Covid
28 Dec
Uncategorized

LEGAL IMPLICATIONS PERTAINING TO QUARANTINE DUE TO COVID-19

QUARANTINE

The Government of the Republic of Lithuania by the ruling No. 207 of 14-03-2020 has announced a quarantine in the territory of Lithuania and the third (full preparation) level of civil protection system readiness from 16-03-2020 00 o’clock until 30-03-2020 24 o’clock (there is a possibility to extend this term).

The ruling sets forth the following requirements for the quarantine (exceptions are also listed in the ruling):

cross-border and domestic movement:

  • aliens are prohibited from entering the Republic of Lithuania;

  • border crossing takes place via several border crossing points listed in the ruling;

  • transit through the territory of Lithuania is limited to the transport means listed in the ruling (from 19-03-2020 00 o’clock only by rail without stop);

  • citizens of the Republic of Lithuania are prohibited from leaving Lithuania, unless they return to their place of residence and go to their place of work;

  • persons returning from foreign countries are obliged to be isolated for 14 days;

  • intensity of intercity and suburban regular (scheduled) connections by passenger transport services shall be limited – only seating positions of at least 1 meter one from another;

  • cruise ship access to Klaipėda seaport is prohibited;

  • movement of goods is not restricted;

 public and private sector activities:

  • in state and municipal institutions, establishments, enterprises managed by state and municipalities, the work is organized and clients are serviced remotely, except for cases when it is necessary to perform respective functions (work) at the workplace. Performance of mandatory emergency functions (works) must be ensured. The private sector is recommended to work in the same form of work organization as the public sector;

  • visiting cultural, leisure, entertainment, sports institutions and physical servicing of visitors is prohibited;

  • all events and gatherings being organized in open and closed spaces are prohibited;

  • activities of sanatoriums, health promotion service and recreation justifys are prohibited;

  • hotel and other premises may be used to isolate persons;

  • activities of catering, restaurants, cafes, bars, nightclubs and other entertainment places are prohibited;

  • activities of shops, supermarkets and / or entertainment justifys and markets other than alimentary is prohibited;

  • beauty services are prohibited;

  • non-cash settlement is recommended;

  • etc.;

organization of the work of educational institutions:

  • education and childcare process as well as educational activities in all educational institutions, day care centres and employment centres are suspended;

organization of work of health care institutions:

  • many requirements. In general, scheduled operations, dental services, consultations, etc. are postponed;

 organization of work of social service institutions:

  • several requirements.

It is recommended that all religious communities operating in Lithuania refrain from organizing religious ceremonies in order to avoid public gatherings.

PERFORMANCE OF AGREEMENTS

Performance of contracts may be obstructed during the quarantine and the following period. In such cases, the contracting parties may avail themselves of the following legal measures:

  • Force Majeure;

  • constraint on contract performance;

  • state actions.

Force Majeure

A party shall be exempt from liability for non-performance of a contract if it proves that the contract was not performed due to Force Majeure circumstances.

Force Majeure are the circumstance due to which a party fails to perform a contract, and which it could not control and reasonably foresee at the time of the conclusion of the contract, and could not prevent their occurrence or consequences thereof. The case law establishes one more obligatory condition for the circumstances to be considered Force Majeure: the party must not have assumed the risk of occurrence of those circumstances or their consequences.

An absence in the market of goods needed for the performance of the obligation, or a lack of necessary financial resources on the part of the party, or a breach of obligations of the debtor’s counter-parties shall not be considered a Force Majeure.

If these circumstances occur and have negative effect, it is important to notify the other party in reasonable time (usually it is better immediately) of their occurrence and impact on the performance of the contract.
Force Majeure does not automatically entitle a defaulting party to terminate the contract and does not cancel the right of the other party to terminate the contract or to suspend its performance of or to claim a payment of interest, unless otherwise is stated in the contract.

Certificates of the Chamber of Industry and Commerce may be issued regarding Force Majeure. They may also be issued by associations of the relevant industry sector. Although not mandatory under the law of the Republic of Lithuania, it may be useful for You as provide additional evidence in the event of litigation or arbitration with another party.

