May 2020
On March 31, 2020 the Mexican Government issued a health emergency declaration (emergencia sanitaria por causa de fuerza mayor) over SARS-CoV2 (COVID-19) coronavirus outbreak and issued stay-at-home and shut-down orders. Although these orders have not been lifted as of today, so this Alert will discuss tips and actions that employers and organizations should proactively engage to be prepared once such orders are lifted especially since new guidelines have been issued by various levels of government creating a complex regulatory maze for employers to navigate in
preparation for reopening.
According to the International Monetary Fund; this pandemic -dubbed by the IMF as the “Great Lockdown”1– is the “…the worst recession since the Great Depression, and far worse than the Global Financial Crisis.”2 But as days and months go by, countries and organizations across the globe are preparing for their comeback. The Great Reopening.
Although it is critical to make a thorough assessment of the situation and come up with a plan tailored made to your organization’s specific needs, everyone can benefit from the following tips and proposed actions:
WHAT WE LEARNED?
- Identify and understand the weaknesses and strengths of your business during the crisis.
- Understand if your business was sufficiently prepared to cope with the coronavirus outbreak and the consequences it entailed (e.g., shut-down or slow-down orders, telecommuting, etc.).
- Brainstorm with your team what are the takeaways from the crisis and what innovations can come out of it. Innovations do not necessarily have to be disruptive. Incremental innovations are also a good thing; small but smart adjustments and changes can go a long way.3
HOW TO MOVE FORWARD?
To use a football analogy, you need to huddle with your team, prepare a game plan and call the next play.
You can resume business as usual or you can take advantage of the unprecedented crisis to adapt and innovate. In any scenario, addressing the issues in the prior section can be a good starting point to make informed decisions. There are many aspects you might need to consider based on the specifics of your business but here we will focus on some legal tips that can get you started on the legal aspects of your business:
- It is impossible to predict the next crisis but gaining a good understanding and hindsight of the current crisis will help you be better equipped to navigate the next one -whether it is a global pandemic or otherwise.
- Whether your organization was classified as an “essential” business or not, prepare and keep a file of what actions were taken and what actions should have (or shouldn’t have) been taken during the crisis. This will help you navigate the next crisis.
- Plan communication to employees to get back to the office and be prepared to answer the next questions:
- What if employees refuse to go back to the office?
- Can employees be ordered to wear facemasks and get tested for Covid-19 as a condition to go back to the office?
- Are there any regulations that should be complied with prior to going back to the office such as social distancing rules, staggered work shifts, sanitization protocols, use of face masks, etc.?
- Identify and assess what will happen with employees who were subjected to salary reductions or employees who were furloughed.
- Many firms realize that work-at-home arrangements during the pandemic were more productive and climate friendly so you might want to consider the following:
- Assess if telecommuting was a good thing during the pandemic and if it can be implemented going forward.4 You can test the waters with a pilot.
- Update your telecommuting/home office policies and arrangements.
- Assess your need for leased office space especially if telecommuting will be implemented. Review your lease arrangements to understand your contraction rights.
- Assess contractual relations with your vendors and customers.
- Identify who suspended/defaulted compliance with their contractual commitments due to the coronavirus outbreak and identify next steps to resume operations with them.
- Understand if your firm suspended/defaulted compliance with its contractual obligations due to the coronavirus outbreak, identify the legal consequences that may result from such default/suspension such as penalties, termination rights, termination of exclusivity rights, to mention a few.
- Understand your payment obligations in foreign currency and the dollar/pesos fluctuation. Many businesses in Mexico undertake payment obligations in US dollars but their cash flow is in pesos.
- Identify if there are federal or local tax breaks available and if your organization is eligible for such benefits.
BE PREPARED TO MAKE ADJUSTMENTS
It is not possible to come up with a perfect plan to get back on track so be ready to adapt and adjust as needed. The coronavirus outbreak presented unique and unprecedented circumstances and its long-term effects are yet to be seen in the years to come, so getting back to normal -or a new normal- will be a challenge and will take time.
CONCLUSION
Just like in football, your business is not the huddle. If you never break the huddle, if you never run the plays, you can never win the game.
This document was prepared by the team of García Mingo & Tejedo, S.C. We can work with your organization in creating content and strategies in preparation for your reopening.
FOR MORE INFORMATION, PLEASE CONTACT:
Juan Tejedo, juan.tejedo@gmt.mx
Alfonso García-Mingo, a.garciamingo@gmt.mx
Carlos Acle, carlos.acle@gmt.mx
1 https://blogs.imf.org/2020/04/14/the-great-lockdown-worst-economic-downturn-since-the-great-depression/
2 Idem
3 https://www.theatlantic.com/ideas/archive/2020/04/safely-reopen-make-workweek-shorter/610906/
4 https://www.fastcompany.com/90504163/twitter-will-let-employees-work-from-home-permanently-will-other-companiesfollow?
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