3 Legal Traps Employers Should Avoid With COVID-19

01
Apr 2020

The lack of legal regulations and clear instructions on behalf of the Serbian authorities caused panic attacks to both employees and employers. On one side, employees are trying to keep their jobs and salaries, while employers strive to preserve their business and keep their employees during the COVID-19 pandemic.

The fact that the announced set of economic measures in the Republic of Serbia has not yet been implemented, unlike in other European countries, certainly does not help.

Particularly, a majority of the European countries facing the coronavirus have issued numerous assistance measures for employees and business entities, such as statutory sick pay, job retention schemes[1], compensation for self-employed workers and professionals, babysitting bonus[2], short-time work system, social security daily benefit[3].

However, none of this can be an excuse for the breach of guaranteed human rights, laws and procedures by the employers. Otherwise, you could fall into one of the following traps:

Not Taking the Occupational Health and Safety Measures

One of the crucial obligations of the employers (even in regular circumstances) is to take reasonable care of employees’ health and safety, prescribed by The Labor Law and the Occupational Safety and Health Law (hereinafter: OSHL). The importance of this duty grows even bigger in the time of the coronavirus pandemic.

If the nature of your business is such that it is impossible to arrange work from home in accordance with The Decree on Organization of Work of Employers During the State of Emergency, you are obliged to provide all additional necessary measures related to the health and safety of your 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 into the particular measures and the consequences if you fail to implement them.

First of all, you are obliged to provide your employees with adequate resources for work, as well as the resources and equipment for personal protection. [4]

Regardless of the measures previously undertaken with respect to the state of emergency, you now need to provide your employees with specific protective equipment – medical masks, examination gloves, hands sanitizers and premises disinfectants, warm water and regular maintenance and ventilation of business premises, as well as all the additional measures which prevent the spread of the disease.

It shall be emphasized that the employer is obliged to ensure that the implementation of the health protection measures 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]

Particularly, that means you can’t oblige your employees to obtain the protective equipment on their own during the state of emergency.

However, similar to the majority of countries, there is currently a shortage of protective equipment in Serbia. Based on the World Health Organization (WHO) projection, an estimated 89 million medical masks are required as a respone to COVID-19 each month.[6]

The question is being raised: how should the employer provide the protection and health at work, if there is no protection equipment?

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.

To be specific, as an employer, you have a duty to stop every work that may represent a potential danger for your employee’s life or health.[7] Therefore, 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 Occupational Safety and Health Law, you will face the 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 changes 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 ground for reducing the salaries by the employer, to what extent and where are the limitations for such actions.

The amendments to the agreed conditions of employment, including the salary, are made in accordance with the legal procedure of 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 with the change of the contracted conditions of employment and the reduction of salary.

Article 116 and 117 of the Labor Law define the possible alternatives available to employers.

Article 116 of the Labor Law stipulates the first 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 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 refered 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 particular case, the coronavirus pandemic could represent the legitimate reason for the application of Article 116, and the legal ground can also be found in the decisions issued by competent authorities relating to the state of emergency.

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 employer, concerning the applicable legal ground.

Employers, you will face class-action lawsuits from employees, if you do not perform this part properly.

The other option 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 a 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 compensation salary.

However, contrary to Article 116, in this situation, the amount of compensation that the employees are entitled to is 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 contract.

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 to 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 will face class-action by the employees.

Unlawful Termination of the Employment Agreement

The economic impact of the coronavirus is visible from the next example: by March 21, the number of unemployed increased up to 3,28 million. [8] The situation in Serbia is no different.

Namely, the majority of legal entities are affected by the state of emergency and the negative economic effects have already become visible. 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 large number of employees directly or indirectly felt the impact of these changes, the Serbian authorities issued clear statements in media, emphasizing that every termination of the employment contract during the state of emergency will be under the increased supervision by competent government bodies. Hence, employers are obliged to undertake all necessary measures to prevent the cancellation of employment relationships.

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 contract, even in a state of emergency, the lawfulness of such procedure 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 that 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.

Therefore, in these circumstances, this legal ground 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.

Adter 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…

It is indisputable that the COVID-19 pandemic will pass (sooner or later) but will leave vast consequences behind.

Despite that, as an employer, you can 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 state of emergency and harshly breached the rights of employees and their obligations.

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 of 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] Source: Website of the World Health Organization
[7] Article 15 Paragraph 1 Line 10 of OSHL
[8] Source: Forbes https://www.forbes.com/sites/sarahhansen/2020/03/26/weekly-unemployment-claims-surge-to-328-million-as-coronavirus-batters-the-economy/#6ecb647411b0

Latest Post

STAY TUNED

Stay in the loop with the most important updates

CONTACT

CONTACT