Coronavirus COVID-19 — How can companies protect themselves (FAQs)
After the outbreak of COVID-19 in China, the virus has spread across Europe at a record-breaking speed. New cases of infection are increasing day by day in Belgium. Is your business prepared for a possible outbreak here in Belgium?
COVID-19 could affect the performance of your contracts, your employment conditions and circumstances, and even disrupt your business severely. Do you have a legal solution to all these challenges? Below are some useful answers to the most frequently asked questions that you would encounter in the coming weeks.
Table of Contents
Employment
Commercial contracts
New, special measures
FPS support measures
How can you, a creditor, protect yourself?
What can you, as a business, do to ensure/protect the continuity of the company?
Employment
1. Q: Is the employer obliged to provide protection (gloves, disinfectants, etc.)?
Yes, the employer has a standard duty of care under law as a prudent employer and must ensure that work is performed in proper circumstances in relation to the health and safety its employees. Appropriate measures can potentially be discussed with the prevention advisor, the Committee for Prevention and Protection at Work, the external advisor for prevention and protection at work.
The World Health Organization (WHO) points out a number of specific preventive measures that are best taken in the workplace to prevent the spread of corona virus in the workplace (https://www.who.int/docs/default-source/coronaviruse/getting-workplace-ready-for-covid-19.pdf?sfvrsn=359a81e7_6). These are, among others:
Make sure your workplaces are always clean and hygienic. Office desks, laptops, telephones, keyboards (etc.) must be cleaned regularly using disinfectants.
Encourage employees and external parties you work with to wash their hands regularly and thoroughly. Place hand sanitizers at prominent places at the workplace, and ensure that these sanitizers are replenished or replaced with new ones regularly (when empty).
Ensure that facial masks and/or facial tissues are available at the workplaces for those who have a runny nose or who cough.
Advise employees and contractors to consult national travel advice before going on business trips;
Think twice about going to a meeting in person. Think of other alternatives for it (e.g., video-call meeting via Skype, etc.);
Others.
2. Q: Can the employer refuse an employee entering the workplace?
I. If the employee shows no symptoms of the coronavirus but has returned from an affected area?
No, if there is no medical certificate confirming that the employee is unfit for work, the employer may not, in theory, deny him or her access to the workplace.
The employer may not demand that the employee undergo a medical check or present a medical certificate attesting that the employee is not infected. You can suggest this to the employee, however, but the initiative to do so must come from the employee.
If the employer takes measures, without the government’s intervention, to deny its employees access to the workplace (despite the employees’ defiance), the employer will be at risk of being found to have committed a contractual breach or made an implied dismissal.
If you wish to deny access to the employee, make a sincere request to him or her to stay home or suggest alternatives.
II. If the employee shows symptoms of the corona virus?
Yes, we believe that this would be possible in accordance with Article 20 of the Employment Contracts Act if there are clear, external signs of the COVID-19 symptoms. After all, the employer is obliged to take reasonable measures to guarantee the health and safety of the employees at the workplace.
The FPS for Employment, Labour, and Social Dialogue (or FPD Labour) is more prudent here, however. The principle remains that the employer cannot deny access to the workplace as long as the employee has not been declared unfit for work according to a medical certificate. Safety measures are possible, however, (and even required) with explicit reference to the example that the employer may, in consultation with the employee, decide to temporarily organize the work differently (e.g., working from home or remotely, using other rooms, etc.).
In addition, the FPS Labour accepts that the employer may ask an employee, who is clearly ill, to go home for the purpose of preserving the safety of the other employees and of seeking medical advice or attention. If the employer believes that the employee's condition indisputably increases the risks at the workplace of the employee, the employer may contact the occupational physician, who will then evaluate whether it is necessary to subject the employee to a health or medical examination. The employee must then immediately comply with the occupational physician’s conclusion.
3. Q: Can the employer oblige all employees to work from home?
We repeat that the FPS Labour has announced that as long as the employee has not been declared unfit for work according to a medical certificate, the employer may not, in theory, deny him or her access to the workplace. In consultation with the employee, an employer may indeed decide to temporarily organize the work differently (e.g., working from home or remotely, using other rooms, etc.).
An obligation imposed unilaterally by the employer does not seem to be acceptable by the FPS Labour.
