A panel of business and legal experts have answered readers’ questions sent in to us this week.
Questions ranged from confusion over customer refunds and consumer protection, redundancy and employer rights, to business loans.
With thanks to Nikki Spoor, accountancy, business and regulatory advisor at White Hart Associates; and Matt Gatenby and Ami Naru, travel and employment law specialists respectively, from Travlaw.
Answers by Nikki Spoor, accountancy, business and regulatory advisor at White Hart Associates
Q: Some tour operators are now not refunding but offering vouchers or credit notes. I understand why they are doing this but what happens if this tour operator then has problems and goes into administration?
Emma Langston, Hays Travel, Cannock
A: Currently under the Package Travel Regulations, once the consumer accepts a “corona voucher” or credit refund then they lose their consumer protection. The voucher is no longer covered until the regulation is changed. We have been lobbying very hard this week to try and get emergency legislator changes.
Q: Re. travel credits, has there been anything confirmed by Abta or in the PTRs stating that as a tour operator we can offer credit values to our customers for future tours rather than just cash refunds?
It would definitely help our future performance and stabilise the balance sheet somewhat.
Lesley Aimers, G Touring
A: Yes it would – in fact it would be a lifeline for travel companies to allow them some breathing space and also help keep the consumer protected. Many EU countries like Holland, Denmark, Sweden, Italy, Belgium and others have already introduced emergency legislative changes to the Package Travel Regulations for this situation. The CAA is broadly aligned, I believe, with Abta but cannot do anything without government sign off.
They are saying it is difficult to get the government’s attention at the moment. This is obviously one of the first industries to be hit and therefore I am not sure how it is not at the top of the list as a priority to save jobs.
Q: We are seeing an increasing number of operators not offering full refunds on Atol-protected holidays – why is this?
Also as clients are getting more agitated about this some are threatening credit card chargebacks – I am very, very worried about this.
Jonathan Cunningham, Key Holidays
A: This is a concern for a lot of tour operators. I asked my team to test the response of credit card companies to consumers requests for chargebacks. Broadly the credit card companies are telling the consumer to revert to their tour operator to provide a refund for cancelled travel arrangements that cannot be provided.
They are saying that if the tour operator isn’t willing to provide the refund or they don’t receive within seven-14 days then to contact them and they will facilitate a chargeback after properly investigating with a maximum 28 days to refund.
If merchants do provide the customer with a chargeback, you will obviously not have any bookings for the merchant to charge against, so the merchant will need to be reimbursed from your bank. Check your merchant contract as to the terms.
Q: What do you think the chances are of a change to the package travel regs favouring amending bookings to a later date over cancellations?
Mark Swords, Swords Travel
A: The chances should be high, bearing in mind a lot of the other EU states did it almost immediately when the crisis hit. We have gone to everybody that is any sort of influencer to try to get it pushed up the agenda.
Q: Are we, as TMCs, entitled to up to £25,000 grant as announced by the chancellor?
A: It was vague in how it was published, like the majority of the measures. This would be administered by local councils, so may be different in each local authority, so I would contact the local council to speak to them and ask.
Q: Can you advise whether the new £3.5-10k grant is available to the self-employed among us? If so, how do we access this?
A: The government hasn’t given any proper details as to how to access these grants as yet.
Q: How can travel agent business owners access the loans announced by the government? What criteria do they have to meet? Is there any other support travel agents can access if they’re struggling financially, especially if they will now due to the school closures?
A: We have done a lot of work on this in my firm this week. The British Business Bank has all the current details about the loans. Some of these details are not correct after speaking to each of the banks on the list. For example, no companies which have had more than €200,000 state aid in the last three years will qualify. R&D tax incentives come under this and a lot of travel companies have claimed these.
Apparently this is one example of what will change when the actual scheme is launched early next week, according to the government. After speaking to a lot of the banks on the list it is not the “holy grail” that it is been made out to be. The monies for the lending is coming from the banks and nothing from government.
The government is providing the 80% guarantee on failure, but has put a bad debt cap on the banks. Also, you need to be aware that the interest-free period is only six months and some of the banks have said the interest after that is going to be 17%. That is not fair. The banks will not be backing businesses which they do not think have a chance of coming out of this potential economic disaster.
