On Tuesday 11 August 2020, we hosted a digital session Women in Luxury Interiors Forum, chaired by Partner in Art Law, Amanda Gray.
We shared practical guidance for those operating in luxury interiors on addressing the ongoing and future impact of COVID-19:
Sonia Campbell, Partner in Dispute Resolution, explained the importance of the FCA's test case seeking clarity on the scope of business interruption (BI) policies, specifically "non-damage" cover for losses not resulting from physical or property damage. Mishcon de Reya is acting on behalf of the only groups of actual insureds allowed to intervene in the case: the Hospitality Insurance Group Action, for QBE and Aviva insureds, and the Hiscox Action Group. It is hoped that the judgment, a draft of which is due in mid-September, will resolve the uncertainty for many insureds as to if and how BI cover should respond to the pandemic, where many claims have already been denied. However, even if the High Court finds in favour of the insureds, the ruling could be appealed as far as the Supreme Court. In the meantime, all businesses should check their policy wording and, if they do have a possible claim, carefully collect evidence of loss. At the same time, those looking to renew existing policies should brace for more exclusions; we are already seeing familiar but tighter restrictions on BI cover, including for losses that stem from infectious diseases and, again, non-damage denial of access.
Supply chain issues and force majeure clauses
Neil Baylis, Partner in the Competition Group, went on to discuss how businesses can make their supply chains more resilient in the face of continued uncertainty. They should first audit their supply chains and contracts for potential areas of weakness, then consider how and when to engage alternative suppliers. They could negotiate shorter terms to make it easier to exit contracts as necessary, and in particular they should ensure that any new or renegotiated force majeure clauses (aimed at unforeseen events) provide protection appropriate to their needs. For example, should the clause expressly cover pandemics? Should it allow for parties' contractual obligations to be terminated or temporarily suspended, or for alternative arrangements to be put in place? Businesses might also move to digitise their supply chains, a trend that will only be accelerated by the pandemic because real-time monitoring of every link allows for a quicker response and readjustment. Likewise, the pandemic has thrown a spotlight on "just in time" arrangements which, while a great boost to efficiency, can see whole supply chains unravel (and multiple orders unmet) when a single part becomes unavailable. In short, businesses must stress-test their supply chains and plan for disruption. With all contracts, there will be a trade-off between flexibility and long-term security.
Finally, Kirti Tiwari-Mehta, Managing Associate in Employment, talked about how smaller businesses in particular have been affected by issues such as the impact of multiple employees being sick or self-isolating at the same time, and the cost of maintaining a proper IT infrastructure where many staff are now working from home. She urged employers to communicate with employees to keep them informed, but also to find out how they can best respond to their needs. This is especially important for female employees who, as studies have shown (The Institute for Fiscal Studies (IFS) and the UCL Institute of Education; Women's Budget Group; NHS), have borne the economic brunt of the pandemic: they are over-represented in the sectors and roles hit hardest, and are more likely to be juggling other responsibilities such as caring and home-schooling. Employers should aim to be as flexible as possible about working arrangements, including working hours. Likewise, junior employees who are missing out on in-office access to mentoring and training should be supported in other ways, for example with regular video calls, monitoring or a buddy scheme, and employers should adjust their expectations of graduates who will have had a different training experience. More broadly, businesses should adjust for the long term, where at least some of the shift to remote working, as well as recruitment (not just how to recruit but where to recruit from), may well survive the pandemic. Finally, in any decisions they make about employees, including redundancies, employers should bear in mind the various legal protections against discrimination.
If you have any questions about any of the above, please contact one of the speakers.