Is the current pandemic an event which will allow me to argue that the lease has been ‘frustrated’?
This is unlikely. Frustration is a doctrine rarely used as a way of getting out of leases. It operates to bring a lease to an early end because of the effect of a supervening event. It is then not a concept readily applicable to a situation where one party is looking to get out of a lease. To be able to argue the doctrine of frustration, you must be able to demonstrate that something unforeseeable has happened that makes it impossible to fulfil the lease and unjust to hold a party to its obligations.
This is not something that can be demonstrated easily.
There was a case in the High Court last year when the doctrine of frustration was looked at in a case involving the European Medical Agency.
The court found that Brexit did not frustrate EMA’s lease. EMA was granted leave to appeal that decision to the Court of Appeal, but unfortunately, the parties settled out of court so the arguments were not tested in the higher court.
Another reason why frustration is likely to fail is an argument that, whilst the current lockdown may force closures to businesses and whilst such closures maybe for a lengthy period, such closures will only be temporary.
Related FAQs
The Act is intended to facilitate the rescue of businesses that are in financial difficulty by preventing suppliers from invoking certain termination clauses under a supply contract, and therefore maintaining supply of goods and services to the business whilst plans to save the business can be considered.
Supply contracts often contain a clause enabling them to terminate the contract, or take other steps such as requiring payment in advance, in the event that the customer enters an insolvency procedure.
This new Act removes any such contractual right by dis-applying any clause that allows the supplier to terminate the contract, or take any other step, due to the customer entering an insolvency process.
Suppliers are also prevented from demanding payment for pre-insolvency debts owed by the customer as a condition of continued supply.
Additionally, where the supplier had a contractual right to terminate the contract due to an event occurring before the customer went into the insolvency process (whether or not linked to payment issues), the supplier loses this right for the duration of the insolvency process.
As a result of the CJRS being extended, the Job Retention Bonus will no longer be paid in February 2021.
Yes. Government guidance now confirms that employers can be required to take holiday during a period of furlough, so long as they are given minimum notice to do so. The notice required is double the length of the holiday.
Employers are also able to cancel employees’ holidays (or require them not to take holiday) if they are on furlough, for example if they are not in a position to pay the additional 20% top up to their normal wages (or more where they earn in excess of the £2,500 monthly cap on furlough payments). Again, employers are required to provide a minimum period of notice of cancellation, which in this case, is the length of the planned holiday.
Employers can ask employees to take or cancel holiday with less notice but they would need to get their agreement to do so.
Government guidance has been updated to state that “Employees should not be placed on furlough for a period simply because they are on holiday for that period.” If a period of furlough happens to coincide with an employee’s holiday then you should ensure that there are business grounds to support furlough being used in that instance so that it isn’t just being used as a means to fund holiday utilisation.
Yes. Their contracts can be renewed or extended during the furlough period without breaking the terms of the scheme.
If the employee’s contract has not already expired, the contract can be extended or renewed. The employee may be furloughed provided that they were employed on or before 30 October 2020. You must also have made a RTI submission to HMRC between 20 March 2020 and 30 October 2020.
If the employee’s contract expired on or after 23 September 2020, the employee can be re-employed and furloughed. Please note that the employee must have been employed by you on 23 September 2020 and you must have made a RTI submission to HMRC between 20 March 2020 and 30 October 2020.
- 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?