4. Q: What if the business must close its doors subsequent to the government’s orders?
To prevent further spread of COVID-19, it is likely that factories and plants will have to close. If this occurs, the company can invoke temporary unemployment on grounds of force majeure (see question 5, ii).
The employer must file a declaration electronically as soon as possible with the authorized unemployment office of the company’s place of establishment. This declaration must mention the evidence of force majeure and the link between COVID-19 and the force majeure. Check the website of the National Employment Office for the other formalities.
5. Q: What about the salary/unemployment allowance?
I. If the employee is infected by the coronavirus and is unfit to work:
If an employee is unfit to work because he or she is infected with COVID-19, he or she will benefit from the same protection as any other Belgian employee on sick leave, on condition that they can present the required medical certificates.
The employees are entitled to guaranteed wage from their employer for a certain period of time.
II. If the company is experiencing serious business disruption because of COVID-19:
If all or some of the blue-collar employees temporarily stop their work for economic reasons (i.e. lack of work), the employer can invoke temporary unemployment (for economic reasons). For white-collar employees, this is only possible under certain conditions.
Employees are entitled to a replacement income from the National Employment Office for the days of inactivity. The employer must file a declaration electronically as soon as possible (see question 4).
III. If it is impossible for the employees to work due to consequences of COVID-19 (e.g., when the employee is in quarantine or if the employee cannot return to Belgium from holiday)
In such scenario, the employee is not unfit to work, but the company can invoke temporarily
unemployment on grounds of force majeure. This applies in any event until June 30, 2020.
The employer must file a declaration electronically as soon as possible with the authorized unemployment office of the company’s place of establishment mentioning the evidence of force majeure and the link between COVID-19 and the force majeure. Check the website
of the National Employment Office for the other formalities.
During this period, the employer is no longer obliged to pay wage. The employees receive temporary unemployment allowance from the National Employment Office for the days of inactivity.
6. Q: Can the employer oblige the employees to use annual leave?
No, this is only possible if the employee agrees with this annual leave, unless a fixed collective holiday is already planned according to the applicable provisions.
Commercial contracts
1. Q: Is COVID-19 outbreak a force majeure event?
Because force majeure clauses are usually contained in commercial agreements, the scope and effect of a force majeure clause is determined on a case-by-case basis, by reference to the wording of the clause and the relevant facts mentioned in the contract.
If the contract or the terms and conditions don’t include a force majeure clause, you must apply the rules of the applicable law of the contract.
According to Belgian law “force majeure” means the absolute or practical impossibility, Beyond the power or control of the contractor, to perform the contract.
This means that each case will need a very factual assessment to know whether COVID-19 can be interpreted in that particular case as ’force majeure’ or ‘absolute impossibility (beyond your power) to perform’.
2. Q: If my Chinese supplier cannot deliver, can I terminate the contract and ask for refund?
It is important to consult the specific terms of your contract and look into the governing law provision.
• If the contract is governed by Belgian law:
You can terminate the contract if the contract provides that termination is possible due to a force majeure event.
If the contract doesn’t provide such specific provisions, according to Belgian
law, you can only terminate the contract in case of force majeure (absolute impossibility, beyond your supplier’s power, to perform) or in case of an accountable and serious failure on the part of your supplier. In case of force majeure you can’t ask for refund, each party shall bear his own risk. In case the non- delivery can’t be interpreted as a consequence of a force majeure event, the non- delivery or serious delayed delivery can be interpreted as an accountable serious failure on the part of your supplier. In this last case, you can terminate the contract and you must be placed in the situation in which you would have been if you had not contracted with your supplier. This means the request of refund is possible.
• If the contract is governed by the laws of PRC:
Under the PRC contract law, the contract can be terminated due to a force majeure event, defined as an objective circumstance which ‘cannot be foreseen, cannot be avoided and cannot overcome’, and this applies regardless of any provision in the contract. If the delay or failure of supply by your Chinese supplier is directly caused by the virus outbreak, such as the temporary closure of plant due to government orders, then it is possible to terminate the contract. Refund of full amount or partial amount of your prepaid price will depend on the execution status of your suppliers. For instance, if the supplier has already manufactured
the products, then only partial refund will be possible. In such case, you can also consider adjusting the delivery timeline instead of terminating.
