The OECD’s Global Forum on Transparency and the Exchange of Information for Tax Purposes (the Global Forum) published the ‘Peer Review of the Automatic Exchange of Financial Account Information 2022’ on 9 November 2022. The full publication is accessible HERE.

Download a PDF copy of our legal guide – British Virgin Islands: Peer Review of the Automatic Exchange of Financial Account Information 2022.

The Global Forum monitors and peer reviews the implementation of the global Standard for Automatic Exchange of Financial Account Information in Tax Matters (the AEOI Standard). In pursuance of its mandate, the Global Forum reviewed each participating jurisdiction’s internal legal frameworks to ensure they are complete and that the AEOI Standard is effectively implemented in practice.

AEOI legal framework

The Global Forum concluded that the British Virgin Islands’ domestic and international legal frameworks implementing the AEOI Standard are in place and are consistent with the core requirements of the AEOI Terms of Reference.

Effectiveness in practice of AEOI

The Global Forum found that the British Virgin Islands’ implementation of the AEOI Standard is only partially compliant with the requirements of the AEOI Terms of Reference to ensure the effectiveness of the AEOI Standard in practice.

In broad summary, the Global Forum concluded that the British Virgin Islands’ implementation of the AEOI Standard is on track with respect to exchanging the information effectively in practice, including in relation to sorting, preparing and validating the information, most of the requirements in relation to correctly transmitting the information in a timely manner and providing corrections, amendments or additions to the information. However, it identified some issues relating to the British Virgin Islands’ administrative compliance framework and related procedures and the exchanging of information in a timely manner with all exchange partners.

In particular, the Global Forum noted that the British Virgin Islands is:

• partially meeting expectations in ensuring that Reporting Financial Institutions correctly conduct the due diligence and reporting procedures, including by having in place the required administrative compliance framework and related procedures. More specifically, significant issues were identified, including with respect to the extent of the implementation of the British Virgin Islands’ compliance strategy and verification activities, its monitoring of key information points such as Tax Identification Numbers and dates of birth and with respect to the enforcement procedures;
• fully meeting expectations in relation to collaborating with its exchange partners to ensure that Reporting Financial Institutions correctly conduct the required due diligence and reporting procedures;
• meeting expectations in relation to sorting, preparing and validating final account information to be reported (the Information). It was also noted that there is room for improvement with respect to the processes to sorting, preparing and validating the Information;
• fully meeting expectations in relation to agreeing and using appropriate transmission methods with each of its exchange partners;
• meeting expectations in relation to exchanging the Information in a timely manner. It was also noted that there is room for improvement with respect to sending information in a timely manner;
• fully meeting expectations in relation to sending the Information in accordance with the agreed transmission methods and encryption standards; and
• appears to be meeting expectations in relation to responding to notifications from exchange partners and the sending of corrected, amended or additional information.

The Recommendations

The Global Forum made three recommendations relating to:

• monitoring and verifying compliance with the AEOI Standard including developing and implementing administrative procedures to enable effective enforcement and appropriate sanctions when non-compliance is detected;
• sorting, preparing and validating information to ensure they meet the AEOI Standard; and
• sending information to exchange partners in a timely manner,

(together, the Recommendations).

The British Virgin Islands’ response

In response to the Global Forum’s assessment, the British Virgin Islands has cited the significant progress it has made in implementing the AEOI Standard as an early adopter notwithstanding its challenges. It referred to the hindrances caused by Hurricanes Irma and Maria including damage to infrastructure and resulting loss of staff. It underscored its commitment to meeting its obligation and continuing the work toward the implementation of the AEOI Standard.

What does this mean for industry players?

Based on the British Virgin Islands’ response to the Global Forum’s assessment, we expect that the BVI International Tax Authority will implement the Recommendations in due course. Accordingly, Reporting Financial Institutions should expect progressively increased compliance monitoring, verification activities and enforcements by the International Tax Authority including the establishment of administrative penalties and sanctions to address non-compliance with the AEOI Standard.

Reporting Financial Institutions should take a closer look at their existing CRS policies and procedures. They should also ensure that they identify the Financial Accounts they maintain, the Reportable Accounts among those Financial Accounts (including their Account Holders, and where relevant Controlling Persons) by correctly conducting the due diligence procedures and collecting and reporting the Information with respect to each Reportable Account.

