COVID-19 was declared a global pandemic by the World Health Organization on the 11th of March 2020. Different countries around the world have put up measures to help restrict its immediate spread as they await a vaccine. However the World Health Organization emergencies director Michael Ryan warned that “the Corona Virus may never go away and populations around the world will have to learn to live with it”. This means that the current reality we are living now will in the long run become the new normal.
Numerous offices and work places were disrupted by the COVID-19 outbreak. Some work places embraced the practice of working from home in order to comply with the social distancing measures enforced by the government. Other places laid-off their employees as they were unable to sustain their salaries during this period. As various countries and health institutions work around the clock to find a vaccine for the virus, Companies and other work forces will have to adapt to the “new normal” way of doing things , this comes with many legal risks and implications.
When the Government of Uganda ordered a nationwide lockdown on the 31st of March 2020, a lot of companies were affected; many businesses came to a standstill causing companies to make a number of changes in order to stay afloat economically. Some of these changes included; having majority of employees working from home, permanently laying off company staff, withholding certain percentage of salary for company staff. It is important for companies to know the legal risks that come with operating during the COVID-19 pandemic.
1. Labour and employment risks
Laying off employees
Companies should be aware of the legal risks that come with unlawfully laying off employees during this period.
Where a company cannot sustain the salaries of all their employees they can consider temporarily laying off their staff. The employment act allows employers to temporary layoff staff they cannot maintain. (These should pass the test under section 81 of the Employment Act).
Section 81 of the Employment Act allows for the termination of more than 10 employee’s contracts within 3 months period, this should only be used as a last resort where the employer suffers hardship due to the COVID-19 outbreak.
There have been a number of companies that have resorted to suspension of employees contracts or laying off of employees because they cannot ably sustain their salaries during pandemic; at the beginning of June 2020 Uganda Christian University suspended its duties and stopped paying its staff salaries from 1st June 2020, this is because the closure of the university since march meant they hadn’t collected any fees from the students a key source of income for the university. Employees of Sanyu Fm also went on strike after rejecting a 25% salary reduction that the company subjected them to, their contracts were later terminated and many of them threatened to sue the company for unlawful termination. Companies should be mindful during this period and ensure that any terminations done are in compliance with the law to prevent litigation cases against them.
It is important for companies to revise their current contracts with employees, and modify some of the clauses such as the “force majeure” clause to include pandemics such as COVID-19. Termination clauses should also be amended to allow for temporary suspension in case of unforeseen circumstances.
Companies should update their data protection policies. Those with employees working from home, usually face the risk of having clients personal data carried out of office. To avoid any litigation against them for mishandling of data, companies should set up policies that show how data should be handled out of the office setting. Protective measures for the data handled should also be set up e.g. providing employees with secure internet connections and keeping them private to avoid cyber security breaches.
Clients consent should be gotten and they should be notified of the change of work procedures, letting them know that some of their work shall be done out of office premises but assuring them that their data and confidential material shall be kept safe.
Companies might find themselves in a situation where they need to collect sensitive health data from their employees, or distribute said data to medical workers in case one of the employees is sick.
In cases like these, the Companies should remember to always keep the Data Privacy and Protection Act 2019 in mind. It is required under law that before collecting such sensitive data from the employee, the employer should first explain to the employee their reason for collecting such data from the employee, and the employee should give their consent to allow such data to be collected.
2. Health and Safety Legal risks
The Occupational Health and Safety Act under section 13 stipulates that employers should maintain a healthy and safe environment for their employees. Companies are under an obligation to make sure that their offices are safe enough for people to work in even during this pandemic.
Companies must ensure that they have safety measures in place;
· Provide hand sanitizer, gloves, masks other items that will make working safer
· Constantly inform employees on the dangers of the pandemic, and educate them on how to protect themselves
· Notify the relevant medical practitioners if they have any employee suffering from COVIDD-19 (Rule 3 of the Public Health (Control of COVID-19) Rules 2020)
Additional measures they can adopt;
· Having employees work in shifts to limit the number of people accessing the office
· Having essential staff come to work and the rest work from home
· Coming up with a working from home plan, including holding meetings using video conferencing etc. (the law is silent on working from home arrangements; however the employment laws still apply to the same)
Companies should note that employees have the right to refuse to work under the OSHA if they believe the work is unsafe. On receiving a work refusal, the employer should investigate the employees concerns. A plan may be arranged for such employees to have them work from home away from danger or they should consider unpaid leave.
Failure of a company to maintain these health standards may put them at high risk of being sued by their employees/staff for negligence.
3. Commercial Risks
Due to the travel ban to countries severely affected by COVID-19 and the restriction of cross boarder movements, trade and commercial transactions for various companies are at a risk. The restriction in movement means a restriction in foreign investments, transactions and supplies. The harsh economic climate risks a surge in business failures, failure to pay off loans and debts etc.
Companies should during this time asses their financials and come up with emergency procedures, back up accounts and mitigating measures to help them stay afloat financially.
Companies should review their contractual obligations with various business partners, assessing which contracts they can be able to perform and others whose timeline should be extended; this will allow them to prevent unnecessary losses of clients and business.
There is a risk of company’s failure to meet tax obligations during this pandemic. Companies are expected to comply with the tax obligations even amidst the COVID-19 pandemic. The Uganda Revenue Authority has tried to ease some of these obligations by extending the deadlines for filing tax returns; however tax payment deadlines have not been extended.
The Tax Procedures Code Act allows for extension of time to pay tax where a business is unable to foresee the challenges in paying their taxes in time. Businesses requiring this extension should apply in writing to URA seeking either an extension in time or an arrangement to pay the taxes in installments.
Despite the legal risks faced by companies during the COVID-19 pandemic, adequate planning and organization as discussed above can help prepare them for any unforeseen risk that may arise.
“Companies should during this time asses their financials and come up with emergency procedures, back up accounts and mitigating measures to help them stay afloat financially.”