The upcoming election in South Africa may pose a risk to the operation of businesses throughout the country. As seen in recent years, elevated political tensions can very quickly escalate into civil unrest. This may result in rioting, looting, arson and other violent acts, which could force businesses to close, lose sales or suffer property damage. Webber Wentzel experts delve into two key areas for businesses, particularly those in the retail sector, to fortify during this period: insurance claims and employment considerations.
Insurance claim considerations
By
Maria Philippides,Sandra Sithole,
Justin Malherbe and
Jodi Hardy.
The volatility that could arise due to civil unrest could disrupt business operations and cause businesses to suffer significant financial losses which may not be covered by the business' ordinary insurance.
Usually, the South Africa Special Risks Insurance Agency (SASRIA) provides cover for business interruption losses which occur as a result of strikes, riots, civil commotion, public disorder and terrorism. Accordingly, now is the time for businesses to ascertain whether they have SASRIA cover for property damage and business interruption, and the extent of that cover.
If businesses anticipate perils outside of the scope of the SASRIA cover or anticipate losses above the limit thereof, it is best to seek legal advice as to the full insurance needs of the business during this time.
There are circumstances where, during a period of civil commotion, businesses may not suffer actual physical damage (which is usually a pre-requisite for business interruption cover). However, the civil commotion may curtail continued business operations and impede employees' access to the premises. This could be due to the blockading of roads by protestors, rubble or fire. Many insurers offer additional cover for this, usually called prevention of access cover, which is over and above the SASRIA cover. The insurance policy wording determines if you're covered, and the extent of cover. Some important, relevant considerations are:
- If and how damage is defined.
- Whether access to the premises must be entirely prevented or if it is sufficient that access is merely hindered.
- If there are any geographical limitations to cover.
- If there is a monetary threshold for accessing this cover.
- If there is a monetary or time excess (for example if the first seven days of business interruption losses are for the business' account).
Employment considerations:
By Lizle Louw and Kate Collier
Despite South Africa's election day being a public holiday, many employers (such as those providing essential services and the retail industry) will still operate/provide services on this day. Adjusting operations may be necessary to allow employees to vote as well as to cater for possible election-related disruptions.
To the extent that an employer identifies election-related disruptions as reasonably likely to occur and consequently impact workplace safety or jeopardise its business interests, employers may face one of the following three scenarios:
Scenario 1: The employer has closed the workplace as a precautionary measure
When a business closes as a precaution, employers have a responsibility under the Basic Conditions of Employment Act (BCEA) to continue remunerating their employees in full. If this is not possible, employers should consult with their employees and agree with them on appropriate alternatives such as remote working, compulsory leave, or a temporary reduction in pay.
In doing so, employers must consider workplace policies and contracts of employment to identify and assess the impact of any deviation from the provisions of the BCEA.
Scenario 2: The employer has elected to continue operations
Employers requiring staff to be at work on election day are obliged to mitigate safety risks associated with possible political disruptions or demonstrations. This may include implementing guidelines that limit employees' exposure to possible harm.
Businesses operating with skeleton staff should consider any impact this may have on employees' ability to carry out their duties in a safe manner. Beyond maintaining adequate security measures, factors such as supervision, competency and training, and availability of tools and equipment are important.
If unsafe conditions occur, emergency protocols must be invoked. Failure to take steps to respond to a known risk to employee safety in the workplace, as far as possible, may amount to a breach of the Occupational Health and Safety Act.
If the employer temporarily ceases operations in response to circumstances beyond its control, employers may be able to apply the no-work-no-pay principle to their employees (ie the employer is prevented from performing in terms of the employment contract due to election-related disruptions).
Should there be damage to property, employers and/or owners of structures must ensure that workplace premises are fixed, inspected, and authorised in line with all the required legislation before such premises may be occupied by employees.
Scenario 3: Employer has not closed the workplace but employees do not report for work
The employer will need to carefully evaluate the circumstances, on a case-by-case basis, when an employee does not report to work due to election disruptions which may include safety concerns. Employers will need to assess whether this refusal is reasonable.
In addition to the scenarios above, employers may also be required to deal with other issues that may impact the employment relationship. For instance, this could involve employees sharing inflammatory or false information regarding the elections via social media or employees being involved in any criminal acts relating to politically charged civil unrest, which may lead to reputational damage.
By proactively implementing a combination of insurance solutions and sound employment practices, businesses can not only mitigate risks associated with upcoming elections but also achieve greater peace of mind during uncertain times. This comprehensive approach ensures operational continuity and safeguards a company's continued success.
