Blog Details

Author - Advocate Rashi Suri (Managing Partner), Pradyun Chakravarty (Associate), Dikshita Damodaran (Associate)

1. Analyzing effect to status of existing contracts?

• Due to the effects of the pandemic and the government intervention, is there any existing contracts which may have undergone a change which may be detrimental to the interest of your company?
• Are there any mandatory obligations or duties that are to be fulfilled by your company in the existing contracts for which no relaxation has been granted by the other party?

2. Has your company received any force majeure notifications as a result of the COVID-19 pandemic?

• There would be contracts or orders wherein the other party due to the effects of Covid-19 would be constrained to perform its obligations under the contract, in such a case the other party may send a notification citing force majeure for not undertaking performance of obligations.
• If in case any notice from the other party of the contract has been received then same has to be appropriately examined and replied to. The contents of the reply may have potential of impacting the performance of any future obligations or future payments under that specific contract.

3. Contracts under which your company is unable to perform its obligations due to the COVID-19 pandemic?

• It is imperative to ascertain:
  • whether any such contract has provisions for force majeure,
  • whether the force majeure provision covers pandemics and epidemics like COVID-19 in its ambit and
  • whether the suspension of performance is permitted under the provisions.
• It is also important that the other party has to be duly notified in case your company is unable to perform its undertaken obligations under the contracts. The notification therefore has to be prepared citing the specific provisions, the arguments and the government circulars and official notifications through which the protection for not performing the duties can be taken.
• In most contracts the notification of force majeure has to be given under a certain time period from the knowledge of the force majeure event. Therefore, the subsisting contracts of your company would have to examined for fulfilling that contractual requirement so as not to incur avoidable potential costs and charges for not notifying the other party in due time.

4. Possibility of breach of contracts due to COVID-19

In case there arises a situation or circumstances due to Covid-19 where your company is or will stand to be in breach of any of the provisions of the subsisting contracts, then that should be reasonably renegotiated with the other party for avoiding any future liabilities in the form of litigation or other such charges and costs.

5. Teleworking or Remote Working (work from home) Contracts, Policies and related Non-Disclosure Agreements

• Your company may have certain non-violable confidential information which it might be sharing with its employees when they have to telework.
• It may be possible that as a new normal for maintaining physical distancing, threat perceptions from travelling through public transports, the employees would be needed to maintain this norm for a few more months.
• Therefore, it is recommended that in such a situation, it becomes imperative for the corporation to protect it confidential information from being disclosed or leaked.
• Upscale Legal can help in this regard by providing custom made Employee Non-disclosure Contracts and also help in developing Policy related to Employees remotely working from home to secure 100% efficiency and minimal to nil disruption to operations of your company in the short term and in the middle term.

6. Post Lockdown workplace policies and future outbreak prevention and mitigation plan development

On April 22, 2020 the WHO Director-General Tedros Adhanom Ghebreyesus told a virtual press conference – “Make no mistake: we have a long way to go. This virus will be with us for a long time and can easily ignite again"

Upscale Legal therefore, in close consultation with the officers of your company will customize and streamline existing policies or make new ones which suitably provides standard operating procedures and policies to tackle the unprecedented challenge to business operation:

• Sickness Policy
• The requirements on employees to inform the employer if they have typical Covid-19 symptoms, or
• Employees to voluntarily discloses such information on a timely basis.
• The “Return to Work” procedures
• Absence policy
• The circumstances in which the employees may be required to stay away from the office?
• The policy regarding employees being required to work from home?
• Travel policy
• Monitoring of official travel
• A Standard Approval and Authorization System
• Communication and information with the Employees -
• By providing intra company information links and communication channels to give clarity regarding the procedures, policies and sop’s that has to be followed by the employees if and when there are emergent circumstances of Covid-19 in the office or if an employee has contracted the same.
• Mitigation Strategies -
• To reduce exposure at work, meetings and events and
• The legal and mandatory guidelines by the Central and/or State governments both for getting the workplace ready in case there is a resurgence of threat from Covid-19.

7. Analyzing status of all term loans and borrowings of your company?

• The RBI has announced various regulatory packages that allows for specific moratorium on the repayment of debts and relaxation of certain norms for working capital facilities.
• Therefore, it becomes necessary to ascertain the benefits that your company can avail in the present circumstances.

8. The compliances under the MCA and other relevant laws and regulations that are applicable to your company

• The MCA has eased the burden of companies in terms of the corporate governance and secretarial processes required to be followed by them especially with respect to relaxing procedural requirements for holding meetings of members and boards.
• Therefore, it becomes necessary to ascertain the benefits that your company can avail in the present circumstances.

9. Commercial Leases – Rights and Obligations of your company as a Lessor or as a Lessee respectively

Your company would be possessing various rights and obligations when it is in the position of a Lessor or as a Lessee. It is imperative therefore to make an assessment both as a landlord and as a tenant (wherever applicable) which relates to:

• How will both the parties (Lessor and Lessee) address closing of Lessee’s business or the problems of reduction in workforce and persisting revenue losses affecting its ability to operate or pay rent for the leased space?
• What should be the appropriate response byyour companyas a Lessor if and when a Lessee defaults or requests for rent relief?
• How does the above affectyour company’sown responsibilities of paying real estate taxes, maintenance costs and debts as a Lessor, if any, on the property? Etc.

The above are among few such questions that needs to ascertained when quantifying for the rights and duties of your company in its various corporate Leases.

10. Cost Cutting, Reduction in Salaries and Reduction in workforce strengths through lay-offs or termination etc.

In case there arises a need to do any of the above to reduce operational costs from lower to middle tier employees, then the following documents would have to examined:

• The Appointment and Offer letters of the respective employee
• The contract or agreement that may have been entered with the employee
  • It is to be discerned whether salary cuts, deferral of bonuses or other such payment cuts
    to the empolyees is allowed under the respective contracts; − The provisions for laying off or terminating employment of the employee before the
    completion of his/her contracted period and−The compensation, remedial and other measures for limiting costs and charges that may
    arise related to the above
• Other cost cutting strategies w.r.t to employment and labour laws for reducing the effect from depleting and loss of revenues and to limit the operational costs borne to the corporation.