Reopening Business: Guide to Labor, Taxes, Rent, Operations for the New Normal

LAST UPDATE: June 9, 2020, 7:33M - We are constantly updating this guide to keep abreast with news and latest updates on business and law regulations.

Reopening Business – General Community Quarantine or GCQ is to start on June 1. We’re now coming out of our homes, going back to work and reopening business after lockdown of 10 weeks, the Philippines has had the longest enforced lockdown in the world.

Everyone is anxious, excited, confused. No one knows what to expect on June 1st onwards.

Probably the most anxious group of all are the small business owners. What happens next? How should MSMEs handle reopening business and handle business issues–rent, labor, taxes, loans, and other measures? Where do we go from here? What changes do businesses have to enforce following the reopening of businesses?

As a business owner myself, I did all the necessary research on how to handle business during the ‘New Normal’. I’ve annoyed tons of people during ECQ and asked lawyers, HR, customers, and fellow businessmen to educate myself in reopening my business after lockdown.

We’ve put them all in this guide for my own resources, and also for other business owners. We hope this will be helpful for everyone to navigating business in the new normal.

1. OPERATIONS

Is my business ready for the new normal?

Employers have to reorganize their operations in a way that complies with government health regulations, in particular, DTI and DOLE Interim Guidelines on Workplace Prevention and Control of COVID-19, dated 30 April 2020.

1 – In-site Protocols

Businesses are required to draft new company protocols and inform your customers and employees of the new rules in place upon reopening business

• Provide disinfectants like sanitizers and alcohol in the workspace
• Get temperature scanners and foot baths, especially on entry and exit points
• Frequently touched items such as doorknobs, toilets and switches should be disinfected at least once every two hours
• Businesses must redesign their workstation layout to allow for unidirectional movement in aisles, corridors, and walkways. One-way pathways help to ensure physical distancing.
• No eating in communal places. Eating together, as in one table, is discouraged but not prohibited.
• In all cases, social distancing of at least one meter must be observed.

General Public Reminders

Part of your duty is to educate your staff and customers on the new normal. Thus, print out posters, wall and floor stickers, and general reminders to place in your establishment.

A summary is provided in Section V of the Interim Guidelines be placed in the company health protocol. In simpler language, these duties are as follows:

• to comply with physical distancing,
• to dispose of tissues properly,
• to wear a mask or face shield at all times,
• to observe proper respiratory etiquette (like sneezing into the mask or into tissue or shirt sleeves if tissue is not available),
• To wash hands regularly,
• To agree to a thermal check and fill up questionnaire prior to entering the premises,
• To agree to follow the company health protocol

You can download Printable COVID Reminder Templates here.

We have shared some ready-to-print, high-resolution files you can download and print for your business. You can also get them printed at Grafik 9 at high-quality resolution and delivered to you. We can add your logo, make custom designs with customizable information tailored to your business needs. Just email info@grafiknine.com.

3 – Go Online

Now more than ever, businesses must adapt to the times and innovate. Many customers have moved to online channels for business. If you’re in food, get your products available on Foodpanda and GrabFood. Rather than having the clients pick up your product in-store, get on delivery services such as Lalamove or Grab.

Businesses should adapt and move many of their business into the web. It ensures real-time recording, more efficiency, also an electronic trail that promotes transparency.

Ramp up on online channels such as Facebook, Instagram, Shopify, and Google my Business. Train your staff online customer service–how to answer queries and send quotations via email, social media, or chat.

Invest in training your workforce with skills that are now regarded as essential: digital marketing, social media marketing, and SEO. These tools are the future, not just a temporary fad.

4 – Rightsizing

In the coming months, owners of MSMEs may have to make hard decisions about their business. They need to ask how businesses can survive and stay profitable in the new normal.

Businesses should adapt and move many of their business into the web. It ensures real-time recording, more efficiency, also an electronic trail that promotes transparency.

Employers may find that they need fewer resources by onboarding work-from-home, teleconferencing, and other digital solutions.

One smart way to rightsize is to avail of co-working spaces instead of continuing to maintain long-term lease agreements. This can be done fully or partially, depending on the needs of the business. Observe your operations for the next few months and pivot accordingly.

In this time of new normal, MSMEs are especially worried about ensuring proper implementations on new protocols set by the IATF. One key benefit of transferring work into a coworking space is to free up headspace. It can get confusing as a business owner on how to go about ‘business as usual’ in the new normal. As a coworking space resident, one can think less about reorganizing their management–and one can focus more on your key business activities.