If you need any assistance with the classification and reporting obligations of any entity pursuant to the AEOI Standard, please feel free to contact us.

The British Virgin Islands (BVI) has introduced further changes to the economic substance (ES) regime by way of amendments to the Economic Substance (Companies and Limited Partnerships) Act, 2018 (the Act). The amendments are introduced by the Economic Substance (Companies and Limited Partnerships) (Amendment) Act, 2021 (the Amendment Act) which came into force on 29 June 2021.

Download a PDF copy of our legal guide looking at the amendments introduced by the Economic Substance (Companies and Limited Partnerships) (Amendment) Act, 2021.

This legal guide considers the key changes to the economic substance regime. 

Distribution and service centre business and limited partnerships without legal personality  

Distribution and service centre business

Prior to the changes introduced by the Amendment Act, the provision of consulting or administrative services (CA Services) to foreign affiliates was not expressly included in the definition of “distribution and service centre business”. Nevertheless, the provision of CA Services to foreign affiliates was listed as one of the core income generating activities (CIGAs) relating to “distribution and service centre business” under the Act. As a matter of construction, some industry practitioners were of the view that any relevant entity providing CA Services would likely be providing “services to foreign affiliates in connection with the business” within the meaning of the previous definition. The Amendment Act now makes it clear that “distribution and service centre business” includes the provision of CA Services to foreign affiliates.

Limited partnerships without legal personality

Initially, the definition of “limited partnership” under the Act excluded limited partnerships without legal personality. The Amendment Act removes that exclusion such that every limited partnership, with or without legal personality, is now subject to the ES regime.

Financial periods for limited partnerships without legal personality 

Following the introduction of the Amendment Act, there is now a six-month transition period for limited partnerships without legal personality which were formed prior to 1 July 2021 (Pre-Existing LPs). Limited partnerships without legal personality formed on or after 1 July 2021 (New LPs) will be immediately subject to the Act upon formation as is already the case with other relevant entities. The “financial period” for Pre-Existing LPs and New LPs is:

• • Pre-Existing LPs: such period of one year commencing on a date no later than 1 January 2022 as the Pre-existing LP shall notify to the International Tax Authority (ITA) and thereafter each successive period of one year running from the end of that period;
  • New LPs: such period of not more than one year from the date of formation as the New LP shall notify to the ITA and thereafter each successive period of one year running from the end of that period.

Investment fund business

Prior to the introduction of the Amendment Act, only the Rules on Economic Substance in the Virgin Islands (the Rules) contained any express indication that the business of being an investment fund did not itself comprise a “relevant activity”. The ITA based its conclusion on the exhaustive list of “relevant activities” under the Act, which did not include investment fund business. The Amendment Act now expressly provides that investment fund business is not a “relevant activity”. Accordingly, an entity that only carries on investment fund business will not be required to comply with any of the ES requirements.

What is investment fund business?

The Amendment Act introduces a definition of “investment fund” as “…an entity whose principal business is the issuing of investment interests to raise funds or pool investor funds with the aim of enabling a holder of such an investment interest to benefit from the profits or gains from the entity’s acquisition, holding, management or disposal of investments and includes any entity through which an investment fund directly or indirectly invests or operates (but not an entity that is itself the ultimate investment held), but does not include a person licenced under the Banks and Trust Companies Act, 1990 or the Insurance Act, 2008, or a person registered under the Cooperatives Societies Act 1979 or the Friendly Societies Act 1928.”

The Amendment Act then defines “investment fund business” as “the business of operating an investment fund”.

The definition of “investment fund” does not make a distinction as between redeemable or non-redeemable interests. As such, it likely includes both open-ended and closed-end investment funds.

Based on our interpretation of the Amendment Act, the following entities might meet the definition of “investment fund”:

• Mutual funds recognised as such by the Financial Services Commission (including incubator and approved funds)
• Closed-end funds recognised under the private investment fund regime
• A master fund, being an entity through which an investment fund directly or indirectly invests

It is likely that that the ITA will provide guidance as to which entities or categories of entities might meet the definition of an “investment fund”. Until then, any relevant entity claiming not to be carrying on a “relevant activity” on the basis that it is an investment fund should consult with their BVI counsel to determine whether the entity is indeed carrying on the business of an investment fund in respect of any relevant financial period.