3. Q: Can I suspend the performance of contracts with customers? Do I have to pay damages?
It is important to consult the specific terms and conditions of your contract. If the contract is governed by Belgian law and no specific provisions on suspension of your performance are included, the suspension of the performance of the contract, without any liability, is only possible in case of temporarily force majeure (only a temporarily absolute impossibility, beyond your power, to perform) or as a reaction on your customer who is not performing his former obligations of the relevant contract. The temporarily nature of the situation of force majeure can give rise to discussion because it depends on a very factual interpretation.
Special new measures
1. Q: Are there special measures adopted by the government to support companies in difficulties?
The government has adopted many measures to support companies that are “directly affected” by COVID-19. These measures include the temporary unemployment allowance on grounds of force majeure, temporary unemployment allowance for economic reasons, which have been mentioned above in the section on employment.
In addition, the following measures were adopted:
(1) Social security contributions (employer’s share) in the first two quarters of 2020 can be paid in monthly installments within 18 months. Any fines or interest incurred for late payment of social security contributions can also be partly or entirely exempt.
(2) VAT can be paid monthly, just as the scheme for payment of social security contributions (employer’s share);
(3) Payroll tax can also be paid monthly;
(4) Payment of income tax for individuals and for companies can be postponed;
(5) Self-employed individuals can have the amount of their anticipated social security contributions reduced;
(6) For self-employed individuals, the social security contributions in the first two quarters of 2020 can be paid one year later;
(7) If the self-employed individuals have temporarily suspended their business activities due to COVID-19, they are entitled to replacement income;
(8) The federal governments will not impose any fines or sanctions for delays in public contracts;
(9) The Flemish Government foresees a one-type (tax-free) premium of EUR 4,000 for cafés and restaurants that must be shut down completely. For shops that must close in the weekend for business, the premium is EUR 2,000. If the closure is longer than the coming three weeks (after April 3, 2020), then there will be an additional lump-sum of EUR 160 per day closed;
(10) The assessments for immoveable property tax are postponed until September, companies have until the end of November to pay this;
(11) A sum of EUR 100 million has been allocated as crisis guarantee. Companies in financial difficulties with existing financial debt (bank loans) that will not be able to repay them temporarily must request a debt arrangement from the banks. If the banks seek security deposits for this, the Flemish Government will commit to 75% of it;
(12) For the tourism sector, Minister Zuhal Demir announced that a sum of EUR 5 million will be allocated for the consequences of the crisis.
FPS support measures
https://financien.belgium.be/nl/ondernemingen/steunmaatregelen-betreffende-het-coronavirus-covid-19.
Businesses that find themselves in difficulties because of the COVID-19 community spread can seek the FPD Finance for support from the measures adopted.
These support measures should be able to give some financial leeway to businesses and permit debtors to bridge the gap during such financially difficult times.
What businesses?
The natural person or legal entity that has an enterprise number (registered with the Belgian Crossroads Bank for Enterprises):
Regardless of the business sector
That finds itself in difficulty because of the COVID-19 community spread, and is able to prove this (e.g., a drop in turnover, a significant decrease in orders and/or reservations, consequences from a “chain reaction” with partnering companies.
Support from these measures will not be granted to companies that are faced with structural or operational difficulties in fulfilling its payment obligations—independent of COVID-19.
What kind of debt?
Withholding tax
VAT
Corporate tax
Legal entities tax
For how long?
Requests must be filed no later than 30 June 2020.
What measures?
1. Installment repayment scheme
2. Exemption from late payment interest
3. Cancellation of fines for non-payment
Under what conditions?
fulfillment of the conditions for filing the declarations
the debts must not originate from fraud
The support measure will be revoked if:
the approved installment repayment scheme is not complied with, unless if the debtor contacts the administration timely about its inability to comply
there is a collective insolvency procedure taking place (bankruptcy, judicial reorganization, ...)
What are the steps?
One request per debt; this applies to all measures
Once you have received a tax assessment or payment demand letter
Use this form
Submit by email or by post
One single point of contact for all of the measures sought: the Regional Collection Center (in Dutch: Regionaal Invorderingscentrum (RIC)) that is responsible for the postcode-marked area of your domicile (for natural persons) or registered office (for
legal entities)
How to find the RIC for your case:
Click here to open the FPS Finance office location guide
In the tab “Filter Gemeente”, fill in your postcode or municipality
Click “Zoeken”. The information of the RIC responsible for processing your request will be shown (including the address and email).
