Our approach to the COVID-19 (Coronavirus) pandemic

Walkers is both prepared and open for business

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Our approach to the COVID-19 (Coronavirus) pandemic

Walkers is both prepared and open for business

Read More

Walkers is a leading international law firm. We advise on the laws of Bermuda, the British Virgin Islands, the Cayman Islands, Guernsey, Ireland and Jersey.
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Protecting your business and securing your workforce – key decisions to get you through COVID-19

At the end of last week, the States of Guernsey announced a first round of Coronavirus support measures for businesses. These include deferring TRP and employer social security contributions for Q1 / Q2 for many employers (excluding for the time being professional services and financial services businesses) and establishing a hardship fund. The hardship fund aims to support staff in sectors hardest hit, such as hospitality, tourism and construction, who may be facing lay off without pay for many weeks.

Over the weekend, the Committee for Home Affairs announced it will be working with the Civil Contingencies Authority to make proactive adjustments to the population management regime in light of the current travel restrictions and their impact on the local economy. The Committee's aim is to prevent those who may have lost their jobs or been put on temporary lay-off from having to leave the Island, at the same time providing resilience in terms of a flexible, available workforce to do necessary jobs as we adjust to these different times.

Against this backdrop, what can employers do themselves to keep staff in employment and increase resilience until the worst is behind us? We suggest some measures below, with some being more far-reaching than others.

Where the suggestions impact employees' terms and conditions (in particular pay, working hours and valued – and valuable - contractual benefits) they should only be introduced after consulting with staff and getting their agreement to the change.

In the current climate, we would expect staff to be more open to change, but this will still require clear communication around the reasons for change and written confirmation of what those changes look like.

Although we normally recommend that this is done by a variation letter, evidenced by the employee's counter signature, in our view an email would suffice. We would, though, recommend you get a read receipt and request confirmation of your employees' agreement to the change by return. If they do not confirm, or respond but object to the change, you will need to follow up to prevent a risk of a breach of contract claim or a claim that they continued to work, but under protest.

Measures to consider are:

  • Restricting new recruitment
  • Deferring start dates
  • Withdrawing job offers for new recruits: provided the offer hasn't been accepted, there will be no liability. If it has been accepted, a contract will exist and the employee will be entitled to notice. If the contract provides for shorter notice during probation, the shorter notice period will apply. The right to be paid will normally only start on the day the job starts, so the employee is only entitled to be paid for any balance of notice falling after the start date. For example, if P's contract provides for 4 weeks' notice during probation and notice is given one week before the employment is due to start, P is entitled to be paid in lieu of 'lost' salary for the 3 weeks falling after the start date; if P's notice had been one week in this example, P would not be entitled to any payment in lieu on the basis that he/she has no entitlement to be paid until the start date and so has no claimable loss under the contract after the start date)
  • Voluntary unpaid leave or a voluntary unpaid sabbatical
  • Requiring staff to take pre-booked holiday (even if their travel plans have had to be cancelled), or to take annual leave in accordance with an agreed schedule (eg by department)
  • Reviewing benefits (we would not encourage interfering with medical benefits or health insurances at this time). Any employer pension contribution 'holidays' would require very careful consideration and consultation with Trustees where appropriate and staff (or their representatives) before being implemented
  • Stopping overtime
  • Freezing bonuses
  • Freezing pay reviews
  • Reduced hours working with a pro-rated reduction in pay
  • Reduced remuneration without reducing hours: if this measure is introduced, it will need to be led from the top and the economic reasons for doing so clearly communicated to staff after careful analysis (and sufficient explanation) of the organisation's financial position
  • Voluntary retirement
  • Voluntary redundancy

The above list isn't exhaustive and reflects longstanding and well understood alternatives to redundancy in normal times. Against the backdrop of a public health emergency impacting on all employers, it may well be that novel measures are devised. If your business comes up with any innovative solutions which you would like to share, please email us at This email address is being protected from spambots. You need JavaScript enabled to view it..

Bermuda: Economic Substance Industry Notice

The Office of the Registrar of Companies released an industry notice on 20 March 2020.

The notice states that the Registrar will take all appropriate circumstances into account in assessing compliance with the Economic Substance Act 2018 (as amended) (the “Act”), the Economic Substance Regulations 2018 (as amended) (the “Regulations”) and the principles set out in the applicable Economic Substance Guidance Notes (as amended) (the “Guidance”) (hereinafter the Act, the Regulations and the Guidance Notes, collectively referred to the “ES Legislation”).

As Bermuda responds to the effect of COVID-19, the Registrar acknowledges that business continuity is challenging and as such, where meetings or other similar compliance measures are not possible due to necessary travel or quarantine restrictions, this may be taken into account. The Registrar did advise that, as with all information evidencing compliance, entities should keep careful records of all such circumstance and should continue in good faith to ensure that ongoing compliance with the economic substance requirements as set out in the ES Legislation.

Please contact Natalie Neto or Melanie Fullerton to discuss any queries in relation to the economic substance requirements in Bermuda and how they may impact your business.