Core income generating activities and winding up

Core income generating activities (CIGAs)

The Act sets out a list of CIGAs for each “relevant activity”. Following the introduction of the Amendment Act, CIGA now also encompasses “all the activities that are of central importance to the relevant entity in terms of generating relevant income and must be carried on in the Virgin Islands”. The ITA had already indicated in the Rules that the specified CIGAs for each “relevant activity” are not confined to those specified activities and that what constitutes the CIGA of a particular activity requires a fact-sensitive analysis in each case. With the new gloss on the definition of CIGA, entities carrying on a relevant activity, other than holding business, might wish to conduct a more structured analysis to pinpoint all activities that generated relevant income for the entity for the financial period under consideration and then determine whether those activities were conducted in the BVI for that period as required by the Act.

Winding up

Given the pending changes to the strike off regime, instead of the ITA seeking for the entity to be struck off under the Act, the ITA will now be seeking for the entity to be wound up in cases where it determines that this is an appropriate enforcement action for any breach of the Act.

What should I be doing now?

Pre-Existing LPs should now be looking to undergo a classification exercise to determine whether the entity is within the scope of the ES requirements. Entities claiming to be conducting only investment fund business and which would accordingly not be required to comply with any of the ES requirements, should also seek legal advice to confirm their status.

If you need further information or any assistance with the classification of your entity for the purposes of the Act, particularly in light of the introduction of the Amendment Act, please feel free to contact us.

 

 

Introduction

Except where a specific exemption applies, an entity holding a BVI financial services licence (each a licensee) is required under the Financial Services Commission Act 2001 (the Act) to appoint an individual approved by the Financial Services Commission (the Commission) as its compliance officer (the Compliance Officer).

As part of his or her core functions, as articulated in the Regulatory Code 2009 (as amended) (the Code), the Compliance Officer must prepare and submit to the Commission an annual Compliance Officer’s report (COR) detailing the level of the licensee’s compliance with the Code and any other applicable financial services legislation.

Download a PDF of our Legal Guide – Compliance Officer’s Reports

When are CORs due?

There was previously no express deadline for the submission of CORs. However, as a matter of convention, a licensee would have up to 12 months after the end of the year to which the report relates to submit its COR to the Commission. Following the amendments to the Code as contained in the Regulatory (Amendment) Code 2019, which came into force on 13 November 2019, a licensee is now required to prepare and submit its COR to the Commission within 3 months after the end of the year to which the report relates. Accordingly, all licensees must submit their CORs relating to the 2020 compliance year by 31 March 2021.

What should a COR contain?

The Code sets out, in precisely the following terms, the minimum details that a COR should contain:

• the number of persons employed by the licensee;
• the names and positions of those employees who participated in any training, the content of material covered, the dates of any such training and a copy of the licensee’s training register;
• a list of any BVI laws that the licensee may have breached over the period under review and a summary of any remedial action and time frame taken to address any such breach;
• a copy of the licensee’s register of compliance breaches (which it is required to maintain under the Code);
• the total number of suspicious activity reports made during the year of the COR;
• a list of significant complaints (as defined in the Code) made by customers of the licensee indicating the dates of the complaint, the nature of these complaints and how they were handled;
• an indication of whether there has been a significant breakdown in the internal control structure of the licensee including any compliance risks that may be associated with the licensee’s business relative to:
  • its existing risk management strategy, policies, systems and controls, and whether the internal controls remain sufficient and appropriate for the licensee’s business; and
  • whether the strategy, policies, systems and internal controls are being implemented and complied with in an effective manner;
• confirmation of whether the licensee remains properly resourced, structured, and organised to enable it to effectively undertake its business activities, including serving the number and types of its customers; and
• confirmation of the level of compliance by the licensee with its reporting, filing and all other obligations under the Code and any other applicable financial services legislation.

Can a licensee request an extension of time to prepare and submit its COR?

There are no clear provisions in the Code or the Act governing whether and how the Commission would consider requests for an extension of time to file a COR. It is likely that the Commission will, as it did prior to the 2019 amendments to the Code, continue to deal with such requests on a case-by-case basis to determine whether the circumstances justify any extension being given or if any enforcement action ought to be taken where a COR has not been submitted by the specified deadline. Considering the likely discretionary nature of that exercise, licensees are well advised to submit their COR to the Commission on time to avoid the risk of any enforcement action being taken against them.

What enforcement action might the Commission take if a licensee fails to submit a COR on time or at all?  

