What happens if I need to sign a new commercial lease in the future?
The outbreak is certainly going to have an impact on new lease negotiations.
Undoubtedly many transactions will be put on hold or indeed stop entirely. Where matters are ongoing, tenants may well look to strengthen rent suspension provision.
It is also possible that tenants and their representatives will also now seek to include termination rights for unseen events. In this regard, the concept of force majeure may start to appear more often in leases.
In both of the examples above, such attempts are not likely to be well received from landlords who will undoubtedly suggest that tenants ensure that their business interruption insurance policies are robust enough to protect the tenant in the event of any future pandemic events.
Another approach tenants might adopt going forwards in negotiations for a new lease (or indeed seeking to vary existing leases), is to move away from the traditional market rent model to a turnover rent arrangement. This will offer some protection going forward if trading conditions deteriorate, but again getting institutional landlords to agree such an approach may prove difficult.
Related FAQs
Yes. With respect to employees you have an obligation to protect their health so you can gather information to do that. You might gather information from your employees on who has the virus, who has had it and recovered and also who has tested negative. You might also want to know if individuals have been in contact with someone who has it or if they are in a vulnerable group. It is reasonable to want to know where individuals have travelled. In the future it may also be reasonable to know if they are planning to travel to a virus hot spot, as the impact of the virus around the world is likely to continue for some time even after the outbreak has been contained in the UK.
It is reasonable to gather some information about visitors to your site, be they customers or suppliers, as this information will also help protect your staff. However, you should keep what you gather to a minimum. For visitors, it’s unlikely that you need to know anything more than they have Covid-19, are displaying symptoms or have recently been in contact with someone who has the virus.
Some organisations are prioritising properties, known to be higher risk, such as properties with open flues, or near to the certificate expiry date.
Vulnerable staff and tenants need protection, safe working practices need to be established, and communicated. Organisations should bring forward servicing for people known to be vulnerable – but bearing in mind the guidance as to preserving the annual test date.
There is not a magic number. It depends on the nature of the organisation, the work carried out, the organisational structure, the geographical spread, working patterns and conditions. We would give specific advice personalised to the organisation and taking all these and other factors in to consideration. There is no such things as too many MHFAs!
Our advice to you here is simple. It will depend on the circumstances surrounding your debt but for the most part, unless it is crystal clear that there has been a debt outstanding long before Covid-19 and there was an inability to pay prior to the Covid situation we would recommend that you hold off issuing any further petitions until after the 31st December. Unless the criteria set out above is met, a judge is likely to exercise their discretion leniently and could dismiss the petition. This could also lead to cost consequences which would adversely affect you.
We are happy to discuss individual cases to assist creditors at this difficult time, however, generally any cases proceeding to petition would be the exception as opposed to the rule. Even if presenting a winding up petition is not available for now, there may still be other forms of legal proceedings that you can use to collect money owed to you, like county court proceedings.
All organisations have underperformers. Capability is a potentially fair reason to dismiss and is separate to any redundancy procedures.
Generally, capability falls into either absences through illness or underperformance in the role. Those who are absent through sickness can be furloughed, but when furlough comes to an end they will need to go back onto sickness. If you are looking to tackle absence then you need to tackle long term and short term absence in a different way.
Long term absence: You need to establish whether the employee is able to return to work (with or without reasonable adjustments) in the medium term. This requires medical opinion and be careful of disability issues. Reasonable adjustments are likely to be important.
Short term absence: You will need to demonstrate that you have fair absence triggers in place and there is normally be a 3 stage procedure: warning and final warning followed by dismissal on notice. Each stage needs a fair procedure, with written information, a fair hearing and the opportunity to appeal. Be careful of disability issues.
As for underperformance: To tackle this, you will need to have clear SMART objectives in place and evidence of the employee failing to meet these. There would then normally be a 3 stage procedure: warning and final warning followed by dismissal on notice. Each stage needs a fair procedure, with written information, a fair hearing and the opportunity to appeal.