COVID-19 Implications for Economic Substance in Guernsey

The rapid deployment of measures to prevent the spread of COVID-19 (Coronavirus) are having an impact on how companies continue to meet their regulatory obligations. Concerns have arisen that those measures, such as restrictions on travel and voluntary and mandatory social distancing, could cause difficulties for companies required to satisfy the economic substance test in Guernsey.

Under the Income Tax (Substance Requirements) (Implementation) Regulations, 2018, as amended, certain companies that are tax resident in Guernsey must satisfy the economic substance test. Companies that are tax resident in Guernsey include companies that are registered, or managed and controlled, in the Island. Part of the economic substance test is for companies to demonstrate that they are directed and managed, and performing core income generating activities, in Guernsey in respect of their relevant activities for economic substance. The di ected and managed part of the economic substance test is separate and distinct from the managed and controlled test used to determine the tax residence of foreign registered companies.

Where companies’ operating practices are adjusted in response to the COVID-19 pandemic, it is expected that the States of Guernsey’s Revenue Service will not treat the company as having failed the economic substance test, if and to the extent that the adjustments are required in order to mitigate the threats from the outbreak. For example, where directors would normally travel to Guernsey to be physically present at board meetings, but to avoid travel or self-isolate, meetings are temporarily held virtually or by telephone, these adjustments should not be regarded as failing to meet the economic substance test.

Guernsey tax resident companies that have adjusted their operating procedures as a result of COVID-19 should clearly record in their books and records the procedures that are being applied, including in board minutes for meetings where directors have not been physically present due to implementation of such measures. If companies intend to hold virtual or remote meetings, they should also check that virtual meetings (including meetings by telephone) are permitted by their Articles of Incorporation. All other normal protocols for meetings should also be observed.

Companies must be mindful of the consequences of any adjustments to their operating procedures in jurisdictions other than Guernsey, which may not take into account the COVID-19 pandemic when assessing the tax residence of companies. The COVID-19 pandemic will also not absolve companies that are in scope of the economic substance requirements from continuing to meet their obligations. Companies should consider alternative arrangements where possible, including appointing alternate directors in Guernsey.

Walkers has a dedicated Regulatory & Risk Advisory Group that can offer legal advice and guidance in connection with all aspects of the Channel Islands’ regimes for economic substance.


Download advisory

Walkers Professional Services COVID-19 Response

We know the pandemic is challenging for all. As you would expect, Walkers Professional Services (“WPS”) puts the health and safety of our people, clients and the community at large first.

We are working collaboratively with clients and industry partners. It is business as usual at WPS with the exception of more staff working remotely than would ordinarily do so under our typical agile working processes.

Office Locations and Business Services
We have implemented working arrangements to protect our staff and communities and we are confident there will be no interruption to client services provided by our teams in each of our global offices. Our remote working capability is robust, well tested and working very effectively.

Business Travel and Meetings
All business and client related travel has been deferred as part of our interim travel protocol. All in-person meetings (for both clients and internal staff) have been moved to take place online, via phone calls and videoconferencing and we will be pleased to arrange these with you as needed. Cayman Islands Government (“CIG”) Services

Postal Services
The CIG announced that international mail services will be suspended between 23 March and 13 April 2020 (see announcement). Along with similar Government service announcements globally, we recommend clients reach out to counter parties directly to request all documents be sent by email.

Both the CIG’s Registrar of Companies (“ROC”) and The Department for International Tax Cooperation (“DITC”) are following Government’s policy and activating business continuity plans during the COVID-19 pandemic (see respective announcements for ROC and DITC).


Click to view advisory

Financial Services Update – Cayman Islands Government

The Cayman Islands Government Ministry of Financial Services (the "Ministry") released an industry advisory on 21 March 2020. The Ministry addressed a number of matters as part of its business continuity plans in relation to the coronavirus (COVID-19) pandemic.

The announcement includes:

Beneficial Ownership Filings Have One Month Extension
The General Registry is giving a one-month extension for beneficial ownership submissions in the face of the COVID-19 pandemic. The extension goes into effect as of Monday, 23 March and will cease on 20 April 2020.

Economic Substance Obligations Continue
The DITC is aware that COVID-19 may impact travel in 2020, which may in turn affect the ability of some entities to hold their board of directors meetings in Cayman during the year but industry is reminded that the directed and managed requirement is only one element of the ES test.

Filings for Entity Changes Extended
Extensions for 30 days will come into effect for notification of changes to directors and officers, to registered offices and amended memorandum and articles of association (including increases in share capital). These extensions to file pertain to changes which occurred on or after 1 March 2020. Filings will not incur penalties before 30 April 2020.

Mutual Funds Regulations Take Effect
The Mutual Funds (Annual Returns) (Amendment) Regulations, 2020 is now in effect after being gazetted on Tuesday, 17 March 2020.

Virtual Assets and Administrative Fines Consultations Extended
The deadlines for responding to consultations relating to (i) the development of a regulatory framework for virtual assets service providers and (ii) the administrative fines regime are extended to 8 April and 6 April respectively.

Click here to view the Ministry's complete industry advisory.


Please contact your usual Walkers contact with any questions.

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