The Commission has broad enforcement powers under the Act which it may exercise in any case where it is of the opinion that a licensee has contravened any provision of the Code or any other financial services legislation. In exercising such powers, the Commission has several options ranging from the issuance of a warning letter against a licensee to the revocation or suspension of its licence. In cases where a licensee has failed to submit its COR, the Commission typically imposes a fine commensurate with the degree of non-compliance. However, repeated infractions could result in more severe enforcement action.

Conclusion

CORs assist both the Commission and the licensee in monitoring the licensee’s compliance with the Code and other applicable financial services legislation. Accordingly, it is enormously important for licensees to prepare accurate and comprehensive CORs that comply with the Code. In doing so, licensees not only avoid the risk of enforcement action for failure to submit a compliant and timely COR; they also benefit from the opportunity to assess their compliance functions against the background of this obligatory regulatory self-inspection.

If you need any further guidance on preparing and submitting a COR or determining whether a licensee is exempt from this reporting requirement, please email us or reach out to one of our lawyers using the contact details below.

 

The Financial Services (Continuity of Business) Act, 2020 (the Act) came into force on 28 March 2020. It was enacted to provide for special measures to support the continuity of financial services business either from within or temporarily outside the Virgin Islands in an “exceptional circumstance”.

Download a PDF of our Guide to the Financial Services (Continuity of Business) Act, 2020

In this guide, we examine the scope of application of the Act and some of the special measures that may be deployed whenever an “exceptional circumstance” has arisen or is likely to arise within or outside the Virgin Islands.

At the start of the 2020 hurricane season, it is timely for entities carrying on financial services business to review and be aware of the provisions of the Financial Services (Exceptional Circumstances) Act, 2020 (the FSECA) which may apply to the financial services industry in the case of any disruption.

The FSECA came into force on 28 March 2020. It repeals the Financial Services (Continuity of Business) Act, 2017 which was put in place for a transient period to deal with the interruption in BVI financial services business in the aftermath of Hurricanes Irma and Maria. The FSECA now provides a permanent framework for the adoption of special measures relating to the conduct of financial services business in the event of an exceptional circumstance arising within or outside the Virgin Islands including but not limited to pandemics, earthquakes and hurricanes.

Whom does the FSECA apply to?

The FSECA applies to:

• all persons holding a financial services licence; and

• any person otherwise subject to the Financial Services Commission Act, 2001 (the FSCA) or any other financial services legislation including approved, recognised and authorised persons,

(together referred to as Relevant Persons).

When does the FSECA apply?

The special measures provided for by the FSECA will apply when the Minister with responsibility for financial services issues an Order published in the Virgin Islands Official Gazette declaring that an exceptional circumstance has arisen or is likely to arise whether within or outside the Virgin Islands (the Order). An exceptional circumstance has arisen or is likely to arise when:

• it has become difficult or impossible to carry out financial services business in and from within the Virgin Islands in accordance with the FSCA or any other financial services legislation; or

• different or special measures are otherwise required to facilitate the conduct of financial services business in and from within the Virgin Islands.

The Order may indicate whether all or only specified provisions of the FSECA will apply or if it applies to all or only specified Relevant Persons. It must indicate the date from which the provisions of the FSECA will apply and, unless specified otherwise, the duration of application. The Order may also specify that the FSECA is to be applied retroactively if necessary.

What are the main allowances under the FSECA?

In an exceptional circumstance, the Board of the Financial Services Commission (the Board), which has the responsibility for monitoring and overseeing the operation of the Financial Services Commission, will be afforded added flexibility to continue to discharge its functions. In particular:

• the Board may not be able to meet for the number of times stipulated in the FSCA. Under FSECA, it will have additional flexibility to meet at any other time or place, whether within or outside the Virgin Islands, or by any convenient medium, including via electronic means;

• the Chairman and/or the Managing Director of the Board may make urgent decisions on their own which would have otherwise required a majority vote of the commissioners of the Board. Such decisions, however, will require subsequent ratification by the Board.