One such coworking company, The Company, is meticulous about making sure that new normal measures on health, safety, and prevention are in place once they reopen to public. The Company is an international coworking space with numerous spaces around the world, two of their Philippine branches are located in Cebu.

Occupations that are “white collar” such as marketing, design, legal, accounting, and computer programming, or those not able to operate at 100% capacity should avail of co-working spaces to free up cash to deal with future uncertainties.

To see if transitioning to coworking is integral for your business in the new normal, read: COVID19 Coworking Spaces in the New Normal

For more details on how your workforce can pivot in the new normal, go to Remote Work Toolbox: How-to Guide to Shift to Remote Work

It is best to consult with a lawyer to help draft the policies and changes in terms of legal, HR, finance and other policies. If you need help with legal and business consulting, you can contact us via our email / social media located at the bottom of this page.

2. EMPLOYEES

Your employees will be the frontliners of your business, so their health and safety must be a top priority. The people under company payroll should be top of mind for every business owner.

Taking care of company personnel should be top of mind. As suggested in the title of the “Bayanihan to Heal as One Act” or R.A. No. 11469, we need to pull together as a society to get us through to this crisis in lesser time.

How to deal employees?

1 – Testing Not Required

Testing is not required for an employee to return to work. “Employers may test workers for COVID-19. Testing kits used and procured shall be the responsibility of the employer,” said in a press release 21 May 2020.

However, employers should reorganize work arrangements and have the new company health protocols in place before reopening business.

2 – Transportation and Pass

Public transportation will be limited in the new normal. If feasible, employers are encouraged to provide shuttle services.

Worker mobility during the new normal should be a significant factor to consider in hiring new workers. Indeed, the Interim Guidelines point out as a duty of the employer to hire from “local community.”

The IATF ID or Rapid Pass shall not be required. But workers should bring their company ID and certificate of employment while passing through checkpoints. (DTI Memorandum Circular 20-22)

3 – Capacity Restrictions

DTI has not allowed all enterprises to operate, depending on the industry or sector. Be in the know whether your business allows full capacity 50% capacity or not allowed to operate as listed in the DTI Memorandum Circular.

Category 1 (Full operational capacity): Media, telecommunications, real estate activities, delivery and logistics services, hospitals, pharmacies, medical clinics, clinics involving dermatological services, optometric, dental, and eye, ear, nose and throat (EENT), food preparation establishments, water refilling, retail establishments (groceries, hypermarkets, public markets, convenience stores and drug stores), agriculture, forestry, fisheries.

Category 2 (50% up to full operational capacity): Manufacturing, security services, veterinary services, funerals, office administrative, office support, computer repair service, essential public and private construction works, mining, e-commerce companies, manufacturing activities.

Category 3 (up to 50% capacity): BPO, Banks, pawnshops, microfinance, money transfer services, legal and accounting, architecture, advertising, malls and commercial centers, publishing, photography, music recording and production, motion picture production, other non-leisure wholesale and retail establishments (motor vehicle parts, hardware, bookstores, baby care supplies)

Category 4 (Not Allowed to Operate): Gyms and fitness studios, sports facilities, entertainment industries such theaters, karaoke, comedy bar, beer houses, nightclubs, playgrounds and children’s amusement centers, tourist destinations such as resorts and waterparks, travel agencies and tour operators, personal care services such as massage, facial care, and spa.

See the full text of Memorandum Circular 20-22 below under resources.

4 – Health Monitoring

A feature of the new normal will be employers becoming a health and sanitation police. Employers have to draft a company health protocol for health monitoring and are responsible for supplying PPEs to employees.

Before entering the workplace, employees must:

• have their temperature taken to see if the same is above 37.5 degrees Celsius
• fill up a daily health questionnaire
• wear masks or face shields

Part of the regular health monitoring is the duty of the employer to submit to DOLE a monthly report of the illnesses, diseases, and injuries in the workplace via the Work Accident or Illness Report (WAIR) Form. It shall copy furnish DOH this report.

Sample Template of Health Monitoring Form:

1. Did you visit a hospital, clinic, or medical health facility in the past 14 days?

2. In the last 14 days and at present, did you experience or are you experiencing any of the ff: fever, colds, cough, sore throat, body pains, headache, or difficulty in breathing?

3. In the last 14 days, have you been in contact with anyone with fever, cough, colds, and/or sore throat?

4. In the last 14 days, have you been in close contact with a person or patient who has either: displayed any symptoms associated with COVID-19, regardless of whether the same person has been tested for COVID-19 or not, or (b) has been confirmed positive for COVID-19?