Constraint of contract performance

Constraint of (hardship in) contract performance set forth in Article 6.204 “Performance of contractual obligations under changed circumstances” of the Civil Code may be or become relevant in the situation at issue.

Where the performance of the contract becomes constrained, the aggrieved party shall have the right to apply to the other party for a modification of the contract. This request must be substantiated and made immediately after the occurrence of constraint of contract performance. A request for a modification of the contract shall not in itself confer on the aggrieved party a right to suspend performance of the contract. If the parties do not agree within a reasonable time on the modification of the contract, both shall be entitled to apply to court.

State actions

A party to a contract is not subject to civil liability if the party has failed to fulfill its obligations due to state actions – mandatory and unforeseen actions (acts) of state institutions that render the obligation impossible and which the parties had no right to contest.

 

Which solution to choose?

It depends on the terms and conditions of your contract, the factual circumstances and their effect and the applicable law.

CONCLUSION OF AGREEMENTS REMOTELY

During the quarantine it is advisable to conclude contracts without arranging a physical meeting for signing. This is possible using a qualified electronic signature. If there is a written agreement between the contractors on the use of a simple (non-qualified) electronic signature and it is possible to save the agreement on a durable medium, then a simple electronic signature may be used as well. In these cases, electronic signatures will have the same power as a regular written signature. If the proper use of a simple electronic signature is not possible, it is worth considering signing a contract by conventional means of telecommunication or IT and later, when possible, formalizing the contract in a non-questionable manner.

INSURANCE

Although Your insurance contracts regarding termination of activities due to epidemics may be not recognized as an insured event, it is worth reviewing your insurance contracts. Inter alia, business interruption, credit insurance, third party liability, travel insurances agreements may be relevant.

MEETINGS AND SITTINGS

Business meetings

Restrictions on physical contact between individuals (except for necessary exceptions) must be enforced in during the quarantine. Instead, real-time remote business meetings and decision-making may be organized by electronic means or in written or other durable media.

Sittings of management and supervisory bodies, meetings of shareholders and other stakeholders

There is usually no difficulty in organizing sittings of management and supervisory bodies (boards, supervisory boards, etc.) by means of remote, IT communications, in organizing voting and in taking of decisions in writing (signing is possible by electronic signature as well).

Shareholders’ (other stakeholders’) meetings may be organized without a physical participation of shareholders (other stakeholders) – by preparing ballot (voting) bulletins in advance and asking shareholders (other shareholders) to fill them out and deliver them before the meeting. Special requirements may apply to publicly traded companies.

It is advisable to consider scheduling a meeting for a later date.

LIMITATIONS OF WORK OF COURTS, NOTARIES, BAILIFFS AND ETC.

During quarantine work of many institutions and enterprises is restricted.

Limitation of work of courts

In the letter dated 16-03-2020, the Judicial Council recommends, inter alia, to cancel all hearings in cases being heard in the oral procedure, scheduled during the quarantine, except in non-postponable cases established by law, and to schedule (postpone) them after the end of the quarantine regime. It is also recommended perform a preparation for litigation remotely by written procedure and a taking of procedural decisions. Many courts follow this recommendation, often offering a written procedure for hearing disputes.

During the quarantine period, access of persons to court premises is restricted and a direct provision of services to persons is suspended.

Limitation of work of notaries

By order No. 1R-76 of 16-03-2020 of the Minister of Justice notarial offices in Lithuania shall not perform notarial acts and shall not accept persons from 00:00 o’ clock 16-03-2020 till 19-03-2020.

An amendment to this order, which will come into force on 20-03-2020, amending restrictions on the procedure of works of notaries is adopted. According to it, notarial acts shall be performed only in the premises of notarial offices; notarial offices shall accept only persons who have previously registered remotely (by telephone or e-mail); the notary may refuse to register the person, disallow him to enter the premises of the notarial office, and not to perform notarial acts and (or) render services, if the notary has doubts about the person’s state of health, non-observance of necessary preventive measures and a possible health risk; only notaries, notary’s office employees, persons for whom the notarial acts will be performed, their representatives may enter the premises of the notarial office; all possible actions necessary to prepare for the notarial act must be carried out remotely (by telephone or e-mail).

