Insights + Resources

April 1, 2020

COVID-19+ ‘Stay at Home’ laws set to profoundly impact commercial offices

New laws mean that people in New South Wales must not leave their homes without ‘reasonable excuse’.  Attending the office or other place of work is not a reasonable excuse, unless the person is unable to work from their place of residence.  As we explain below, these new laws will significantly increase the take-up of digital connection tools and profoundly impact office occupations.

The Order restricting Gathering and Movement

With effect from Monday 31 March 2020, the New South Wales Public Health (COVID-19 Restrictions on Gathering and Movement) Order 2020 (Order), provides that a person must not leave their place of residence without a “reasonable excuse”.

Under the list of “reasonable excuses” in the Order, it includes: “travelling for the purposes of work if the person cannot work from the person’s place of residence”.

As drafted, the Order means that if a person is able to practicably perform their job from home, then attending their place of work is not a “reasonable excuse” for leaving their place of residence.  Doing so is an offence.

Whilst offices are included in the list of Essential Gatherings in Schedule 2 of the Order, if a person can work from home (‘WFH’), then they should not be in the office.

Meaning of “cannot work from” home under the NSW Order

No guidance is provided as to the meaning of “cannot work from the person’s place of residence”.  However as drafted the Order sets a high bar, putting the onus on the worker and their employer to establish why it is not possible to WFH.

If the job involves driving a vehicle, stacking shelves, policing the streets, operating heavy machinery or a range of other tasks that require physical presence, then clearly the person cannot work from home.  Other jobs are in a grey zone – can physiotherapy be conducted from home?  Perhaps it can to some extent by videoconferencing, with the patient being instructed to manipulate their own bodies. In response to social distancing measures, trials by physio clinics are already underway.

However workers in many “office jobs”, including those in finance, sales, customer support, IT and management, can largely use phones, computers, digital tools (including video conferencing applications) and the internet to get things done. Technically speaking, unless the job is impracticable to do remotely (essentially, impossible to carry out) it seems these workers are largely obliged to WFH.

Penalties  

Failure to comply with the Order is an offence.

For individuals, this attracts a maximum penalty of imprisonment for 6 months and/or a fine of up to $11,000 plus $5,500 for each day the offence continues.

For corporations, there is a maximum penalty of $55,000 plus $27,500 for each day the offence continues.

Timeframe

The Order commenced on 31 March 2020 and expires on 29 June 2020 unless revoked earlier by the Minister.

Victorian Direction

In Victoria, a similar Direction applies under the Public Health and Wellbeing Act 2008, with effect from 30 March 2020.

Unlike the NSW Order, the Victorian Direction only applies for a 2 week period, until 13 April 2020.

Further, the Victorian Direction provides that the person may leave home to attend work if it is “not reasonably practicable” to WFH.  This test is more lenient than the absolutism of the NSW Order, which does not include the reasonableness requirement.

Re-negotiation of commercial leases

On 29 March 2020, prior to the Order being announced, National Cabinet had indicated that short-term intervention is needed for commercial tenancies. Commercial tenants, landlords and financial institutions were encouraged to collectively find a way to ensure that businesses survive COVID-19. As part of this, National Cabinet announced a set of guiding principles for such discussions, including:

  • Tenants and landlords being encouraged to agree on rent relief or temporary amendments to the lease, with reduction or waiver of rental payment for a defined period for impacted tenants;
  • The ability for tenants to terminate leases and/or seek mediation or conciliation on the grounds of financial distress;
  • Commercial property owners should ensure that benefits received in respect of their properties also benefit their tenants in proportion to the economic impact caused to them;
  • Parties not significantly affected by coronavirus expected to honour their agreements.

The National Cabinet will consider advice from Treasurers on commercial tenancies at its next meeting on Friday 3 April.

Impacts on commercial office leases

In considering the re-negotiation of commercial leases in the time of corona, the argument arises that the Order is an unforeseen and frustrating event that radically affects the principal objective of the tenant in entering into the contract (i.e. to accomodate their workers). On the other hand, with the Order to operate until 29 June 2020 unless revoked earlier by the Minister or extended, owners may seek to argue that the intervening event is temporary and its risk should fall on the tenant, who should continue to be obliged to pay for the premises.

Impacts on workforce digitalisation

Before corona, remote working habits were already being increasingly driven by the widespread availability and adoption of powerful and affordable online communication tools such as Trello, Slack and Zoom, and the deep penetration of iOS and Android smart phones. The Order in New South Wales now creates a regulatory driver to expedite the adoption of these kinds of digital tools to facilitate working from home.

What’s next?

It is easy to picture the CBD, with floor after floor of office tower after office tower standing empty. The deserted city. Despite this futuristic vision, arguments arise that WFH is not feasible for many workers. For example, where a person can discharge most but not all of their duties from home, or where they live in a shared house with inadequate privacy or confidentiality. Take note though; very significant fines and even imprisonment can flow from getting this wrong.

Edwards and Co anticipates that, drawing on interstate and international experience, further guidance from the Government about when WFH is considered impracticable will be forthcoming soon.

Please contact us if you need advice about your business in light of the extraordinary circumstances of the coronavirus.

This article is part of our “law in the time of corona” series of business law articles.

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