Lockdown: Corporates asked not to draw on force majeure

President cautions it could have a ‘domino effect’ on other businesses.
President Cyril Ramaphosa addressing the nation on Thursday night. Image: Siyabulela Duda, GCIS

In announcing a two-week extension of the national lockdown to halt the spread of Covid-19, President Cyril Ramaphosa on Thursday night appealed to big businesses in South Africa to pay suppliers and not to opt for force majeure in the interests of the country’s economy.

“I would like to call on all businesses to continue to pay their suppliers, to the extent that they can, to ensure that those suppliers can also continue to operate and pay their staff and suppliers,” he said.

“I would like to appeal to all large businesses not to resort to force majeure and stop paying their suppliers and rental commitments, as such practice has a domino effect on all other businesses dependent on that chain,” the president added.

His comments come as several companies are considering drawing on force majeure provisions to mitigate the impact of the economic fallout from the Covid-19 lockdown, which has effectively seen thousands of businesses countrywide being forced to halt their operations. Many are applying the ‘no-work, no pay’ principle in addition to job cuts to stay in business.

Major retailers first to move

Since the lockdown started on March 27, Moneyweb has reported extensively on moves by several major retailers – including the likes of TFG, Pepkor and KFC – not to pay rentals to landlords for April due to their stores being closed. The move is effectively based on the ‘force majeure’ legal position.

Property industry bodies such as the South African Property Owners Association and the SA Real Estate Investment Trust Association have warned that the retail property sector could face collapse if there is widespread non-payment of rentals, especially by the major retailers that can afford to do so.

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Meanwhile, during his address to the nation on Thursday night, Ramaphosa applauded all employers that have continued to pay their workers during what he described as a “very difficult time”. He also commended the employers that are working with unions and government to help their employees access Unemployment Insurance Fund (UIF) benefits.

Billions in employee assistance

The president noted that the UIF had set aside R40 billion to help employees who will be unable to work as part of efforts to prevent jobs losses due to the lockdown. He said the fund had already paid out R356 million.

“We must do all we can to ensure that the underlying economy continues to function and to focus support on those small businesses that really need [it],” Ramaphosa stressed.

The extension of the nationwide lockdown by a further two weeks, effectively to May 1, means that most of the existing lockdown measures will remain in force until further notice.

“We will use the coming days to evaluate how we will embark on risk-adjusted measures that can enable a phased recovery of the economy, allowing the return to operation of certain sectors under strictly controlled conditions,” Ramaphosa noted.

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…and when 1 May arrives (which is a Friday, by the way)…the people will say “wait, it’s a PUBLIC HOLIDAY!)

I think, in reality the world over, the December holiday-season would be completely written off, as employers (and individuals) make up for lost production & income. Schools go on until 31 Dec.

Forget the luxury of annual bonuses….for those that are still ‘fortunate’ to have a job by then, even if it’s cut by 30%.

Sorry, we’re grafting boet! Krismis will have to come in 2021.

Good point.

Looks as though the plan is then to get at least one more SASSA grant payment debacle in before stopping lockdowns.

This could possibly expose more people to harm than canceling lockdown right now.

Looks like the SASSA dates were changed a few days ago to the 4th and 5th of May.

That helps and the fact remains extending it after the end of the month could be a problem.

We should strongly consider suspending public holidays for the rest of the year once the lockdown is over.
Workers Day, Youth Day, Women’s Day, Heritage Day, Day of Reconciliation… that’s five days or a working week that can be used to get back lost time. I’d still keep the week between Christmas and New Year’s, including Boxing Day as a truncated holiday.

Some just don’t have the money to pay rent cyril.

Is Pepkor going to reverse their immoral decision to not pay rent for April and are the exces going to take a 30% reduction in salary for the next 3 months, like the President ? .

If this crisis is not cause for Force Majeure then I do not know what is !!!!

People will remember which companies that can afford it, relied on this to squirm out of commitments.

I will also make a point of having our staff collect KFC litter and from opening day I will do a weekly drop at KFC counter. One of the great things over last two weeks is takeaways closed and their litter no longer decorating fences, rivers, etc.

The ANC has been the perpetual Force Majeure.

Coming soon 50%+ unemployment, landfills of corpses next to townships, starvation, social unrest and finally a whole lot of printed rands to try solve it all.

Why should companies do the right thing when the govt hasn’t?

Comms minister get administrative leave for behaviour that lands the common man in jail or with a significant fine

Lead from the front

End of comments.

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