In Scotland, from 15 July 2020, indoor hospitality can resume. Many businesses operating in the food and drink sector have, of course, remained open during the COVID-19 pandemic. Whether your business has remained open, or you are preparing to re-open, now is a good time to review whether your practices are in line with the current law and government advice. The following provides guidance on the key areas those working in this sector should consider when operating during COVID-19 restrictions.
How to terminate the contract You need to be aware of how the contract can be terminated, either by you (a ‘get out’) or by the other party (do they have the right to terminate?). While it depends on the specific terms, contracts typically can be terminated on several grounds, including illegality, breach or insolvency. Of particular significance in the present circumstances may be the inclusion of a force majeure clause, and the effect this will have on termination. See our blog here. In some cases, these terms can be implied into the contract even if not an express term. 2. Notice Provisions for termination Do you need to give notice of termination? If so, what time period and in what form? A failure to provide proper notice may be a breach of contract. Consult our top tips for serving a termination ‘notice’. 3. Liability – is liability limited, or excluded? A valid and effective ‘limitation of liability’ clause or ‘exclusion’ clause will operate to limit or exclude damages that may be claimed if a breach of contract occurs. The Courts will apply a ‘reasonableness’ test to determine if the clause is valid. A contractual term that seeks to exclude all claims for financial loss is likely to be considered as unreasonable by the Courts. Read our blog on ‘exclusion’ clauses here. TOP THINGS TO DO: 1. Review the contract and identify the cause of dispute. 2. Try to find a resolution and consider the dispute resolution clauses in the contract. 3. Consider obtaining legal advice to help resolve your dispute. TOP THINGS TO THINK OF: 1. To terminate or not? If there is a dispute, do I want to terminate the contract (and if so how)? Or try and resolve? 2. Notice, Notice, Notice – how much notice, and in what form, do I need to give? 3. Keep records If parties are in dispute, make sure a clear record of your attempts to resolve the dispute asserting your position to the other party exists. COVID-19 guidance: Food and drink manufacturing and the supply chain COVID-19 guidance: Food and drink manufacturing and the supply chain 6 IP CONSIDERATIONS TOP THINGS TO KNOW: 1. Intellectual Property (IP) is often the most important and valuable asset of a business. With many businesses having to adapt and innovate to keep afloat, it is important to recognise that IP can give you a competitive edge and should be protected from exploitation by others. 2. IP exists in many forms such as brand names, logos, confidential information and product design. Some IP rights need not be registered but, where registration is possible, this can provide stronger protection. 3. Professional advice should always be sought to ensure you have the best strategies in place to protect your IP. TOP THINGS TO DO: 1. Take steps to identify the IP assets of your business and keep records as to how and when they are used. 2. Review any trade mark registrations to ensure that your brand is adequately protected. Consider obtaining trade marks if your branding is unregistered. 3. Carry out searches before embarking on any new business ideas or branding to ensure you do not infringe third party rights. 4. Be aware of your competitors and enforce your IP rights where necessary. This is vital to maintain and enhance their value and the competitive edge of your business. Read our handy guide on protecting your IP in Scotland and blog on the importance of choosing the right brand protection strategy TOP THINGS TO THINK OF: 1. Be distinctive. When considering new ideas for your business and its branding, perhaps if diversifying due to COVID-19, be as original and distinctive as possible. The point of a brand is to make your business stand out from the rest so that it is uniquely associated with the products and services you offer. 2. Make sure you own the IP relating to your business. With focus shifting to online services in the current climate, it is important to be aware that, for instance, a website developer or graphic designer will own the copyright in a website or logo which they have created on your behalf unless a contract is in place transferring ownership to you. Material found on the internet such as photographs, artwork and music may also be copyright works which cannot be used without the owner’s permission. 3. Where music is played or performed in public at premises (for instance, to staff or customers), a licence from PPL PRS Limited known as “TheMusicLicence” is usually required to avoid copyright infringement. Further information about PPL PRS Limited, including the measures they have in place to support businesses through COVID-19, can be found here. COVID-19 guidance: Food and drink manufacturing and the supply chain 7 TAX TOP THINGS TO KNOW: 1. The Coronavirus Job Retention Scheme (CJRS) allows staff to return on a part time basis. As in the Employment section above, claims for the second phase of the scheme must be made on or before 30 November 2020. A Jobs Retention Bonus of £1,000 will be available for each furloughed employee who is still employed as of 31 January 2021. 2. If you deferred payment of VAT between 20 March 2020 and 30 June 2020 this will need to be paid by 31 March 2021. In the meantime, returns still need to be made. Cancelled direct debit facilities will need to be reinstated for VAT payments after 1 July 2020. HMRC will consider bespoke time to pay arrangements if cash flow is an issue in relation to payment of taxes. 