Employee relations and other considerations for the COVID-19 crisis
A time to know your obligations and limitsNow that the dust and initial upheaval has started to settle, companies should take stock of their options and consider them in the light of the ongoing situation.
For companies the current coronavirus crisis has presented some additional challenges beyond simply staying healthy: how to follow the laws, protect the business, its employees, and the bottom line, all at once.
The illness caused by the coronavirus, COVID-19, is now in every news report. We now make it part of our daily decision making, both in private and professionally.
In this newsletter we will look at legal aspects businesses need to consider and some of the challenges they may need to face where COVID-19 is concerned.
Company obligations to staff under the lawFirst and foremost, where should you look for guidance? For businesses, the applicable law here is the Occupational Health and Safety Act (Abbreviated as TTOS: Follow the link for the full text https://www.riigiteataja.ee/en/eli/520032019007/consolide).
That’s where the courts will go to reach their verdicts.
One important point to note is that TTOS compliance is not optional. It is mandatory. Ignoring it is not advised.
What is Occupational Safety? Simply put it is a system of measures that are applied to organisations to make sure their employees are able to work without unnecessary risk to life and limb (Art 2 (2) of the TTOS).
Of course, the TTOS does its best to remove risks from the workplace, but some jobs are inherently more dangerous, such as working with biological hazards. Viruses are one of those biological risks under the terms of TTOS (Art 8 (1)) and where exposure to viruses and the like are part of a job, the employer shall provide an employee with personal protective equipment.
It can certainly be argued that, given the situation, COVID 19 isn’t just a work based risk. However it can`t be stressed enough that a pandemic poses a major risk to both employees and employers, and so every employer's good practice should be to minimize the risk of getting a virus while working.
Employee rights and obligations
As the employer must work to keep employees safe, employees must also do their bit.
In order to make sure everyone is all on the same page, it is good practice for companies to spell out what they expect of their staff. This could be in their employment contract, or Standard Operating Procedures so there can’t be any excuses.
What should staff take into account? The law says they need to also work to maintain the safe work environment, by following occupational health and safety requirements. This can also include recommendations of the Health Board and other authorities. Employees also need to make sure they look after any personal protective equipment they’ve been given and use it correctly.
However, be warned: an employer’s obligation to look after their employees is not dependent on whether or not employees stick to their own obligations.
In working for a company, an employee has the right to certain things. They can demand personal protective equipment in line with what the TTOS states. They can expect to receive information on risks in the workplace, including those highlighted by risk assessments and to know what will be done about those risks.
They can also refuse to carry out or continue doing tasks if these represent a risk to their health or other people’s or if it does not comply with the requirements of TTOS. If this is the case they must notify the employer or their representative.
If a safe workplace isn’t incentive enough, here are some more to do as the TTOS requires: An employer who does not follow the required precautions for a working environment affected by physical, chemical, biological (including coronavirus), physiological or psychosocial hazards which involved a threat to the health or life of an employee is punishable by a fine of up to 300 fine units (1200 euros). In case of a legal person, 32,000 euros.
Considerations for companies during the COVID-19 pandemic
The above is the current legal framework that companies and employees must operate in. What happens if this is applied during a pandemic, such as COVID-19? (Classed as a pandemic by the WHO on 11th March 2020)
In the shadow of COVID-19, companies may want, or need to make changes to their working practices in order to protect staff as well as the viability of the business as a whole. This is, of course, possible provided certain considerations are taken into account.
Firstly, no changes to contracts can be unilateral. Both parties must agree. As such changes must be acceptable to both parties and, ideally, reached through discourse.
The limitations of reducing working hours to reduce costs
In the current situation, employers may decide that reduced working hours are a good idea. However, beware: this may not mean lower costs, certainly in terms of wages.
Current employment law says that companies who decide to reduce working hours can’t pay an employee less if that employee is ready and able to keep working under original conditions.
However, this changes if a drop in workload is the result of something the employer cannot control. Workload changes due to COVID-19 fit this criterion.
In such a case the employer has the option of reducing workload, and thus salary for up to 3 months over a 12 month period. Any reduction in salary must be reasonable and only if payment of the full wage would mean too great a burden to the employer.
The extent of the salary reduction is at the discretion of the employer. According to the Employment Contracts Act guidelines the employer must assess what the final wage should be after the reduction before reducing the wage of the employee. That said, an automatic reduction to the minimum wage is not in accordance with the law.
Furthermore, under no circumstances, can that salary drop below the minimum wage currently set at €584/month or €3.48/hr.
If this step proves necessary, and meets the legal criteria, an employer must give the employees at least 14 calendar days’ notice. Furthermore, the employee has the right to reduce their own work for the employer, proportionally to the reduction in remuneration.
So, if a company, because of stressors such as COVID-19, decides to reduce salaries by 20% for the next 3 months, they must tell workers at least 14 days before the move takes effect and the affected workers can also decide to reduce their work by 20%.
Clearly, the case for cutting hours is not as plain as one might imagine.
If those risks weren’t enough, an employee can simply decide to end their employment contract due to the changes. To do so they need only give the employer 5 working days’ notice.
Government wage compensation, but not for all
The government decreed on 20 March that certain companies will be eligible to seek compensation from the government in cases where they have had to reduce their employees’ wages due to a lack of work. The programme works as follows:
Companies may seek this compensation if they meet at least two of three criteria. The first is that they have suffered at least a 30% reduction in turnover compared to 2019. Another is that the company is unable to provide at least 30% of employees with the agreed amount of work. Finally, the employer has decided to reduce the the wages of at least 30% of its employees by at least 30% or to the statutory minimum wage
Applications will be accepted starting April for the months of March and April, i.e. compensation will not be paid for more than 2 months. Whether or not this will be extended is as yet unclear.
The application is to be filed by the company but is for the benefit of the employees, i.e. the government will pay the compensation to the employees account.
Considerations for increasing work hours
An employer may decide that the best way to survive in the current crisis is to not reduce costs, but to increase productivity. One way could be to increase the work required of its employees. This may also be an unavoidable consequence rather than a business tactic as is the current case for healthcare professionals.
If more work is the issue, there are, again, legal considerations and procedures to follow. Firstly, both parties (employer and employee) may agree on overtime. It may be that, for the good of the company, employers can demand that additional work be done. Ideally, an agreed solution is best.
There are limits, however, as any increase in work cannot exceed the maximum of 52 hours of work in 7 days averaged over 4 months. Overtime also comes at a price 1.5 times the standard wage.
In times of unforeseen emergencies that cannot easily be resolved. In these cases holidays can be postponed, cut short or cancelled unilaterally by the employer.
Aside from their own health, an employee may have dependents who require care at home, making work impossible. In such cases the employer must still provide an average wage for a reasonable period.
Careful planning and execution needed
COVID-19 presents all companies with a host of challenges, but especially those working with narrow margins. Managing expenses through payroll and working hours is an option but one to be carefully considered due to obligations designed to protect both employers and employees from damaging consequences.
The recent governmental initiative described above may alleviate some of that strain for some companies but certainly not all the strain and not for all companies.
Health hazards arising from COVID-19 may, themselves also increase expenses as employers strive to meet their legal obligations to protect staff.
This may seem like a daunting time, and it is. Not falling foul of the law, when trying to save a business in strife is a delicate task. Given the stakes, buying good old fashioned legal advice may be an expense you can’t afford to ignore.
If you have a any additional questions regarding this topic, don’t hesitate to contact Paul Keres, sworn advocate at Glikman Alvin LEVIN, at (+372) 686 0000 or via email Paul.Keres@levinlaw.ee
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