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3 Legal Traps Employers Should Avoid With COVID-19

Jelena Đukanović

Attorney at Law


The spread of the COVID-19 pandemic has led to many doubts regarding labor relations, both in the world and in Serbia. In the absence of adequate legal regulations, as well as late guidelines from the competent authorities – both employees and employers found themselves in panic. And while employees took care, of their health, and to save their jobs and earnings, employers were worried about how to save their business and employees during the pandemic.

Labor relations are supported by countries around the globe – packages of measures to help employees and business entities, such as statutory sick pay, job retention schemes[1], compensation for self-employed workers and professionals, babysitting bonus[2], part-time work system, social security daily benefit[3].

What has also come to the fore, is that there is no justification for employers to violate guaranteed human rights, laws, and procedures. In this regard, below we will deal with three 3 traps that have emerged in a new light due to the coronavirus pandemic:

Not Taking the Occupational Health and Safety Measures

Even in regular circumstances, one of the most important obligations of every employer is to provide conditions for healthy and safe work. This obligation is prescribed by the Labor Law, as well as the special regulation – the Law on Occupational Health and Safety (hereinafter: LOHS). With the onset of the coronavirus pandemic, complying with the employer’s basic obligations has been a real challenge.

During the state of emergency in Serbia, the Decree on Organization of Work of Employers During the State of Emergency was passed, which recommends all employers organize work from home. However, by their nature, that is not possible in every type of work, in those situations the employers were required to implement additional necessary measures in order to protect the health of their employees. In our blog COVID-19 and Employers: Didn’t Like Work From Home? Better Start… we wrote about the organization of work if the work from home is not an option for you.

In this blog, we will look at the specific measures that need to be implemented given the duration of the pandemic, as well as the consequences that may occur if you fail to execute them.

Primarily, you have an obligation to provide your employees with adequate means of work/resources, as well as the resources and equipment for personal protection. [4]

What that specifically means – depends on the situation. For example, during a state of emergency, this included the obligation of the employer to provide employees with protective equipment in the form of medical masks and examination gloves, hand sanitizers and premises disinfectants, warm water, and regular maintenance and ventilation of the premises, but also to take all other measures to reduce risks of spreading the infection.

It shall be emphasized that the employer is obliged to ensure that the implementation of the health protection measures at work does not cause any financial expenses to the employees and does not affect their material and social position at work and related to work. [5]

Therefore, you cannot obligate your employees to obtain the protective equipment on their own.

If there is a risk of infection among multiple employees, you are in a legal obligation to hinder the spread of the virus, by organizing remote work or shift work, in order to reduce the number of employees on the business premises of the employer. If this kind of work organization is not possible in your case, you are obliged to suspend the work.

It should also be noted that, as an employer, you have a duty to stop every work that may represent a potential danger to your employee’s life or health.[6] So, if you cannot compel with that duty, the only remaining possibility for you is to suspend the work.

In case there are no implemented such safety measures as described, an employee has the indisputable right to refuse to work, and it would be unlawful to terminate the employment act on that basis.

If you fail to implement all the necessary work protection measures and thus breach the provisions of the LOHS, you are at risk of facing penalties in the amount of RSD 800,000 up to RSD 1,000,000 – for a legal entity, RSD 400,000 up to RSD 500,000 for an entrepreneur, or from RSD 40,000 up to RSD 50,000 for a director, i.e. another representative of the employer.

Breach of the Employees’ Right to Salary

Under the circumstances when almost every company faces economic disruptions due to coronavirus, it is evident that the salaries of the employees will, likewise, be affected.

However, it might seem questionable whether there is a legal basis for reducing the salaries by the employer, to what extent, and where are the limitations for such an action.

The amendments to the agreed conditions of employment, including the salary, shall be made in accordance with the legal procedure for concluding an annex to the employment agreement. Despite that, while sensing the fear of losing their income, it is highly unlikely that any employee would consent to the change of the contracted conditions of employment and the reduction of salary.

Thus, we will take a look at Articles 116 and 117 of the Labor Law, as they define the possible alternatives available to employers.

Article 116 of the Labor Law stipulates the first useful possibility for the employer.

The employer can refer the employees to a compensated leave of absence, in the case of interruption of work or the reduction of volume of work without the employee’s fault, for 45 workdays in a calendar year at most.

The Labor Law explicitly prescribes that, in this case, the compensation of salary has to amount to at least 60% of the average salary in the 12 preceding months, but not lower than the minimum salary.

In this event, the employee is referred to the leave without their consent but is entitled to the defined compensation of salary.

The Labor Law does not exemplarily define the situations which would be considered as an interruption of work or the reduction of volume of work, but the most common reasons for the suspension of work without the employee’s fault, in the present practice, are: the shortage on the raw or processed materials required for the producing and other means of work, accumulated supplies of goods with no possibilities for selling, employer’s financial situation, etc.

