16th March 2020
Author: Dr Michael Frendo
Legal Issues for Entrepreneurs in the Travel and Hospitality Industry arising from the COVID-19 Pandemic
Hoteliers and restaurant owners should bear in mind a number of considerations in the light of the COVID-19 Pandemic. In this short write-up we seek to clarify some aspects of the legal issues arising for employers in the Travel and Hospitality Industry.

I Review your Contracts – See whether Performance of Contractual Obligations is affected

1. It is opportune to immediately review your contractual obligations since, from your end, or from the part of your contractual partners, there may be contractual obligations which cannot be honoured and performance may either be delayed, interrupted or even cancelled. The principle of force majeure refers to unforeseeable extraordinary circumstances which prevents a party from fulfilling a contractual obligation or obligations. It also arises, by way of example, from acts, events or circumstances beyond the reasonable control of the party, including a pandemic or a local public health emergency by inference or direct reference. In English law contracts tend to make reference to 'frustration' rather than to 'force majeure', a doctrine which also applies where a subsequent unforeseen event frustrates the further performance of the Agreement. Force majeure provisions vary considerably from contract to contract since it is open to the parties in an agreement to define and agree which circumstances constitute force majeure. Therefore, it is in your interest to review the force majeure clause in each of your contracts.

Where possible, companies should strive to meet their existing contractual obligations without resorting to invoking force majeure.

II Review your Insurance Cover - and See whether Notifications are required

2. Insurance is another important aspect. It is critical to check your insurance coverage to determine whether your policy applies to situations arising from the COVID-19 emergency. In particular the policy may cover (a) employee costs or compensation (b) third party/public liability and (c) business interruption. Note that you may have specific notification requirements towards your insurer and you need to be ahead of this to ensure that you meet your obligations towards the Insurer in a contract that is considered uberimmae fidei, that is, "of the utmost good faith" between the insured and the insurer. Ensuring to take these proactive measures will help you be prepared for the implications that may arise from the result of the pandemic should it continue for a much longer period of time.

3. In this regard also note that guests who have booked to stay at your hotel may also be covered by their personal travel insurance which could entitle them to compensation for their travel and accommodation costs if they are prevented from travelling because, for example, of a "Government restriction arising from epidemic or pandemic".

4. The Package Travel and Linked Travel Arrangements Regulations, 2018 (S.L. 409.19, the 'Regulations') which give effect to the EU Directive 2015/2302 on Package Travel may apply. The Regulations ensure full refund for the purchaser of a package holiday if there are "unavoidable and extraordinary circumstances which significantly affect the performance of the package occurring at the place of destination or its immediate vicinity and significantly affecting the performance of the package"[1]. The Regulations also cater for "unavoidable and extraordinary circumstances" which cover a situation beyond the control of the party who invokes such a situation and the consequences of which could not have been avoided if all reasonable measures had been taken. The Directive also makes reference to the possibility of termination of the package travel contract at any time before the start of the package due to unavoidable and extraordinary circumstances will significantly affect the performance of the package including "significant risks to human health such as the outbreak of a serious disease at the travel destination."[2] It is apposite to also check if a booking has come through a Tour Operator. Note that EU law continues to operate in the UK even after Brexit during the transition period which, up to now, is the end of 2020.

5. Always remember that to be successful in an insurance claim if you have coverage, you need to show causal link between your loss and COVID-19.

6. The Public Health Act (Cap. 465) gives the Superintendent of Public Health wide powers if a public health emergency is declared. After declaring a public health emergency, any number of measures may be taken in order to reduce, remove or eliminate the threat to public health and this includes the segregation or isolation of any person in any area, in the worst scenario this could also include your hotel. While the law provides that that "(a)ny person may apply to the Superintendent for reasonable compensation for any loss or damage suffered as a result of anything done under this Part" categorically declares that "Compensation is not payable to any person who suffers any loss or damage because: […] the loss or damage caused by a public health emergency".[3]

III Check the situation vis-à-vis Employees

7. If your business has a crisis management plan in place, ensure that the Employees are aware of it and what they have to do to comply with it. This could include, inter alia, an instruction for Employees to keep away from all but essential travel.