The Order may also specify that:

• a Relevant Person may temporarily relocate the whole or part of his or her business to another jurisdiction or to a new address within the Virgin Islands in order to continue the operation of his or her business;

• the provisions of the Insurance Act and the Regulatory Code relating to the licensing of loss adjusters are disapplied;

• directors or authorised agents normally required to be resident in the Virgin Islands may be resident outside the Virgin Islands for the period that the Order remains in force;

• the Commission may extend the time for Relevant Persons to perform outstanding obligations, including the payment of any administrative penalty;

• records that are normally required to be kept in the Virgin Islands may be temporarily kept in the jurisdiction of relocation; and

• certain specified fees that would have otherwise been payable are waived.

What are the additional points to note under the FSECA?

Where a Relevant Person relocates temporarily outside the Virgin Islands due to an exceptional circumstance, he or she will be deemed to be operating in the Virgin Islands and must continue to comply with all applicable laws.

The FSECA also establishes a Financial Services Complaints Tribunal to receive and investigate complaints made by a client or customer of a licensee regarding the handling of claims made against the licensee.

The Minister has already issued an Order in light of the disruptions caused by the Covid-19 pandemic. Although hopefully further orders under the FSECA will not be required, the FSECA now provides a permanent legislative framework to help facilitate the ongoing operation of the financial services industry in or temporarily from outside the Virgin Islands in the event of any exceptional circumstance.

For more information and to discuss how the FSECA could inform your business continuity plans and strategies, please feel free to email us or reach out to one of our lawyers using the contact details below.

 

 

Introduction to Private Investment Funds

Download a PDF of this article

The British Virgin Islands (BVI) Securities and Investment Business Act, 2010 (the Act) was amended to introduce a new private investment fund (PIF) regime for previously unregulated closed-ended investment funds effective as of 31 December 2019. The Act is accompanied by the Private Investment Funds Regulations, 2019 (the Regulations) which together constitute the PIF regime.

Under the PIF regime, a private investment fund must apply to the Financial Services Commission (the Commission) for recognition before it may be promoted or allowed to operate as a PIF in or from within the BVI. However, all PIFs currently operating in the BVI must apply for recognition within the transition period specified in the Act which commenced on 31 December 2019 and ends on 1 July 2020. Any PIF failing to do so will be considered to be conducting unauthorised financial services business and therefore subject to enforcement action.

In this guide, we focus solely on the application process for recognition of PIFs currently operating in the BVI which must be submitted to the Commission by 1 July 2020. This guide is based on the requirements contained in the Act and the Regulations, the Guidelines prepared by the Commission and the statements made by the Director of the Commission’s Investment Business Division at the virtual Meet the Regulator Forum held on 2 June 2020.

The Application Process

Step 1: As a critical first step, PIFs should conduct a classification exercise to determine whether or not they fall within the definition of “private investment fund” under the Act.

A PIF is defined as any company, partnership, unit trust or any other body incorporated, registered, formed or organised in the BVI or any other country which:

• collects and pools investor funds for the purpose of collective investment and diversification of portfolio risk; and
• issues fund interests, which entitle the holder to receive an amount computed by reference to the value of a proportionate interest in the whole or in a part of the net assets of the company, partnership, unit trust or other body.

PIFs will typically include most types of private equity funds, for example. However, joint venture enterprises, family offices and investment vehicles investing in only one asset class will not generally satisfy the PIF definition and will quite likely fall outside scope. In the final analysis, each PIF must be examined on its own circumstances to determine if both limbs of the definition are satisfied. If you are uncertain about your entity’s classification, we strongly recommend that you speak with a lawyer.

Step 2: PIFs are required to have an authorised representative and appointed persons responsible for undertaking:

• valuation;
• management; and
• safekeeping relating to the fund property.

You should have the names and addresses of these persons to hand as you prepare to complete the application.  You will also need additional information about the PIF including places of business inside and outside the BVI, entity type, the names of the directors or general partners, details of the trustees where applicable and the PIF’s financial reporting mechanism.

Step 3: Once you have gathered all the relevant information, you should commence the application process immediately.

You will need:

(a) the completed application form together with:

• the PIF’s constitutional documents;
• the PIF’s certificate of incorporation, formation, registration or equivalent document;
• the PIF’s valuation policy;
• the offering document or term sheet, or the proposed offering document or term sheet, if applicable;
• register of directors, if applicable;
• a résumé or biography for each director, general partner, trustee or other underlying individual(s) where the director, general partner or trustee is a corporate entity; and

(b) the initial application fee of US$700.

