New Coronavirus (2019-nCov): Advice for Employers
Due to the spread of the new coronavirus 2019-nCov (“Coronavirus”), many companies are facing the question of how to adapt to the current situation and adjust their business processes. They are having to take into account, inter alia, a significant reduction in the volumes of work and recommendations for self-isolation.
We have prepared comments on the most frequent questions that employers face when adapting their business to operate in the Coronavirus situation.
Is it possible to temporarily transfer employees to part-time work and reduce their salaries accordingly?
The amount of salary as well as the number of working hours are essential conditions of a labor contract which can be changed only further to an agreement to this effect between the employee and the employer. Moreover, judicial practice shows that a reduction in salary, even with the employee’s consent, will be allowed only if it is accompanied by the corresponding decrease in the number of working hours and/or job duties.
If the employee does agree to work part-time with a corresponding salary cut, such changes must be formalized through signing an addendum to the labor contract between the employer and employee. This option may be suitable for those companies which face a significant reduction in customers’ orders or which, for other reasons, cannot provide employees with a sufficient amount of work.
We note that without an employee’s consent, the only case when an employer can unilaterally enforce the above changes is if it can prove that the current working conditions cannot be maintained for reasons related to organizational or technological changes in working conditions pursuant to Article 74 of the Russian Labor Code. This Article can apply, for example, if the employer, in order to adapt to the Coronavirus pandemic and the self-isolation regime, introduces new technologies and automates operations which used to be handled manually, which implies less involvement of human resources in business processes. However, this option requires compliance with a rather time-consuming procedure. Specifically, the employer must notify the employee two months beforehand of the pending changes and the reasons for them, and only after this notice period expires can the employees be transferred to part-time work with their salary reduced accordingly. This option may not be suitable for many employers, as it requires actual proof and the Coronavirus pandemic cannot per se be considered to constitute “organizational or technological changes in working conditions”. Moreover, after the two-month notice period, the changes caused by the current situation may become unnecessary.
Is it mandatory to keep paying employees their bonuses?
Those employers who are concerned with the fact that the volume of work is decreasing significantly and expenses for labor remuneration are not following suit may be advised to check the company’s current remuneration scheme. More specifically, often remuneration for employees of certain categories (e.g. sales) consists not only of a fixed sanely but also a bonus that is usually paid in the amount of certain percentage of their wage, or sales volumes, or the amount of work performed, etc.
If the employer’s financial situation does not allow the usual level of expenses for labor remuneration to be maintained, then as a temporary measure the payment of bonuses can be suspended until the situation becomes more stable. As a rule, labor contracts and bonus policies or similar internal regulations of the employer include standard wording that the payment of bonuses is a right but not an obligation of the employer.
However, if this wording is missing and the payment of bonuses in a certain amount is stipulated as an obligation of the company, including one depending on certain conditions that have been met by the employee, then the bonus may not be unilaterally reduced or withheld.
Is it possible to force employees to take vacation?
The employer may force an employee to take vacation (paid leave) only on condition that (i) this vacation is set forth by the vacation schedule, and (ii) the employer has duly notified the employee in writing of the pending vacation two weeks in advance.
We remind you that each employer adopts the vacation schedule no later than 2 weeks before the calendar year commences. In other words, the vacation schedules for 2020 had to be adopted no later than 17 December 2019, when there were no signs of the pending pandemic and it could not be taken into account.
Any vacation that is not set forth in the vacation schedule, as well as any unpaid leave, can be taken upon agreement between the employer and the employee. It cannot be unilaterally enforced by the employer.
Can a company declare downtime?
Downtime is the temporary suspension of the work for reasons of an economic, technological, technical or organizational nature. The Russian Labor Code does not contain an exhaustive list of the reasons that can cause downtime, and the employees’ consent to downtime is not required.
It is mandatory for the employer to specify the reasons for any downtime. These reasons affect the amount of payments to employees during the period of downtime, and the employer therefore must indicate them in as clear and detailed a manner as possible. If downtime is caused through the employer’s fault, employees are paid during the downtime period at the rate of two-thirds of their average monthly salary. If the downtime is caused by reasons beyond the employer’s control, two-thirds of the employee’s fixed monthly salary (which is usually lower than the average monthly salary) is paid during the period of downtime.
We note that it is usually quite difficult for the employer to prove that the declaration of downtime is not the employer’s fault, because substantial judicial practice shows that in the majority of cases the courts rule that the downtime has been caused through the employer’s fault, explaining that it is the employer that is a commercial entity and that should bear the corresponding business risks (inter alia, those related to crises, a lack of customers’ orders, non-performance by counterparties, etc.).
However, there is reason to believe that downtime caused by the Coronavirus may be classified differently. Official guidance has not yet been issued; however, at the recent meeting of the Russian Trilateral Commission on the Regulation of Social and Labor Relations, the Deputy Prime Minister of Russia, Ms. Tatyana Golikova, expressly stated that downtime in the circumstances at hand cannot be considered to be due to employers’ fault.
We note that judicial practice shows that downtime can be declared either with respect to the whole organization or only to certain categories of the company’s employees.
How to formalize an employee’s remote work?
As the Coronavirus spreads, more and more companies are transferring their employees to a home office regime. We advise you to bear in mind that such transfer needs to be properly formalized. Inter alia, it is necessary to:
- besides the director issuing the appropriate order, conclude addenda to labor contracts stipulating that the employees are being temporarily transferred to a remote work pattern, taking due account of the specific regulation of remote work provided for in Chapter 49.1 of the Russian Labor Code;
- include in the addenda provisions that will allow the employer to oversee the employee’s work, e.g. an obligation for the employee to be contactable by cellphone during business hours, to provide reports on work performed, to confirm expenses so that they can be timely compensated, etc.;
- ensure the security of the company’s commercially confidential information, as well as compliance with personal data protection laws, especially when no prohibition has been stipulated on employees using their personal laptops when working from home.
Which additional responsibilities does an employer have due to the Coronavirus pandemic?
In many regions of Russia, including Moscow and St. Petersburg, a number of additional responsibilities have been imposed on employers. Inter alia, employers must:
- ensure the daily measurement of the temperature of employees in workplaces (taking due account of clarifications of the Federal Supervisory Agency for Information Technologies and Communications, since information about the temperature constitutes personal data of an employee) and must remove employees with a fever from the workplace;
- ensure the regular disinfection of workplaces and office equipment;
- assist employees in enforcing self-isolation at home, and introduce tools for remote meetings and conferences;
- in the event that an employee affected by the Coronavirus is identified, further to a request from the Office of the Federal Service for Consumer Rights and Human Welfare Protection, immediately provide information about all work contacts of the indisposed person and ensure that the premises where the patient was located are disinfected.