Labor Implications with Employers' COVID-19 Response Globally

Labor — trade unions, national unions and works councils, including local, national and European Works Councils (EWC) — impact everything employers do in Europe.

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Please note that this resource is for informational purposes and should not be considered legal advice.

Labor — trade unions, national unions and works councils, including local, national and European Works Councils (EWC) — impact everything employers do in Europe. Most employment terms are subject to a labor contract and/or an individual employment contract. To change a term and condition of employment employers often need to follow an elaborate process of notification, consultation, consent, codetermination; the negotiations required, however, vary based on contract language and individual country regulations. Terms and conditions of employment include working hours, pay, benefits and location. Actions such as reductions in force (RIF) or furloughs usually require that special economic conditions be met and may require notification and approval from local regulators. The concept of “acquired rights” can often mean that a pay or benefit intended to be provided on a “temporary” basis may be deemed a long-term entitlement unless certain procedures are followed.

All of this is highly problematic in today’s coronavirus environment, where the world’s circumstances require governments and employers to make changes to respond to public health.  This includes changes to working hours, working location (home vs office), pay and leave. Some employers may want to give “extra time or money” to support employees during the crisis but not intend for them to be permanent entitlements.  How are employers navigating these labor rules in this environment to enable them to take actions? 

In Europe, workers councils are represented on corporate boards, so they have a say in how companies respond in a crisis. The governments are working with employers and labor representatives to provide temporary measures to ensure that the economy recovers after the COVID-19 pandemic. A lot of the measures have given employers unilateral decision-making to activate these temporary measures as long as they notify work councils.

Below are examples of how countries are addressing labor and economy concerns during this unprecedented situation:

  • In Germany, for example, unions and companies agreed to shorten work schedules to avoid mass layoffs.
  • In Sweden, Italy and Spain, unions, employers and governments have reached joint agreements dealing with worker safety, work hours and layoff benefits in light of the crisis.
  • European workers affected by the coronavirus crisis will keep receiving up to 100% of their normal wages under protections won by trade unions.

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In many countries, trade unions have been negotiating with employers and national governments to put in place policies that will secure the short-term income and long-term livelihoods of workers:

  • Austria: Trade unions, employers and the government agreed to a reduced hours work scheme, which will ensure that the lowest paid workers receive 90% of their normal wages. Middle earners will receive 85%, and higher earners will receive 80%.
  • Netherlands: Picking up many of the trade unions’ proposals to preserve employees’ jobs and incomes, the Dutch government announced a 3-month scheme that will allow workers to retain their full income, though the amount retained will depend on the size of companies’ loss of turnover. If the loss is substantial, companies will receive up to 90% wage support from the state.  This scheme also applies to temporary and contract workers.
  • Denmark: Trade unions, employers and the government agreed on a temporary wage subsidy scheme for companies affected by the crisis. The government will fund 75% of wages up to 23,000 DKK (aprox.3,000 euros) if the company refrains from making workers who retain 100% of their monthly wages redundant.
  • Romania: Trade unions took part in a government working group, which agreed that workers will continue receiving two-thirds of their normal wage if they cannot work or are temporarily laid off.
  • U.K.: Following negotiations with trade unions, the government agreed to reimburse 80% of wages up to a limit of 2,500 pounds for employees who would otherwise be made redundant.

In stark contrast, Croatia, which currently holds the EU Council Presidency, is proposing to suspend labor and social rights. For 18 EU countries’ short time work measures, please see this resource.

Below the temporary work contract changes that have been made to address the COVID-19 pandemic:

Country-Specific Schemes

Telework

France has removed the consent of the employee requirement to implement telework in response to the pandemic. The employer must ensure that the employee can carry out duties from home without risk to her or his health and provide necessary IT tools for telework. Companies will have to update their single-risk assessment document (DUER) to assess telework risks, such as isolation, and take necessary measures to prevent them.

Time Savings Accounts (Days of Rest [JRTT])

To address the economic impact of COVID-19, France has given employers the unilateral power to impose which dates employees may take as days of rest, including if the companies provide it in a lump sum agreement, even if there are legal and contractual provisions stating otherwise. These changes must be given a notice period of at least one clear day. In addition, these modifications cannot extend beyond December 31, 2020.

Working Hours

Maximum daily working hours have been extended to 12 hours for both day and night shift employees.