Please note that the PIF’s constitutional documents should indicate that:

• the PIF is not authorised to have more than 50 investors; or
• an invitation to subscribe for, or purchase, fund interests shall be made on a private basis only; or
• the fund interests shall be issued only to professional investors with a minimum investment of US$100,000.

It might not be necessary or feasible for a PIF to issue an offering document or a term sheet. In those cases, the PIF must specify in the application form:

• why the fund does not intend to issue an offering document or term sheet; and
• how the information relating to investments in the fund will be communicated to investors or potential investors.

Step 4: The Commission has said that it will not process incomplete applications.

You should therefore ensure that the application form is thoroughly completed and all supporting documents are in place and meet specifications.

Step 5: You should then submit the completed application form and accompanying documents to the Commission by hand or email.

Step 6: The Commission will assess completed applications to ensure that they are compliant with the Act and the Regulations.

Assessments will be done on a “first come, first served” basis and, as indicated by the Commission, within 24-48 hours of receipt.

As specified in the Act, when the Commission grants an application for recognition, it will register the PIF in the Register of Private Investment Funds. The Commission will also issue a certificate of recognition as a PIF upon payment of the recognition fee of US$1,000 (for approvals up to 30 June 2020).

Recognition fees for any PIF approved after 30 June 2020 will be US$500. Such recognition will be valid until the end of the year. PIFs must then pay an annual fee of US$1000 to maintain the certificate of recognition.

If the application has been denied, the Commission will notify the applicant accordingly.

Conclusion

PIFs currently operating in the BVI should seek to become compliant with the new PIF regime as a matter of urgency. We can help you to navigate this process from classification of your investment vehicle to recognition by the Commission.

For more information or if you require any assistance with your PIF applications, please feel free to email us at ghp@ghpbvi.com or reach out to one of our lawyers using the contact details below.

Jermaine O Case Joins George Henry Partners LP

Jermaine O Case joined George Henry Partners LP (GHP) on 18 May 2020 as the newest addition to the firm. Jermaine brings to the firm experience and expertise in the areas of banking, financial services regulatory, corporate and commercial, debt finance, employment and general commercial litigation. Jermaine also advises on all aspects of the British Virgin Islands’ telecommunications regulatory framework.

“Jermaine is a great addition to our team. His particular skill set and experience are an excellent fit for GHP, and enhance our offering and capacity to provide the best service to our clients. We are excited to have Jermaine on board at this critical stage of our development and look forward to deploying the expanded suite of services his addition to the GHP team brings,” remarked Sheila George, Managing Partner.

“I am ecstatic about joining GHP and couldn’t be prouder to be a part of this highly qualified and skilled team. I am delighted to have the opportunity to work in an environment with a culture of excellence, where every member of the team is given a platform and is motivated to achieve his or her full potential. GHP’s core values certainly align with my own. Their people-centric approach ensures that clients receive consistent, high quality, tailored legal support. I very much look forward to using my skills, expertise and experience to add value to the team,” said Jermaine Case.

View Jermaine’s Profile

 

Download the PDF of our guide to employers’ obligations in relation to the coronavirus outbreak 

As of 16 March 2020, there were no confirmed cases of coronavirus (officially known as Covid-19) within the British Virgin Islands. As more coronavirus cases are detected outside of China and the first cases have been identified within the Caribbean area, BVI employers should monitor the impact of the outbreak and take steps to protect their employees and their business.

The outbreak of coronavirus raises points of employment law, immigration, and health and safety for BVI employers. Specific legal advice should be sought where necessary, particularly as the situation is changing daily.

General Measures

Employers should have regard to the following measures to help them to manage the current coronavirus outbreak:

• Monitor and follow advice and guidance from relevant authorities such as the World Health Organisation, the BVI Health Services Authority, Pan American Health Organisation and the Caribbean Public Health Agency
• Determine protocols for the self-isolation of employees, where deemed appropriate
• Carry out a risk assessment to identify the risks faced by employees and visitors and implement measures to mitigate those risks, paying particular attention to vulnerable persons (such as those with weakened immune systems, older people, and those with long-term health conditions including diabetes, cancer, heart disease, asthma and chronic lung disease)
• Inform employees about any proposed measures to be implemented in the workplace, consulting with employees or employee representatives where appropriate, bearing in mind the need to encourage employee participation
• Review the possibility of flexible working and whether existing employment contracts, policies and working arrangements permit such flexibility. If they do not, consider how such flexibility might be achieved
• Review existing policies governing business travel, vacation leave, sick leave, caring for dependents and working from home. Employers should adopt a reasonable and consistent approach, taking account of risk assessments and official guidance
• Review any relevant insurance policies and guidance issued by insurers, particularly in connection with travel, medical insurance, and business interruption
• Ensure that contact details for employees are up to date, including who should be contacted in the event of an emergency
• Consider how employees who are currently travelling or who have travel plans will be impacted by the current travel restrictions
• Consider arrangements for dealing with employees who need to travel abroad, who may be at particular risk of contracting coronavirus, or who report symptoms and may have coronavirus