You will receive a reply within 30 days from the date you have submitted your request.
How can you, a creditor, protect yourself in times of COVID-19?
Consequent to the COVID-19 outbreak, all restaurants and cafés are compelled to close
their business until (at least) 3 April 2020. For the businesses that are already facing a difficult financial situation, this could be fatal and could even lead to bankruptcy.
How can you, as buyer or supplier, protect yourself in the event that your co-contracting party goes bankrupt?
Retention of title
Concept
If you are a seller or supplier of moveable goods, it is recommended that you have a
retention-of-title clause in your contract. In particular, it is clause that stipulates that you continue to be the owner of the goods until you have received full payment for them. A retention of title gives you the right to recover the moveable goods if the buyer is in default in paying the purchase price for the goods (Article 69 Collateral Act).
Contract required
This retention of title is only valid if this is set out in writing, no later than the time of
delivery of the goods. This can be done by way of a contract that is drawn up before the parties’ cooperation or set out in the general conditions (of sale) that you use. For business enterprises, these general conditions apply if they have been communicated, read, and accepted at (and no later than) the start of the commercial relationship or transaction. This acceptance can be made tacitly.
No other registration required but is recommended
This retention of title does not require any other validity requirements or fulfillment of the
obligation to register, unless it is for goods that could risk becoming immoveable because of their destined use. However, registering it in the security interest register (or pledge register) can offer extra protection.
This is in theory not obligatory, but every professional buyer is obliged to check the pledge register. If, despite the registration, the professional buyer decides to the purchase the goods from your co-contracting party outside the “usual business activity” of your contracting party, you can invoke that this buyer did not act in good faith and has affected your retention of title. But please bear in mind that this registration is not free, but the costs are limited.
Consequence
If your co-contracting party is in default in paying the purchase price, you can demand recovery of the goods without the need for court intervention.
In addition, your retention of title is valid also if concurring events take place, for example, in the event of bankruptcy or liquidation of a business. Based on this retention of title, you can recover your goods from the bankruptcy receiver.
If the goods are part of an inventory, and if the inventory has already been resold before the bankruptcy, then your retention of title is converted into the monetary value of the goods.
You will therefore be given a privileged position in the context of the bankruptcy.
Security interest
Concept
If you cannot invoke any retention of title, you, as creditor, can draw up a pledge agreement with your debtor. A pledge is a security interest in rem whereby you can agree that certain goods belonging to the debtor be encumbered to guarantee your debt claim. The statutory provisions (in the Civil Code) governing security interest in rem on moveable goods were amended by the Act of 11 July 2013 (which entered into force on 01.01.2018). Since this amendment, the legislation on security interest in rem has been relaxed significantly.
Contract required
This security interest can be agreed upon based on an agreement between the pledgor and pledgee that sets out clearly what goods are encumbered by the pledge and what debt claim is covered by the pledge guarantee. In addition, the maximum sum guaranteed must be mentioned.
The types of goods on which the pledge can be placed are very broad. They can be physical and non-physical goods, businesses, or even an entire bulk of goods as long as they “can be specified”. The advantage is that dispossession of the goods encumbered by a pledge is no longer necessary. The pledgor can therefore simply possess the goods, sell them, or even process or handle them if this falls within the usual operations of its business activities. The security interest therefore remains intact on the goods or is the monetary value of those goods.
Registration required
This security interest must be registered in the security interest register (pledge register). This registration excludes a professional buyer from being considered as a “good faith purchaser”. Any professional buyer is obliged to check this register if it does not want its potential purchase to be declared unenforceable against it. Therefore, if the pledgor sells the encumbered goods to a professional, but this sale does not fall under the usual business activities, then this sale does not bind the pledgee. In such scenario, the pledgee can seek recovery of the goods from this third-party buyer.
Consequence
If the pledgor is in default in paying the debt, the pledgee can proceed to recover the
pledge-encumbered goods. The pledgee must consequently notify the pledgor by
registered letter about (i) the sum of the secured debt claim, (i) the description
of the encumbered goods, (iii) the above mentioned way of recovery, and (iv) the
right of the pledgor to release the goods by paying the amount of the secured
debt claim. This notification must be given no later than 10 days before the
effective recovery and does not require any prior approval from the court.
