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Coping with the Coronavirus: Quarantine, Contracts & Commerce


Amid concerns of toilet paper supply, best hygiene practices, and discerning when to self-quarantine, we at Allied Legal wanted to talk to you about the legal and financial implications of coronavirus.

State of Emergency

Victoria’s Premier Daniel Andrews declared a State of Emergency, effective from 12:00pm on Monday 16 March 2020. A State of Emergency isn’t a call for panic. Rather, it’s a limited power available to the government to enact unusual policies addressing an emergency. For now, the main policies to be aware of under the current State of Emergency include:

  • Authorised Officers have the ability to detain people, restrict movement, prevent entry to a premise, or do anything else reasonably necessary to prevent the spread of coronavirus.
  •  Non-Essential mass gatherings of over 500 people are banned. This ban, though, has a number of exceptions. For example, places like office buildings, shopping centres, and public transport at which more than 500 people would congregate in the course of ordinary business are not banned.

At this stage, commercial businesses can continue as normal under the State of Emergency. However, these powers can be used to quarantine suburbs, businesses, or even entire professions. There is currently no indication of plans to use these more extreme measures.

For more detailed information on the State of Emergency, visit:
https://www.premier.vic.gov.au/state-of-emergency-declared-in-victoria-over-covid-19/

In the Workplace

Employers have a legal obligation to provide a working environment that is safe to their employees. This includes a requirement to monitor any conditions in the workplace under the manager’s control to fulfil this obligation. If you are concerned about the safety of your workplace, and the capacity of your business to function amid a pandemic, you should consider the following points in determining how to proceed:

  • The normal employee entitlements for paid sick leave and paid carer’s leave apply amid coronavirus. Employees can be required to demonstrate that they are sick if they are requesting paid sick leave. 
  • Notwithstanding, businesses may consider negotiating alternative working arrangements with their employees, such as arranging for them to work from home, if their business model allows for it.
  • Without demonstrating the requirements for paid sick or carer’s leave, or without an alternative arrangement in place, employees are not entitled to be paid for missing work.
  • Businesses may wish to send an employee home if there is reason to suspect that they have been exposed to coronavirus. If a business stands down an employee when they are willing and able to work, they will likely be entitled to pay until they return. There are some circumstances in which an employer can stand down an employee from work without pay. These circumstances usually include stoppage of work for reasons that are outside of the employer’s control. An employee having coronavirus is not likely to meet this requirement, however this may differ depending on the terms of the employment agreement or employment contract.  

For more detailed information on employers obligations and employee rights during the coronavirus outbreak, visit: https://www.fairwork.gov.au/about-us/news-and-media-releases/website-news/coronavirus-and-australian-workplace-laws

Business Dealings

There are many situations where coronavirus may impact on the viability of a commercial contract. In such situations, there are two main ways that a party can seek to be excused from the contract:

The first is by a provision, called a ‘force majeure’ provision, which terminates a contract in a situation that is out of the parties’ control. These might include natural disasters or public emergencies. Whether coronavirus falls under this provision will depend on how the provision itself is written. The presence of words such as “public emergency”, “pandemic”, “health crisis” or similar are a good indication that the provision covers coronavirus.

  • If the contract doesn’t contain a force majeure provision, the contract might be ‘frustrated’ by coronavirus. This is called, aptly, ‘frustration’. A contract is frustrated in circumstances similar to those covered by a force majeure provision, and results in the contract being terminated. This can only happen if the contract doesn’t have a force majeure clause. We strongly recommend you seek legal advice prior to relying on such arguments. 
  •  Remember, there is a large amount of case law behind both these concepts. If you have concerns about a contract that you are party to, whether written or verbal, please contact us at hello@alliedlegal.com.au.

Stimulus Package

 Your accountant may have already informed you about the Federal Government’s announced $17.6b stimulus package to combat the economic impact of coronavirus. If you are a business owner then you are likely to benefit from this initiative. The stimulus package includes:

  • The instant asset write-off threshold is increased from $30,000 to $150,000 and now includes all businesses with an aggregated annual turnover of less than $500 million. This will last until 30 June 2020. 
  • As an investment incentive, businesses with an annual turnover of less than $500 million will be able to deduct 50% of the cost of an eligible asset on installation. This incentive will be available until 30 June 2021.
  • Small and medium-sized businesses will receive a tax-free payment of up to $25,000, with a minimum payment of $2,000 for eligible businesses.
  • Small businesses with apprentices or trainees can apply for a wage subsidy of 50% of the apprentice’s or trainee’s wages for up to 9 months (from 1 January 2020 to 30 September 2020).

This package has not yet been legislated for so, while it will almost certainly proceed, it is possible that the final package will differ to what is currently proposed. The bills for the package will be introduced for urgent consideration in the last parliamentary sitting of March 2020.

For more information on the coronavirus stimulus package, and to find out if your business is eligible, visit: https://treasury.gov.au/coronavirus

Looking Forward

There is no denying that this is a difficult and frightening time for all. For business owners, in addition to being a health matter, coronavirus is an unprecedented economic and commercial crisis. It is important that you plan forward to ensure that your business is not only resilient through coronavirus but is in a position to thrive. To this end, we offer the following tips:

  • Stay up to date on how the State of Emergency powers are being exercised, and how they might affect your business. While there is currently no indication of a shut down, it is possible that one may occur soon. So, make sure you have discussed alternate working arrangements with your employees so that business can carry on. Slack, Skype, and even Facebook are all viable options for working with your employees from home.
  • Talk openly with your employees about their health and safety. Encourage them to seek help from the coronavirus hotline on 1800 020 080, and to avoid panicking from a self-diagnosis. 
  • Maintain transparency with your clients and customers about how the coronavirus will impact your capacity to provide them with your goods or services.
  • Look into your eligibility for the stimulus package! In times of economic distress even a small amount can go a long way, and your business may be exactly who the stimulus package is intended for.

 Contact Us

We hope this article has been helpful, but we understand that you may be looking for an answer to a problem which we haven’t covered in detail. Here at Allied Legal, we provide commercial services across legal, business development, growth and expansion. Whether you have a straightforward contract question or need to develop a strategy throughout coronavirus, we can help.

Reach out on 03 8638 0888, or email us at hello@alliedlegal.com.au to see what we can do for your business. All inquiries are obligation free.

Talt Anast - Commercial & Startup Lawyer


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