Exceptional Premium

This is offered to employees without a profit-sharing scheme. This benefit has been expanded beyond contracted employees, to those on contract on the date of filing, as of April 2, 2020. This exceptional premium's amount may also be adjusted to address COVID-19 relevant working conditions. The government has extended the deadline for paying this premium from June 30 to August 31, 2020.

Source: Lambert LD. COVID-19 French Employment Law Alert. Field Fisher. April 6, 2020. https://www.fieldfisher.com/en/insights/covid-19-%E2%80%93-alerte-droit-social

Infected Employees

In case of an existing infection or a suspicion of an infection, the employer should consider early involvement and close coordination with the responsible health authorities. If an employee is infected with COVID-19, the responsible health authorities should be notified in order to seek guidance to best protect the health of the workforce. The authorities can then impose professional bans on activities and quarantines to prevent the virus from spreading. There is currently no specific requirement for employers to inform staff representatives (such as works councils) if an employee becomes infected. Nevertheless, works councils have a general right to information on health and safety issues, so it is advisable to generally to inform and involve the works council on any measures,  with a view to developing potential co-determination requirements in relation to changes to working time and other aspects of the workplace. When informing anyone other than the health authorities about an infected employee, employers must be very careful to balance the privacy of the individual with the public interest in avoiding the spread of the virus.

If an employee is infected, he or she will be entitled to continued payment of remuneration (paid by the employer for up to 6 weeks) as per the statutory rules on compensation in case of sickness.

If an employee is quarantined by the authorities under the German Infection Protection Act, he or she will be entitled to public compensation for up to 6 weeks for lost earnings and statutory sick pay for any further period (more than 6 weeks). Within the first 6 weeks, this compensation needs to be paid out by the employer who can claim reimbursement.

Source: Klumpp C. COVID-19: Guidance for Employers in Germany. Bird & Bird. April 2020. https://www.twobirds.com/en/news/articles/2020/global/multinational-employer-series-tackling-coronavirus-in-germany

Immunity Report

Germany’s Robert Koch Institute, the German Centre for Infection Research, the Institute for Virology at Berlin’s Charite hospital and blood donation services are studying if people who had COVID-19 would have immunity from the disease, and if so, the duration of that immunity. Depending on what the research finds, the government may issue immunity passports for those who have already recovered from the disease.

Source: Proctor K, Sample I and Oltermann P. ‘Immunity Passports’ Could Speed Up Return to Work After COVID-19. The Guardian. March 30, 2020. https://www.theguardian.com/world/2020/mar/30/immunity-passports-could-speed-up-return-to-work-after-covid-19

Telework

Italy simplified its process for allowing employees to telework. It removes the written employee agreement and employers will inform employees in writing on how teleworking has to be performed and include the following details:

  • Ways under which the employer may exercise hierarchical and supervisory powers;
  • Employee’s resting time;
  • Technological and organizational measures put in place to ensure compliance with laws regarding resting hours, including the “right to disconnect” from remote working;
  • Employee misconduct subject to disciplinary sanctions; and
  • The employee’s right to be appropriately trained, if needed.

Information on risks is usually delivered via paper copy and identifies the general and specific risks connected with specific working activities. Employers are required to protect the health and safety of their employees even when they are working remotely. To this end, employers are required to deliver information on risks regarding health and safety at work to employees working remotely. See the Italian National Institute for Insurance Against Occupational Accidents (INAIL) website for more details.

Suspension of Work

If the government has mandated that a company’s activities must be suspended, then an employee's absence appears to be justified, because it is completely independent of his/her will. In such an event, the employer should not be obligated to pay remuneration to its employees, since the employer’s inability to run its operations is not the employer’s fault. Furthermore, employment relationships will be suspended until operations are restored. The employer may consider applying for certain public schemes for salary integration or enter into collective agreements at a company level with the company’s works council to regulate the use of holidays and permits to leave.  It is important to note that the national collective bargaining agreement applied by the company could provide for ad hoc disciplines in case of suspension of the employment relationship.

If an employer's decision to suspend its operations temporarily due to the “COVID-19 emergency,” and not by an order issued by the Public Authority, employees remain entitled to receive their remuneration.

Compulsory Quarantine

If an employee is prevented from working due to a medical or mandatory quarantine, he/she shall be put under sick leave. For employees other than executives, sick leave is paid by the Italian National Social Security Institute (with the exception of the first 3 days of sick leave, usually paid by the employer). Once sick leave has come to an end, the employee is required to return to work. If the employee fails to do so, further absences may be considered unjustified, and the employer may be entitled to not pay the relevant salary and to even issue a disciplinary sanction against the employee.

