PANDEMIC LOCKDOWN: EXPLORING THE OPTIONS AVAILABLE TO EMPLOYERS

By Paul Omobhude Esq.

Introduction

It is no longer news that the world is on lockdown which has paralysed both the economy and the entire labour force. This paper will address the options available to employers during the lockdown.

It is no doubt that there are different employers in different sectors whose finances, resources, income or profit are determined by the kind of industry they work in. For instance, a transport company generates its funds from daily income. However, considering the pandemic lockdown, it will be practically impossible for the employer to pay the salaries of drivers and other personnel because funds are not coming into the company due to the lockdown.

In simplicita, employers have been faced with several issues due to lack of funds to pay their employees and there are few options open to such employers.

Presently, we will be using Nigeria as a case study for this paper.

 

The few options open to employers are:

  • Employees working remotely from home
  • Shift or rotational technique
  • Compulsory leave
  • Salary reduction
  • Termination based on redundancy

We will now proceed to examine these options in the following paragraphs.

  • Employees working remotely from home

Because COVID-19 is easily spread through contact with infected persons or surfaces, working remotely is a viable option employers can adopt in the management of their workforce.

In light of this, employees whose portfolio or work schedule does not require them to be in the office must work from home to manage the spread of the virus within the work environment.

 

  • Shifts and rotational technique

Employers also have the option to rotate employees or run different time shift in the work environment allowing fewer people or employees in the office at the same time. For example, a company with a strength of about 30 essential staff might employ a shift or rotational mechanism where 5 people work at the same time for specific hours or days to be replaced by another set in a scheduled time frame.

  • Compulsory leave

Employers can also request that their employees embark on compulsory leave for some months to ease the financial burden on the company or organization during the period of lockdown. However, it is pertinent to note that the terms of employment and general labour laws do not make provision for compulsory unpaid leave as this attempt may be a breach on the terms of employment of the employees. Therefore, the employer must communicate with the employees to reach an understanding taking into consideration the peculiarity of the case at hand.

  • Salary reduction

Employers can reach an understanding with the employees taking into consideration the nature and circumstance of the company’s financial inflow and downturn of businesses. This understanding will focus on temporary salary reduction brought on in an attempt to keep the company afloat and prevent it from being grounded.

 

  • Termination on the ground of redundancy

This should ordinarily not be an option for employers but when push comes to shove, an employer might consider this option.

Termination of contract of employment is usually one of the ways an employment relationship is determined. In modern-day employment contracts, varying termination clauses are inserted, stating what grounds and procedures by which a contract of employment can be terminated. Keeping in mind that businesses are being forced to seek ways of minimising overhead cost due to current economic restrictions, termination of an employment contract is an option an employer might choose to consider. This is an option that can be enforced on the grounds of redundancy.

Legally, the Supreme Court of Nigeria following the general rule that an employee can terminate a contract of employment at any time for whatever reason, either good or bad held in Odinkenmere v Imprest Bakolori (Nig) Ltd (1995) 8 NWLR Part 411 Pg 52: that:

“An employee cannot compel the employer to retain him no matter how desirable that may be on humanitarian or other grounds. Inasmuch as the same way an employer cannot compel an employee to remain in his service no matter how indispensable his services may be to his employer.”

This implies that the employer keeping the business’ interest in mind, though undesirable, may terminate the contract of employment of any employee considering the prevailing economic circumstance.

Be that as it may, it is very apposite to call to mind the recent decision of the National Industrial Court of Nigeria, {NICN} in Mr Ebere Onyekachi Alloysius v Diamond Bank Plc (2015) 58 N.L.L.R. 92, where the court stated emphatically that:

 “It is now contrary to international labour standard and international best practice, and therefore unfair for an employer to terminate the employment of its employee without any reason or justifiable reason that is connected with the performance of the employee’s work.– the Court can now move away from the harsh and rigid common law posture of allowing an employer to terminate its employee for bad or no reason at all”

However, though the National Industrial Court (NICN) took a very contrary opinion from the earlier position of the Court in Odinkenmere v Imprest Bakolori (Supra}, it must be pointed out that the Supreme Court decision as expressed above remains binding until the Supreme Court in its wisdom overturns itself.

Redundancy as grounds for loss of employment has been defined in Section 20 {3} of the Cap L LFN 2004 Labour Act as “involuntary and permanent loss of employment caused by excess manpower”. 

The Labour Act does not state what can lead to “excess manpower” or defined “excess manpower” but what can easily be gleaned from the Labour Act is that excess manpower connotes situations wherein an organization has more personnel than is needed for a particular assignment. A classic example is where a company purchases a machine to perform a specific function. This action will render previous employees of that assignment redundant. 

Redundancy, as provided for under the Nigerian Labour Act, is wide and can be stretched to cover several situations including economic exigencies and restrictions like the current Coronavirus pandemic.

In Alexander O. Ejah & Ors v Niger Mills Co. Ltd NICN/CA/97/2013, 27-2-2015, the NICN in its unfettered opinion stated that evidence which showed the Defendant’s employment contract was terminated because the employers changed their mode of operation from manual to an automated process requiring less staff was necessitated by economic and technological reasons and therefore justified and rightly falls within the meaning of redundancy as contemplated under the Act.

Furthermore, it is important to note that the Labour Act places a responsibility on an employer to provide work for his employees. Section 17 {1} of the Cap L LFN 2004 Labour Act provides that every employer shall provide work suitable to the worker’s capacity on every day unless where the worker has broken his contract or is not fit to work. 

Though Section 17 of the Labour Act makes it mandatory for an employer to provide work for an employee when he is fit or not under some disciplinary actions like suspension, Section 17 {1}{a} of the Labour Act envisages a situation where it is impossible and beyond the power of the employer to provide work. This situation contemplated is referred to as labour redundancy; the situation contemplates exigencies which are beyond the employer’s control. 

Section 17 {1}{a} provides as follows:

“where, owing to a temporary emergency or other circumstances beyond the employers control {the period of which shall not exceed one week or such longer period as an authorized labour officer may allow in any particular case}, the worker shall be entitled to those wages only on the first day of those period in question”

Gleaning from the above, the economic lockdown as being experienced right now in Nigeria can easily be likened to a force majeure – an unforeseeable circumstance limiting the employer from providing work or meeting with the required capacity to maintain its league of employees. Consequently, an employer of labour can terminate an employment contract permanently or temporarily on the ground of redundancy.

We sincerely believe every employer should not make termination based on redundancy an option except the survival of the business is greatly threatened because some of the employees never planned or prepared for the pandemic lockdown as the employer can still consider the other options like Employees working remotely from home, Shift or rotational technique, Compulsory leave and Salary reduction before exploring termination.

 

Conclusion

The effect of Coronavirus on the economic space has had severe economic implications. Private business owners and employers are forced to bear the burden of managing a business and meeting up with the obligation of their employees’ remuneration. Bearing this in mind, employers must be mindful to consider options available to them against the backdrop of existing contracts of employment with their employees to be able to make the best decisions which will be beneficial to all parties involved.     

 

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