The South African government developed a five-level approach for a phased reopening of the economy, and implemented measures to curb the transmission of COVID-19. Accordingly, certain businesses (other than those providing essential services) are permitted to reopen and operate, depending on the alert level. South Africa is currently at alert level 4, and is due to move to alert level 3 from 1 June 2020. We will provide more details when once available.
1. What are the key things that employers have to consider in relation to social distancing in the workplace, e.g. open plan or spacing of desks, use of shared equipment, limited access to communal facilities, canteen / restaurant, etc.?
The Regulations require employers to adopt measures to promote physical distancing of employees, including enabling employees to work from home and minimising the need for employees to be physically present at the workplace.
The Directive requires employers, as far as reasonably practicable, to minimise the number of employees at the workplace at any given time through rotation, staggered working hours, shift systems, remote-working arrangements or similar measures.
The employer must take measures to limit contact between employees and ensure a minimum of 1.5 metres between employees when working (in certain sectors, sector-specific guidelines provide for a greater distance between employees). If it is not possible to appropriately distance employees, then physical barriers must be arranged or appropriate PPE provided to employees free of charge.
Contact between employees and the public must be limited as far as reasonably practicable.
2. What key hygiene and/or infection prevention measures will employers have to take to ensure a safe workplace e.g. provision of adequate handwashing facilities, regular deep cleaning of offices, etc.?
The Regulations and Directive stipulate that businesses must provide hand sanitiser for use by the public and employees at the entrance to the premises. Every employee who works away from the office, other than from home, must be provided with hand sanitiser free of charge.
The employer must take steps to ensure all work surfaces and equipment are disinfected before work resumes, regularly during the working period, and after work ends. There must also be adequate facilities and soap for washing of hands and paper towels must be provided, because the use of fabric towelling has been prohibited. All biometric systems must be disabled unless they are COVID-19-proof.
3. Are there any specific obligations, liabilities or duties of conduct imposed on landlords, tenants or visitors with respect to the use or re-use and decontamination of premises; care, cleaning and maintenance of the exclusive and common areas; reporting requirements and/or measures in case of identified infections; health and safety issues - e.g. recommissioning water systems to avoid virus, installation of plexiglass screens, moving desks to comply with distancing. remodulation of fire prevention strategies (entrance/exit routes)? Is any distinction made between asset classes?
The Regulations provide that every business premise must provide hand sanitisers for use by the public at the entrance to the premises.
The Regulations also provide that every business premises, including but not limited to, a supermarket, shop, grocery store, retail store, wholesale produce market or pharmacy must:
- determine their area of floor space in square metres;
- based on their area floor space, determine the number of customers and employees allowed inside the premises at any point in time;
- take steps to ensure persons queuing inside or outside the premises are able to maintain a distance of 1.5 metres from each other;
- assign, in writing, an employee or any other suitable person as the compliance officer, who must ensure compliance with the measures listed above; and
- adopt measures to promote physical distancing of employees.
The tenant will need to comply with the requirement for employers, as explained in question 1 in the People section of these FAQ, and in the questions immediately above.
The Regulations provide that every person must wear a cloth mask or a homemade item that covers the nose and mouth when in a public place, or another appropriate item to cover the nose and mouth. No person will be allowed to use any form of public transport, or enter a building, place or premises, if they do not wear a cloth face mask or a homemade item that covers the nose and mouth when in a public place.
4. Are there any rent suspension measures and/or stay of recourses and actions (including eviction) or any Government support initiatives such as a furloughed building grant scheme (if so, maybe only a part of the building should be re-occupied)? When rent suspension measures are available, what is the usual payment mechanism and timing agreed to by the parties?
The Regulations provide that no person may be evicted from their place of residence for the duration of the lockdown, unless a court has granted an eviction order. All eviction orders shall be stayed and suspended until the last day of alert level 4, unless a court decides it is not just and equitable to do so.
The Minister of Trade, Industry and Competition published a block exemption for the retail property sector exempting certain categories of agreements between designated retail tenants (clothing, footwear, home textile, personal care and restaurants) and retail property landlords from certain provisions of the Competition Act, if the agreements are for the sole purpose of:
- coordinating conduct to prevent the national disaster from escalating;
- alleviating the economic and social effects of the national disaster; or
- enabling designated retail tenants to manage their finances during the national disaster and be in a position to continue normal operations post-COVID-19.
