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Employment and Labour Relations Issues Arising from COVID-19 

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Employment and Labour Relations Issues Arising from COVID-19 

Employment and Labour Lawyers Association of Nigeria

 ELLAN is a registered NGO made up of Nigerian lawyers with expertise in employment and labour relations. This note is a product of the Publications Committee of ELLAN with contributions from John Asokhia, Tomilola Tobun and Adeola Osifeko.

 

The outbreak of the novel Coronavirus Disease- (COVID-19) – has brought about a global economic downturn and negative impact on global commercial activities with economies at the brink of a recession. Generally, labour relations are governed by the labour legislation in different countries and more specifically by contracts of employment, which spell out the terms which have been agreed to by both employer and employees to govern their relations during the term of employment.

 

A pandemic of this type is unprecedented and it is not unlikely that most employers in drawing up employment contracts would not have contemplated circumstances which would bring about this level of interruption and disruption to work as we now have with the COVID-19. Businesses now have to deal with issues of non-performance of obligations in employment contracts and situations which employment contracts, company policies and employee handbooks cannot deal with sufficiently. In this note, The Employment and Labour Lawyers Association of Nigeria (ELLAN)[1] gives some guidance on some common employment and labour related issues that have been thrown up by the pandemic.

 

  1. CAN AN EMPLOYER TERMINATE AN EMPLOYMENT CONTRACT AS A RESULT OF THE IMPRACTICABILITY OF THE EMPLOYEE TO DO WORK AND EARN A SALARY?

It is the duty of the employer to provide remuneration for work done. Both the employer and the employee can agree on the nature and scope of work to be done by the employee as well as the amount the employer will pay as remuneration and these among other terms is usually stated in an employment contract.

 

As a result of the rapid spread of the COVID-19, many governments are enforcing different measures to restrict movement in order to contain its spread with the attendant effect of the

 

enforcement of such measures having an extensive negative impact on the economy and by extension labour relations. The most dominant effect of COVID-19 on labour relations in every industry is the change in the workspace – employees can no longer work from their offices as agreed with the employer and where practicable, carry out/discharge the specific duties from home/remotely – will have to adapt to working remotely. Whilst this arrangement is not new to the world of work and many private organisations have integrated the idea of working remotely into the employee’s work schedule, many private and even public institutions (especially civil servants comprising one-third of the working population in Nigeria) are yet to  fully appreciate the concept of working remotely. In Nigeria, many business models are still quite fixated on the traditional models of work which require an employee to resume at a physical office in order to carry out tasks usually between 8a.m to 6p.m. As a result of this change in workspace (and cash flow expectations for the employer resulting from economic recession) the employee may either not have work to do or the tools may not be available at home to do the work efficiently as the employer would have expected.

 

In view of this evolving nature of work now occasioned by COVID-19, would an employer be acting lawfully or within the terms of the contract between parties if it terminates the contract with its employees on the basis that those contracts have been frustrated because the pandemic has made it impossible for parties to perform their obligations under the employment contracts?

 

Employment contracts may be susceptible to termination by frustration due to those occurrences beyond the control of the parties, which can be illness, imprisonment, an outbreak of war, disease (in this case epidemic/pandemic), change in law or regulations and the death of either party. Whilst any of these occurrences may be termed a frustrating event capable of discharging the parties from their contractual obligations, employers must be careful not to be too quick to terminate employment contracts on the incidence of such frustrating events. What is crucial is that both the employer and employee must be seen to make reasonable adjustments to ensure there is a continued exercise of rights and fulfillment of obligations as permitted in the circumstance.[2]

 

Some considerations which an employer should take into account before deciding on termination as a result of a frustrating event such as the COVID-19 pandemic are: adjustments in expenditures to retain liquidity and working capital, the nature of the job and whether the employee has developed translatable skills that can be useful to the organisation during a recession, the nature, length and effect of the event, whether in the circumstance a reasonable employer could have been expected to wait any longer before terminating the employment,

 

and has the employer made any reasonable adjustments to ensure the continued existence of the contract?[3]

On the other hand, where a contract of employment provides for a force majeure clause which contemplates the occurrence of a specific supervening event or circumstance that impedes or prevents an employer or the employee from performing one or more of their respective contractual obligations, such force majeure clause may be relied upon in consideration of suspending their rights and obligation under the employment contract.  In that circumstance, the employer/ employee will have to prove that:

 

  1. such occurrence was reasonably unforeseeable at the time of the conclusion of the contract
  2. such occurrence is beyond the control of the employer/employee and could not be reasonably avoided, and
  3. due to the occurrence of such event, the employer/employee is incapable of performing obligations under the employment contract.

