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COVID-19 and Employment Concerns (Legal Perspective)

The effect is global, entire countries in lockdown, thousands at intensive care units, medical community making a huge sacrifice, leaders are tensed, markets are empty and entire industries in complete standstill. Obviously business is not as usual.

Epidemics are not unprecedented in the history or mankind, though not usual either. The world has witnessed severe epidemics where the millions of lives were lost. The recent Corona virus COVID-19 is unique in the sense of its geographical expansion and pandemic status. Nonetheless, we remain hopeful in the mercy of almighty and we are committed to obey the instructions of our government.

Business is not as usual:

The recent corona out-break has posed reasonable threats over the legitimate expectation of business across the globe. Who is responsible for this threat and who shall take over the liability of negative impact? It is quite evident that the fault lies on none as it was completely beyond human control.

This leaves several questions on the table. Is it possible to ask all the stakeholders to concur a piece of the liability? How about the employees, can they be asked to support the business by way of compromising their salary and other entitlements? Will the employer be justifiable on reducing the salary as the revenues are deteriorated by COVID-19? Will it be fair to prioritize the other dues over the employee debt? What are the legal repercussions of unpaid leave arrangements?

The employers perspective:

There have been several unexpected incidents in the markets such as payment delays, market disruption, supply chain blockage, travel restrictions, etc.

One solution could be a reduced salary for this month, though there are questions of the legality of this. From next month, the only option is to send the staff on unpaid leave or set-off the annual leave to minimize operational expenses.

The employees perspective:

Employees are fully aware about the market situations, but how they can survive without a salary.

While they are willing to stand by the company during this difficult time, how can they justify a reduced salary? They did not ask for a doubled salary when the company had a high turnover. They are also quite clueless about the legal framework of being handed out reduced salaries or being told to take leave. They are unsure of what to do.

What is the legal perspective on this?

In Accordance with Article 76 of UAE Federal Law No.8 of 1980: It is the discretion of the employer to fix the date of Annual Leave. It is not within the law to send the staff on unpaid leave unless otherwise mutually agreed between the employer and employee. Such consensus should be devoid of duress. The employee debt shall have priority over the other debt subjects to the applicable laws and regulations.  The argument of force majeure may not be easy to prove as the employer has to prove the impossibility of performance in respect of salary commitments after giving the due consideration to the cash reserve and other requirements under the Commercial companies Law.

However, the government interventions and departmental decrees are crucial.

These concerns are not of higher relevance for well moving companies with huge turn over, yet they must consider this given the uncertainty in the mid term. Since the employment law is welfare legislation, it will be construed in accordance to purposive interpretation of statute. A fair approach to the issue in compliance to the laws and regulations would mitigate the greater risk in all perspective.

At the end, on moral ground: stand with employer and support the employee as you are a family together.

Here, I close the thoughts with the words of Sheikh Mohamed bin Zayed Al Nahyan, Crown prince of Abu Dhabi and Deputy Supreme Commander of United Arab Emirates Armed Forces, “We will get through the ongoing tough times and survive the myriad challenges that we and the entire world are experiencing. The hard time will pass anyway; we might just as well put that passing time to get stronger than before,”

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