The retail property block exemption removes the restrictions on competing landlords from entering into negotiations with each other or their tenants, in order to minimise the financial burden of tenants.
The retail property block exemption therefore exempts the following agreements or practices between designated retail tenants and property landlords with the aim of ensuring the financial survival of the retail tenant:
- payment holidays or rental discounts for tenants
- limitations on the eviction of tenants
- the suspension or adjustment to lease agreement clauses that restrict the retail tenant from undertaking measures required to protect its viability
The exemption applies in limited circumstances and only if the agreement is undertaken at the request of, and in coordination, with the Department of Trade, Industry and Competition.
5. Are there specific tax reliefs on payment or collection of rent instalments? Do they apply subject to actual payment or regardless? Do they apply generally or only to specific asset classes?
6. Are there any measures regarding relief from the performance of real estate-related contractual obligations?
No. However, landlords and their tenants may, in the ordinary course of business, negotiate and agree on measures providing relief from the performance of contractual obligations.
7. Are there any credit facilities in place to mitigate loss of income for landlords?
This depends on the terms and features of the credit agreement between the landlord and the lender. If the credit agreement provides cover for the loss of income, then (typically) the landlord may submit a claim for loss of income from the lender or request a payment holiday from the lender.
8. Is there any relief from loan repayments / enforcement of loans secured against properties?
There is no general relief from loan repayments or enforcement of loans secured against properties made available by the government. However, the execution of writs of execution and all attachment and removal of property have been suspended.
The Minister of Trade, Industry and Competition published a block exemption for the banking sector exempting certain categories of agreements between banks, the Banking Association of South Africa and/or Payments Association of South Africa from certain provisions of the Competition Act, if the agreements are for the sole purpose of:
- coordinating conduct to prevent the national disaster from escalating;
- enabling the banking sector to minimise the negative effect on the ability of customers (both business and private individuals) to manage their finances during the national disaster and be in a position to continue normal operations post-COVID-19; and
- enabling the banking sector to manage the banking infrastructure, including the payment infrastructure, ATMs and branches.
The banking block exemption therefore exempts the agreements or practices listed below, if the sole purpose of such agreements or practices are to ensure the management of debtors and the continuation of credit extension during COVID-19:
- payment holidays and debt relief for business and individual debtors subject to financial stress
- limitations set on asset repossessions of business and individual debtors subject to financial stress
- the extension of credit lines to individuals and businesses subject to financial stress
The exemption applies only if the agreement is undertaken at the request of, and in coordination, with the Department of Trade, Industry and Competition and excludes agreement in respect of prices, unless specifically authorised by the Minister of Trade, Industry and Competition or the Minister of Finance.
9. Are public services necessary to complete the sale, acquisition or other operation of real estate assets or companies or to establish the right to open for business (planning authorities, notary public, Land Registry, Companies’ Registry, etc.)?
The following public services are needed to complete the sale or acquisition of real estate assets:
- The local municipality, to obtain a Municipal Clearance Certificate for rates and taxes relating to the property being sold. The Regulations set out which services municipalities are required to perform during alert level 4, which includes the issuing of Municipal Clearance Certificates.
- The South African Revenue Services, to obtain a Tax Clearance Certificate in respect of the seller. The SARS Commissioner announced that taxpayers and traders are required to use online service channels to obtain the Tax Clearance Certificate.
- The Deeds Office, which is responsible for the registration, management and maintenance of property registries in South Africa. Deeds registration has been identified as an essential service under the alert level 4 lockdown regulations. The Department of Agriculture, Land Reform and Rural Development announced the reopening of deeds offices across South Africa from 13 May 2020. Accordingly, all services are now available and all lodgements of property transactions will be accepted. However, only conveyancers will be allowed in the Deeds Office and consultations can take place only through appointments.
The Companies and Intellectual Property Commission (CIPC) is responsible for the registration of companies and intellectual property rights (such as trademarks, patents, designs and copyright). The CIPC is also responsible for monitoring compliance with and contraventions of financial reporting standards, and making recommendations thereto to the Financial Reporting Standards Council.