Let me be clear, the banks need to open their “war chest” as they were bailed out in 2008 – in my opinion they owe it to help this industry now.
We are ready to send out details to all our clients on accessibility and details as soon as the detail is published. If you are not an existing client we are still happy to send you any detail you need. Just email us and we will put you on the list for all the information we are sending out to our clients to help them through.
Answers by Matt Gatenby, senior partner, Travlaw
Q: In light of some operators now not offering refunds, and there being suggestions customers make insurance claims or take a credit note or a deferred holiday, some operators are still offering full refunds? Do we not need consistency?
Also, can your legal advisors tell us what our customers are likely to be told if they seek legal advice of their own? Finally, if the customer accepts a credit note valid for an agreed time and that tour operator subsequently goes out of business can we have an assurance from Abta/CAA that those funds would be financially protected and refunded as a holiday would be?”
Daryl Hamlett, Travelabout
A: This is a fast moving issue (and I know we all wish it was moving faster, but it seems to me that there are sterling efforts going on) but as of right now the legal position is pretty clear, and in consumers’ favour. This is why, as Travel Weekly’s Ian Taylor has mentioned elsewhere, there is this movement to change the rules at a fundamental level.
I would expect a key point to be that travel businesses will have to offer, specifically, a “refund credit note” that is demonstrably associated with an existing Atol-protected booking. We all await movement on this!
In the meantime, referring customers to their travel insurers remains a sensible step, especially given the “blanket” no-travel advisory that UK government has given. If travel insurers reject such a claim, you are entitled to ask a customer to provide you with a copy of the official rejection. As an industry we need clarity from insurers why they may not pay out if customers do travel against government advisories, and also why they may not pay out if customers don’t travel in line with such advisories!
Matt Gatenby, Travlaw
Q: I have a client in resort in Borneo, isolated to a room with basic food being delivered to the door. They have been advised if they leave the island they will not be allowed back. There are no guest facilities available at all and no TV in the room. The Tour Operator have said that if the customers want to come back early today it will be an additional amount. The customers are due to return back in a week on their normal flight. If I, the agent, pay for the early return flights, would I have any chance of getting that money back from operator or the customer?
Joan Jones, Once in a lifetime holidays
A: This is the kind of difficult situation we never want to see customers in. Once a package has begun, the organiser has a responsibility to find alternatives if they find they are constrained to not provide a significant element of the ongoing arrangements. That may include an option to return the customers back to their point of origin at no extra cost, although availability of flights might be an issue.
Either way, this is therefore a matter for the tour operator to discuss with the customers, and the facts of what is, and is not, available will be key. As an agent, I would be wary about paying for anything even with the obvious high level of customer service you are clearly and commendably showing – there is a real risk that you would not be able to recover such monies from either the customer or the operator.
I would certainly continue to communicate with the customers wherever you reasonably can, and suggest they also engage their own travel insurance policy.
Q: If a client chooses to alter flight dates to a later period, when that is an offer from the carrier, does this constitute a ‘new’ booking? Would this then be viewed by an insurance company as a booking made after March 13 and, therefore, ineligible for cover?
A: One practical step all travel businesses should be taking is to make it clear that any form of amendment should be a continuation of the original booking. That then ensures that the original T&Cs apply, and that there is less chance that an insurer would be able to argue that the cover cannot apply.
Answers from Ami Maru, partner and head of employment at Travlaw
Q: Do the ‘protection’ rules still apply during mass collective consultation for anyone on maternity leave?
Would they be protected against redundancy if considerable numbers of people in the same role were being removed from the business?
A: In short the “protection” does apply during collective consultation. If a redundancy situation arises during an employee’s maternity leave and “it is not practicable by reason of redundancy” for the employer to continue to employ her under her existing contract, the employee is entitled to be offered a suitable alternative vacancy (where one is available) to start immediately after her existing contract ends. This gives the employee on maternity leave priority over other employees who are also at risk of redundancy and is a rare example of lawful positive discrimination.
