Which agreements will qualify for exemption?
There are four criteria which must be satisfied if an agreement is to be considered exempt:
- It must improve production or distribution, or promoting technical or economic progress – the guidance suggests that cooperation ensuring essential goods and services can be made available to the public, or an important sub-set of the public such as key workers, will satisfy this criterion.
- It must allow consumers a fair share of the resulting benefit – the guidance suggests this will be the case where the action prevents or reduces shortages.
- It must not impose on the undertakings concerned restrictions which are not indispensable to the attainment of the above benefits – the guidance suggests this will be the case where the cooperation is the only reasonable option due to the urgency of the crisis and where the cooperation is temporary in nature.
- It must not afford the undertakings concerned the possibility of eliminating competition – therefore the parties must endeavour to retain competition in respect of the products (in particular price competition).
Related FAQs
The coronavirus outbreak has seen State support being given to businesses on an unprecedented scale.
This issue is likely to be increasingly relevant as Governments seek to protect and stimulate their economies as they emerge from lockdown.
How have the rules been relaxed in the context of the crisis and what facets of the existing law can be used for the State to provide support to undertakings?
Employees on any type of employment contract including full-time, part-time, agency, flexible or zero hours and foreign nationals who are eligible to work in the UK on any visa can be furloughed subject to the following excluded categories:
- Anyone who was not employed prior to 30 October 2020
- Anyone for whom you haven’t made a PAYE Real Time Information submission to HMRC between 20 March 2020 and 30 October 2020.
- Employees who are working but on reduced hours or for reduced pay
- Employees currently receiving SSP (see FAQ on SSP and self-isolation below)
- Public sector employees
- Employees of businesses or organisations in receipt of public funding for staff costs (except for those who are not primarily funded by the government and whose staff cannot be redeployed to assist with the Covid-19 response)
Commercial leases generally prevent a tenant from withholding payments of rent. If a tenant stops paying rent there will be a breach of the tenant’s covenant to pay rent which, strictly speaking, will entitle the landlord to forfeit the lease and/or seek to recover the arrears in the courts.
However, on 23 March 2020, the Ministry of Housing, Communities and Local Government announced that all commercial tenants in England, Wales and Northern Ireland missing rent payments are to benefit from a government ban on forfeiture of their lease. This change, which will prevent landlords from terminating leases and evicting commercial tenants, is included in the Coronavirus Bill. It will come into force very shortly (once the Coronavirus Bill receives Royal Assent, which is expected to be in a matter of days) and will last until 30 June 2020, with an option for the government to extend this deadline.
It is anticipated that many commercial tenants will take advantage of the reprieve and withhold their rent. Importantly note the rules will apply not only to principal rent but to “any sum a tenant is required to pay”, leaving the burden of supplying services and insuring the premises on landlords.
It is also important to note however that the protection offered by the government is from the threat of forfeiture should tenants withhold rental payments. The liability to pay the rent however remains an interest on unpaid rents will accrue. Furthermore, remedies other than forfeiture may be pursued by the landlord e.g. service of a statutory demand before insolvency or ordinary litigation proceedings for arrears etc.. Tenants then ideally should look to reschedule or suspend rental payment through discussions with their landlord.
The advantage of this being you might be able to negotiate a sensible and manageable repayment program in respect of the suspended rent, free of the threat of litigation.
No, there is no obligation on employers to offer a flexible furlough arrangement to staff. Operationally, flexible furlough may not be appropriate for your business and equally, returning on a part-time basis may not be suitable for individuals already furloughed for various reasons. Concerns about returning to work part-time or at all should be considered on a case-by-case basis.
Funding audits are being paused and no new audits will be commenced during the lockdown period.