Ever since the emergence of COVID-19 as a pandemic, the world has witnessed extensive lockdowns and a call for people to stay home as some of the preventive measures against the spread of the disease. The crisis has disrupted the labour market and the sustenance of private business entities that rely heavily on that market.
The current level of uncertainty posed by COVID-19 has strained employment relations between private business owners and their employees because of the employer’s need to scale down on their losses and the polar need to ensure the security of employee’s employment and health.
As employers explore their available options, including termination, sending employees on leave, layoffs, and invoking the force majeure clause, the legal implications of their actions are called to light. All classes of employees, including the essential, non-essential, and casual employees, will be affected by the decisions of the employers. The purpose of this article is to, therefore, highlight certain legal aspects business owners and employers in Uganda will have to consider and have in mind before taking any decisive steps concerning their employees amid this crisis.
Before the employer makes any decision concerning his/her employees, the employer must, as a rule, refer to the Employment Contract since the agreement of the parties governs every employment relationship. The terms of the Contract will be able to guide the employer on how he/she will deal with the employees. This Contract must comply with the provisions of the Employment Act 2006 because terms in the Contract less favourable than those provided for in the Employment Act 2006 are null and void. In the absence of a written contract, the Employment Act is instructive.
An ordinary Employment Contract may contain clauses on termination, leave, and force majeure. All these are the options employers are looking at amidst the COVID-19 crisis. However, the exercise of these options cannot be made dissolutely. The Employment Act 2006, the Ministry of Gender, Labour and Social Development 2020 COVID-19 guidelines and International Labour Organisation 2020 Note on COVID-19 in the world of work (ILO COVID-19 Note) all offer guiding principles on how employers should treat employees in these unprecedented times. While the employer considers each option below, I will highlight the legal framework the employer must consider while taking any decisive measure.
A. Invoking the Force Majeure Clause
The Force Majeure clause is a term of a contract that excuses a party from performing its obligations in case of the occurrence of any event beyond the control of any party, including war, acts of God, government lockdown or plagues. The employer may invoke this clause if, as a result of COVID-19, he/she has failed to substantially fulfill his/her obligations under contract. The purpose of this clause should be to suspend the contract until when such interference can no longer stop the employer from fulfilling their contractual obligations unless otherwise agreed.
Any employer seeking to rely on this clause will have the burden to prove that as a result of COVID-19, they are unable to fulfill contractual expectations and that COVID-19 actually fits into the definition of force majeure as provided for in the Contract.
The 2020 Ministry of Gender, Labour and Social Development guidelines on COVID-19 call for a humane face while dealing with the employees. Because of the conclusiveness of this clause in many contracts and it being indiscriminate towards the categories of employees, the employer should only consider this option if all efforts to sustain the business entity fail.
B. Termination of employment
Termination of employment means the discharge of an employee from employment at the initiative of the employer for justifiable reasons other than misconduct, such as expiry of contract and attainment of retirement age, among others. It is not a disciplinary act (that is, does not require disciplinary proceedings) but is merely a contractual exit arrangement available to either an employee or employer and can be exercised by either party.
There are many contracts that provide that an employer is at liberty to terminate an employee’s contract as long as the employee is paid in lieu of notice. As such, feeling pushed to the corner due to losses occasioned by COVID-19, the employer uses that clause to terminate the employee’s Contract.
The Employment Act 2006 and case law have put guard rails on how this clause must be used. In Mary Pamela Sozi v PPDA C.S No. 63/2012, the court pointed out that an employer cannot unreasonably and without justification terminate the contract of an employee just because there is a clause in the employment contract that allows for payment in lieu of notice.
In Florence Mafumba v Uganda Development Bank- Labour Claim 138/2014, the Industrial court held that in terminating the employment of an employee, there must be circumstances that are justifiable but which have no bearing on the fault or misconduct of the employee. In employing the employee, the employer had reason to so employ him/her. In the same way, in terminating the employee, there ought to be a reason for the decision.
If the employer assumes that COVID-19 is a justifiable reason for terminating the services of the employee, then the employer will be charged with proving that COVID-19 has affected the business entity to the extent of justifying terminating the services of the employee.
An employee who has worked for at least 13 weeks’ continuous service (about three months) has a right to claim for unfair termination if, in their opinion, the reasons advanced by the employer are not sufficient or justifiable. It could be made worse for the employer if they, after terminating the services of the said employee, employ someone else in their stead within an unreasonable time.
The 2020 COVID-19 guidelines by the Ministry of Gender, Labour and Social Development call upon employers to retain employees who are paid on a monthly basis (regardless of whether they are essential or non-essential staff) since termination at this stage may be costly in terms of payment of terminal benefits- if any as provided for in one’s human resource manual/ contract of employment.
