It is arguably more important than ever that retailers and service providers take steps to protect and safeguard their goodwill towards customers, their turnover and their supply chain mechanisms. But under the current Government-enforced restrictions, what is and isn’t permitted? And what steps can those businesses that have closed take to review their business use and product line to procure COVID-19 compliance?
The ability of retailers and service providers to trade or remain open is now governed by the Health Protection (Coronavirus, Restrictions) (England) Regulations 2020. The regulations came into force on 26 March and were last reviewed by the Government on 16 April. Following that review, the restrictions remain in force during the emergency period which takes effect from 26 March until they are lifted by the Secretary of State for Health. They remain subject to Government review every 21 days following the last review date.
What must be closed?
Food retail
Regulation 4 deals with:
- Food retail;
- Bars; and
- Public houses (listed at Schedule 2 Part 1)
This prohibits the sale of food or drink for consumption on premises. If a business sells food or drink for consumption off the premises, no such food or drink must be consumed on any ancillary or adjacent dining areas. Food or drink provided by hotel room service is an exception to this prohibition.
A person carrying on or responsible for the management of any Regulation 4 business during the emergency period must cease to carry on that business except by making deliveries or otherwise providing services in response to customer orders received:
- Through a website
- By telephone including orders by text message
- By post
Comment
If you are running a public house or a restaurant, consider converting to takeaway use for the duration of the lockdown to preserve goodwill and turnover.
When considering this option you may wish to think about the following:
- Can food production be facilitated from a central production hub with delivery through the restaurant or public house outlets to preserve turnover and local client loyalty?
- Review your production, supply and delivery platforms (including website and social media platforms) to ensure clientele and suppliers are aware of any revised delivery provision.
- Ensure you have the delivery infrastructure to respond to takeaway demand quickly and in a legally compliant manner.
- Seek professional advice on legal issues relating to leases, funding agreements and planning consents.
Non-food retail
Regulation 5 addresses leisure and assembly businesses such as hotel and holiday accommodation, cinemas, nightclubs, beauty parlours, gyms, playgrounds and auction houses (listed at Schedule 2 Part 2). In addition, it contains restrictions governing the use of places of worship, community centres and crematoria.
A person carrying on or responsible for the management of any such Regulation 5 business during the emergency period may only provide that service in response to orders received through a website, by telephone (including orders by text message) or by post.
Comment
Consider what, if any, aspect of these services can be provided through online service provision. Is there any relevant technology that can be used to retain and safeguard client base and loyalty? Can you amend your services in certain categories to meet demand through remote or virtual provision of services?
Enforcement
Any person who carries on business in contravention of Regulation 4 or Regulation 5 without reasonable excuse is committing an offence. Further, any person who obstructs a person from complying with the regulations is also committing an offence which is punishable by summary conviction by a fine. If committed by a corporate body, the officer (a director, manager or secretary of the corporate body) as well as the corporate body itself is guilty of the offence and liable to be prosecuted. The Crown Prosecution Service and any person designated by the Secretary of State is the prosecuting authority under the regulations.
An authorised person (e.g. police constable) may issue a fixed penalty notice to anyone they reasonably believe to have committed an offence under the regulations and is over the age of 18. The penalty offers the person to whom it is issued the opportunity of discharging any liability to conviction for the offence by payment of a fixed penalty to a local authority specified in the notice at a sum of £60 (or £30 if paid within 14 days). If a second fixed penalty notice is required, the amount increases to £120; and in the case of subsequent repeat notices, the amount will double by reference to the amount specified in the previous notice to a maximum of £960.
Non-closure exemptions
The regulations confirm that those businesses specified in Schedule 2 Part 3 are permitted to remain open. These include:
- Food retailers including food markets, supermarkets and convenience stores
- Off licences
- Pharmacies
- Newsagents
- Homeware, building supplies and hardware stores, and storage and distribution facilities including delivery drop-off or collection points where the facilities are in the premises of a business that is permitted
- Petrol stations
- Car repair and MOT services
- Bicycle shops
- Taxi or vehicle hire businesses
- Banks, building societies, credit unions
- Post offices
- Funeral directors
- Laundrettes and dry cleaners
- Dental services, opticians, audiology services, chiropody and other medical or health services
- Veterinary surgeons and pet shops
- Agricultural supplies shops
- Car parks
- Public toilets
Comment
If you are operating a business that you have closed during the lockdown, ask yourself whether the business – or any part of it - falls within any of the non-closure exemptions listed above. Consider whether there is a possibility of continuing the business by focusing on that partially permitted trade in order to preserve continuity of trade, goodwill and supply lines during the lockdown.
If you occupy under a lease, it is advisable to check the permitted use provision and any planning consent to ensure that any change of use will not result in a breach or where necessary seek appropriate consent. Consider whether you need consent from any relevant funders or investors where a change will impact on existing agreements. In negotiations with landlords, seek to ensure you retain the flexibility to switch back to your existing use if required once the lockdown measures are relaxed or lifted.
Where it is possible to change use or provide services in a way that procures compliance with the regulations, this may increase the value, goodwill and resilience of a business. It could also facilitate the growth of untapped market opportunities even after the regulations are relaxed, lifted or amended.
Please note: Nothing in this article constitutes legal advice and we are not liable for any reliance on the information provided. This is a rapidly changing subject, and whilst correct at the time of writing, circumstances may have changed since publication. Please refer to Gov.uk for up-to-date advice on the Government’s response to this issue.
To find out more about anything covered in this article, please contact Fionnuala Nolan or another member of Thrings’ Commercial Property team.
