Emergency from COVID-19

Preapared by Flavia Barone, Flavio Mondello Malvestiti, Aldo Radice

The Coronavirus emergency in Italy will have significant economic repercussions. Some measures in support of the economy have already been introduced, others are coming soon. The blockage of economic activities in the northern and central regions of Italy will cause a slowdown not only to national production but will also lead to a sharp slowdown in foreign tourism, a sector that contributes 13% to the annual GDP.

In order to deal with this emergency, specific decrees have been issued. In the coming days, other decrees will follow addressing these topics: the damages and economic impacts of the Coronavirus emergency. The Decree Law February 23, 2020, No 6 on ‘Urgent measures for the containment and the management of the epidemiological emergency from COVID-19. (20G00020)” was immediately followed by implementing measures adopted through the Prime Ministerial Decree of February 23, 2020 and February 25, 2020.

The following forecasts/restrictions are worth mentioning due to their impact on the ordinary business operations in the Red Zone (11 municipalities in Lombardy and Veneto) and, as a result, throughout the country:

a) ban on access and departure to/from the municipalities of the Red Zone;

b) suspension of protests or initiatives of any kind, events and all forms of meetings in a public or private place;

c) suspension of opening services to the public of museums, other cultural institutions and places;

d) suspension of the activities of public offices, without prejudice to the provision of essential and public services utility;

e) suspension of public insolvency procedures for the recruitment of staff;

f) closure of all commercial activities, without prejudice to the provision of essential and public services utility;

g) suspension of freight and passenger transport services, land, rail, inland waterways, and local public, even non-scheduled, excluding the transport of necessities;

h) suspension of work activities for enterprises, excluding those providing essential services and of public utility;

i) suspension of work activities for resident or domiciled workers, also de facto, in the municipality or area concerned, even if they take place outside the municipality or area indicated.

More and more EU and non-EU countries are advising against trips to Italy. Limitations and prohibitions have been introduced by various countries for the entry of travelers from Italy. It is clear that these measures will have an impact on companies operating nationally and internationally in terms of blocking or slowing down in activities, relations with suppliers, contraction in production and revenues. These impacts on the economy of enterprises will be reverberated throughout the country.

The first interventions in support of enterprises

The Director of the Inland Revenue Agency, Ernesto Maria Ruffini, has instructed to immediately implement the provision of the MEF Decree of February 24, 2020 with the following operational indications:

  • suspension of payments of taxes, withholding taxes and tax obligations for taxpayers and enterprises resident or operating in the eleven municipalities concerned (the suspension operates for payments and obligations with due date in the period between February 21, 2020 and March 31, 2020)
  • the obligations and payments subject to suspension must be made in a single instalment within one month following the end of the period of suspension;
  • the suspension shall also apply to payment slips issued by collection agents  and payments resulting from enforceable assessments.

In addition, a task force has been set up at MEF level to monitor the impact of the virus on our economy. Further decrees are expected to be issued. As anticipated by the Minister of Finance:

  • a first decree will provide for the suspension of social security contributions and payments for the scrapping of files in the most affected territories, with a postponement of tax obligations even for clients of professionals who are in the Red Zone;
  • with a further decree, as reported in the specialized press, measures will be introduced to support the liquidity of SMEs through a strengthening of the guarantee fund -€50 million additional- and to support exports -€350 million additional-. Even outside the Red Zone, for tourism, “there will be general measures as for other sectors. In addition, there will be an extension and a very significant financing of the Redundancy Fund”.

The Minister of Labour, Nunzia Catalfo, convened the social parts to define and share the plan for the management of the Coronavirus emergency. A series of tools are being prepared to protect the workers in the municipalities of the Red Zone: ordinary redundancy fund, wage supplementation fund and the redundancy fund in derogation for companies with less than 6 employees.

The Prime Ministerial Decree of February 25, 2020 outlines the application of agile work. It is applicable in a provisional way, until March 15, 2020, for employers with registered or operational headquarters in the following regions: Emilia Romagna, Friuli Venezia Giulia, Lombardy, Piedmont, Veneto and Liguria, and for workers residing there or domiciled people who work outside these territories, to any employment relationship, even in the absence of individual agreements provided for therein (for further details see the dedicated Newsalert).

We will monitor developments and the resulting measures that will be introduced for the benefit of companies in order to mitigate the economic impacts of COVID-19.

Finally, we enclose an operational checklist that may be useful to assess whether the company has taken into consideration all the significant impacts of this crisis.

Checklist- Key considerations to manage risk emerging from the COVID-19 outbreak


  • Set clear strategic priorities based on your business values and revisit existing strategy, considering legal and reputational risks
  • Review ongoing projects impacted and prepare for new market opportunities (M&A opportunities or online market expansion, etc.)
  • Challenge the existing Business Continuity Plan and establish an appropriate Crisis Management Team
  • Identify and quantify cost reduction measures as a result of economic slowdown
  • Develop clear, consistent and effective communications with internal and external stakeholders

Operational Supply chain / Contractual

  • suspensions from suppliers within China
  • Revisit supply chain model and consider short term changes e.g. alternative suppliers, production planning to reflect factory closures/delays to workforce returning
  • Establish alternative communication protocols with buyers and suppliers whilst there are restrictions on travel and physical meetings
  • Review contractual agreements to identify and mitigate potential disputes in production and delivery(inbound and outbound) arising from delay or failure to fulfil orders
  • Communicate with customers to assess ability to pay on time
  • Review government directives to ensure compliance
  • Consider opportunities for immediate relief of commercial leases

Financing Cash / Insurance

  • visit your business plan and update KPI’s to provide a realistic basis to critically assess the necessary actions
  • Review actual cash flow position and accurately forecast cash on a regular (daily) basis to mitigate likely shortages from falling sales and restriction in movements of people and goods
  • Consider the impact on working capital of changes in the supply chain
  • Critically review debt service obligations to identify potential events of default (e.g. missed interest payments) and assess likely consequences
  • Proactively engage with lenders and other stakeholders, preventing surprises and enabling potential rescheduling of debt or alternative financing sources
  • Prioritise reviewing insurance policies to assess potential recoveries for business interruption and clarify coverage as the situation develops
  • Consider if the business qualifies for financial relief initiatives recently implemented by the Government
  • Assess the implication for the potential delay of business expansion or consolidation and the next round financing

HR Workforce / Health /Safety

  • Prioritise health, safety and wellbeing of employees
  • Establish clear and timely communications with staff and stakeholders
  • Leverage technology and flexible working arrangements
  • Regularly collect data of your staff to support fluidity of decision making (e.g. their location, travel, date of return)
  • Quantify impact of lost production, overtime payments and compensation leave for flexible working days
  • Manage the implication of labour costs in mid-long term
  • Adjust any necessary employee insurance policies to reflect the situation □Provision of mental health support to employees in times of anxiety

Technology Data / Telecoms

  • Ensure the IT Lead is an integral part of the Crisis Management Team
  • Prioritise stable IT infrastructure that can support remote working and potential demands (e.g. spike in mass conference calls/video conferences)
  • Establish, plan and cost protocols to support hardware and software off-site
  • Provide visibility of business issues and performance metrics to satisfy requirements of stakeholders (e.g. government reporting requirements)
  • Consider alterative technology-enabled solutions to support business continuity with the restrictions experienced, particularly for offline business in sectors such as retail and consumer