The BVI economy is built on the twin pillars of financial services and tourism, both of which involve significant elements of international travel. Both of these areas of the economy will be impacted to varying degrees by the restrictions on travel and interaction that are being effected by governments around the world. 

With the number of confirmed cases in the Caribbean area on the increase, employers need to understand what their obligations are to employees and how they should react to some of the challenges that will be faced. While specific legal advice should always be sought in relation to the coronavirus and its impact upon the workplace, we have endeavoured to cover some of the more common questions and concerns below.

What is an employer’s duty of care?

The Labour Code places obligations on employers in relation to health and safety in the workplace. This obligation requires employers to ensure that:

• a safe, sound and secure working environment is provided so far as reasonably practicable
• every reasonable precaution is taken in the circumstances for the protection of workers
• reasonable precautions are taken in the circumstances to protect the general public who come into contact with the workplace
• all applicable standards and policies established by the Labour Department and other relevant agencies of the Government in consultation with stakeholders are complied with. Practically, such agencies would include the BVI Health Services Authority and the Environmental Health Division of the Ministry of Health and Social Development

A breach of an employer’s obligations pertaining to health and safety under the Labour Code constitutes a criminal offence. Criminal liability may extend to individuals (including directors and other employees) where a breach of the obligation has been facilitated by their neglect.

The Labour Code requires employers to undertake a suitable and sufficient assessment of the risks to the safety and health of both (i) employees while at work; and (ii) persons who are not employees, but which are impacted in some way by the employer’s business. This latter category will capture persons such as customers, visitors, suppliers and persons on secondment. Employers should take the time now to review and update their risk assessment to reflect the challenges faced by the coronavirus outbreak and ensure that any required changes are implemented as soon as possible.   

Can an employer expect an employee required to self-isolate to work from home?

This will depend on the circumstances of each case, but is likely to depend on:

• whether the employee is impacted by symptoms of coronavirus – in which case, it is likely that they should not be working and should be on sick leave
• is it a type of job that can be undertaken from home?
• if it is a type of job that can be undertaken from home, does the employer/employee have the systems in place to enable that job to be undertaken from home?

Employers should consider whether they need to take any steps to facilitate working from home. This may include ensuring that employees have a way of logging on to secure systems and can access any necessary materials. The ability to work from home should be assessed for support staff as well as more senior staff. In this regard, employers should assess the availability of laptops, printers and other devices, the absence of which might prevent employees working effectively from home. Working from home may not be an option for some professions and trades.

The key point is that employers should take steps now to assess the viability of working from home, since the spread of the coronavirus has been unpredictable so far and it is unclear how long the duration of any impact might be. Using other countries that have confirmed cases of coronavirus as examples, it is likely that some workplaces will be closed (either voluntarily or required to close by the authorities) and employers need to make sure that any disruption is limited, to the extent possible.

Can an employer prevent employees travelling abroad on vacation?

It is unlikely that an employer could prevent an employee from travelling on vacation, even if the proposed destination is considered to be high risk. However, it would be prudent to advise employees against travel to certain areas in accordance with official advice, to ensure that government guidance is accessible to employees and to ask employees to notify the employer if they are intending to travel to affected areas.

Can an employer ask employees to provide cover for those who are unwell or in self-isolation?

Employers should review employment contracts and any relevant policy to determine whether employees can be required to provide cover for other employees who are unable to attend work because of the coronavirus. Employees should be consulted as it may not be appropriate or reasonable for some employees to work additional hours.

In any event, employers should pay close attention to the provisions of the Labour Code as they relate to the requirement to pay premium pay and also in respect of meal and rest periods.

Can an employer prevent an employee who has refused to self-isolate from accessing the workplace to limit the spread of coronavirus?

