ANJARWALLA & SEJPAL: Employment laws and Covid-19

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In Summary

According to the International Labour Organisation (ILO), full or partial lockdown measures around the world are affecting almost 2.7 billion workers representing about 81 percent of the global workforce.

The Covid-19 crisis is expected to wipe out 6.7 per cent of working hours globally in the second quarter of 2020, equivalent to 195 million full-time workers.

The majority of job losses or reduced working hours and consequent salary reductions, will occur in hardest-hit sectors, including hospitality, real estate, business and administrative activities, manufacturing, wholesale and retail trade, tourism and aviation.

That said, all sectors of the economy will experience some level of impact due to the crisis. The ILO believes that the total number of job losses in 2020 will be dependent on the measures taken to mitigate the impact of the pandemic. Providing certain reliefs to employees and employers is one such measure.
In Kenya, the Covid-19 pandemic has forced a number of employers to reduce working hours, cut salaries and benefits, send employees on unpaid leave and, in some cases, declare redundancies in light of the financial difficulties that they are facing.

RE-NEGOTIATING EMPLOYMENT TERMS

Under the Employment Act, the terms and conditions of an employee’s employment contract cannot be revised without the employer consulting with their employees. In addition, the courts have ruled that in such cases consent is also required to be obtained even though the Act does not stipulate the requirement for consent.

However, due to the unprecedented nature of the pandemic and the dire financial difficulties many employers are facing, the need for consultation and consent may not be practical if it otherwise means a winding up of the business altogether.

In some instances, employers have had to make unilateral decisions concerning their staff due to the sudden adverse impact of the pandemic.

One example of this is employers asking employees to go on unpaid leave. This has been particularly relevant for businesses that could not realistically remain operational during the pandemic, even with remote working arrangements.

A restaurant or a hotel that has had to shut its doors due to the restrictions in movement or an airline that has had to ground its flights, is unlikely to have much choice in dealing with its workers, making the requirement to obtain their consent an unnecessary burden, if it is to try and keep the business afloat.

The law should provide more flexibility to employers at this time. To do so would likely mean more employees being able to keep their jobs rather than lose them. For instance, allowing employers to engage employees on a part time basis rather than full time (with a consequent reduction in entitlements to benefits) or allowing employers to reduce employees’ salaries and benefits may overall help to keep more people in work as opposed to terminating their jobs if there is no viable alternative.

Whilst some of the changes and other arrangements may be entered into consensually between employers and employees, there remains a possibility that employees who consent now may later sue their employer on the grounds that they only agreed to the changes in their contract because, for example, the employer said he had no other choice.

To minimise such risks it may be necessary for the requirement for employers to seek consent from their employees be suspended for the duration of the pandemic. The employers should still have consultations with the employees about the measures to be effected. However, to ensure fairness, employers should be required to prove that they were facing significant financial difficulty and needed to forego the obtaining of consent before implementing the changes.

SICK LEAVE AND PAY

Under normal circumstances, the Employment Act and the General Wages Order entitle employees to between 7 and 30 days sick leave with full pay and thereafter, a maximum of between 7 and 15 days sick leave with half pay.

The law is silent on whether the quarantine period should be deducted from an employee’s sick leave and if so, when the sick leave period is exhausted, should the additional number of days of quarantine be deducted from their annual leave.

The law should be amended to provide that where an employee is required to be in quarantine due to Covid-19, the quarantine period should be considered an additional sick leave period.

REDUNDANCY

Redundancy refers to loss of employment which occurs where through no fault of employees an employer decides that their jobs have become superfluous to the organisation.

The law requires that prior to declaring redundancies, consultations be had for a minimum of one month between an employer and its employees and any trade union acting on behalf of unionised workers. Due to the unprecedented nature of the pandemic and it effects, the consultation period should be shortened, for instance to 21 days or other reasonable period in the circumstances, if it means survival of the business.

An employee who is declared redundant is entitled to be paid on the termination date a package comprising at a minimum of pay for all accrued leave; wages in lieu of notice (if the notice period is not to be worked) and severance pay at the rate of not less than 15 days’ pay for each completed year of service.

Given the financial strain on many employers, it may be necessary that employers are allowed to pay the redundancy package in 2 or 3 instalments depending on their financial position.

Lastly, under the law, an employer cannot rehire for a position that has been declared redundant for a one year period following the date of the redundancy.

Given the unique circumstances arising from the pandemic employers should be allowed to re-employ people to fill roles declared redundant if things return to normal earlier than 12 months. To be fair to those whose positions were made redundant due to the pandemic, employers who see improvement in their business and wish to rehire, should be required to offer the positions back to those who lost them.

SOCIAL WELFARE PROVISIONS

There are various statutory deductions and remittances that apply for the duration of an employment contracts and these do not take into account any flexi work arrangements that may have been in place.

For instance, both the National Hospital Insurance Fund Act and National Social Security Fund Act require employers to deduct and remit statutory contributions from employees’ salaries and deposit them in both funds. However, if an employer has had to send certain of its employees on unpaid leave these payments should be suspended for the duration of the unpaid leave.

Whatever legislative interventions are put in place in light of the pandemic, it will be important to seek to achieve fairness for both employers and employees and to take into consideration the circumstances of all parties involved.

Overall, the objective of any legislative interventions should be to minimise disruption and job losses. If employers are allowed flexibility in the form of pay-cuts, flexi work with reduced pay, unpaid leave amongst other such arrangements for the duration of the Covid-19 pandemic, it may mean more employees retain their jobs rather than lose them and that more businesses have a chance to survive than become insolvent.

Mr Anjarwalla & Ms Sejpal are Advocates of the High Court of Kenya and Partners at Anjarwalla & Khanna LLP