If no voluntary arrangement can be reached, a private sale or public auction can be organized, whether or not with the involvement of a bailiff. Judicial review over this sale takes place afterwards. The pledgor, pledgee, or other third parties with standing can have recourse to the court at any time if a dispute pertaining to this recovery arises.
If your co-contracting party goes bankrupt, you, as pledgee, are a privileged creditor who will have priority in being paid, the payment of which will come from the proceeds from
the sale of the encumbered goods.
Pledge with dispossession?
The usual possessory pledge, with dispossession, remains valid. In such scenario, there is no obligation to register it. As pledgee in such scenario, you are responsible for the encumbered goods. Moreover, you are obliged to keep these goods separate from similar goods so that they do not get mixed up.
Privileged right for the undefined seller
If you have no retention of title or did not agree to a pledge agreement, and your co-contracting party goes bankrupt, you still have a few limited options. In such scenario, you can invoke the privileged right of the “undefined seller” of moveable goods (Art. 20,5 Hypothecation Act). You must be able to prove only that a sale and delivery of the goods has taken place. Since the Act of 14 January 2013 (which entered into force on 1 September 2013), you, as the undefined seller, are no longer obliged to deposit your invoices with the clerk of the enterprise court.
Article 20,5 Hypothecation Act also provides for the possibility to recover the goods, but only if the sale has been done without a stipulation of timing. To block a resale from taking place, the buyer must recover the goods within 8 days after delivery, and the goods must still be in the same condition as they were at the time of delivery. If the goods have already been used or handled, this privileged right applies only if the sold goods can still be identified.
Apart from these possibilities, it is recommended in any event that you try as much as possible to pay for the goods in advance or in cash at the time of delivery.
If it still comes to a bankruptcy situation, it is important in each of the scenarios described above that you file a debt claim via www.regsol.be when your co-contracting party becomes bankrupt. You can register your privileged right in this filing. This must be done within the year after the bankruptcy proceedings are open, under penalty of the claim being time-barred. If it is still impossible to recuperate your claim, you can still request a tax declaration from the receiver, with which you can use to recuperate the VAT.
What can you, as a business, do to ensure/protect the continuity of the company?
What can you, as a business, do to guarantee or safeguard the continuity of your business?
Judicial reorganization procedure
You can apply to the enterprise court and seek permission to undergo a judicial reorganization procedure (in Dutch: procedure gerechtelijke reorganisatie or PGR-procedure, which used to be called the WCO-procedure, referring to the procedure under the statute Wet op de continuïteit van de onderneming (the Enterprise Continuity Act). Just as what was provided for in the former Enterprise Continuity Act, you can apply for a PGR-procedure with the intention of obtaining an amicable settlement, a collective arrangement, or with the intention of transferring all or part of the business activities.
The application for opening a PGR-procedure (or permission to have it opened) must be justified. More specifically, you must explain that your business’s continuity is jeopardized immediately or in due course. This newsletter will not focus in detail the different modalities of each of these procedures, but it will describe several specific possibilities that can be useful, bearing in mind the situation in society today.
This procedure offers several possibilities that can help you go through the shut-down period, regardless of whether you find your business in a positive or negative liquidity situation before this procedure.
Suspension of contractual obligations
If your business is in a healthy liquidity position before the shut-down period, but you wish to bridge the gap in the mandatory shut-down period without getting your fingers burned as much as possible, then you can apply for temporary protection afforded by the PGR-procedure. In particular, you can use this procedure to suspend certain obligations. In that way, you can decide unilaterally from the opening of this PGR-procedure to suspend the performance of certain contractual obligations for the period of the suspension (which is set by the court). For this, you must send a notice to your co-contracting party in which you explicitly justify that this suspension is necessary for your business’s reorganization.
If your co-contracting party suffers harm as a result of this temporary suspension of your
obligations, then its debt claim for compensation will be recorded as part of the suspension (or the obligations suspended). Moreover, your co-contracting party can decide to suspend its own obligations too. It can also decide not to end the contract merely and only because of the unilateral suspension of the contract performance by the debtor. But it can indeed terminate it if you, the debtor, committed a specific breach before the PGR-procedure.