 

Employers must therefore be deliberate about spelling out what constitutes a force majeure circumstance and the mechanism for remedies available to the parties in the contract of employment. Failure to do so means that a supervening event such as an epidemic which prevents performance of the contract will not (and cannot) be described as a force majeure event, so as to provide relief from performance – because it has not been named as a qualifying event in the contract. In the event that the employment contract provides for the force majeure consideration, the employer can invoke the clause by a written notification informing the employee that the parties are absolved from carrying on their obligations from the date of occurrence of the event. In such circumstance where the contract of employment provides for termination in the event that an impediment arises, it is important that the due process for termination (e.g. notice pay requirement, severance packages, terminal benefits, or consultation with union representatives) must be followed and the employer complies with international best practices in compensating an employee for the loss of earnings incurred as a consequence of the termination.4

 

It is also important to state in the notice of termination that the pandemic is the reason for termination. This is against the backdrop of the fact that it is contrary to international best practices for any employer to terminate an employment contract without giving the employee the reason for such termination[4] and such termination has in some cases been interpreted by the National Industrial Court to amount to an unfair labour practice.6

 

  1. [5] CAN AN EMPLOYER SUSPEND THE PAYMENT OF SALARIES OR REDUCE SALARIES AS A RESULT OF ITS INABILITY TO GENERATE INCOME DUE TO THE OUTBREAK OF THE PANDEMIC?

By the principles of the law of contract, parties to a contract are bound by its terms and cannot vary the terms and conditions of the contract except with the consent of the other party. This extends to employer – employee relationship and the general principles relating to the construction, termination, amendment and enforcement of a contract will apply to an employment contract unless a specific labour legislation provides for derogation from the general principles. The National Industrial Court of Nigeria (NICN) in determining controversies relating to the forfeiture of an employment benefit following a variation of the terms of a contract will usually find in favour of the employee.[6]  Variation and material changes to an employment contract must be communicated to employees well in advance of when the same would be made/implemented and this is to promote industrial harmony such that material changes are not unilaterally made by the employer and imposed on the employees if such an amendment is made effective.[7]  Every employer should engage its employees before making such changes as salary suspension or reduction.

  1. CAN AN EMPLOYER MANDATE AN EMPLOYEE TO PROCEED ON PAID /UNPAID LEAVE IN VIEW OF THE COMPULSORY STAY AT HOME PERIOD?

The Nigerian Labour Act provides for at least six days paid annual leave[8] and most employment contracts state in clear terms the number of annual leave days which can be taken by the employee. Due to the compulsory stay at home occasioned by the outbreak of the pandemic, many organisations are considering restructuring or bringing forward the scheduled leave days/period of employees such that the leave days are supplanted by the period now being spent at home. We reckon that this cannot be done unilaterally and every organisation must consider its business process before enforcing such rescheduling. If the employees are working from home, it is likely that the courts would consider it to be an unfair labour practice for them to be compulsorily made to take their leave days when they are turning in expected deliverables. It has been established that employment relationships are generally characterised by the inequality of bargaining power.[9] It is thus important that whatever leave structure is being proposed by an organisation must be agreed with the employees11 before enforcement,

 

Industrial Court Act 2006 and the International Labour Organization (ILO) Termination of Employment Convention 1982 (No. 158).

 

otherwise it can amount to an unfair labour practice for which the court may see the need to protect and or avail the weaker party (the employee in this case) extra contractual protections.

  1. CAN AN EMPLOYER MANDATE ITS EMPLOYEES TO TAKE A FURLOUGH LEAVE AS A RESULT OF THE LOCKDOWN OCCASIONED BY THE OUTBREAK OF THE PANDEMIC?

