Blog
23 March 2020
Saving us from the effects of COVID-19!

Without a doubt, the COVID-19 pandemic has given rise to a number of negative effects worldwide (and this is just the beginning). School and cultural institutions have been closed. So have been many shops and service points. People cannot go to work, and entrepreneurs fear severe losses.

Hence, what can you do to protect yourself against the economic consequences of coronavirus?

If you are an employee, the best you can do is to keep calm and wait it out. The government has made it possible to apply for a care allowance for those who need to stay home to take care of children under the age of eight. All you need to do is file an application with ZUS (online is the safest way). You may ask your employer to let you work from home (if only the nature of your job allows remote working). The employer may instruct the employee to perform work, over a specified period, under an employment agreement, outside the regular workplace under Article 3 of the Act of 2 March 2020 on special solutions related to the prevention, counteracting and combating COVID-19, other communicable diseases and resultant crisis situations.

What is more, the President has addressed financial institutions to help the borrowers. The Association of Polish Bankers (ZBP) has informed that, under the currently binding law and at the request of the borrower, banks may suspend capital-interest payments or capital payments for a period of up to three months.

Entrepreneurs, though, are slightly disadvantaged. The government has helped them by announcing the currently available support methods, such as the suspension of social insurance contributions (ZUS), installment schemes or remission of liabilities. Similarly, financial institutions operate on the basis of the Tax Ordinance with respect to taxes.

In addition, a special act is under development to support entrepreneurs at these difficult times, under which small and medium enterprises would be temporarily exempt from ZUS contributions and tax obligations. However, what type of relief the act is going to offer is yet to be seen.

It seems, though, that the present coronavirus situation is bound to have far reaching repercussions. Even when the pandemic is over, which we all hope will be the case soon, the problems of entrepreneurs will continue.

At least a two-week downtime could be disastrous for our companies. We are losing sleep over existing contracts which cannot be performed. Certainly, we should hope that our business partners will show some understanding…. but life is not always a bed of roses.

Downtime at a construction site may result in contractual penalties. The result of failure to produce certain quantities of goods or perform an agreement may be liability for damages.

In addition to the lack of or decrease in income, we may have to pay contractual penalties or damages for failure to comply or fully comply with the obligations of the contract. What can we do?

First of all, keep calm. There are several methods to help us solve this difficult situation.

They are, among others, contractual penalty mitigation or the rebus sic stantibus rule, which you can read about in other articles you can find on the blog.

Most importantly, however, in accordance with the Civil Code, a party to the agreement shall have a duty to remedy any losses sustained by another Party and consequential to non-performance or inadequate performance of contractual obligations, unless such non-performance or inadequate performance is a consequence of circumstances beyond control of the debtor. Therefore, if we can prove that we have failed to perform the obligations or performed them inadequately due to the pandemic or related restrictions imposed by the government, we will avoid responsibility or, simply put, the need to pay damages or contractual penalties.

Moreover, the Act of 2 March 2020 on special solutions related to the prevention, counteracting and combating COVID-19, other communicable diseases and resultant crisis situations also provides for some solutions. For example, under the Act, the carriers shall not be liable for damages done in relation to the actions of authorities aimed at counteracting COVID-19, in particular, for the lack of carriage possibilities due to restrictions on movements.

However, as everything needs to be proved, do remember to collect evidence.

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