5. In the last 14 days, have you traveled outside the Philippines?

6. Have you traveled to any other city aside from your home?

7. Do you have any of the following medical conditions: hypertension, diabetes, cancer, or with immunity that compromises health status, serious heart conditions,chronic lung disease or moderate to severe asthma, or pregnant?

The medical data collected by employers is personal data and must be used only to comply with government rules and regulations. The employer has to keep the data confidential and secure.

Employers also have to inform their employees of their rights to data privacy – the right to keep the data confidential, secure, retained only for so long as necessary, and be used only to comply with statutes and government regulations.

5 – Assign a Safety Officer

One or more employees may be designated as safety officer assigned with enforcing company health protocol. The security guard now has a special role, an additional designation as the safety officer. The guard aa safety officer must instill physical distancing within the premises and outside of the premises at all times, especially if there is a queue for customers.

6 – Other Work Arrangements

Businesses are advised to strategize on how to reduce the number of people that have to work on-site or in the office. Meetings can be done via teleconferencing or with proper physical distancing.

If possible, alternative work arrangements are encouraged. This may include working from home or working on alternate work hours on a rotational basis.

Priority for work-from-home arrangements should be for more vulnerable workers (pregnant women, advanced aged workers, and other high-risk groups).

It is not allowed to diminish employee benefits as a result of a company reorganization. Employers may lay off workers for authorized causes such as retrenchment, redundancy, or reasons for closing the business. They should consult with an employment or labor lawyer to make sure the authorized causes for termination exist.

What if an employee is suspected of COVID-19?

The company should include in its company health protocol rules for attending to and transporting the suspected worker to the nearest hospital if need be, and reporting the case to DOH.

After discovery of suspected case, the company should have a protocol on workplace decontamination.

Workers present in the work area with the suspect COVID-19 worker shall go on the required 14-day home quarantine. A protocol for returning to work should be included in the company health protocol.

What if I can’t afford to hire them back?

Unfortunately, some companies will have to downsize because of retracted business. These are difficult decisions business owners will have to make. Can you afford to keep all your employees, or will you need to make sacrifices to ensure business survival?

Some employers have cut back on as much as 20% to 50% of their workforce. Others have asked their staff to return to work once the business gets better, and in the meantime find other jobs or means of income.

Some might really need to cut jobs. Members who lost their jobs due to the pandemic can get up to P20,000 cash benefit.

You can see the DTI and DOLE Interim Guidelines on resources.

3. RENT

Philippine MSMEs ask: What if I can’t pay during COVID my Commercial Rent?

GCQ is about to be implemented next week and business owners are starting to address the white elephant in the room. What happens next? How are we going to deal with our fees and bills?

What if I Can’t Pay Rent?

Commercial lease or rental payments are usually a big portion of a business’s operational expenses.

The coronavirus crisis and the mandated lockdown or ECQ have forced many businesses to close down. For a lot of SMEs it is impossible to pay rent, because of no incoming business.

To know more details on Bayanihan as One Act, we’ve detailed it further below.

Rent Deferred Not Waived

It is worth noting that a majority of landlords are not big property conglomerates. Many landlords rely on rental income as their only means of living.

DTI Secretary Ramon Lopez has clarified that rental fees and charges are deferred but not waived during the enhanced community quarantine. PNA

The cumulative amount of rent fees within the quarantine period shall be equally amortized in the next six months at no penalty or interest.

Lessors who refuse to follow mandate on providing a 30-day grace period to lessees will be penalized with imprisonment of at least two months, fines, or both.

Complaints can be brought to the DTI via Fair Trade and Enforcement Bureau. Contact them via email – FTEB@dti.gov.ph or through the agency’s regional offices.

1 – Review your contracts

Lease contracts, and contracts in general, are governed by the Civil Code. The Civil Code provision on force majeure states:

Article 1174. Except in cases expressly specified by the law, or when it is otherwise declared by stipulation, or when the nature of the obligation requires the assumption of risk, no person shall be responsible for those events which, could not be foreseen, or which, though foreseen, were inevitable.

Article 1174

Some lease contracts have a force majeure or fortuitous event clause that restates the above provision, but Article 1174 applies even without such clause.

Review the lease Agreement for any clause providing for force majeure as there may be contractually agreed-upon procedures for invoking it.

2 – Call your landlord

If you’ve gone through your lease agreement and still found that you still have an obligation of payment, go ahead and call or write, or talk to your landlord.

Tell your landlord: ‘We’re all going through difficult times due to the pandemic. Obviously it will be difficult for me to pay for the lease. Moving forward can we re-negotiate on terms?’

