2020 is a year many of us in retail would like to forget. Regardless of how you traded, Covid-19 delivered unexpected challenges and some tough lessons for all retailers.
We’ve recapped our top 5 Covid-19 legal lessons from 2020 and outlined how you can tackle these proactively in 2021.
1. Leasing: Never have rents hurt as much as they did during lockdown. Unfortunately, most leases did not have provisions dealing with what happened in an unprecedented event such as Covid-19. Retailers were left trying to negotiate with landlords and ultimately, muddle their way through the (often confusing) rental code.
For those with retail leases, there are some lessons you can take into your next lease negotiation (whether for a renewal, new lease or when trying to negotiate some further relief):
- Landlords can’t opt-out of Government mandated rental codes. However, as the Code relief period is due to shortly end in most States/Territories, those who are still impacted need to sit down with their landlords and try and negotiate further relief as soon as possible.
- Those taking new leases should seek to incorporate a ‘Force Majeure’ clause which deals with what happens when trade is prevented.
- Those taking new leases should avoid giving personal guarantees to minimise your personal risk if a site isn’t performing and needs to close.
- Avoid holding leases in companies that own valuable assets or other businesses – so as to protect your positive assets from unpaid rent claims.
- Make sure your leases have fair assignment clauses – landlords should not be able to withhold consent to you assigning your lease to a suitable new tenant when things aren’t going great.
2. Supply Terms: Make sure your contracts (with suppliers) have clauses dealing with what happens in a pandemic/Force Majeure event. Ideally, you want to avoid (or delay) having to pay for goods or services where your trade is impacted.
3. Terms of Sale: Make sure your terms of sale (for customers) have clear provisions dealing with what happens if you can’t deliver orders on time due to Covid-19 impacts. Otherwise, you risk consumers being able to cancel orders and obtain refunds.
4. Employment: Check your employment contracts are up to date and that you are aware of award obligations. If you need to make changes to your workforce, contact an employment lawyer first.
5. Health and Safety: Make sure you have clear policies in place to protect your workers – this includes Covid-19 safety measures but also, generally reviewing your Workplace Health and Safety measures to minimise your risk of unforeseen claims.
The ARA’s legal advisors, Hitch Advisory are here to help you ensure 2021 is smoother than 2020. Should you wish to have a chat, Hitch offers a free 30 minute consultation for each member on topics of your choosing. Happy New Year!