Limitation of work of bailiffs

By order No. 1R-76 of 16-03-2020 of the Minister of Justice bailiffs’ offices in Lithuania shall not accept interested persons, shall service them in remote manner (by telephone or e-mail). Bailiffs shall postpone enforcement actions requiring a direct participation of the bailiff, assistant bailiff, parties to the enforcement proceedings and other persons.

Limitation of work of justify of Registers

Clients are served only in the 10 largest customer service units in critical and urgent cases and only by pre-registering by phone in advance.

Limitation of tax administrator’s activities

The State Tax Inspectorate (STI) announces that its service units are closed and STI services are provided only remotely.

LABOR RELATIONS

Quarantine may disrupt work of employees in their normal workplaces; it is necessary to ensure that an employee is not at work if his presence or work poses a risk to the health and safety of other employees; the employer may be disrupted and he may no longer (for at least a limited period) be able to offer his employees works agreed in employment contracts.

Remote work

Remote work is a form of work organization or a way of carrying out work, where the employee for a whole or a part of his working time performs all or part of the work functions assigned to him on a regular basis in the order agreed with the employer outside his place of work, including through the use of information technologies.
The law stipulates that the remote work shall be ordered at the request of the employee or by agreement between the parties and that the employee’s refusal to work remotely shall not be a valid reason for termination of the employment contract or change of working conditions.

The Government’s ruling establishing the quarantine requires public sector entities and recommends private sector entities to organize a remote work (exceptions apply). There are opinions that on that ground and in accordance with general provisions of the Occupational Safety and Health Law as well as internal working procedures, unless there are exceptional circumstances requiring otherwise, the employer must issue an order requiring employees to work remotely, whether or not the employee agrees (of course, a receipt of employees’ consents is recommended).

From 19-03-2020, an amendment to Article 49 of the Labor Code came into effect, obliging the employer to offer a reasoned written offer to the employee to work remotely, when all of the following conditions exist: (1) the Government has declared an emergency situation or quarantine; (2) the objective is to protect the safety of health of employees and third parties; (3) the health of the employee poses a risk to the safety of other employees.

The employer’s offer to the employee to work remotely must state the reason, the deadline and the legal basis for the offer of remote work. The employee must inform the employer in writing of his consent to remote work within one working day. If the employee refuses to work remotely or fails to respond to the employer’s offer to work remotely, the employer shall dismiss the employee from work in a time not exceeding one working day, disallowing him to work and not paying him a salary. The employer’s decision to dismiss the employee must state the length of the dismissal, the reason and the legal basis for the dismissal.

Downtime

If, for objective reasons, the employer is unable to provide the employee with the work agreed in the employment contract and the employee does not agree to another job offered to him, the employer shall declare the downtime for the employee.

In the calendar month in which the downtime was announced, the employee must be paid a salary at least not lower than the minimum monthly salary (MMS) approved by the Government. Without prejudice to this rule, in the case of downtime, the employee shall be remunerated on the basis of his average salary (AS):

  • for the 1st day of downtime – a full at AS;

  • for the 2nd and 3rd days of downtime – 2/3 of his AS;

  • for the 4th and subsequent days of downtime – 40% of his AS.

An amendment to Article 47 of the Labour Code came into force and effect on 19-03-2020, conferring to the employer the right to declare downtime to an employee or group of employees also in the case, when the Government declares a state-level emergency situation or quarantine and as a result, the employer cannot provide the employee with a work agreed in the employment contract. Unlike in case of a regular downtime, in this case the employee may not be required to come to the workplace.

During the downtime, the employer shall pay the employee a salary not lower than MMS, when the employment contract is full time. Part of costs of the salary for downtime incurred by a private sector employer (with exceptions) shall be reimbursed at the rate and in the manner prescribed by the Employment Law (see section Subsidies for employers (salaries)).

The employer may also announce a partial downtime to the employee by reducing the number of working days per week (at least two working days) or the number of working hours per day (at least three working hours). In this case, the salary shall be paid for working time, and the downtime shall be paid in proportion to the MMS.

