Corona Virus or COVID-19, has caused unprecedented interruption to retail and commercial operations, and has had a profound effect on retail operations and the performance of contractual obligations for organisations engaged to clean, secure or maintain those premises. It is important that parties remain informed on potential risks before taking any action.
In view of the changed circumstances brought about by the COVID-19 pandemic, some managers of commercial premises are requesting that cleaning and inspection operations be reduced in their scope or intensity.
Changed cleaning and/or contractual arrangements must be reflected in your indemnity insurance. In the absence of an insurance policy which reflects changes to cleaning and/or contractual arrangements, you may be left without cover in the event of an incident, leaving your organisation adversely exposed to a claim for damages.
In light of the COVID-19 pandemic, and the reduction in foot traffic caused by social isolation requirements, some owners and managers of commercial premises have questioned the requirements for the frequency and nature of current cleaning arrangements. Whilst each case will depend upon the terms of the contract and specific circumstances, it is important to understand that:
- Your duties and obligations in respect of the frequency and nature of cleaning are at a minimum those reflected in your contract for cleaning services (this means if it says you must inspect every 5, 10, 15 or 20 minutes, this is the absolute minimum requirement).
- If more frequent or intensive cleaning and inspection operations than those presently required by your contractual arrangements are required, this is unlikely to put your company at greater risk, provided you retain the resources to at least undertake your duties and obligations under your contractual arrangements.
- However, requests to:
- reduce the nature, scope and frequency of your cleaning and inspection operations;
- reduce resources/headcount; or
- undertake cleaning and inspection operations which divert team members from those duties and obligations presently reflected in contractual arrangements between you and the managers of commercial premises,will not be covered by your current insurance arrangements.
- In the absence of a policy of insurance which properly reflects any modified arrangements between you and the managers of commercial premises, you will not have insurance cover or an appropriate indemnity for some (if not all) of your cleaning and inspection operations.
- In the example of commercial cleaning services, seeking to reduce the rostered cleaning hours, frequency of rotations or obligations in general may amount to non-performance and could amount to termination of the contract. The other contracting party may take advantage and seek damages for wrongful repudiation or as leverage to escape the contract for other commercial reasons.
- Needless to say, in the event of a personal injuries claim, you may then be liable for the entire amount of any damages award made to a successful plaintiff.
Responding to COVID-19 – Our team of experience
There is great uncertainty concerning the impact of COVID-19 on the performance of contractual obligations. It is crucial that you obtain legal advice before making any concessions to alter your contractual obligations as these decisions may well cause further harm to the business.
Retail owners understandably may pressure commercial cleaners to reduce their systems of cleaning to reflect the reduced foot traffic; however, this puts adverse risk on insurance coverage and indemnity provisions.
Prior to agreeing to any variation of your cleaning or service agreements, parties must also consider insurance implications. Critically, it must be determined what impact any such changes will have on coverage in the event of an incident. In these circumstances, cleaners need to negotiate further contractual indemnities for not meeting loop times and common law standards for systems of cleaning and inspection. In short, if your client wants you to reduce your loops or service levels, they need to take responsibility if you are sued for not having done a sufficient number of loops.
Companies are moving towards a collaborative approach to ensure business longevity through this time. However, the reality is that businesses must ensure they are minimising their risk to avoid creating even greater challenges.
Arrangements with your insurer to change the policy of insurance should be made prior to entering any agreement to change your cleaning and /or contractual arrangements. It is important you obtain appropriate legal advice to ensure you are protected with the appropriate indemnities and obtain the proper legal analysis of the potential impact of COVID-19.
Our team brings together a unique range of knowledge on key legal issues to assist clients navigate the unprecedented economic challenges arising from COVID-19 pandemic.
This paper is general in nature and is not legal advice. You should not rely on this paper and if you require specific advice or assistance, please contact our office.