Global employers have a number of challenges to address due to the coronavirus (COVID-19) crisis, including have to monitor the variety of local governments’ responses.
While businesses in some countries have to close down their operations due to government orders, businesses in other jurisdictions are merely affected by the economic implications of the crisis.
It is also that some jurisdictions will put the financial burden solely on the businesses, requiring them to continue to pay salaries to employees despite a shutdown where others will have the employees to bear the financial risk.
New measures and state aid programmes are announced and updated by the day across countries, making it difficult for businesses to keep track and adopt a global strategy. But some trends emerge, as follows.
Compelling employees to take annual leave days
The use of employees’ annual leave in the event of plant closures is currently contemplated in various countries – often contrary to traditional principles – and in some cases it is even explicitly demanded of employees as their contribution to survival of the company.
For example, the Danish government is making its wage subsidy scheme conditional on the employees contributing at least five days of their annual leave. Singapore's Ministry of Labour recommends that employees should even take up to 50 per cent of annual leave in case of a loss of working hours. In other countries, employees who cannot work from home are expected to take annual leave days.
However, even if an employer may unilaterally order employees to take annual leave days, this instrument does not improve short-term liquidity. Also, in such cases, in addition to salaries, further payments may have to be made. In some countries like Brazil these payment become due even before the start of the leave.
Reduction of working hours
Many countries provide for a temporary reduction of working hours in the event of a slump in demand. However, the conditions and legal consequences differ greatly.
As an example, the recommended maximum term of temporary reduction in working hours is one month in Singapore while there is no time limit in Romania at all.
In practice, some administrations have created significant thresholds for applicants aiming to reduce the working hours of their employees. For example, a well-known fast-food chain in Spain recently failed with its application and was told that fast food could also be sold online and delivered to people’s homes.
Similar cases have been reported from France, whereas the Netherlands has now even completely abandoned its concept of reduction of employees’ working hours due to excessive demand and instead allows for pay reductions in connection with a wage subsidy scheme.
Local incentives – financial aid
Many countries provide or plan to provide extensive financial assistance to companies struggling in the crisis, e.g. deferral of tax debts, social security contributions and rents for state-owned real estate, short-time work benefits and personnel cost subsidies, or sick pay even to healthy employees who have to self-isolate.
Despite the above, there are clear differences between countries that are less affected by the coronavirus and those that are heavily affected. While the latter have already introduced numerous measures, other countries are still in the early stages of contingency planning.
One of the measures many countries worldwide have adapted is financial aid. While it is being introduced and distributed pro-actively, the legal employment framework is being adapted more carefully due to the long-term implications of such changes.
Employers’ and employees’ representatives should therefore collaborate for practical solutions to the current situation in order to balance the interests of both employees and employers. Singapore may serve as a model in such a case.
It is using non-binding recommendations which were drawn up jointly by the government, the umbrella organisation of trade unions and the employers' representatives.
Finally, even in jurisdictions that do not value employee protection rights as much as other countries, employers should react reasonably to the impact of the crisis. This would protect them against repercussions in other jurisdictions and threats to their reputation in certain markets.
For further information on workforce issues arising from the pandemic, please visit our coronavirus alert hub where you will also find a checklist for managing your people through the crisis.