During alert level 4, only fully automated services will be provided by the CIPC. The following services may be accessed via the E-services and BizPortal online channels:
- annual returns
- compliance checklist
- enterprise search
- company and close corporation financial year end changes
- company and close corporation address changes
- auditor, accounting officer and company secretary changes
- company name changes
- BB-BEE certificate
- domain name registration
Certain pieces of legislation relating to companies and intellectual property have timeframes for lodging documents with the CIPC. The CIPC announced that, due to the lockdown and the inability of its staff to process these documents, the period from 24 March to 4 May 2020 will be regarded as days not counting for legal purposes. This would ensure companies do not suffer prejudice in complying with the legal timeframes as a result of the lockdown.
Manual lodgements of documents can be by placing documents in the various drop boxes outside the CIPC office building. No documents will be received in person by any CIPC staff member. In addition, the CIPC will not (until further notice) take any action by placing companies into deregistration for the non-compliance with annual returns or deregister companies currently in the deregistration process for non-compliance with annual returns.
Companies involved in the supply of essential services (e.g. medical/health practitioners, grocery stores, fire services, hardware stores) require a permit, issued by the CIPC, to conduct business. Companies providing essential or permitted services can apply for the permit online. Alternatively, employers can issue their employees with a Form 2 permit in accordance with Annexure A of the Regulations.
10. Are there any specific processes or protocols available to consummate real estate operations enabling them to comply with any required social distancing (e.g. electronic signature, etc.)?
In general, electronic signatures are permitted in terms of the Electronic Communications and Transactions Act, 25 of 2002. However, the following agreements relating to real estate operations may not be concluded with an electronic signature:
- contracts for transfer or sale of immovable property, including sectional titles and mortgage bonds; and
- deeds and long-term leases for a period of more than 20 years.
11. Are contractors who were carrying out works within the premises obliged to resume them? Can building sites reopen when they were closed down? Are there any specific provisions in relation to certain asset classes authorising continuation / resumption of works (e.g. healthcare structures)?
Contractors providing the following services are allowed to operate during alert level 4:
- production, supply and maintenance of power, water and telecommunication services
- emergency repair work
- roof repair work
The Regulations also provide a list of construction and related services that may resume work under alert level 4:
- civil engineering for public works projects (including water, energy and sanitation)
- public works civil engineering and construction works
- road and bridge projects, including local road repairs
- critical maintenance and repairs
Building sites are not allowed to reopen during alert level 4. When building sites do reopen, the management of the building sites must ensure the building site complies with relevant regulations to ensure the health and safety of everyone on the building site and curb the spread of COVID-19.
12. Are there remedies or contractual arrangements available to address impossibility or delay for a party to handover premises to another which are/were to be constructed or refurbished, or for such other party to take over those premises?
The Alert Level 4 Regulations make provision for the one-off movement of persons and transportation of goods. A person who needs to travel to his or her new place of residence and to transport goods (limited to household furniture) is permitted to do so between 7 May and 7 June 2020.
In respect of contracts with a force majeure provision, the party wishing to rely on it would need to prove the COVID-19 pandemic is covered by the force majeure provision. Force majeure provisions triggered by the COVID-19 pandemic may free a party from liability or obligation of performance. If a force majeure clause is triggered it may have different effects on the obligations of the parties: it could suspend the performance of the obligation for a specific duration or suspend the performance of an obligation indefinitely.
In the absence of a force majeure clause, parties can agree to make arrangements to address the impossibility or delay of the performance of obligations.
13. Has the duration of validity of administrative authorisations pertaining to development/construction of real estate assets (in particular planning authorisations) been extended?
Litigation and Regulation
14. Is the use of disclaimers for visitors or others coming on to the site of business useful for limiting potential future COVID-19 claims?
Potentially. However, in terms of the Regulations, businesses are obliged to comply with certain COVID-19-related health and safety requirements (please see the People section of these FAQ, and above in this section, for more details on the measures businesses are required to implement).
As such, while disclaimers may be of assistance in limiting liability in regard to the use of the site of business, they will not absolve the businesses of compliance with the legal obligations.