A Furlough is a mandatory suspension from work for either a short or long period of time. An organization may furlough its employees where it lacks the financial resources to keep paying them but does not want to lay them off. During the furlough period, the employee is not expected to do any work and receives no salaries. Furloughed employees retain their employment rights but can take advantage of unemployment benefits, such as government allowances like wage subsidies.

 

This type of leave does not apply as a principle of employment law in Nigeria and there is no legal framework for its application. However, the principle can be applied in Nigeria under the permitted practice of suspension of employment contracts upon the agreement of both the employer and the employee. If it must be implemented, it will require the consent of the employees and trade union officials for unionized industries. The employer and employee would equally have to determine the terms of the suspension; which benefits and obligations will remain in the furlough period and which will be totally suspended and what remedies will be available to each party where there is a breach of the agreed terms. Where such furlough terms have not been previously agreed upon, the employer must again engage with the employees as a unilateral enforcement of this type of arrangement can amount to the employer undermining the rights of the employee which may give rise to claims of constructive dismissal and unfair labour practice against the employer.

  1. CAN A COMPANY SUSPEND THE ONBOARDING OF NEW HIRES WHOSE RESUMPTION DATES FALLS WITHIN THE LOCKDOWN PERIOD TO AVOID PAYING SALARY FOR THE PERIOD OF THE LOCKDOWN?

It is not unlikely that most new hires at this time have either signed their employment contracts virtually or agreed to the terms expressly (including the date of resumption), by way of e-mail, a phone call or text message. Whether or not the new hire resumes at the business premise, the resumption date which now forms part of the contractual term is binding. The new hire has rights even prior to the start of the employment[10]  or   resumption at the business office and these rights should not be unilaterally taken away by the employer.

 

To all intents and purposes, the new hire is an employee and s/he should undergo the onboarding process. The Human Resource department/personnel can make good use of available virtual interaction platforms -including Zoom, Skype for Business and Microsoft

 

Teams- to get work going. A new hire like any other employee can work remotely under the instructions/guidance of the assigned line manager and is entitled to earn a salary for work done.

 

Where the work of the new hire cannot be done remotely and the resumption at the office premises is crucial to the employment, the employer can embark on a consultative process with such employees to agree on further terms (re-negotiation of resumption date, payment of minimum wage, reduced compensation or termination of the contract after an agreed period of time where the situation remains). Sufficient notice should be given prior to any suspension, review or amendment of the employment contracts of such new hires.

  1. CAN A CONTRACT OF AN EMPLOYEE BE TERMINATED WHERE THE EMPLOYEE CLAIMS NOT TO HAVE THE NECESSARY WORK TOOLS?

It is the duty of the employer to make available to the employee proper tools (e.g. laptops, phones, internet facility, etc.) which will aid the work of the employee[11] and also to ensure that Information Technology (IT) systems support working remotely. The employee will be acting within his right to demand for these tools if not available where the employee has to work from home. The employer should also notify the employee of the period of time for completing any upgrade on the IT infrastructure (e.g. creation of employee files on the internet cloud to monitor work progression, inclusion of sign in/out feature) especially if it would interfere with the work deliverables of the employee.

 

  • termination of a contract by the employer on the basis that an employee could not deliver on key performance objectives can amount to a breach of contract where such employee raises the defence that he/she was not given the appropriate tools to work with remotely. To ensure the employee has all necessary tools required for working remotely, both the employer and employee can make reasonable adjustments For instance, the employer and employee can agree on the reallocation of sums which make up the salary (e.g. part of the transport allowance (not currently expended on commuting due to the lockdown) can be agreed to be used to procure the tools or a soft loan be given to the employee to procure such tools or any other resource important to efficiently deliver on his tasks while working remotely from home (e.g. fuel, online subscriptions for e-learning or virtual interaction platforms).
  1. CAN AN ORGANIZATION DEFER PROMOTIONS AND BONUSES IN VIEW OF THE EFFECT OF COVID-19 ON INCOME GENERATION?