Partial work

Partial work is a work time which is shorter up to half the working time quota of an employee, whereby the diminished salary is compensated to the employee by paying a part-time work pay-out in accordance with the Law on Unemployment Social Insurance. Partial work may be set forth when, for important economic reasons, objectively existing in a particular area or sector of the economy and recognized as such by the Government, the employer is unable to provide work to the employees and there exists prerequisites for the dismissal of the group of employees. The basis for the employer to determine partial work is the decision of the territorial branch of the State Social Insurance Fund Board regarding the granting of partial work pay-out.

The Government has submitted to Seimas for consideration a draft amendment to the Law on Unemployment Social Insurance, which proposes to establish that insured persons, whose employer establishes part-time work, shall also be entitled to a partial work pay-out, when the Government declares a state-level emergency situation. The employee shall apply to the Territorial Branch of the State Social Insurance Fund Board for granting partial work pay-out by submitting a reasoned request for granting a partial work pay-out, the planned commencement of partial work, which may not be earlier than 30 days from the date of application, and its end.

 

Ensuring the safety and health of employees

Employers must provide their employees with safe and healthy working conditions in all work-related aspects. It is also the duty of the employer to ensure that suitable and sufficient protective equipment are used: personal protective equipment, disinfectants, etc. Employees are entitled to refuse to work if there is a risk to their safety and health of workers – when the working environment is harmful and (or) dangerous to health or life.

It may be argued that presence of potentially COVID-19 infected persons at the workplace, together with other employees, constitutes a health or life-threatening and (or) hazardous work environment. This not only imposes an obligation on the employer to ensure that persons who have returned from abroad worked remotely, but also the right of other employees to refuse to work with other potentially COVID-19 infected persons. The justification for an employee’s refusal to work should be assessed on a case-by-case basis.

STATE SUBSIDIES FOR BUSINESS

In the quarantine situation, the state has provided certain financial support measures for business.

Subsidies for employers (for salaries)

From March 19, 2020, the amendment to Article 41 of the Employment Law came into force and effect, stating that employers, who retain job places for employed persons who are announced downtime pursuant to Clause 2 of Part 1 of Article 47 of the Labour Code (due to an emergency situation or quarantine announced by the Government), shall be paid a subsidy for salaries on the salaries imputed for those employed persons. The amount of the subsidy shall be calculated as a percentage of the salaries of the employed person and shall be 60 percent or 90 percent, when restrictions are imposed by the Government in sectors of economic activities, but not exceeding MMS. Such subsidies for salaries are payable for up to 3 months.

Pay-outs for self-employed persons

The Employment Law was supplemented by Article 5(1), which allows a self-employed person to apply to the Employment Office for granting and payment of pay-out from the Guarantee Fund in the event of announcement by the Government of emergency situation or quarantine. This pay-out in the amount of one minimum consumption needs for the current year, i. e. EUR 257, shall be paid to a person monthly. It shall be paid only if the self-employed person actually pursued an activity before the date on which the pay-out was claimed and has paid all required social security contributions for a period of at least 3 months during 12 months prior to the date of declaration of emergency situation or quarantine by the Government and does not work under employment contract or on the basis of legal relations comparable to labour relations.

TAXES

Deferral of filing of tax returns and payment of the personal income tax

STI in the order No. VA-24 of 18-03-2020 established that returns on personal income tax must be filed and that income tax assessed therein must be paid by 01-07-2020.

Deferral and arrangement of taxes

STI announces that in the nearest future, subject to the restrictions / prohibitions imposed on performance of activities, it will name the types of economic activities, the taxpayers engaged into which likely had a direct adverse effect. Also, STI should announce the taxpayers who will be subject to the aid measures – recovery of the declared taxes will not be performed, relief from default interest will be applied and, having concluded the tax loan agreement (TLA), the interest will not be charged. According to STI, these payers will also be subject to analogous measures to facilitate the payment of State social insurance contributions.
It is anticipated that once the TLA has been concluded, taxes may be deferred until the end of the emergency situation and continue to be paid according to an agreed schedule (unless the taxpayer requests a more intensive payment).

STI notifies that if entrepreneurs have tax debts that arose prior to announcement of the quarantine, but are currently unable to pay them, they should contact the STI for TLA, and those who have already entered into such agreements may request a change in the TLA schedule and terms and conditions.

