The Liability of Businesses in the Event of a COVID-19 Outbreak

Legal Insight

May 2020

George Psarakis LL.M. (mult.), PgCert

Republished from Euro2Day

Summary: This article examines the issue of the liability, civil and criminal, of the members of the management of the company and the company itself in the event of a Covid-19 incident against its customers and employees.

Smithfield Foods Inc, a US-based meat processing company, has been hit with a compensation claim on behalf of an employee who contracted COVID-19 due to what the employee claims was the company's failure to take appropriate protective measures against the virus. The company was accused of failing to provide adequate personal protective equipment in violation of US Centers for Disease Control and Prevention (CDC) guidelines, forcing employees to work too close together, and scheduling work schedules and breaks in such a way that employees crowded into common areas. Allegations were also made that management did not provide the necessary time for personal hygiene (hand washing, etc.) and failed to put in place a specific framework for the control, detection and tracing of Covid-19 cases.

Walmart, again based in the US, was reported in the media to be facing a lawsuit from the family of a worker who died after a battle with the virus. According to the relatives' claims, the company, among other things, failed to provide gloves and other personal protective equipment to its workers and failed to enforce the necessary distances. Wando Evans, aged 51, passed away two days - on 29/3/2020 - after being granted sick leave due to the onset of symptoms of Covid-19. 

In relation to the liability of companies towards their employees and customers, there is already an intense debate in the US regarding possible legislative initiatives to define "safe harbours", i.e. specific frameworks within which no claim for damages against companies can be accepted. This is because businesses are required to open their premises when they are most likely to be confronted with Covid-19 incidents within their workplace or customer service. The rationale is to precisely define specific security measures to be taken by type of business, in the event of non-compliance with which there is no question of their liability. 

Various bodies around the world have already issued guidelines on protective measures. For example, the US Centers for Disease Control and Prevention (CDC) has issued specific manuals which describe precisely the actions to be taken by employers in the event of a suspected COVID-19 outbreak. Corresponding guidance is also available for the prevention of this eventuality. Indicative measures include the adoption of flexible forms of work (teleworking etc.) and flexible working hours, increasing the distance between employees and customers, providing services at a distance, increasing the rate of air renewal and improving existing ventilation systems, providing cleaning equipment and placing it in all workplaces, displaying information leaflets, frequent cleaning of areas and surfaces (knobs, keyboards etc.) etc. In fact, the Greek administration often refers to the CDC guidelines (see e.g. recent circular of the Ministry of Health of the Ministry of Health of the Republic of Greece, No. 26635/23.4.2020 on measures to be taken when using air conditioning units). 

Therefore, as we are now entering a new period after the initial outbreak of the pandemic, concerns have increasingly begun to arise about the potential liability of businesses not only to its employees but also to its customers from failure to comply with safety measures. What personal protective equipment should be provided? What is the responsibility of companies and company boards? What is the responsibility of hotels and catering establishments? These are questions which will certainly need to be answered in the coming months and which will very probably be examined in court.

In relation to Greek law, very briefly, the following can be observed:

1.The company must not only take care of its employees but also of its customers. As the Supreme Court has stated in the past, there is an obligation of protection even when an enterprise has invited the public to visit or use a certain place, in which case it must take all measures necessary and appropriate for the safety of visitors (SC 5/2001). In relation to hotel businesses, the hotelier, likewise, has an obligation to protect his guests by taking measures to prevent risks and comply with hygiene rules. The question naturally arises as to what these necessary measures are and where exactly they are defined. If there is a specific framework of protection rules provided for in our legislation, then it can be argued that if the undertaking complies with it, there can be no question of its liability for not taking any other additional measures that it could have taken. However, where the framework is not precisely defined, as in the case of COVID-19, for example, where the administration and the legislature have not yet had time to lay down a specific and detailed plan of action, then the undertaking must comply with the unwritten rules of diligence, compliance with which is considered to be mandatory by any reasonable businessman in the relevant business cycle. In practice, this means that the business should comply with the recommendations of the EODY and the competent bodies, even if they have not taken the form of a legal rule of law (see e.g. Supreme Court decision 1629/2010 where it was held that if specific security conditions have been established by law in advance in a business for the protection of customers and staff, additional measures cannot be claimed even in good faith). 

