Can employees who are self-isolating or on sick leave be placed on Flexible Furlough?

That will depend on the terms of your facility and the stance taken by your bank.

Banking facilities often place obligations on businesses to stick to certain financial criteria. For example, an obligation to keep turnover or profit above certain levels or a commitment to keep the bank’s exposure within an agreed percentage of the value of the company’s assets (known as loan to value ratio).

The consequences of breaching those covenants will depend on the terms of your facility, but normally this amounts to an event of default. Events of default can result in the loan (or whatever form the facility takes) becoming repayable and could give the bank certain powers to take action to recover the money that they are owed.

Whether the bank will take action during these unprecedented times is another matter, particularly given the extent of support being offered to businesses via mainstream lenders and the political desire to keep viable businesses up and running. Lenders themselves will no doubt wish to remain supportive where possible. The underlying performance of the business (and whether but for the effects of Covid-19 it would have been in a healthy financial position), the relationship you have with the bank and your history with them will no doubt be relevant to the approach taken by the bank. However, early engagement with your bank (as well as other key stakeholders in the business) will be important.

The government has stated that the scheme will apply to apprentices and that they can continue to train whilst they are furloughed. However you must pay at least the Apprenticeship Minimum Wage, National Living Wage or National Minimum Wage for all periods of training during furlough leave, taking into account the rate increases from 1 April 2020 and the increases which will take effect from 1 April 2021. This means that you will be responsible for any shortfall in the amount claimed under the scheme and the appropriate minimum wage.

We recommend that you get in touch to discuss any queries on furloughing apprentices.

It has now changed. Instead of being 3 weeks, it is now technically any period. However, 7 days is the minimum claim period you can now make.

For the purposes of collective consultation, making someone redundant and/or changing terms and conditions of employment, by termination and re-engagement, is also classed as a dismissal by reason of redundancy and so has the exact same consultation requirements.

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.