This is the second in a four-part series prepared by Restructuring and Insolvency Specialists Association of Bermuda (RISA Bermuda) on insights to help small- to mid-size organisations manage financial, operational, and staffing considerations, as well as directors’ duties and responsibilities, in view of the current Covid-19 crisis.

In the first part of the series, we highlighted the financial considerations that Bermuda businesses will want to have in mind during the crisis, here: http://www.royalgazette.com/business/article/20200414/managing-your-business-through-crisis

Today we look at employee considerations.

Employee considerations — moving to a new working model to protect employees; how to navigate financial pressures

All but essential businesses (defined as Permitted Business in Schedule 1 of the Emergency Powers (Covid-19 Shelter in Place) Regulations 2020) have had to shift to working remotely or cease operating, in order to comply with the “shelter in place” order currently in place.

The intent of the restrictive measures imposed by the regulations is of course to prevent the spread of the disease but trigger a wide range of considerations for business owners and managers, from health and safety, to operational and financial.

Bermuda businesses presently fall into one of three categories:

• Those that are permitted to continue to open for business as a permitted business

• Those that can continue to operate remotely

• Those that are unable to operate remotely for whatever reason or which are prohibited from operation under the Regulations.

Your employee considerations will no doubt be dictated by which category your organisation falls into and the dynamics of your organisation. We set out below some of the considerations to have in mind to navigate the crisis.

In this time of crisis, it is important to consider how you meet your obligations to employees while protecting your organisation’s financial health; any relief that may be available; and where redundancies and / or layoffs cannot be avoided, how to best support employees through that process.

Operational considerations: health, safety and wellbeing of your employees is paramount

• Ensure your organisation restructures in such a way to meet the requirements under the regulations and follow government-recommended precautions to help prevent the spread of the disease. Bear in mind any penalties that may be incurred for failure to restructure your operations to meet the rules and regulations that have been imposed. You should also consider the reputational risk to your organisation that may arise if measures to protect employees are inadequate;

• For employees not engaged in an essential service, establish a remote work option when possible, if not already doing so

• Where possible, attempt to shift your sales strategy to an online platform, albeit this will not be possible for certain businesses under the “shelter in place order” however it may still be good to explore this as a means to reach customers as the situation develops and restrictions ease;

• How to provide employees flexibility within the new work arrangements (i.e. balancing family requirements with work)

• Communicate your newly implemented health measures (including employee arrangements) internally and externally to customers and other stakeholders

• Assess who performs the most critical tasks within your organisation and what happens if they are unable to work for a period; take steps to share skills, information and training to increase resilience to absences

• If you or your team have more time available (because you have less work or fewer customers), use this time to improve your processes and efficiencies, improve products and services or make the changes you’ve been meaning to do over the past few years or months. We know we all have them in our business, and we’ve been too busy to get to them. Well, use this time now.

• Conduct training in your company or get training yourself as a leader in areas you know will improve your company. If you know you are weak on social media marketing, or accounting and budgeting, IT, or a niche thing in your business category that could drive your business, invest your time into this. Get your team doing the same.

Financial considerations: meeting employee obligations and steps that may be taken to survive the crisis

• If there is going to be any difficulty in meeting financial obligations to employees, consider communicating this to employees at an early stage and engaging them in ways in which you might work together to weather the crisis.

• Ensure you stay current on pension, payroll tax, insurance and social security obligations and where necessary take advantage of any relief offered. The Government has announced relief is to be provided to small businesses, so watch for those details. The Tax Commissioner has also, for example, extended the period in which to pay first-quarter payroll tax for those businesses that require it from April 15 to April 30, 2020. https://www.gov.bm/articles/ministry-institutes-relief-measures.

• Can flexible working arrangements be implemented to help reduce costs? Consider reducing hours, or whether agreement with employees can be reached on employees voluntarily taking vacation time or agreeing a reduction in salary to help the organisation avoid layoffs or redundancies. Careful consideration must be given to obligations to employees and that some changes cannot be made unilaterally but will require employee agreement. Also consider if any of your employees are unionised and whether negotiations with the relevant union will be required.

• Layoffs and redundancies: while uncomfortable, in some cases it may simply be unavoidable that headcount of staff be reduced in order to curtail expenditure and save the business. How can this best be handled and what resources do you have available to help employees through this process? Consider in advance, for example, what documentation the employer may need to provide to the employee for employees to be eligible to apply for relief under the Public Treasury (Administration and Payments) (Temporary Unemployment Benefit) Regulations 2020.

• Obtain financial advice before matters escalate.

• Bear in mind that this is a fluid situation, with the possibility that the “shelter in place” order may be extended again and that rules and regulations could change. Government has also indicated that further financial relief and assistance may still be to come.

In all employee-related decisions, it is important to consider from the outset of distress, at what point such decisions need to be made. In the circumstance, a clear plan should be identified with criteria and decision-making documented. Employers should have frank and honest discussions with relevant staff. Businesses that survive crisis can later thrive and where layoffs could not be avoided, subsequently re-hire and/or improve their headcount. Businesses that fail simply cease to be employers.

It is worth taking the time to consider all of the above in an effort to protect and sustain your functionality when the crisis subsides while retaining employee goodwill and loyalty, which will be all the more important in the months ahead when businesses are able to return to normal operations.

• RISA Bermuda consists of accountants, lawyers, and other individuals who are directly or indirectly engaged in the business of insolvency and restructuring in Bermuda. Refer to www.risa.bm for further information. No insights from this article constitute legal, financial, commercial or other professional advice