2. On 9/3/2020 e.g. the Secretary General of Public Health issued a circular entitled "Measures to protect public health through prevention against the spread of the COVID-19 coronavirus in workplaces". On 11/3/2020, the EODY issued a booklet of instructions for hotels and other travellers' accommodation. Similarly, the Ministry of Labour and Social Affairs, in collaboration with EL.INH.Y.A.E., issued in mid-March 2020 Guidelines and prevention measures in workplaces, which specify various measures, such as a) the provision to staff of personal protective equipment (masks, gloves, protective goggles, protective overalls, etc.) and the training/supervision of their use, b) the design of the workplace to ensure the safety of staff (e.g. (b) the design of the workplace to ensure the safety of the workforce (e.g. placing of partitions, maintaining distances between offices so that the number of employees per square metre is reduced) and adequate ventilation of the area; (c) the provision of necessary materials for hand washing such as soap and disposable hand towels together with the use of alcohol-based antiseptic in public areas; and (d) the provision of systematic cleaning of work areas and surfaces as well as work equipment; and (e) the systematic cleaning of work areas and work surfaces. 

3. Under the current legal framework, the employer is obliged, inter alia, to ensure the health and safety of employees with regard to all aspects of work by taking the necessary measures, as well as to supervise the proper implementation of these measures (Article 42 of Law 3850/2010). However, the measures for safety, health and hygiene at work may under no circumstances entail a financial burden on employees. The employer must furthermore have available a written assessment of the safety and health risks existing at work, as well as specify the personal protection measures to be taken and, if necessary, the protective equipment to be used. The written occupational risk assessment should also be updated, as indicated by the ELNH, as to the risks and prevention measures by COVID-19. Under the Civil Code, the employer is also required to arrange the work and workplace-related matters, as well as those relating to accommodation, facilities and machinery or tools, so as to protect the life and health of the worker (Art. 662 CC). 

4. The employee also has the right to refuse to perform his/her work for as long as the employer does not take the necessary protective measures, without the latter being entitled to terminate the employment contract and without the employee losing the right to payment of his/her salary (Articles 45(4) of Law 3850/10 and 325 of the Civil Code). It is logical that you cannot require the employee to continue to come to the workplace without the protection of his/her health being ensured. For example, in the 1990s there were several cases of employees refusing to work in places where asbestos was used by the company. 

 5. Proof on the part of the employee or customer that the transmission of the virus took place within the company is particularly difficult. Proving that the business did not take the necessary measures may, in certain circumstances, be easy. But how can it be proved that it was the measures - however inadequate - that led to the infection of a person with the virus? It could be argued, for example, that while the measures were indeed inadequate, the infection was not due to that reason, but to some other cause, e.g. contact with a carrier in a means of public transport when the employee or customer was returning home. It is indeed particularly difficult to prove and cannot be compared with other cases, since even in the Ebola epidemic, foreign courts, due to its reduced spread, could more easily accept or not accept a link between the workplace and the transmission of the disease. Of course, in the case of Greece, where the number of cases seems to be at a low level, it is likely that depending on the region such proof may become less difficult. 

6. As regards the criminal liability of members of the management of a company for not taking the necessary measures, Article 285 of the Penal Code provides for the punishment of those who violate the measures ordered by law or by the competent authority to prevent the spread of a communicable disease. The application of this provision, however, presupposes that specific measures have been taken by the administration or the legislature. It does not concern, for example, a breach of recommendations of advisory or consultative bodies or a breach of circulars. Therefore, when, for example, the specific framework under which catering establishments may operate is legislated, any breach of it may result in the criminal sanction of the offender under this provision. And this is irrespective of whether or not the transmission of the disease actually took place in that particular place - a fact that will be extremely difficult to prove anyway. Because what the criminal legislator is interested in in this article is that the offender endangered the life and health of the public. 

7. Another issue, moreover, that should be considered is the possible individual civil liability of the members of the Board of Directors or the CEO of a joint stock company in the event of a Covid-19 incident (liability for damages). For in addition to the company, if the misconduct of a director or employee is proven, the director himself may face a claim for damages and so on. It has been accepted by our courts - without, however, being able to claim that it is still a crystallized rule - that members of the management are not personally liable for omissions of lower executive bodies (managers, supervisors, directors, etc.), provided that they have defined specific procedures and protocols of action and proceed to duly supervise and monitor that these are observed (see the case law of the Court of Justice of the European Communities, cited above). See also decision 370/2018 of the Supreme Court in the Marfin case -which overturned a contrary appellate decision- where it was held that the bank's board members are not liable when the welfare obligations were entrusted to subordinate managers and no issue of misconduct was raised as to the selection or supervision of these persons). In other words, in this case, the board members of a company should, on the one hand, give the relevant instructions to the relevant employees to implement all the relevant safety protocols and legislation (EODY notices etc.) and, on the other hand, monitor that the above are actually complied with in practice and do not remain empty words. Supervision obviously does not require on-the-spot checks throughout the day, but may include, for example, weekly reports from management, checklists of specific measures per workplace (checklists), etc.