NEWS & ANALYSIS FMJ.CO.UK
LEGAL VIEW - WORKPLACE
6 MAY 2020
BDO REPORT SAYS FM HAS STRATEGIC ROLE
TO SUPPORT BUSINESSES THROUGH CRISIS
The Facilities Management Profession will play an integral part to help businesses
back to commercial viability finds the latest edition of BDO’s M&A Facilities
Management report which examines the COVID-19 situation facing the FM industry
and provides an overview of the key M&A themes in 2019.
The report warns that the pandemic will continue to have disruptive and
transformative consequences for companies and the people they employ, with
many buildings moving into shutdown mode. It says that the most immediate
impact of COVID-19 for many will be a significant drop in sales and the key point is
preserving cash. However, it also adds that the FM profession has an essential role
to play during the pandemic and is immensely proud to see collective e ort across
the industry in stepping up to the challenge, providing mission critical support.
Although the year started well, with M&A market underpinned by robust
valuations and buoyant financing conditions, the e ects of COVID-19 will lead to
an inevitable slowdown in M&A activity in the immediate term. In connection with
both existing deals and new deals, the report expects that there will be critical
questions around target valuations, which will require the parties to be flexible
about purchase price and structure.
Satvir Bungar, MD and UK Head of Facilities Section at M&A Advisory commented:
“Some of the larger FM operators are reporting a mixed impact on their activities,
signalling a significant downgrading to profits because of the turbulence and
uncertainty caused by the COVID-19 outbreak. Similarly, many of the smaller
operators are struggling to provide their clients with solutions.”
But he adds that: “Despite the various challenges, this is not a repeat of 2008 as
underlying conditions for M&A remain positive. We are using this time to prepare
and help our clients to be robust and ready for a sale later down the line.
“When buildings fully reopen, there will be a heightened awareness around
hygiene, food safety, HVAC, and need for new maintenance strategies to reduce
the risk of COVID-19 transmission. FM professionals will be the first responders to
make sure people feel secure about going back to their working environments. We
hope all this starts to change attitudes towards the importance of o en overlooked
management of facilities at Board level and the increasing need to form e ective
strategic partnerships with FM operators.”
COMPASS GROUP CLOSES OVER HALF
OF ITS BUSINESSES AS A RESULT OF
COUNTRY LOCKDOWNS
In the latest trading update from Compass Group, the multinational food and
support services company has seen 55 per cent of its businesses closed due to
country lock downs as a result of the coronavirus pandemic.
The Group’s Sports & Leisure division is 100 per cent closed, while its Education and
Business & Industry divisions are 75 per cent closed. Only the company’s Healthcare and
Defence, O shore and Remote divisions remain 100 per cent in operation.
Compass reported it is proactively mitigating its cost base by around £450 million
per month by taking a wide range of actions including limited use of variable forms of
in-unit labour such as over-time, contractors, and temporary workers, and redeploying
or furloughing much of the fixed element of its in-unit labour, reducing salary, hours or
furloughed above-unit overhead employees. The Chief Executive has also temporarily
reduced his salary by 30 per cent, whilst the Group Board and Executive Committee
have temporarily reduced their fees and salaries by 25 per cent.
The group added in its statement its purpose is to care for the communities it serves.
Compass Healthcare teams around the world have mobilised resources at scale and
with pace to allow the business to support governments and Healthcare clients. It
is also preparing and delivering food to critical and essential workers, the elderly,
vulnerable and those in financial distress, o en working in partnership with grassroots
support organisations.
Compass added the business has performed in line with the expectations set out in
its Coronavirus Trading Update of 17 March 2020. Organic revenue growth for Half Year
2020 was c.1.6 per cent, within the 0-2 per cent expected range.
COVID-19 AND
RIDDOR REPORTING:
COULD EMPLOYERS
BE PROSECUTED?
By Kelly Mansfi eld, Community
Editor, International Workplace
The HSE has clarifi ed that, in certain circumstances,
employers must report new cases of COVID-19 under the
Reporting of Injuries, Diseases and Dangerous Occurrences
Regulations 2013 (RIDDOR), which require employers and
other people in charge of work premises to report and keep
records of certain incidents at work. For COVID-19 cases, this
can include an unintended incident at work that has led to
someone’s possible or actual exposure to coronavirus; where
a worker has been diagnosed with COVID-19 and there is
reasonable evidence that it was caused by exposure at work;
and if a worker dies as a result of occupational exposure to
coronavirus.
This could have signifi cant ramifi cations for organisations
such as hospitals, supermarkets, waste and other key
frontline facilities, where work is ongoing and the issue of
the provision of personal protective equipment is paramount,
and sometimes lacking. So, what should employers be doing
diff erently?
Says Pam Loch, Solicitor and Managing Director of
Loch Employment Law: “The concern for employers with
COVID-19 cases will be the ambiguity in the context of the
current virus as, due to a lack of testing, it is not possible
to establish whether someone has or had the virus and
whether the worker was exposed to coronavirus at work due
to how many cases of COVID-19 there are predicted to be. For
certain industries, such as supermarkets, it will be diffi cult
to determine where the employee contracted the virus and
the business will need to decide whether there is reasonable
evidence.
“Companies should review each case on an individual basis
as the HSE can take enforcement action against businesses
that are not compliant with the guidance, both for the
incident itself and how the reporting is handled. If you think
any cases are reportable, you must make a report under
RIDDOR.”
The HSE has published specifi c guidance for businesses,
including fi t testing of face masks to avoid transmission
and implementing social distancing measures. HSE can also
identify employers who are not taking action to comply
with current Public Health England guidance and issue
enforcement notices or specifi c advice to employers.
Protecting employees through the provision of PPE is a
hugely contentious issue, with daily reports on the lack
of suffi cient protection being provided to front-line staff .
If it could be proven that this lack of protection led to an
employee’s contraction of Coronavirus, or even the death of
an employee, could employers be facing health and safety or
even corporate manslaughter convictions?
Kathryn Gilbertson, Partner, Regulatory, at Greenwoods
GRM, says:“It’s not beyond the realms of possibility that the
HSE will investigate individual RIDDOR reports for COVID-19
infection and bring proceedings against employers for
exposing their employees to the risk (actual or possible) of
COVID-19. Whether there will be a corporate manslaughter
prosecution depends on the facts of the case, the extent of the
evidence and the CPS’ review of the prosecution fi le.
“I’m not aware that the police and HSE are conducting any
corporate manslaughter investigations currently, but from
the press coverage there appear to be several deaths involving
medical staff and care workers who worked with insuffi cient
or no PPE, such that they could have become infected in the
workplace. So, maybe it’s a watch this space?”