I have recently bought or sold a business. How will earn outs and deferred consideration be affected by coronavirus?
A common feature of corporate acquisitions is that part of the consideration is paid on deferred terms or by way of earn out over a period of years following completion. Where deferred consideration is payable, this is either on the basis that outstanding payments will be made on scheduled dates or, less usually, subject to certain agreed (typically financial) objectives being met. These objectives almost always relate to a period before completion of the deal and are dealt with as part of a completion accounts mechanism.
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The Construction Leadership Council (with backing from the Government) has issued practical guidance and draft pro-forma documents to enable all parties involved in the construction supply chain to enter into collaborative and open dialogue about applications for extensions of time and additional payment and to minimise potential disputes. The guidance can we downloaded here
The draft letters and notices included in the guidance have been prepared on the basis of the standard JCT Design and Build 2016 and NEC 3/4 Engineering and Construction Contract (Option A) and parties will need to make sure that they are completed/adjusted to comply with their own specific contracts.
The Cabinet Office has also issued a general statement calling on parties to contracts adversely affected by C-19 to act responsibly and fairly and to support national efforts to protect jobs and the economy.
Potentially. The first question is why the person is not able to return, as their individual circumstances will be very relevant in terms of whether they can be safely dismissed.
Employers should ask themselves 2 questions in this situation:
- Have I done everything I am required to do in order to make the workplace safe for the individual to return; and
- Is what the employee saying reasonable?
If the answer to question 1. is no then a dismissal is unlikely to be fair. However, even if the answer to question 1. is yes, then there is still question 2. to address. If the employee has reasonable grounds as to why they are unable to return to work, e.g. due to health issues, childcare responsibilities etc then the dismissal is unlikely to be fair. It is only if you can answer yes to question 1. and no to question 2. that you can have some confidence in the potential safety of the dismissal.
Dismissals based on objections to returning to work on health and safety grounds will very often be risky and are highly fact specific, therefore please contact one of the employment team for further advice prior to dismissal.
The Government has announced a £750 million funding package for charities to ensure they can continue their vital work during the coronavirus outbreak. This is for a 3 month period and further specific funding may be made available.
Charities which are businesses can also access the Government’s Coronavirus Business Interruption Loan Scheme (CBILS) – Please see our Funding and Finance FAQ’s.
A claim for indirect discrimination is the most likely risk here. The first point to make is that the decision to review duties is being made based on the growing amount of medical evidence that the BAME community is being disproportionately adversely affected by the COVID 19 pandemic compared to other ethnic groups. The key is to ensure that blanket policy decisions are not taken, nor should assumptions be made about the risk to each individual concerned. Decisions should only be made on an individual basis with an open dialogue with the individual concerned. You as their employer, need to ensure that the individual feels listened to and heard; that this is not just a tick box exercise.
Consider having a working group which has an overview of the policy decisions being made. That working group should contain representatives from across the staff groups including staff side, but importantly, representatives from different ethnic backgrounds to ensure the important voices are heard. Accountability should be built into that group. This group should also be a safe environment for staff to raise concerns about their health and safety and safe systems at work.
- The Pensions Regulator has published regularly-updated guidance for employers.
- It will take “a proportionate and risk-based approach towards enforcement decisions … with the aim of supporting both employers and savers”. In other words, the law remains the same, but the Regulator will show restraint in enforcement against breaches.