How may proceedings change after Covid-19?
During the COVID-19 global pandemic, trials and hearings have been mostly conducted over Skype for Business and various other online platforms. Looking forward to the future, what we have experienced during the lock-down may continue and we believe will make litigation a more streamlined, user friendly experience for litigants.
One example of a regime which has been introduced is hybrid trials for lower value claims. Hybrid trials allow for parties and their witnesses to be linked into the court room by video link, whilst the judge and advocates are present in court. This makes it easier and frees up more time for witnesses, which would otherwise be spent in travel and waiting time, especially for those with other commitments.
With hybrid trials, clients still get a full legal experience and the judge will still apply normal legal principles during the trial. The procedure for the case is the same, both leading up to the trial or hearing and during the case itself; except without the need to physically attend court. It may also mean that there will be less of a backlog arising from the current crisis with cases continuing to be heard, allowing for matters to be listed earlier and a quicker outcome for the parties involved.
The shift to the use of online platforms may prove more practical for all those involved in legal matters. Interim hearings can be heard remotely resulting in a time and cost saving for litigants. Even for the final hearing only the legal representatives need to attend court – again resulting in time and cost savings for all concerned.
Related FAQs
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.
The workplace will not revert to its pre-Covid-19 state overnight, with social distancing in the work place likely to remain in place for quite some time to come.
This could mean that businesses will need to think carefully about how their capacity will be impacted, and how this will affect their ability to perform contractual obligations.
For example, if a business has an outsourcing contract under which it has to perform a business process, or produce a particular output, will it be able to comply with contractual performance standards whilst social distancing is still in place? In the context of a manufacturing business, what will be the impact on production schedules and delivery dates? There might also be an impact on operating costs, for example if processes are changed and additional shifts are introduced – can these additional costs be sustained?
Businesses need to plan a safe system of work for their employees to ensure they comply with Health and Safety legislation, but they also need to consider how this will impact on their ability to perform pre-existing contractual obligations. Ultimately, contractual arrangements with customers might need to remain on a revised footing for a number of months.
Getting to a point where agreement is reached on allocation of additional costs and/or changes to key elements of a contract such as scope of work, performance standards and delivery date will require co-operation between contracting parties. Again, it is important that any variations that are agreed are recorded properly and follow the required contractual procedures.
IR35 is an anti-tax avoidance regime which is intended to tackle (in HMRC’s view) the long standing issue of individual contractors providing their services or labour via an intermediary – which is usually a personal service company (referred to as a PSC). We’ll talk about PSCs here, but there are other types of intermediaries that are caught.
HMRC’s view is that this arrangement is often considered to be disguised employment and therefore a tax-avoidance arrangement.
So IR35 is essentially a test of employment status – and if, once you apply the test, the contractor should be an employee, they should then be taxed as an employee.
It is almost impossible to completely guard against the risks associated with contractor insolvency, but there are some steps which can assist in mitigating and managing the risks involved. To be in the best possible position, it is worth considering the following at the outset of any project:
- Check the contractor’s financial position – particularly the specific company which will enter into the building contract, as the employer’s rights will be against this company rather than the business as a whole
- Take legal advice to ensure that the building contract is properly drafted with appropriate provisions to deal with an insolvency event
- Consider requiring a performance bond and/or parent company guarantee (each serve slightly different purposes)
- Obtain collateral warranties from the consultants and sub-contractors involved, so that there are contractual rights against other parties if the contractor is no longer able to meet claims
- Consider requiring retention bonds, advance payment bonds or vesting certificates if necessary
- Project bank accounts and escrow accounts can also provide some further assurances for the parties involved
The guidance gives numerous examples of the types of performance adjustment which parties should consider. For example this includes:
- Varying deadlines (e.g. for performance or payment)
- Varying compensation (e.g. to recognise increased costs)
- Varying the nature of performance (e.g. allowing substitute goods, allowing pert delivery of services)
The guidance also encourages a reasonable approach to enforcement, which might encourage delaying issuing formal proceedings, increased use of mediation or providing more information to the other party than would be volunteered under normal circumstances.