3. The Government has relaxed processes to help businesses to claim back duty on spoilt beer, wine, and cider for brewer, cider producers, wine makers and publicans there is no current end date to this (though HMRC has undertaken to give 30 days’ notice before withdrawing this measure). Suitable evidence of destruction having taken place should be kept and your monthly returns adjusted to calculate the duty owed. TOP THINGS TO DO: 1. Check the conditions of “flexible furlough”. If you accessed CJRS prior to 30 June 2020, take advantage of “flexible furlough” but check the conditions carefully. You will have to cover the cost of employees as normal in terms of their employment contract for the hours they actually work – there is no government contribution for these hours. A claim can be made under the CJRS for the hours furloughed employees who are not working – meaning they will be entitled to 80% salary (subject to the £2,500 monthly cap) for their furloughed hours. No grant is available for the cost of employers’ NIC and pension contributions from August. 2. Review transfer pricing arrangements as COVID-19’s impact on global business could have implications for arm’s length pricing between group companies. 3. Make sure your business is claiming all available tax reliefs – look at utilisation of losses, ensure capital allowances are fully claimed and review potential R&D tax credit claims. TOP THINGS TO THINK OF: 1. Contributing to furlough payments. The table below explains to what extent employers will have to start contributing to an employee’s furlough payments: 2. To qualify for payment of the £1000 bonus paid for every employee who remains continuously employed through to the end of January 2021, the employee must earn an average of £520 per month between the end of October and the end of January 2021. Payment will be made in February 2021. 3. It is expected that the Autumn Statement will give the Chancellor and HM Treasury time to make more targeted structural changes needed to support the UK economy. Table of maximum contributions per month July Aug Government contribution: employer NICs and pension contributions Yes no Government contribution: wages 80% up to £2.500 80% up to £2.500 Employer contribution: employer NICs and pension contributions No yes Employer contribution: wages - - Employee receives 80% up to £2,500 per month 80% up to £2,500 per month COVID-19 guidance: Food and drink manufacturing and the supply chain HEALTH AND SAFETY TOP THINGS TO KNOW: 1. Employers remain under a duty to protect the health, safety and welfare of their employees and other people who might be affected by their business. If you implement changes with a view to protecting your employees and others from the risks of COVID-19 remember to think about the impact that your changes might have on other health & safety obligations – for example, do any changes to the layout of your premises affect fire safety? 2. There has been a relaxation of some requirements to assist with operating during COVID-19, for example, restrictions on out of hours deliveries for shops and warehouses have been made as has a relaxation of driver hours and vehicle testing. 3. Social distancing is a legal requirement in Scotland and recommended across the UK. In Scotland the general rule is 2 metres. Required distances are subject to review. To maintain physical distancing, you will need to consider factors such as workplace layout, limiting access to certain parts of the workplace, staggering entry / exit times and breaks, splitting your workforce into specific teams and considering the use of additional technology support. TOP THINGS TO DO: 1. Make your workplace COVID-secure. You should conduct specific risk assessments to reflect the changes required to reduce the likelihood of transmission. Depending on your business, you should consult with health & safety representatives appointed by trade unions, employeeappointed representatives, or employees directly regarding the risk assessment. 2. Update your operational procedures and create supply chain contingency plans. Ensure your policies are updated for any new procedures and your premises are safe to reopen. If you are restarting operations after a period of inaction, the usual startup procedures should be reviewed, and the premises should be assessed in terms of cleanliness, maintenance and pest control. Additionally, if you require to alter your supply chain at short notice, ensure you have conducted appropriate due diligence and have followed health & safety procedures. 3. Plan how your workplace will flow. Plan how workers can safely travel through the premises and limit opportunities for contact between permanent and transient workers such as hauliers, transport staff and contractors. TOP THINGS TO THINK OF: 1. Whether your insurance policy is fit for purpose. Many business insurance policies are designed to cover standard risks and therefore do not provide protection for the current global pandemic. If your business is reopening, you should ensure that your insurance policies (including employer’s and public liability) covers any changes you have made and consider taking out additional cover if not. 2. How to enact a rapid shutdown if an outbreak of COVID-19 is detected. Procedures should be put in place to allow a swift response – including how to store or dispose of stock and how to safely shut down plant and machinery – and employees should be trained on how to respond to such an incident. 3. Obtaining COVID-19 assurances from other businesses you work with. You may wish to get assurances from other businesses you work with that they are, and will, adhere to the obligations on them in relation to COVID-19.