What is the current guidance for court of protection hearings?

We hope that all organisations will come out of lockdown successfully. However, the current economic crisis means that many organisations will face very difficult trading conditions.

Employment costs are one of, if not the, largest cost to your organisation. These costs will have an effect on your financial well-being – and many organisations are now considering how to reduce employment costs. That said, your workforce is also your most important asset and as we get back to business, you will need your workforce to run the organisation, produce your goods, deliver your services and deal with your customers.

As a result, many organisations are facing a very difficult situation – how to reduce or flex the cost of the workforce whilst also maintaining an ability to service customers. This difficulty is enhanced by the uncertainty of when the pandemic will be controlled and the threat of lockdowns end.

The change in the law has the potential to place much greater financial risks on suppliers, making it more difficult to exit a contract with a customer of doubtful solvency.  This will place increased emphasis on appropriate financial due diligence and credit checking before entering into supply contracts.

In addition to the obvious issues around financial risk, suppliers will also need to think carefully about how their contracts are drafted.  For example, any form of right that is drafted so as to be triggered on customer insolvency will clearly be problematic.  These could include:

• Retention of Title provisions, which are commonly drafted so that the right to enter premises and retake possession of the goods is triggered on insolvency;
• Provisions for brand protection, which seek to control how goods are dealt with on termination of the contract.

This is potentially a very significant development for many businesses.  We would strongly recommend specialist advice be obtained so that:

• businesses understand the potential increased risks faced; and
• where possible, contracts are updated so that appropriate protections are maintained.

From 1 July 2020 the furlough scheme has been operating more flexibly.

The key changes from 1 July 2020 were:

• All furloughed employees are subject to the new flexible furlough rules and the new basis for calculating claims
• Furloughed employees can be brought back to work on a part-time basis for any amount of time and can work any work pattern
• Employers can claim for the hours not worked compared the hours the person would normally have worked in that period
• There must be a new written furlough agreement in place to record the agreement with the furloughed employee to return to work part-time
• The new agreement (including a collective agreement) must be made before any period of flexible furlough begins but it may be varied at a later stage if necessary. The agreement must be incorporated into the employee’s contract of employment, either expressly or impliedly
• Employers must keep a record of this agreement until at least 30 June 2025, and they must also keep a record of the hours the furlough employee worked and the hours that they were furloughed
• Employees can be furloughed from 1 July 2020 for any amount of time and more than once
• However, if you re-furloughed an employee after 10 June but before 1 July 2020, they had to be furloughed for an initial period of three consecutive weeks
• Claims for payments under the scheme must not cross calendar months so if you are claiming for the initial three week period of a re-furloughed employee who was furloughed on 12 June for example, you must submit separate claims for the dates in June and July
• Although flexible furlough agreements can last any length of time, you should only submit a claim to HMRC once a week.

Click here for details of what sort of things directors should consider if the business is insolvent .

There may be additional sources of funding available in addition to the funding made available to help pay the wages.

If you still have concerns that your business might not be able to survive you should take advice as soon as possible from our team of experts or an insolvency or restructuring practitioner. That doesn’t necessarily mean that the business is bound to fail but your advisers will be able to explore with you different ways to navigate through the current difficulties faced by the business and any restructuring/refinancing opportunities based on their extensive experience of helping companies that are facing financial problems. If ultimately saving the business in its current form is not possible, your advisors can help you ensure that you do everything you can to protect your employees and creditors whilst also ensuring that you comply with your duties as a director.

It is unlikely that an employer can place such a requirement on staff without infringing the employee’s privacy. If the employee is acting in accordance with the rules, limiting their activity would likely be considered unreasonable.