In this case, the coronavirus pandemic could represent the legitimate reason for the application of Article 116 of the Labor Law.

However, it is important to highlight that the work suspension, as well as the reduction of salary based on this legal ground, has to be followed by appropriate legal acts of the employer, concerning the applicable legal ground.

Employers, you are at risk of facing class-action lawsuits from employees, if you do not perform this part properly.

The second option which is available to employers is to suspend the work due to a failure to ensure the safety and protection of life and health at work.

The Labor Law prescribes that the employee is entitled to compensation of salary during an interruption of employer’s work which occurred at the order of competent state authority or employer’s competent body, due to a failure to ensure safety and protection of life and health at work, which is a condition to continue the work without the risk for life and health of employees and other persons.

Therefore, if all legal conditions for the application of this Article are met, the employer is obliged to suspend the work, refer the employees to go home, and pay them the salary compensation.

But, in comparison with Article 116, in this situation, the amount of compensation that the employees are entitled to will be determined by the employer.

Particularly, according to the Labor Law, if it comes to the interruption of work based on this ground, the employee is entitled to the amount determined by a bylaw and employment agreement.

Interestingly, the Labor Law here does not define any limitations regarding the lowest amount of compensation, not even the obligation of paying the minimum salary.

Surely, we suggest you be very careful with this legal ground and make sure (if you haven’t yet) that your internal acts are harmonized with the above-mentioned provisions. Otherwise, the entire procedure might be unlawful and consequently lead to the obligation of repaying the (difference in) salary to all those employees whose salary was reduced by this ground.

Hence, as well as in the previous case – if you fail to perform this part properly, you are at risk of facing a class action by the employees.

Unlawful Termination of the Employment Agreement

According to the data from the Republic Bureau of Statistics, the number of unemployed persons in Serbia has increased by 17.8% in the last year.

Namely, a large number of business entities, as well as entire individual sectors, are permanently affected by the economic effects that have accompanied the pandemic. Due to that, the dilemma regarding the further business performance of companies in Serbia arose, as well as the issue of continuation i.e. extension of employment relationships of many employees. As a great portion of employees directly or indirectly felt the impact of these changes, the Serbian authorities have been emphasizing for months that every termination of the employment agreement will be under the increased supervision by the competent authorities, and that the employer is obliged to take all measures to prevent the termination of employment.

Therefore, the attention of the employers is drawn to only terminate the employment relationships as the last resort, when all the other options have been exploited.

Anyhow, if the employment relationship is terminated, it is of high importance to conduct the entire procedure in accordance with the law, to prevent potential class actions against the employer due to the unlawful termination of employment agreements.

In regular circumstances, one of the most common ways to end the employment relationship is the consensus between the employee and the employer.

Although a consensus represents a legitimate legal ground for the termination of the employment agreement, the lawfulness of such procedure in this situation could be questionable.

Specifically, a key element of a consensus is the consent of the will of both contracting parties – employer and employee, on the termination of an employment relationship. Where there is no will, there is no consensus, either.

In the agreement, there is no place for the defects of consent. That means that between the contracting parties there cannot be any coercion or delusion present.

In case the employer uses force to make the employee sign the consent for the termination of the employment relationship, the employee is entitled to object such agreement, regarding there was a defect of consent – force.

Hence in these circumstances, this legal basis is extremely risky for the employer, given that it is highly unlikely that the procedure of the termination of employment relationship would be performed lawfully.

Another common legal ground for the cancellation of an employment relationship is the legitimate interest of an employer – precisely, the rules regarding employee redundancy.

The Labor Law prescribes that the employer can terminate the employment agreement in the event of technological, economic, or organizational changes which cause the need for work of employees to cease, or the need for work decreases.

Although we consider that this legal ground can be legitimate, it is necessary to establish specific economic indicators that support the employer’s decision. The court practice set the bar quite high, so it is of great importance to apply this legal concept in accordance with the regulation.

After the lawful completion of the procedure and issuance of a solution-finding program for the employee redundancy (if the legal requirements are met), it is the employer’s legal obligation to pay appropriate severance to employees.

Coronavirus Shall Pass, But…

As an employer, you shall do everything to prevent the coronavirus from causing harm to your business reputation.

You most certainly do not want to be marked as the employer who left their employee hanging in the middle of the pandemic and harshly breached the rights of the employees.

Furthermore, the violation of the above-mentioned rights might seem economically beneficial from this perspective. However, ask yourself: how valuable will it seem afterward, when COVID-19 is over, and you are obliged to bear the penalties, legal costs arising from court disputes and the compensations for the damage you caused to your employees?

[1] The UK
[2] EU – Italy
[3] France
[4] Article 23 and 24 of OSHL
[5] Article 10 of OSHL
[6] Article 15 Paragraph 1 Line 10 of OSHL

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