26 March 2020

Duties and Corporate Social Responsibility in relation to Covid-19

Every business has duties and responsibilities. As a result of the Covid-19 pandemic, these are being thrown into even sharper focus. In this post, we’ll look at how to best carry out your duties during the outbreak and consider how corporate social responsibility is affected.

Health and safety law in relation to Covid-19

Under health and safety law, it is your duty to protect the health, safety and welfare of your employees and other people who might be affected by your business. But the duty is not absolute. You must take all reasonably practicable measures to achieve this. This means weighing up the risk with the measures to ensure that workers and others are protected from anything that may cause actual or potential harm. You are effectively undertaking a risk assessment to control, so far as is reasonably practicable, any risks of harm, injury or health that could arise in the context of the workplace or by the conduct of your undertaking. A careful and considered risk assessment takes skill to perform: it is a careful examination of what would cause harm to people allowing you to weigh up whether you have taken enough precautions or whether you should do more to prevent harm. It is worth noting that a breach of health and safety law is a criminal offence.

In the context of the Covid-19 outbreak, your risk assessment (which the law requires an employer to undertake) should carefully consider how to deal with the risk posed by infected (or potentially infected) employees and non-employees (such as contractors and visitors). If you were to knowingly allow an individual who has been advised to self-isolate to attend your premises or come into contact with others on your premises, you may be in breach of that duty, particularly where any of those other persons are more vulnerable to infection – for example, pregnant employees, or those with long-term/underlying health conditions.

You should also carefully navigate communications with your staff about the Covid-19 outbreak. Under UK data protection law, personal data concerning health is ‘special category data’. This means you need to ensure that any communication does not include any data about, for example, an individual that is absent. It would be acceptable to let employees know that there has been a confirmed Covid-19 case within its workforce, but it would not be appropriate to provide any details from which the individual might be identified.

Duties for directors in relation to Covid-19

Directors of your company also have duties, both in respect of those owed to the company and in the context of health and safety regulation those owed to employees.

With regards to the company there are two particular duties that are likely to be particularly affected by Covid-19: promoting the success of the business, and exercising reasonable skill, care and diligence.

Promoting the success of the business

Directors must act in the way they consider, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole. Success will often mean a long-term increase in value but fundamentally it is up to each director to decide, in good faith, whether it is appropriate for the company to take a particular course of action. Therefore, directors should have regard to, and balance:

  • the likely consequences of any decision in the long term;
  • the interests of the company’s employees;
  • the need to foster the company’s business relationships with suppliers, customers and others; and
  • the impact of the company’s operations on the community and the environment.

Points 2 and 4 are, perhaps, most relevant in the context of the Covid-19 outbreak. Plainly, over the coming months, directors may be forced to take decisions which are commercially detrimental to the business, but which are in the interests of its employees and the wider community. However, acting in the employees’ interests is likely to enhance the reputation of the company and reduce the likelihood of any claims.

Exercising reasonable skill, care and diligence

Directors must exercise the same care, skill and diligence that would be exercised by a reasonably diligent person. The expected standard is measured against both objective and subjective yardsticks.

Given the Covid-19 outbreak will result in directors entering unchartered territory, they can take some comfort from the fact that an ill-advised decision is unlikely to attract liability for breach of duty (providing more could not have been reasonably expected of someone else in his or her position).

In the context of health and safety if an offence is committed with the consent or connivance of a director (or a senior manager) or is attributable to any neglect on their part, that individual may be prosecuted and convicted alongside the company itself. In extreme circumstances (but one where there is a growing trend) if an individual director’s grossly negligent behaviour causes a person’s death, they could be found guilty of individual gross negligence manslaughter. The penalties for breaches of health and safety legislation vary but can be an unlimited fine or up to two years imprisonment (and life imprisonment for a conviction of gross negligence manslaughter).

Corporate Social Responsibility (CSR)

You should also consider your CSR policy. The decisions businesses make now are likely to be remembered by employees, clients and (if relevant) the general public. That being said, this must be balanced against ensuring the business is financially stable.

There is undoubtedly a risk that an employee has or will contract Covid-19 whilst working on-site at your premises. You should also bear in mind that if they had caught it from another employee that had been advised to self-isolate, you could be held liable for breach of duty.

For that reason, you should (as a minimum) follow and implement government and PHE guidance as closely as possible, and ensure a record of steps taken is kept. This information would be invaluable in defence of any claim. Whether the business and/or the directors make any decisions that go further than the advice provided by the government or PHE depends on a balance between the commercial realities of the business, and the impact of any decisions on employees and the wider community.

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Adam Finch, Partner

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