities above £250,000, personal guarantees may still be required by a lender but the amount which can be recovered under these guarantees is capped at a maximum of 20% of the outstanding balance of the CBILS facility after taking into account any other recoveries from business assets.

As the coronavirus outbreak continues to develop, we have seen many countries begin to implement emergency procedures and legislation in an attempt to control the spread of the disease.

These have included bans on gatherings and public events, closures of shops, bars, restaurants and public spaces, and full lockdowns which restrict all but key workers to their homes except in certain limited circumstances.

This has a direct impact on businesses and their ability to operate. So what happens if a contract becomes impossible to perform because of emergency legislation?

For example:

• If you are a hospitality business, you have agreed to host an event, and gatherings are prohibited
• If you are a manufacturer or service provider, and your staff are required to remain at home, making performance of the contract impossible

The government has announced a number of measures to try to protect businesses during the current period of uncertainty. However there is no outright ban on creditors being able to take legal action to recover money they are owed, though there are temporary restrictions on some forms of legal action, like winding up petitions.

However, it is important to note that these measures only relate to winding up proceedings. Creditors will still be free to commence county court claims.

The new Corporate Insolvency and Governance Act 2020 brings in a new “moratorium” procedure. Businesses in financial difficulty that are viable and can be rescued will now be able to work with an insolvency practitioner to obtain at least 20 business days’ breathing space from creditors to allow the business to formulate a plan to deal with its financial problems.

For more information on the Corporate Insolvency and Governance Act, click here

As part of the raft of measures put forward by the government over recent months, there are also restrictions on landlords taking action to evict commercial tenants who miss rent payments. Various payment holidays and forbearance have been put in place in respect of certain tax liabilities and some business rates.

If your business is going to go into an insolvency process like administration or a company voluntary arrangement, there is the ability to obtain a freeze on creditors taking action whilst those procedures are put in place. However, these sorts of moratoriums will not be available to everyone and in any event not unless an insolvency process is being instigated.

Regardless of whether a business has formal protection from creditors or not, engagement with creditors and trying to reach agreement with them to deal with the debt is therefore vital. Much of the protection measures that the Government has introduced like curbing the ability of landlords to evict a commercial tenant, do not wipe out the debt. They simply prevent action being taken or a payment becoming due for a short time. All businesses should use that time to consider how those debts can be dealt with and engage with the relevant stakeholders sooner rather than later.