THE EFFECTS OF COVID 19 ON THE CONTRACTS OF EMPLOYMENT

1. We are seeing a number of employers suspending their contractual obligations under the Employment contracts on the ground of COVID 19. This has left employees without salaries for as long as the suspension exists.

2. Similarly, other employers have decided to deduct the salaries of the employees either by half or by a certain percentage, leaving employees with less salary than what they would have actually earned.

With the foregoing scenarios, some employers had the courtesy of writing to their employees notifying them of the decision taken. Others have simply sent their workers home or terminated their employment contracts. These include universities, companies, sole proprietorship, and individuals.

Kindly share your views on suspension, salary deductions and termination of employment contracts as a result of COVID 19.

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OPINION

The employer can lawfully suspend his/her Employees under S.63 of the Employment Act only in the circumstance when doing an inquiry for dismissal which should only last for 4 weeks but not on the ground of frustration or a pandemic like COVID 19.

Termination is possible under S.81, with the obligation upon the employer to pay terminal benefits which may be very costly for the employer especially where the contract provides for terminal benefits.

In addition, the employment Act No. 6 of 2006 under S.40(2)(a-d),(3)-(a-c and (4) provides for circumstances where the employer is not obliged to provide work.

Where the contract has a clause on force majeur it should be interpreted on case by case basis.

I recommend that the current (Employment Amendment Bill of 2019) before parliament should cater for circumstances where the employer can neither provide work to the employee nor have any source of income to remunerate/pay his/employees as a ground for suspension of the employment Contract.

COVID 19 is a wake-up call revealing serious gaps that need to be addressed in our Employment laws. The law needs to strike a balance between employers and employees depending on the particular case. Kenya has interestingly moved a step ahead and they have now introduced “The pandemic response and management bill 2020”. Which I find so interesting.

In conclusion, I advise that employment contracts be varied with the consent of the employees. A unilateral decision by the employer may turn out dangerous and it will give rise to law suits on grounds of unlawful termination, unfair dismissal etc. where an employee unreasonably refuses to come into agreement with his/her employor, he or she can be paid in lieu of notice and bring the employment to an end.

My opinion is that neither employers nor employees should take advantage of COVID-19 to the detriment of one another. This is because the crisis has affected all sectors of the economy greatly and changed work situations for millions of people around the globe. No one was prepared for the crisis and thus its effect is upon everyone.

Regardless of the above, the rights that arise out of the employer-employee relationship need to be respected. In a bid to safeguard employees' rights, the Ministry of Labour on the 25th of March 2020 instructed employers to submit details of employees' who are likely to be affected in accordance with Section 19 of the Employment Act, 2006; which would serve as notice to the Ministry before termination of employees. (see https://www.monitor.co.ug/News/National/Covid-19--Government-moves-to-protect-workers-rights/688334-5513772-m8vh3e/index.html)

A contract between an employer and an employee governs their employment relationship. The contract terms are meant to guide the employer on how to deal with employees and these terms should be in line with the Employment Act 2006, lest they are rendered legally unenforceable. For cases where there is no employment contract, the Act is quite informative.

It should be noted that it is unlawful for an employer to unilaterally change the terms and conditions of one's employment contract. Section 46(b) of the Employment Act 2006 prohibits a reduction of wages without the employee's consent. Therefore, any salary deduction not agreed upon by the employee is unlawful. It is hence more prudent for an employer to seek his/her employee's consent before imposing any salary deductions not covered under the law.

Due to the current circumstances, many businesses are operating on much lower budgets, if not in deficit. Most contracts provide for payment in lieu of notice as under Section 58(5) of the Employment Act; and many employers are finding a safe haven in such provisions since termination is made easier. However, It should be done on justifiable grounds and this depends on the facts of the case. For example, if the crisis has made it impossible for a business to operate, then this option is viable.

I am hence of the view that;

1. Any measures affecting employees' rights should be taken with regard to the law.
2. Salary deductions should be agreed upon between employers and their employees.
3. Where possible, employers should lay off employees instead of terminating their employment. (termination should be the last resort)
4. Employers should develop written COVID-19 policies to safeguard their employees' interests and also protect themselves from any liability.
5. Parties to employment contracts should review and amend existing contracts and make use of addenda to include terms tailored towards the crisis.

Most importantly, I implore both employers and employees to act with empathy and to respect each other's rights since this crisis poses negative impacts on us all.

This is very informative. Thank you.

I agree Nathanella, the parties should sit down for a consent to avoid the looming pseunamy of cases before the courts of law with limited capacity at the industrial court to dispose them off without undue delay.

Salary reduction should be done on agreement between the employer and the employee, and the employee should be given reasons as to why that decision was reached because you cant expect to be paid yet the business you are running is inoperative.
The employment act should be amended to cater for such emergencies when an employee can be LAID OFF, CONDITIONS, TIME LIMIT and tight provisions should be put in place to cater for job security

Thanks Albert for this wonderful opinion