Nightlife closed and bars shut at 1 am

On 14 August 2020 the Interterritorial Council of the National Health System agreed coordinated measures for the whole of Spain in response to rising infections. The Ministry of Health declared the suspension of the activity of nightclubs, dance halls and late-night bars, with or without live music, as a preventive measure. It was also set that hospitality and catering would close at 1 am, and smoking outdoors was restricted where a two-metre distance cannot be kept, for example on terraces.

The regional governments had to apply the agreement each with its own resolution; Catalonia, for example, adopted the extraordinary measures in its territory. For a sector that had reopened only weeks earlier and was entering the summer with limited capacity, the closure meant another economic blow. But it also hit a wide chain: drinks suppliers, security, entertainment and cleaning firms, and the owners of premises.

A suspension with no end date

The measure was adopted as a coordinated public health action, under the law on cohesion and quality of the National Health System. It is a preventive suspension with no end date: it depends on how the epidemic develops. That open-ended timing complicates planning, because nobody knows when reopening will be possible or on what terms.

For those who hold a licence, a rented premises or an operating contract, the difference between suspension and termination matters: while the activity is suspended by public order, the licence and the contracts remain in force, unless agreed or provided otherwise, and so do the obligations. It is worth knowing exactly which force majeure or suspension clauses each contract contains. For the business owner, the consequence is that the closure does not depend on their own will or specific situation but on a general health decision.

Rent and contracts

For many closed businesses, the rent on the premises is the largest fixed cost. The exceptional measures approved in spring on commercial leases had their own requirements and deadlines and were not automatic, so it cannot be assumed that they cover the situation created by a new closure. It must be checked case by case which rule or which clause applies.

Absent a specific solution, the usual route is to negotiate a temporary reduction or deferral with the landlord, putting it in writing. A clear agreement avoids later problems for both parties. If the landlord is a large company or a public body, its internal policies may differ from those of a private owner, and it is worth asking as soon as possible. What matters is not simply to stop paying or to build up debt without warning: early, documented communication usually makes an agreement easier.

Staff, insurance and support

On employment matters, the main instrument remained furlough schemes (ERTE) for force majeure or economic reasons, on the conditions in force at any given time, which should be checked with your employment adviser before applying them. It is also worth checking whether the policy covers loss of profit from administrative closure, something many policies exclude.

In the medium term, the sector will have to decide what part of its offer can move to other permitted formats and at what cost. Some venues have reoriented their business towards restaurants, private events or daytime activities; not all can do so, and each change requires checking licences and capacity. This is general information: each case requires its own analysis. If the company has permanent seasonal or temporary staff, it is also worth checking how the closure affects those contracts.

With a measure that has no end date, the only thing that can be controlled is preparation.

This article is general information. It is not legal, tax or investment advice, and it does not take anyone’s particular circumstances into account.