Promotions are not employment rights but conditional entitlements of employees and an organization is at liberty to create the parameters for assessing performance and consequently

 

promoting deserving individuals in any given circumstance. On the other hand, bonuses can be a part of contractual terms (where it is inserted in the employment contracts or in policies which form part of the employment contract) and such terms can be binding on the employer.

For instance, 13th month salary is a type of bonus which can be part of a contractual term or where such has become a customary practice of an organization, it creates an expectation interest. An expectation interest is capable of creating an entitlement or vesting a right in an employee and may be recoverable against the employer and the NICN has ruled that such benefits should not be arbitrarily deferred. Where an expectation interest of the employee is recognised, the courts will enforce the same in favour of the employee even where the employer gives in its defence adverse economic impact.[12]

 

  • deferment of such bonuses by the employer without consulting with the employee may amount to a unilateral variation of the employment contract for which an employer can be liable for a breach. A deferment of a promotion on the other hand will have to be considered on a case by case basis. Where an employee has become entitled to a promotion upon an assessment of his performance, the employer should have a consultative dialogue with such employee so as to give the basis for possible deferments of the promotion.
  1. SHOULD HUMAN RESOURCE POLICIES BE FORMULATED/ IMPLEMENTED TO REFLECT THE CONTROL OF COVID-19 INFECTION IN THE WORKPLACE?

In order to contain the spread of COVID-19 in Nigeria, the President issued the COVID-19 Regulations 202015 and the Governor of Lagos state (having recorded the highest incidences) issued the Infectious Disease (Emergency Prevention) Regulations 2020 implementing a total lockdown of activities and a ban on all public gatherings, exempting only essential services personnel from the restrictions. In essence, such essential services personnel are employees who are at the risk of contracting the disease and it is the obligation of the employers to ensure their health and safety.  It is important that any organisation carrying on its business should immediately adopt these regulations as health and safety measures in the workplace as well as incorporate the necessary provisions of the Regulation in the existing HR policies.

 

For the purpose of preventing the spread of COVID-19, the prescribed sanitary practices issued by the National Centre for Disease Control should be maintained during the control period and every employer or principal must minimize interactions by observing social distancing practices, ensure that resumption time is alternated among staff, and make thermometers available for taking staff temperature at the point of entry. Sitting arrangements in an open plan office should be structured in such a way that at least 2 metres space is maintained between two individuals. Where individuals at the workplace form a queue or remain in an area  (including a pantry, waiting area or room, or an area with changing or sanitary facilities or any point of

 

convergence) for any reason, then every individual on the queue or at the said area should maintain at least one metre distance away from any other individual within that area. The safety policy should also highlight that individuals other than staff who supply services to employees in the office premises should maintain social distancing at the reception and do not arrive the workplace at the same time with the staff. Such suppliers should not remain in the workplace for a longer period than necessary. Physical meeting with other employees, clients and other third parties should be kept at the barest minimum and conferencing arrangements should be made available as alternatives to physical meetings.

 

HR policies should also give considerations to emergency leave policies that allow staff to take time off to get tested, offer paid sick days to affected staff and discourage any form of discrimination in the workplace that could affect the mental health of sick staff after recovery. Organisations whose employees are currently observing the stay at home policy should implement and give effect to these regulations and policies post COVID-19.

 

  1. ARE THERE ANY DATA PROTECTION REQUIREMENTS THAT EMPLOYERS SHOULD CONSIDER IN RELATION TO COVID-19?

Employers in collecting and  processing data of its employees especially as regards the health status of its employees who have tested positive to COVID-19 should consider its obligations under the Nigerian Data Protection Regulations (NDPR), 2019. Such employee data should only be processed for the purpose of protecting the health interest of others, performing a task mandated by public health officials or in compliance with a legal obligation.[13] Public health laws may however override the provisions of the regulations regarding consent where applicable. For instance, public health interests will supersede the employee’s right to consent to the processing of his personal health information in situations where the employee needs to be compelled to be quarantined, or tested or forced to receive medical treatment to prevent the transmission of an infection or communicable disease.[14]

  1. WILL INJURY SUSTAINED WHILE WORKING REMOTELY AT HOME BE CONSIDERED AS WORK INJURY FOR WHICH THE EMPLOYEE CAN BE COMPENSATED?