But please bear in mind that this right to suspend one’s obligations does apply to employment contracts.
This procedure often leads to the situation in which you will be obliged to pay for all new orders or commitments in advance or in cash upon delivery.
Suspension of enforcement measures
If your company was already in a precarious situation before the mandatory shut-down, the application for the PGR-procedure can have an added value in that all enforcement measures against your business are suspended. However, during the PGR-procedure, you are not allowed to incur any new debt.
If a public auction has already been planned and which takes place in 2 months after the filing of the PGR-procedure application, this sale will not be suspended automatically. You will have to file a separate application with the enterprise court for this in which you justify why this suspension is necessary for the reorganization or continuity of the business.
In addition, all seizure measures retain their conservatory effect. You can also seek the enterprise court to order the lifting of the seizure if this is necessary for the continuity of the business.
Bankruptcy
If this mandatory shut-down period is unfortunately the last straw for the business, then you can apply for bankruptcy.
Since the Act of 11 August 2017, which entered into force on 1 May 2018, the concept of enterprise has been broadened to a significant extent. In accordance with Article I.1, 1 °
Code of Economic Code, the following organizations are described as enterprises:
(a) Any natural person who exercises a business activity as a self-employed independent;
(b) Any legal entity;
(c) Any other organization without legal personality.
The application for bankruptcy does not have to be filed with the clerk of the enterprise court any more. The enterprise can apply for this free of charge (either by itself or by
an authorized person) via the website www.regsol.be.
In general, the file is processed at the first hearing before the bankruptcy chamber of the enterprise court, which takes place in the judicial district where the registered office
of the enterprise is located. The enterprise does not have to be present any more at this hearing, unless the court explicitly requests so beforehand.
If you, as a natural person, apply for bankruptcy, it is recommended that you file a petition seeking a waiver of all remaining debt at the same time — and this, no later than 3 months after the bankruptcy application. Concretely speaking, this means that the receiver will sell off all the bankrupt’s assets first. If there are still remaining debt after the distribution of proceeds from the sale of the assets, then the remaining debt will be cancelled. This waiver is automatically granted unless the bankrupt has committed gross errors that have contributed to the bankruptcy.
But please bear in mind that from the moment that the bankruptcy conditions are met, you, as the enterprise, must apply for bankruptcy in the same month. The bankruptcy conditions are: cessation of payment and “shocked state of credit” (i.e., loss of credibility among creditors). If the bankruptcy is applied for too late, this can lead to the finding of personal liability of the director.
Government support measures
In addition to the above mentioned procedures, the government has also put in place financial support measures at this time. This newsletter will not go into detail the conditions and modalities of those measures, but we wish to draw your attention to the possibility of them.
With these measures, businesses that find themselves in difficulty as a result of the COVID-19 spread can seek support measures from the FPS Finance for the following types of debt: withholding tax, VAT, personal income tax, corporate income tax, tax on legal entities. Provided that your application is filed no later than 30.06.2020, you can request for
(i) an instalment payment scheme,
(ii) exemption from late payment interest, or
(iii) cancellation of fines for non-payment.
You can find more information on this website: https://financien.belgium.be/nl/ondernemingen/steunmaatregelen-betreffende-het-coronavirus-covid-19.
In addition, you can also apply for a “hindrance premium”. Businesses that are affected by a complete shut-down can obtain a one-time premium of EUR 4,000. And if they still have to keep their business closed after 21 days, there will be a compensation of EUR 160 per day. For businesses that must close in the weekend, there is a one-time premium of EUR 2,000. And if they still have to keep their business closed after 21 days, they are entitled to compensation of EUR 160 per day. There can also be flexibility in the conditions for support measures and subsidies, as well as in the granting of credits by banks.
For specific assessments or advice on the extent to which your business can be eligible for a certain support measure, an individual analysis of the case or situation is necessary.
Specific questions? Need help?
Do not hesitate to contact your usual contact in our firm or Ava Tu (head of our China Desk) at ava.tu@monardlaw.be for further questions or assistance.
Ava will guide you to the appropriate specialist depending on the nature of your question. We will be more than happy to help you and your business.