Businesses will be eager to return to work following Monday’s announcement that we will move to alert level 2 from Thursday 14 May 2020. Under alert level 2 most commercial premises will be able to open if they can do so safely and in accordance with Government guidance. It is important for commercial landlords and tenants to remember the following points relating to health and safety and leasing arrangements generally.

1. Return to work plans

It is important for tenants to ensure their business has updated return to work plans to accommodate the number of people that may return to the workplace. These plans need to account for the general public, as well as workers. We recommend that for those businesses that haven’t been operating under alert level 3 review the information that WorkSafe has prepared, including a useful list of points to consider and a template safety plan for businesses to use.

It will be important to understand how contract tracing will be completed, particularly in multi-tenant sites, and also to ensure systems are in place for appropriate physical distancing. Businesses should consider whether any changes to the layout of the site are required to ensure public traffic is managed appropriately.

We recommend you familiarise yourself with the industry guidelines that have been endorsed by WorkSafe and put in place for alert level 3, and be alive to new guidance that will be released in due course for alert level 2. These guidelines represent best practice on how to operate and will be the standard by which you are assessed.

2. Engagement between landlords and tenants is key

Section 34 of the HSW Act requires a PCBU to, so far as is reasonably practicable, consult, cooperate with, and coordinate activities with all other PCBUs who have a duty in relation to the same matter. As both landlords and tenants are PCBUs for the purpose of the HSW Act, it is particularly important that both parties ensure they are properly complying with that duty in respect of matters relating to health and safety matters arising from the property.

In particular, tenants should be contacting landlords now to begin the process of determining whether the building is safe for re-entry. Landlords may need to take steps to ensure that facilities that have gone unused during lockdown are safe for use, which may come with some unforeseen costs. For example, do air-conditioning units and other aspects of the site need cleaning before re-opening?

After the return to work phase is complete, it is still important that landlords and tenants maintain open lines of communication about ongoing changes in the workplace to ensure that appropriate coordination of activities.

3. What to expect from WorkSafe

WorkSafe has been conducting random site assessments at alert level 3, and we expect inspectors to be even more proactive about checking sites at alert level 2. These assessments will be to ensure that PCBUs (persons conducting a business or undertaking) have an appropriate COVID-19 safety plan, proper contact tracing processes, and are implementing reasonable health and safety measures, as well as engaging with workers about what they are doing. Assessments may be conducted with the Police or Labour Inspectors (from MBIE) as part of an inter-governmental taskforce, but each organisation’s focus will be different reflecting their different functions. WorkSafe inspectors will focus on ensuring compliance with the Health and Safety at Work Act 2015 (‘HSW Act’). The Police will monitor for compliance with the Health Act 1956.

The guidelines endorsed by WorkSafe (for alert level 3) represent best practice on how to operate and will be the standard by which you are assessed until further guidelines are released that are specific to alert level 2.

4. What will the change to alert level 2 mean for rent abatements?

For landlords and tenants with the Auckland District Law Society Inc (Sixth Edition) 2012 form of lease (‘ADLS Lease’), alert level 2 is likely to mean more (and, in many cases, all) rent and outgoings will become payable again. The ‘No Access in Emergency’ provision in clause 27.5 of that lease provides that a ‘fair proportion’ of the rent and outgoings shall cease to be payable where a tenant is unable to gain access to the premises to fully conduct their business for safety reasons resulting from an emergency (i.e. on and from 26 March 2020, which was the date business premises were required to be closed pursuant to the Order under the Health Act).

The rent abatement is to last until the tenant is once again able to access the premises to fully conduct their business. If they are able to fully conduct their business at alert level 2, then the rent abatement should cease. However, at alert level 2, many tenants may still be unable to fully conduct their business due to ongoing physical distancing restrictions. For such tenants, they will still be entitled to a rent abatement at alert level 2 but the proportion of rent abatement is likely to decrease reflecting their increased ability to conduct their business from the premises.

For further commentary on the operation of the No Access in Emergency provision, see our previous article here.