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:
a) such occurrence was reasonably unforeseeable
at the time of the conclusion of the contract
b) such
occurrence is beyond the control of the employer/employee and could not be
reasonably avoided, and
c) 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[5] and such
termination has in some cases been interpreted by the National Industrial Court
to amount to an unfair labour practice.[6]
2. 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.[7] 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.[8] Every employer should
engage its employees before making such changes as salary suspension or
reduction.
3.
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[9] 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.[10] It is
thus important that whatever leave structure is being proposed by an
organisation must be agreed with the employees[11] before
enforcement, 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.
4.
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.
5. 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[12] 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.
6. 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[13]
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.
A
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 s/he 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).
7. 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.[14]
A 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.
8. 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 2020[15] 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.
9. 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.[16] 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.[17]
10.
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.[18] 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 COVID-19.
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 ellannigeria@gmail.com
END NOTES
[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).
5
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 Industrial Court Act 2006, Industrial Court Act 2006 and the International Labour
Organization (ILO) Termination of Employment Convention 1982 (No. 158).
6
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.
7
Ajah v
Fidelity Bank (Unreported Suit No. NICN/LA/588/2017,
judgment delivered on 14th May 2019)
8
JOHESU v. Federal Ministry of Health (2016) 65 NLLR (Pt. 229) 84 NIC
9 Section 19 of the Nigerian
Labour Act Cap L1, Laws of the Federation of Nigeria 2004.
[1]0 ISCARE Nigeria
Limited v. Mrs. Victoria Akinsanya & Anor NIC/LA/484/2012.
[1]1 ILO Holidays with Pay Convention (Revised)
1970 (No. 132).
[1]2 First Bank of Nigeria Plc.
v Nnaemeka Eminike, Unreported Suit No. NICN/ABJ/195/2018, judgment delivered
on 12th April 2019.
[1]3 Lovell v Blundells and T.A
Crompton & co (1943) 77 LI.L Rep 340.
[1]4 Registered
Trustees of Union Bank Pensioners Association v Union Bank and 2 others (NICN/LA/555/2012)
[1]5 Pursuant to the Quarantine
Act, CAP Q2 Laws of the Federation of Nigeria, 2004.
[1]6 Section 2 NDPR Regulations
2019.
[1]7 Section 25 of the Public
Health Law of Lagos State,2015 CAP P16,
Laws of Lagos State.
[1]8 Section 73 of the Employee
Compensation Act, 2010.