Absence for Fear of Being Infected

If an employee unilaterally decides, even in the absence of an order issued by the Public Authorities, not to go to work due to his/her fear of being infected, the absence may be considered unjustified.

As a consequence, the employer in this scenario would be entitled to trigger a disciplinary procedure against the employee and issue a disciplinary sanction, which (depending on the national collective bargaining agreement applied) might also entail dismissal in the event of unauthorized absence longer than 3 days. Nonetheless, nothing would prevent the employer from agreeing to provide a period of unpaid leave to its employees who are fearful of becoming infected.

Source: National Law Review. COVID-19: Tools for Italian Employers in Facing the Emergency. March 12, 2020 https://www.natlawreview.com/article/covid-19-tools-italian-employers-facing-emergency

Contract Agreements

Employers are entitled to suspend contracts or reduce (by between 10% and 70%) the working time of their employees, with a proportional reduction of salary. Employees would be entitled to unemployment benefits to compensate – partially – for the decrease of salary suffered.

If the employer commits to maintaining  employment for 6 months  from the restart of the activity, and if the company has less than 50 employees ( as of 29 February 2020), the employer would be entitled to an exemption of payment of the employer’s contribution during the period of suspension of contracts or reduction of working time. If the company has, at that date, 50 or more employees, the exemption from the obligation to pay contributions will be 75% of the company’s contribution.

The new regulation states that employees would be entitled to receive the contributory unemployment benefit, even if they do not comply with the minimum period necessary for it. Furthermore, the period during which the contributory unemployment benefit is received would not be considered part of future unemployment benefits.

These changes require “State of Emergency” force majeure triggers:

  • The suspension or cancellation of activities (such as closures of restaurants, bars and retail in general);
  • The temporary closure of establishments open to the public;
  • A loss of activity caused by the restrictions made on public transport and, in general, on the mobility of people and goods;
  • A lack of supplies that seriously impedes the continuation of the ordinary development of the activity; or
  • Urgent and extraordinary situations due to contagion of the workforce or the adoption of preventive isolation measures decreed by the health authorities.

In any case, the employer would have to prove that the causes of force majeure concur with the grounds relied on, and ultimately, it would be the labor authorities in charge to verify if this is the case.

Source: COVID-19 Employment Measures in Spain. Osborne Clarke. March 25, 2020. https://www.osborneclarke.com/insights/covid-19-employment-measures-spain/

Contract Agreements

U.A.E.’s Ministry of Human Resources and Emiratization has provided guidance on how employers affected by the COVID-19 measures are allowed to restructure the contractual relationship with employees, in mutual agreement, through gradual procedures:

  • Implementing a remote work system;
  • Granting employees paid leave;
  • Granting employees unpaid leave;
  • Temporarily reducing salaries during the aforementioned period (via an annexure); and
  • Permanently reducing salaries (must get approval from ministry).

Dealing with Additional Staff

If employers have more staff than they need, the employer must register the additional workers on the country’s virtual job market so that other companies may recruit those employees. Until the employee is recruited, the company will remain obliged to provide these employees with accommodation and other dues, except for salary, as long as they are in the country or until they are hired by other businesses.

Employers who are hiring must post their vacancies on the virtual job market, search available data and select whoever meets the requirements. Work permits will be acquired online or through transfer of work permits from the previous employer.

Source: Salama S. Coronavirus: U.A.E. Ministry Regulates Employer-Employee Relations in Private Sector. Gulf News. March 30, 2020. https://gulfnews.com/uae/coronavirus-uae-ministry-regulates-employer-employee-relations-in-private-sector-1.70703412

Furlough Scheme

The U.K. government released a new scheme to support employers and employees with furloughs to reduce COVID-19’s impact on the country’s economy. It provides employers guidance on how to approach furloughs and streamlines the process online. It includes guidance on holiday pay and subsequent redundancies.

Source: Robertson N, Fisher C and Bruce M. COVID-19: U.K. Government Updates Furlough Guidance. Mayer Brown. April 6, 2020. https://www.mayerbrown.com/en/perspectives-events/publications/2020/04/covid-19-uk-government-updates-furlough-guidance

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