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Legal Implications of COVID-19: "One Should Think About the Worst Case Scenario"

To conclude our impact series, we take a look at an area that is difficult to grasp and probably the most complex: the legal dangers for companies due to the COVID-19 pandemic. We asked lawyer Dr. Christian Herbert for guidance.

MunichJul 30, 2020

Claims for damages from employees who feel they are not sufficiently protected, legal disputes with insurance companies due to a business lockdown, conflicts due to unfulfilled contracts … the COVID-19 pandemic also presents companies with numerous legal challenges that can become painful and threaten their existence.

We wanted to know how a legal expert evaluates the developments of the last few months and spoke to Dr. Christian Herbert, lawyer for administrative law, commercial and corporate law and international business law at the Gréus law firm in Heidelberg, Germany.

KINEXON: Dr. Herbert, how do you assess the protection measures taken by companies to date from a legal perspective? Where do you see a need for action?

Dr. Herbert: I consult many large production companies at the industrial location of Mannheim. During the lockdown, production stood still. Employees were sent home.

At that time, problems with adequate protective measures therefore did not arise. The situation was different with contract workers that were temporarily employed. Here, some difficult legal questions arose regarding remuneration and claims, which have not been clarified to date.

Another major legal problem is that a temporary employee is not formally subject to instructions from the company where he works. He cannot be forced to comply with protective measures. At best, he may be expelled from the factory premises if he does not comply with the required protective measures.

A business closure insurance is intended to cover the financial loss of a business closure. 

Crucial for this: 

  • Closure was initiated by an external party 
  • Insurance contract covers the event as occured 
  • Sufficient safeguards can be presented 

KINEXON: Do the measures currently applied go far enough for you? Or are more far-reaching measures needed?

Dr. Herbert: As far as I got insight, the protective measures have been well and sufficiently communicated to the employees by the companies. 

However, the measures have been in place for some time and in the daily work many duties are quickly forgotten. This is normal, but leads to the fact that good measures are only implemented to a limited extent.

KINEXON: How should companies react?

Dr. Herbert: With regard to further measures, the worst case scenario should be considered. The question should be asked whether in a COVID-19 infection the plant has to be closed down completely or whether the existing measures can prevent a lockdown. 

KINEXON: In order to prevent this worst case scenario, companies rely on distance and hygiene rules as well as tracing infection chains. What do companies have to observe in legal terms? 

Dr. Herbert: Distance and hygiene rules are and will remain the most important regulations. Maintaining a minimum distance of 6 feet to other persons is recommended, especially if other protective measures are not available or not possible.

In addition, a hygiene concept need to be designed by companies. However, some legal pitfalls arise from this. Let’s take the tracing of infection chains, for example: 

Companies should definitely check the legal regulations before implementing their concept! Employees do not have to agree to every data acquisition!

KINEXON: Are there any new legal developments regarding the tracing of infection chains?

Dr. Herbert: With the pandemic, a lot of is currently changing in labour law. For example, employees are required to provide more information. Two examples: Because of the devastating risk of infection, it is now assumed that a COVID-19 infection must be communicated in concrete terms. It is therefore no longer sufficient to simply call in sick”.

And even if employees are on holiday in COVID-19 risk areas, the company will probably have a right to be informed without being asked. Most likely, the company can demand that the employee undergoes a test. If the employee refuses, the work can be refused — unpaid.

KINEXON: Both of these factors are probably very much to the benefit of companies. What do you see as legal dangers? For example, for companies that do not adequately protect employees?

Dr. Herbert: This question is closely linked to the question of what duties entrepreneurs have towards their employees in the specific situation. This results from the field of activity of the company, but also from the personal constitution of the worker.

Germany: Company must prove that the infection did not take place in the company.

USA: Infected employee must prove that infection occurred during working hours.

A lack of protection can be the cause of illness or worse. Questions of liability arise here as a consequence: Can the employer be held liable for criminal liability, for example for negligent bodily injury? Can the employee demand sufficient protective measures? Are fines threatened because of the lack of protective measures or must compensation be paid for treatment costs or damages for pain and suffering?

Quite clearly: health protection in the company is not only a topic for the company doctor. The serious liability risks are also an issue for the compliance officer.

KINEXON: How high do you estimate the risk of a wave of complaints from employees who do not feel adequately protected?

Dr. Herbert: Same here, a distinction must be made between legal protection which serves as a preventive measure to improve protective measures and that which subsequently claims damages for lack of health protection.

With regard to preventive legal protection, I consider the danger” of the number of plaintiffs to be rather low, while in individual cases the consequences for the company can be serious .

Let us take this prominent case in the German meat industry, where employees went public instead of seeking legal protection. This may also have to do with the financial inhibition threshold to go to court.

Nevertheless, I think that such blatant violations will in future motivate sensitized employees to seek legal protection in advance.

Current legal situation (state: july 2020)

KINEXON: How do you estimate the chances of success for such lawsuits?

Dr. Herbert: The extent to which protective measures were actually deficient and the legal objective pursued are important.

With regard to future protective measures which must be implemented to protect employees, a court is likely to order a measure more quickly. Ultimately, the interest of the employer in continuing the business is weighed against the question of the employee’s health protection.

If the intended measure is appropriate and not entirely disproportionate, health protection will probably be given priority as a rule. For subsequent financial compensation, the question of quantifiable damage is also relevant. But no statement can be made here without looking at the individual case.

KINEXON: Speaking about hygiene and safety protocols, the question of proportionality is central and important. In other words, what can and cannot be expected of employees? How should companies ideally proceed in order to clarify this question to the best possible satisfaction of all? Is there a proven process?

Dr. Herbert: It is still too early to speak of a proven process when the situation is still constantly changing. Also the operational requirements are so different that there is no one clear answer to this.

At the peak of the pandemic, German politicians repeatedly swore that Germany would have to move together” during the lockdown. I think it should be the same with coordinating hygiene and safety protocols within the company: Really all departments must work together on this!

The issue of health and safety is far too important to be made the subject of common frictions, for example between the works council and management.

Especially because of the fact that numerous legal questions concerning employee protection cannot be answered clearly at this point, all possibilities for risk minimization and documentation should be exhausted. 

No matter what the legal situation is, as soon as a case of infection becomes known among the staff, companies must provide evidence of concrete, effective protective measures and immediately stop possible chains of infection. 

Organizational, behavioral and personal protective measures such as those listed in the so-called Stop Model” (see graphic above) do reduce the risk of infection, but it is questionable whether they also provide the necessary clarity in legal disputes. Technical measures such as KINEXON SafeZone also have their advantages here.

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