"Be Kind" - Even When Dealing In Business!
Updated: Jun 26
This week, our co-founder and partner of Serenity Law LLP, Avinder Laroya, discussed the recent guidance given by the government to businesses. Within the published note, the government urges companies to be "fair and reasonable" when it comes to settling disputes.
Whilst some contracts may have become frustrated as a result of the Coronavirus, other businesses may find themselves not quite unable to perform, but facing significant difficulties in performance. This means that they are unable to break their contract under the Doctrine of Frustration, but what if they don't have a Force Majeure provision in place, either? This could explain why the government felt obligated to speak out to ask businesses to act fairly and reasonably, extending deadlines or renegotiating terms, for example.
What About The People Behind The Business?
The director of the WHO (World Health Organisation) Department of Mental Health, Devora Kestel, has been quoted as saying:
"The isolation, the fear, the uncertainty, the economic turmoil - they all cause or could cause psychological distress."
Following months of the issues highlighted by Dr Kestel, there is concern emerging among experts of a second influx of patients requiring the services of the NHS, only this time for psychiatric services as opposed to treatment for the Coronavirus.
How Does This Impact Business?
The most vital asset in almost any business is its people. Demonstrated perfectly by the brave and selfless attitudes of front line key workers during the pandemic, businesses and the economy as a whole simply could not continue if it wasn't for their staff. As well as our wonderful NHS and emergency services, key workers were also employed by private companies. Farmers ensured we had food and milk; lorry drivers ensured these goods were delivered to us; supermarket staff kept the shelves stacked and served us with smiles, despite the chaos - This list of every day heroes is endless. And, for these businesses to continue to run smoothly, these staff need to be in good health, both physically and mentally.
Prior to the Coronavirus outbreak, research had shown that around 15% of employees suffer from mental health conditions - and that's only those who have disclosed their illness. Directors and employees at higher management level are also more likely to suffer with work related stress, which could be exacerbated further by the additional stresses of COVID-19. With Dr Kestel's predictions in mind, the impact on national worsening mental health could impact upon businesses in a number of ways:
Absenteeism - Employees may feel unable to perform their role and taking time off;
Presenteeism - Those employees coming into work despite their fragile mental health are unlikely to be as productive as usual;
Increased costs - Funding cover for those unable to work or recruitment should the employee leave the business;
Decreased staff morale - Humans are social beings and the overall morale can be impacted when someone is unwell.
What would happen then if the company was one with very few employees, or if the company owner or directors were the ones unable to mentally cope? In some cases, this could mean that businesses are no longer able to continue to operate, impacting on the economy as a whole, but also the local communities and the individual lives of those employees affected.
How Does This Relate To The Government Guidance?
The internet is saturated with pages urging people to be kind to one another, however, the government guidance on contractual behaviours could be seen to be developing this kindness movement into the business world. By being fair, reasonable and understanding to contracted companies, businesses are being offered a chance to fulfil their duties. We have all been impacted by the Coronavirus and the government clearly states that in order for the economy to rebuild, businesses must support one another.
Although there are likely to be a handful of companies who may take advantage of kindness, on the whole, the mutual respect is likely to strengthen business relationships. This little bit of understanding might, in some cases, stop a sole-trader's mental health from reaching breaking point or allow an SME to keep trading, keeping their small, loyal workforce employed.
Overall, it's not just the economy that will benefit from this reasonable and fair approach to contractual issues. Owners and staff, the very people behind the business, will be impacted by any hasty decisions to enter litigation proceedings and by offering even a small adjustment to contractual terms, businesses can support one another to trade another day, saving jobs, livelihoods, families and, in some cases, lives.
We are experts in commercial contract law and are offering business documentation audits among other legal services as a part of our Coronavirus Business Resources packages. One of our experienced commercial lawyers will thoroughly review any documentation, including your contracts with suppliers and customers, to identify any areas that may cause you to be at risk.
Any amendments, reviews or renegotiation can also be facilitated in a fair and reasonable manner, with our co-founder, Avinder Laroya, who is a accredited mediator. The government recommend businesses enter a mediation process prior to any litigation and up to 80% of cases tend to be resolved within the first day of mediating.
To find out more about any of our commercial legal services, book a FREE consultation here or call 0800 019 7773.