Due to the outbreak of Coronavirus each and every sector of national and international business has been hit hard and the economy is facing a very serious crisis across the country. Meanwhile it is important to take a note on key legal issues to be faced due to this giant pandemic of Coronavirus.

Tourism Industry

According to industry chamber outbreak of coronavirus is the one of the worst crises ever to hit the Indian tourism industry impacting all its geographical segments – inbound, outbound and domestic, almost all tourism verticals – leisure, adventure, heritage, MICE, cruise, corporate and niche segments. The whole tourism value chain across hotels, travel agents, tour operations, destinations, restaurants, family entertainment venues and air, land and sea transportation have been hit.  

Mergers and Acquisitions 

M & A transactions may have impact due to the outbreak of COVID-19. Some of the major issues may be in disclosures, data rooms and due diligence. Buyers should consider conducting due diligence on the level of risk and on the target’s scenario planning. As diligence activities including the possibilities to conduct on site due diligence, audits and inspections and exercising the relevant access rights will be delayed.

Insolvency

Due to the spread of COVID-19 companies are experiencing financial distress as they try to mitigate the financial impacts of supply chain issues coupled with lower customer demand. Companies may be forced to seek formal and informal protection from their creditors due to which increased insolvency is on the horizon.

Corporate Sector and Governance

Now there is need for directors to understand the scope of their fiduciary and statutory duties. It is important to act with reasonable care, skills and diligence in the best interest of the company. In order to maintain some important point to be taken into consideration:

  • The board of directors should engage with management team to evaluate the business continuity risk.
  • Management team should keep the board sufficiently informed and understand the material risks caused due to COVID- 19.
  • Proper communication with consumers to be maintained in order to keep them updated of any disruption of services and allowing them the opportunity to secure alternate source of supply.
  • To connect with shareholders regarding the company’s assessment due to coronavirus and the company’s plan to tackle them same.
  • Disclosures and communication due to coronavirus on the business operation should be planned and coordinated with the legal teams to ensure compliance with applicable law.

Workplace Issues

Employers in order to maintain safe and healthy environment for their employees, workers, trainees etc. should do everything reasonably possible to ensure prevention. Employers must inform about all hygiene guidelines given by the Ministry of Health and Family Welfare, Govt. of India and to make arrangements for hand sanitizers and face masks.

  • There is no legal necessity to grant leave for COVID-19 in excess of what is statutorily mandated or contractually agreed upon. But due to the communicable nature of disease it is advisable for the employers to allow affected employees to proceed on paid leave.
  • There should be no termination on the ground that a person is being suspected of COVID-19.
  • The employer may allow an employee to work from home.
  • An employer has a right to prevent an employee suffering from COVID-19 from entering into workplace for the protection of other employees.  
  • The important note for employers is to plan ahead reasonably otherwise it may impact adversely on staff and may damage future employee relations.