8. Start by showing that as a responsible Employer you are aware of the need to take due care of Employees at the workplace. Provide, where possible due to supply restrictions, hand washing materials and gels to keep your Employees safe. Consider partially or fully having the workforce work from home or reduce the number of people in close proximity, where possible. Remember that a COVID-19 case in your establishment will have consequences beyond that of the single Employee.

9. If any Employee is medically certified as having COVID-19, this would be considered and accounted for as sick leave because the employee would not be fit to come to work.

10. The Minimum Special Leave Entitlement (Amendment) Regulations (L.N. 62/2020) have been issued to include quarantine leave which is defined as follows:

"leave to be granted to the employee without loss of wages in such cases where the employee is legally obliged to abide by a quarantine order confining the employee to a certain area or to certain premises as determined by the Superintendent of Public Health under the Public Health Act or by any public authority under any other law."

Quarantine leave has therefore now been qualified as being Special Leave without loss of wages by virtue of this Legal Notice 62 of 2020. This measure had already been adopted by Government for its own employees and is now being extended to the private sector. Employers are requesting not to bear the full burden of this new Special leave. The law does not specify whether the Employer may still request the Employee to work from home during this Special leave when the Employee remains healthy while in quarantine.

11. The amendments to the Minimum Special Leave Entitlement Regulations also do not cover situations where an Employee, on the other hand, disregards instructions to refrain from all but essential travel at this time, and travels nonetheless for leisure, he or she has a weaker case in not having the mandatory quarantine considered as his or her own leave.

12. There may be other cases which are in a grey area, such as when an Employee was already abroad when the crisis arose or when COVID-19 spread to the country where the Employee was subsequent to his travels in that country, or through which he or she was compelled to transit in order to return to Malta. It is unclear which leave applies when an Employee inevitably has to stay away from work to care for family members because of COVID-19.

13. This is a pandemic situation and common sense and a sense of fairness should regulate such grey areas particularly in the interest of Employer-Employee relations. The examination of any Collective Agreement is also opportune and if required, discussions should be held with the Union responsible.

14. Unions and Government must be aware, that many Hoteliers and Restaurant owners may have their business at risk because of COVID-19 and may need to resort to the tools provided by employment law, including but not limited to redundancies, in the interest of retaining their business as a going concern with the aim of not closing down.

IV Be aware of Evolving Aid Packages / Relaxation of legal obligations

15. In this regard keep au courant with developments as they take place. For example, on Saturday 14th March 2020, the Government announced a €100 million aid package to businesses operating in certain sectors which include the tourism and hospitality sectors may apply to your business and among other measures, the local Government has announced the postponement for March and April of provisional tax, VAT, and social security payments and the refund scheme for expenses incurred by businesses which invest in teleworking. If Government owes you payments, these payments to businesses will be accelerated and other financial and non-financial measures may be announced in the coming days and weeks in an effort to ease the impact on the tourism industry.

1] Regulation 11(2), Package Travel and Linked Travel Arrangements Regulations

[2] Article 31, Directive (EU) 2015/2302

[3] Article 17 (1) and 17 (2) (b) respectively of the Public Health Act.

Updated to 14 March 2020 at 20.00hrs.

This a general guidance note and does not constitute legal advice. Specific advice is to be sought for each and every case. We intend to closely monitor the developments and the inevitable legal implications which arise in connection with the COVID-19 global outbreak.

FRENDO LAPIRA LEGAL, 41 St Christopher Street, Valletta VLT 1464
Tel: 21234000.

The Partners on the COVID-19 Legal Issues team are Dr Michael Frendo [michael@frendolapira.com] and Dr Nicola Lapira [

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