The employees most likely to be affected by this option will be casual employees. These are employees who are paid on an hourly or daily basis at the completion of each day’s work. The Ministry has requested employers to review their contracts and to reach into an agreement as to those who may stay home.
Some employers are opting to send their employees on paid, unpaid, sick and/or annual leave depending on the financial capacities of the business entity. Some employees may reject the offer to take leave since it is an entitlement of the employee that usually is requested for by the employee.
In the case of Kyazze v Busoga College Mwiri (LD Ref No. 143 of 2016) it was held that, although an employee is entitled to leave per the Employment Act 2006, such leave is ordinarily granted when the employee applies for it. Unless there are special circumstances, an employer may not force an employee to go on leave.
The crisis caused by COVID-19 may be taken to be circumstances that are special enough to justify sending an Employee on leave, be it paid or unpaid. The 2020 COVID-19 guidelines by the Ministry of Gender, Labour and Social Development invite Employees to take annual leave and or leave without pay upon agreement with their Employers. Consequently, both parties may agree that the circumstances brought upon by COVID-19 are indeed special to warrant the employees taking leave. It is still upon both parties to decide whether to go on paid or unpaid leave.
For sick leave, the employee is entitled to paid sick leave for two months if they have completed at least one month’s continuous service with the employer and have a certificate from a qualified medical practitioner stating that they are unable to work because of sickness. The International Labour Organisation 2020 Note on COVID-19 in the world of work (ILO COVID-19 Note) calls employers to grant paid sick leave to employees who are unwell or in quarantine as a result of COVID-19.
During the leave period, be it sick leave or any other leave, the employee will not be working. The employees most likely to be affected by this option are the non-essential employees since they are not required to meet the core function and programs of their entity during the crisis and/ or they do not need to be physically present at the workplace. For essential employees, especially the ones whose physical presence is not necessary but are required to meet the core function, and programs of their entity, the ILO COVID-19 Note calls for the implementation of teleworking and staggered hours as aids to work which may include working from home.
D. Collective termination and layoffs
There are businesses like factories that have more than ten employees that may be considering this option. Under section 81 of the Employment Act 2006, if the employer contemplates termination of not fewer than ten employees over a period not exceeding three months for economic, technological, structural or auxiliary reasons, then the employer shall;
- Inform the employee and labour union representatives, if any, through a four weeks’ notice or less (for a justifiable reason) before termination of the reason as to why termination is contemplated, the number of workers to be affected and the period over which they will remain out of employment.
- Notify the commissioner as well with the same information.
The employer still must prove that COVID-19 has led to economic difficulties within the business entity, thus justifying collective termination. The 2020 Ministry of Gender, Labour and Social Development guidelines on COVID-19 propose the following measures to be undertaken in light of collective termination and layoffs;
- For unionized workers, the employer should explore the provisions of collective bargaining agreements in case layoffs and redundancies become the best option,
- Employers must give notice to affected workers and their labour union representatives if any,
- Employers should use a humane approach ( marked by compassion, sympathy, or consideration) in terminating the contracts which should be signed by both parties.
- There must be counseling provided by the employer before the termination.
- Temporary layoff by the employer should not affect the continuity of service.
- A commitment to re-engage the employee when work normalizes should be entered into with the employee and signed by both parties.
- Employers must pay terminal benefits to the employees unless otherwise agreed upon.
The ILO COVID-19 Note on the world of work calls upon employers to enter into employment retention schemes, including short-time work arrangements and or partial unemployment benefits should an employer decide to lay off his/her employees temporarily.
Conclusion and Recommendation
These are unique times, and employees are looking to their workplaces as sources of social security. ILO has projected that there will be a significant rise in unemployment and underemployment in the wake of the virus of up to 24.7 million affected people.
To mitigate the rising levels of unemployment and underemployment, the employer should use less drastic measures as called upon by ILO and the Ministry of Gender, Labour and Social Development in dealing with his/her employees as employees will be gravely affected. In the meantime, ILO recommends tripartite social dialogue between Governments and Workers’ and Employers’ organizations to develop and implement sustainable solutions for recovery from the economic hiatus imposed on the world by COVID-19.
This article provides general information only. It is not intended to provide advice concerning any specific set of facts, nor is it intended to be relied on as legal advice.
ABOUT THE AUTHORS
Abio Patience is an Associate at M/s Tibugwisa & Co. Advocates. For comments and inquiries contact her at firstname.lastname@example.org or tel: +256787021216 or for other services by the firm check the firm’s website on www.tadvocates.com