If the enterprise has already applied for a deferral of contributions or has concluded an agreement with Sodra on deferral of employees’ social security contributions and is currently unable to pay contributions according to the established schedule, the contributions’ deferral agreement will not be terminated – businessmen should contact Sodra within one month from a cancellation of the emergency situation in the country for a change of the terms and conditions of the deferment agreement and of the schedule.

With the adoption of the amendment to the Tax Administration Law, entrepreneurs will now also be able to enter into a TLA on personal income tax.

Non-charging of default interest

STI announces that STI, Sodra and Customs will not apply recovery actions (except for customs duties) and will not charge default interest to taxpayers who are adversely affected (according to the list), with respect to taxes a payment term for which is due after 16-03-2020 (quarantine announcement). According to STI, this principle will remain in effect until the emergency situation is lifted in the country.

Advance Corporate Income Tax

STI announces that it has postponed the deadline for filing returns and paying the advance corporate income tax until 30-03-2020.
STI reminds that enterprises have the right once a year to change the method of payment of the advance corporate income tax: to change the method of calculating the advance profit tax on the results of the previous year to the method of the expected results. In order to change the method of calculating tax, an enterprise must indicate this when filing an advance tax return. If an enterprise changes the method of payment of an advance tax to the expected results, a decrease in the profit of the enterprise may also reduce, or eliminate, the amount of the advance tax payable.

All companies that calculate a tax loss during a tax period are provided with the opportunity to carry forward tax losses to other tax periods in accordance with the procedure established by the Law on Corporate Income Tax and to reduce the taxable profit calculated in those tax periods.

Exemption from filing tax return
STI states that taxpayers may be exempt from filing tax returns and (or) other documents specified in legal acts, when they temporarily sustain from activities (do not enter into and do not perform transactions; do not perform settlements with economic entities; do not receive income other than interest on funds held in taxpayers’ bank accounts).
Deferral of payment of social security contributions
Sodra states that if a person is unable to pay the social security contributions on time, they may be deferred. To do this, one must apply to the relevant local department of Sodra. The recovery of social security contributions shall be suspended as from the date on which the application is submitted with all necessary documents.

OTHER SUPPORT MEASURES

In the quarantine situation, the state also provided other support measures pertaining to finances.

Assistance for implementation of projects being financed from EU funds

The Ministry of Finance announces that it is preparing an Interim Arrangement that is going to define facilitations for implementation projects pending the country’s difficult COVID-19 related situation.

The European Commission is preparing legislative changes that will provide Member States with flexibility in redistribution of funds and wider possibilities to access investments from European Regional Development Fund.

Postponement of credit payments

From 19-03-2020 Article 22 of the Law on Credit Related with Real Estate was amended. It provides for a deferral of payment of credit instalments, other than interest, by the recipient of the credit for a period specified in the application which shall not exceed 3 months, subject to the existence of all the following conditions:

  • the consumer credit recipient or his spouse becomes unemployed or loses at least 1/3 of his income;

  • the borrower no longer meets the statutory creditworthiness assessment and responsible lending requirements pertaining to the ratio of the borrower’s average installment amount under credit and other contracts with his income;

  • the credit agreement was concluded before the entry into force and effect of the amendment law, i. e. by 18-03-2020.

From 19-03-2020 the Law on Consumer Credit was supplemented with Article 181. It provides for a deferral of payment of credit installments, other than interest, by the recipient of the credit for a period specified in the application which shall not exceed 3 months, subject to the existence of all the following conditions:

  • the marriage of the consumer credit recipient terminates or the spouse of the consumer credit recipient dies, or the consumer credit recipient or his spouse becomes unemployed or loses at least 1/3 of his income, or the consumer credit recipient is in the prescribed procedure recognized as incapacitated or partially incapacitated for work, or the consumer credit recipient the borrower performs a permanent compulsory initial military service;

  • the borrower no longer meets the statutory creditworthiness assessment and responsible lending requirements pertaining to the ratio of the borrower’s average installment amount under credit and other contracts with his income;

  • the credit agreement was concluded before the entry into force and effect of the amendment law, i. e. by 18-03-2020.

Sickness pay-outs

From 19-03-2020 the Sickness and Maternity Social Insurance Law was supplemented with Article 111.