Now more than ever, landlords should provide relief, provide assurance, and strengthen good relations with their lessees. The government has called upon lessors to present alternatives: rental discounts, waived rent, staggered payments, payment extensions, etc.

Whatever new terms you and the landlord have agreed with: whether to defer, discount or waive rent, put it down in writing. Both parties must sign it, talk to a lawyer, and make sure the agreement is enforceable after all of this is over.”

The landlord will be interested in an agreement that is mutually beneficial. They would be interested in locking in contracts, especially because doing business is expected to be more difficult in the following months.

With a contract in place, they can accumulate accounts receivable, which assures income in the coming months. Without this, they just have the asset value of the property, which is at risk of tipping into a free-fall.

For more details, please refer to ‘Bayanihan to Heal As One’ Act under resources

4. BILLS AND TAXES

Aside from rent, companies also have other payables upon reopening business: suppliers, utility bills, taxes, loans, etc.

Can I afford to pay my bills and taxes?

1 – BIR Deadline Extended

The deadline for the filing and payment of various taxes has been extended by the Bureau of Internal Revenue as a result of the extended lockdown period.

According to BIR Revenue Regulation No. 11-2020, June 14, 2020 is the extended deadline for the filing of three (3) taxes:

1.) Annual Income Tax Return (AITR) for Individuals
2.) First Quarter ITR for Individuals
3.) AITR for Corporations for Calendar Year 2019 and for Fiscal Year ending January 31, 2020

June 29, 2020 is the new extended deadline for corporations to file their 1st Quarter ITR.

The filing of tax amnesty for delinquencies has also been extended from April 23, 2020 to June 22, 2020.

The deadlines for other taxes are in RR No. 11-2020 which is linked here.

2 – 30-Day Grace Period

On Loans

The Department of Finance has issued rules and regulations (IRR) otherwise known as the Bayanihan Act, requiring all lending institutions, public or private, a mandatory grace period for payment of loans that fall during the ECQ or Enhanced Community Quarantine.

The institutions are prohibited to applying fees, penalties, interests, and other charges during the said period.

Grace periods on loans on private banks or financial institutions vary. BPI has offered a 30-day grace period to qualified loan and credit card customers. Metrobank and PSbank have offered the same terms. Ask your bank their terms as i is a case-to-case basis.

BDO has also given insurance and banking clients of good standing 60-day extension on payments due up to April 15.

For government financing institutions, SB Corporation has agreed on a payment moratorium for existing loans from March 16 to April 14, 2020. Afterward, borrowers may request to pay only the interest up to October 2020.

Pag-IBIG Fund borrowers may apply for a three-month suspension of payments of loans. Applications may be submitted to their nearest Pag-IBIG branch when ECQ lifts.

SSS, on the other hand, has also extended the deadline for premium payments on SSS for January to March.

Failure to comply with the provisions may result in the imposition of a fine from 10,000 to 1,000,000 PHP, or two-month imprisonment, or both.

On Utility Bills

Thankfully, utility bills–water, power and internet–have given a grace period for customers for both households and businesses.

Just like in rent, such bills shall be amortized in equal installments, and payable in the 30 days after the quarantine is lifted.

3 – Negotiate with Suppliers

Everyone in the supply chain is affected. We are all confused and wary of doing business in the midst of a pandemic, and it is best to keep good relations with suppliers.

Let them understand your financial state (I’m sure they do, they’re on the same state, too), Be reasonable with expectations because they also have businesses to run, too. Negotiate for terms that are reasonable for all.

HELPFUL RESOURCES

General Resources on Reopening Business After Lockdown

• Remote Work Toolbox: How-to Guide to Shift to Remote Work
• Economerienda – More COVID19 Related Posts
• StartHere.PH – Is Your Business Ready for the New Normal? Here Are Some Things to Start With.
• GCQ Infographics by Janelle Moran
• Grafik 9 Printable Templates
• IATF GCQ Guidelines

On Rent

• PNA.gov.ph – DTI clarifies rents are deferred, not waived during ECQ
• Rappler – DTI sets 30-day grace period for residential and commercial rent

On Labor

• DTI Memorandum Circular No. 20-22
• SSS members who lost jobs to receive up to P20,000 cash benefit

On Loans

• Baker McKenzie – Philippines: Mandatory Grace Period for Payment of Loans Falling During Enhanced Community Quarantine
• Small Business Corporation – FB Page
• One News – Acquiring Loans in the Time of COVID-19

 

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Rachel Arandilla is the blogger behind business blog Economerienda, a website dedicated to snackable content on business, law, and life.