Employers must bear in mind the duties of care that they owe to other employees and members of the general public that could come into contact with the workplace. If an employer knowingly allows an employee who has been advised to self-isolate to attend the workplace, the employer may be in breach of those duties.

Suspension may be an option where an individual who has been advised to self-isolate refuses to do so, but employers should consider whether they have a right to suspend in these circumstances. Where no express contractual right to do so exists, legal advice should be sought.

Should employees who are required to self-isolate be paid?

Employers are unlikely to be able to insist that employees take vacation leave for any period of self-isolation in the absence of a contractual right to do so where such self-isolation accords with official guidance. As these employees are not “sick”, it is unlikely that they will be covered by sick leave. Instead, assuming the employer has instructed employees who according to official guidance should self-isolate to remain away from their place of work, employees are likely to be on a period of leave. This leave is likely to need to be paid, unless an employer has a contractual right to place the employee on a period of unpaid leave. The situation is more nuanced where employees consider they should self-isolate for reasons other than those reflected by official guidance.

Where an employee voluntarily remains away from the workplace due to self-isolation without discussing this with the employer first, or for reasons that are not proportionate or reasonable, there may be more scope for considering such leave to be unpaid, although this will depend on the circumstances in each case.

Are employees with coronavirus entitled to sick leave?

This will depend on an analysis of the employee’s employment contract, any relevant policy and an understanding of the statutory position under the Labour Code.

In essence, the Labour Code links the eligibility to sick leave with illness. There could be circumstances in which a person is advised to self-isolate (perhaps because they have been in close contact with a person that has tested positive for coronavirus) but is not actually unwell. In such cases employees may not have a legal entitlement to sick leave under the Labour Code.  Where an employee is unwell, the Labour Code entitles that employee to sick leave with pay for a period of not less than twelve working days in any one year, provided the employee has been continuously employed for a period of at least four months.

Employers should consider making exceptions to their usual sick leave policies to ensure that employees do not feel compelled to attend the workplace when in accordance with official advice they should self-isolate to help to contain the spread of coronavirus.

How should an employer deal with incidents of discrimination and harassment?

There have been reports in other parts of the world of racism and prejudice being shown towards persons from certain countries that have been heavily impacted by the spread of coronavirus, particularly China. Employers need to be mindful of the risk of such behaviour occurring in the workplace.

Employers will potentially be liable for harassment or discrimination by their employees towards other employees and should therefore ensure that reasonable steps are taken to prevent such conduct.

Should business travel be curtailed?

Certain countries have imposed travel restrictions, and these are likely to be updated regularly and with little notice. In the BVI, the visa-free initiative for Chinese nationals is currently suspended.

Employers should pay attention to official advice relating to travel restrictions and should also consider implementing policies to minimise the risk of employees catching coronavirus in connection with business-related travel. Measures to be considered should include health screening for employees returning from abroad and delaying or cancelling non-essential business travel and meetings. Employers should also consider contingency planning for the possibility of employees being quarantined or falling ill when travelling abroad. Employers should review their current travel and medical health insurance arrangements to determine if they remain in force and are adequate.

How to deal with employees who are unable or unwilling to attend work?

Some employees may be able but unwilling to attend the workplace because of fears of contracting coronavirus. Where work can be undertaken from home, it may be possible to agree that the employee works from home for a short period.

In other cases, it may be possible to agree that time away is taken as vacation or unpaid leave. However, if an agreed resolution cannot be found and an employee refuses to attend work without good cause, disciplinary action could be considered.

Before acting, employers should ensure that they have undertaken a risk assessment and have taken steps to mitigate any workplace risks which might cause employees concern. Employers should also ensure that they have dealt with requests to remain away from work in a proportionate, reasonable and consistent manner.

Other employees may be willing but unable to work because they are caring for dependents, as a result of closed schools, or transport disruptions. Employers will need to consider the terms of employment contracts and any relevant policies when determining how to respond to requests to be absent from work, bearing in mind that such requests could be made in relation to an extended period of time and by a significant number of employees.

For more information and to discuss these and any other ways in which the coronavirus outbreak may have an impact on your business, please feel free to email us or reach out to one of our lawyers using the contact details below.

The content of this guide is intended for general information purposes only and is current as at the date of publication indicated. This guide does not constitute legal advice and should not be relied upon as such. You should always seek specific legal advice that takes into account your individual circumstances.