It provides for pay-outs to natural persons in connection with the emergency situation or quarantine announced by the Government. Pay-outs are foreseen for persons who:

  • in the course of performance of their professional functions, in which a contact with a person suffering from a serious transmissible disease is unavoidable (necessary), have become ill with that disease;

  • who have a serious chronic illness included into the list and who, while performing functions of their occupational activities during the emergency situation or quarantine announced by the Government, are at risk of becoming ill with a transmissible disease and becoming temporarily incapacitated for work due to that, and who have no possibility to get use of remote work or their employer has not declared their downtime for that situation;

  • if a child being educated in a pre-school, pre-primary or primary education program, as well as a disabled studying person under 21 years of age, needs to be supervised, have no possibility to get use of remote work or their employer has not declared their downtime;

  • etc.

PROCUREMENTS

Facilitation of public procurements

An amendment to the Law on Public Procurement entered into effect on 19-03-2020. According to it:

  • the contracting authority is entitled not to apply the statutory grounds for exclusion from the contractor from the procurement procedures only in exceptional cases, where it is necessary to ensure protection of the public interest, including the protection of public health and the environment;

  • in the case of simplified procurement and in certain cases of international procurement performed by way of non-announced negotiations, the contracting authority may, in the cases defined in the amendment, conclude the procurement agreement without compliance with the requirements established for requirements applicable for stages and other requirements for procurement procedures and content of the procurement contract.

Interpretation by the Public Procurement Office regarding modification of procurement contracts
The Public Procurement Office (PPO) announced several recommendations on modification of procurement contracts. The PPO specifies that changes to procurement contracts (terms, quantities, volumes, prices) shall be made in line with procedure established in the contract and (or) in accordance with the Law on Public Procurements, and that termination should be limited to exceptional cases where it is not possible to save the contract. The PPO explains in detail various options for modification of procurement contracts.
According to PPO, if the contract is not enforceable in an emergency situation and becomes non-relevant when unforeseen circumstances disappear, it is likely that such a contract will have to be terminated. Stopping supply chains, announcing quarantine and activity restrictions due to corona-virus, contracts should be terminated in the least painful way possible for both parties.

 

DATA PROTECTION

The European Data Protection Board and the State Data Protection Inspectorate (SDPI) recognize that the General Data Protection Regulation (GDPR) provides for the legal grounds to enable the employers and the competent public health authorities to process personal data in the context of epidemics, without the need to obtain the consent of the data subject. This applies for instance when the processing of personal data is necessary for the employers for reasons of public interest in the area of public health or to protect vital interests (Art. 6 and 9 of the GDPR) or to comply with another legal obligation.
According to the SDPI, it is possible to process internal sets of personal data about employees, students, etc. by including the following information:

  • whether the person was traveling to a ‘country of risk’;

  • whether the person was in contact with a person who traveled to a ‘country of risk’ or is suffering from COVID-19;

  • whether the person is at home due to quarantine (without giving a reason) and the quarantine period;

  • whether the person is ill (without specifying a specific disease or other reason).

 An employer or other data controller shall have the right to ask their employees or visitors whether they have symptoms of COVID-19 or whether they have been diagnosed with COVID-19. The right of access to this information does not mean that employers or other data controllers can document the information received or compile relevant data files. Employers may also process such personal data related to the employee as the fact of opting for remote work and other restrictions on the employee’s work.
 

SDPI states that any personal data processed by employers or other data controllers must be provided to public authorities for public health purposes in accordance with GDPR requirements. Requests for personal data must be assessed on a case-by-case basis, for example, where statistics are requested, the controller (data processor) should not provide data identifying the particular data subject.

Where global measures to control the current situation such as restriction of missions and meetings, cancellation of events, ensuring certain hygiene requirements are in place, data controllers should not violate the right of their employees or other data subjects to the protection of personal data, for example, they should not be required to provide personal data which are not necessary to ensure the execution of the procedure established. Data controllers should refrain from collecting temperature readings of employees or visitors, medical records, or etc. This cannot be considered as an obligation of the employer. The data controller should take active steps to inform data subjects about symptoms, potential risks, ways of managing them, measures to be taken, opportunities for remote working, the duty of employees to report on COVID-19 or similar symptoms, etc.