The disruptive forces of technology have made working remotely possible and practicable and the flexibility of work schedules facilitated by the use of technology are now being considered in drafting the terms of engagement for an employee. As a consequence, employment contracts will also have to address injury done to the employee in the course of his employment, howbeit from a remote workplace.

 

The Employee Compensation Act, 2010, the law which provides for the compensation for death or injury, disease or disability suffered by an employee in the course of employment defines workplace as any place a person performs work or is required to be in the course of

 

employment.[15] We are of the opinion that this wide definition could cover places where remote work is done even though not specifically mentioned. The unique facts of every death occasioned or injury done will be considered in determining liability for injury suffered whilst working remotely as well as the compensation the employee is entitled to. Employment contracts which set out clear provisions on injury in remote workplaces will enable both parties define and identify injury which can be attributable to work being done remotely as well as the remedies applicable.

 

CONCLUSION

 

Indeed the economic impact of the outbreak of the COVID-19 has been devastating and the consequential impact of the outbreak on the world of work cannot be exhaustively discussed. What is crucial in these times is for employers to continuously engage and dialogue with their employees before any decision which can be seen to alter the employer’s obligations or the employees’ rights is taken by the employer. Both the employer and the employee must be seen to reasonably adjust to the harsh realities which we now have to face in the present circumstance to ensure that labour and employment relations do not break down post COVID19.

 

[1] ELLAN is a registered NGO made up of Nigerian lawyers with expertise in employment and labour relations. This note is a product of the Publications Committee of ELLAN with contributions from John Asokhia, Tomilola Tobun and Adeola Osifeko.

[2] In the UK case of Warner v Armfield Retail & Leisure Ltd [2013]Eq LR 122, the Employment Appeal Tribunal held that there was no room for the application of the doctrine of frustration once the duty of reasonable adjustment arose (as applicable by the UK Equality Act of 2010).

[3] Marshall v Harland & Wolff [1972] IRLR 90; Eggstores (Stamford Hill) Limited [1976] IRLR 51 4 ILO Employment Promotion and Protection against Unemployment Convention, 1988 (No. 168).

[4] Section 254 (1) (f) and (h) of the 1999 Constitution of the Federal Republic of Nigeria (Third Alteration) permits the Court to apply international best practices or interpretation of international labour standards. See also Section 7(6) of the National

[5] See Aloysius v. Diamond Bank Plc [2015] 58 NLLR (Pt. 199) 92 at 134 where the National Industrial Court of Nigeria took the view that reason for termination must be given. The Supreme Court has a divergent view. In Obanye v Union Bank of Nigeria Plc (2018) LPELR 44702 (SC), the Court maintained the Common Law position that an employer need not justify the reason for a termination.

[6] Ajah v Fidelity Bank (Unreported Suit No. NICN/LA/588/2017, judgment delivered on 14th May 2019)

[7] JOHESU v. Federal Ministry of Health (2016) 65 NLLR (Pt. 229) 84 NIC

[8] Section 19 of the Nigerian Labour Act Cap L1, Laws of the Federation of Nigeria 2004.

[9] ISCARE Nigeria Limited v. Mrs. Victoria Akinsanya & Anor NIC/LA/484/2012. 11  ILO Holidays with Pay Convention (Revised) 1970 (No. 132).

[10] First Bank of Nigeria Plc. v Nnaemeka Eminike, Unreported Suit No. NICN/ABJ/195/2018, judgment delivered on 12th April 2019.

[11] Lovell v Blundells and T.A Crompton & co (1943) 77 LI.L Rep 340.

[12] Registered Trustees of Union Bank Pensioners Association v Union Bank and 2 others (NICN/LA/555/2012) 15 Pursuant to the Quarantine Act, CAP Q2 Laws of the Federation of Nigeria, 2004.

[13] Section 2 NDPR Regulations 2019.

[14] Section 25 of the Public Health Law of Lagos State,2015  CAP P16, Laws of Lagos State.

[15] Section 73 of the Employee Compensation Act, 2010.

 

This information provided by ELLAN is not a legal opinion and should not be relied upon without seeking advice from professional advisers. Requests for further enquiries should be sent to [email protected]   

 

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