Q: My son is having to self-isolate due to symptoms of Covid 19. As his parent I am following government guidelines that I to have to self-isolate for two weeks. I am being told by my company that I have to take my time off as unpaid and I can’t claim SSP as it’s not me that is sick. Can you advise if this correct information. I am not taking the time off work voluntary as I certainly can’t afford two weeks loss of earnings, I am just following government guidelines.
Any help and advice would be greatly appreciated.
A: If you are self-isolating because of COVID-19, from March 13, you can now claim SSP. This includes individuals who are caring for people self-isolating in the same household and therefore have been advised to do a household quarantine.
Q: We have absolutely no alternative but to activate HR1 collective consultation – are the ‘special circumstances applicable?
Q: We understand that ‘special circumstances’ normally only apply for ‘insolvency situations’ but given we have never experienced a situation of this magnitude surely Coronavirus 19 is a ‘special circumstance’. If it is not, is there any way we could approach the government to get a ruling on special circumstances and allow us to use this clause?
Q: The time and length of collective consultation is causing a strain on our liquidity. If we could go straight into the process without the current rules we would be able to remove some of the costs with immediate effect. Ultimately saving jobs in the long run. Why can’t we?
A: Where an employer proposes to make large-scale redundancies of 20 or more employees within a period of 90 days or less (collective redundancies), it must consult on its proposal with representatives of the affected employees and also notify BEIS.
In some cases, employers may be able to take advantage of a limited exception to the obligation to collectively consult. The exception is limited because it does not apply to all of the obligations, nor does it necessarily remove those obligations entirely.
The exception applies where there are “special circumstances which render it not reasonably practicable” for the employer to comply with the requirement:
- To begin in good time and at least the relevant minimum period before the first dismissal;
- To consult with a view to reaching agreement about ways of:
- avoiding dismissals;
- reducing the numbers of employees to be dismissed; and
- mitigating the consequences of the dismissals; or
- To provide the statutory information under the legislation.
In such a case, the employer “shall take all such steps towards compliance with that requirement as are reasonably practicable in those circumstances, the burden of proof is on the employer to show (a) the existence of special circumstances and (b) that such steps as were reasonably practicable were taken to comply with the particular requirement concerned.
The first issue is to determine whether “special circumstances” apply. It is not enough for an employer to show that there are circumstances which render compliance with the relevant statutory requirements not reasonably practicable. Those circumstances must be “special”.
There is no generic category of “special circumstances”, and the existence of special circumstances is therefore judged on the facts of the case. In this case would coronavirus amount to a special circumstance? This requires an assessment at the relevant time of actual events and the practicalities of consultation. If for example any circumstances which the employer identifies in hindsight are not capable of amounting to special circumstances.
If, for example, a “sudden disaster” (whether physical or financial) strikes a company, making it necessary to close the concern, then this will be capable of being a special circumstance. On the other hand, if redundancies were due to a “gradual run-down of the business”, then a tribunal might decide that the circumstances were not special. There must be “something out of the ordinary” for special circumstances to exist.
In respect of Covid 19 I do not think you can safely rely on “special circumstance’s” defence and do nothing. This is new uncharted territory and no case law on it, therefore even if this was deemed to amount to a “special circumstance”, this would not absolve the employer absolutely from the obligation to consult. The employer must still fulfil those obligations with which it was reasonably practicable to comply, or which were unaffected by the special circumstances.
Where full compliance was not reasonably practicable, the employer is also obliged to take all steps towards compliance as are reasonably practicable in the circumstances of the case.
Q: Will I get paid if I need to look after my young children who are off school from next week onwards? I can work from home but it’s difficult with toddlers, and I have to deliver food/shopping to elderly relatives.
A: The UK government has said that everyone should work from home where possible. But as this this is only advice, whether you are allowed to or not will depend on your employer.
There are several options available here. You could take annual leave. Alternatively you could agree with your employer to take time off in lieu and make up the time at a later date. You could negotiate to work part time during this period, this would be at your employers discretion. You are also entitled to take time off for dependants but this would be unpaid unless your employer agrees to the contrary.
This is a community-moderated forum.
All post are the individual views of the respective commenter and are not the expressed views of Travel Weekly.
By posting your comments you agree to accept our Terms & Conditions.