How are you firing or laying off?
Last Friday was 1st May and we were reminded that it was Labour Day. This was a special Labour day because many company’s and employees are going through really tough times. We recognise the fact that a lot of business, big and small, are going through or are prepar- ing to go through turbulent and unprecedented times in this season of COVID-19.
Unfortunately, the impact and the aftermath of this pandemic will be great. Employers and employees will be impacted in equal measure. The questions I have been grappling with are how will an SME survive through this period and still cope with paying its overheads consistently; and how many businesses have or had planned for this period or such calamities?
My bet is, very few. Most SMEs did not have any mitigations in place to cushion them in the prevailing circumstances because of the nature of their businesses. The COVID-19 pandemic was unforeseen and difficult to plan for by private sector players.
I will place emphasis on how a company or employer should deal with employment issues and critical overheads like rent during this pandemic in order to avoid legal tussles now or in the future. Employ- ment Act respectively provide the procedures to be undertaken and valid reasons for fair termination of employment by either party to an employment agreement.
Pay-cuts
Where termination of employment is not viable, an option available to SMEs and employees is renegotiation of the terms of the employment agreement for mutual benefit.
It is important to note that the employment agreement is a contract requiring all elements of a valid contract to be met. The proposed pay cut must therefore be accepted by the employee.
Employers should understand that employees should not be coerced to accept a pay-cut proposal as coercion will expose the employer to claims for breach of the employment agreement.
If an employee agrees to take a pay cut, an addendum to the employ- ment agreement should be signed between the employer and employee.
Issuance of Termination Notice
I am of the opinion that the contractual circumstances prevalent under the COVID-19 Pandemic would be a perfect trigger for a force majeure clause in any other contract not specifically excluding such events. However, force majeure clauses are rare in employment contracts, a fact parties to employment contracts should consider remedying in the future.
Nevertheless, under the Kenyan Employment Act it would be a challenge to claim events such as the COVID-19 pandemic as grounds for termination of an employment contract. But the fact that the pandemic has had an unprecedented effect on viability of SMEs that need resolution paths cannot be ignored.
In my opinion, as long as an employer abides by the procedures detailed under Section 41 of the Employment Act, it would be a valid reason under the Act to issue a termination notice to employees whose roles and assignments require services that cannot be provided from home or where affected employers are unable to operate due to lack of raw materials or market for its goods and services.
Redundancy
The other viable option is to terminate an employee whose services have become superfluous on account of redundancy. Section 40 the Employment Act provides the conditions to be complied with before a termination on account of redundancy can be activated.
While redundancy is an option available to employers during the throes of this pandemic, the process is complex and has considerable cost implications due to the conditions imposed by the Employment Act and various court rulings.
The reality is that the current pandemic will subside, whether by vaccine or herd immunity and sooner or later we will return to normalcy. I foresee a rise in employment related disputes and litigation.
Employers that fail to mitigate under the circumstances, improperly handle ensuing employment issues and rely on termination of employ- ees as alleviation of economic stresses, will pay a heavy penalty.