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LOCKDOWN & CONTRACTS OF EMPLOYMENT

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By Brenald Chinyowa

Published in Financial Gazette 16 April 2020

It has been 4 months after COVID 19 virus was discovered in Wuhan, China. The events that followed saw this epidemic being upgraded to a global pandemic that also saw Zimbabwe recording its first case in March 2020. A global pandemic has undoubtedly affected global economies and markets. In an attempt to contain the virus many countries including Zimbabwe and South Africa has declared national lockdowns with the minimum being 21 days with a possibility of extension if authorities see it fit to extend for the interest of Public Health.

Businesses are built on the employer-employee relationship thus the same is not spared by the effects of the lockdown. The promulgation of SI 83 of 2020 has seen the declaration of other sectors’ essentials services. Nevertheless, the number of affected employment contracts are more than the ones not being affected. I have encountered a lot of questions from the industry from both the employees and the employers such as below;

  • Should employees receive full salaries or receive salaries at all during a lockdown?
  • Should the employees take leave during a lockdown?
  • Should employers terminate employment contracts during the lockdown?
  • How is an employee refusing to come to work dealt with?

This is a rare case of our generation and due diligence should be exercised in navigating this issue. One of the advice I have always shared is that you grow your own solution from within but be guided by the generic legal provisions of the contract law. Make use of the works council to grow your solutions. What is key is to enhance business continuity in all these deliberations.

The relationship between an employer and an employee is governed by a legal figment called the contract of employment. This is a legally binding agreement between the two parties (employer and employee) it outlines the contractual obligations of both parties and the generic ones are that employer must provide work, must pay a salary, and so on and for the employee are that the employee must provide himself or herself for work and so on.

The presidential proclamation of a national lockdown and the subsequent promulgation of Statutory Instrument 83 of 2020 created a force majeure or vis major or casus fortuitus. This presents a supervening impossibility in performance of some contracts. Thus, we now have a maxim impossibilium nulla obligatio est emulsifying the employment relationship (contract of employment). In cases of the occurrence of a supervening impossibility both parties are relived of their contractual obligations. This was held in the case of Peters Flamman and Co Appellants v Kokstad Municipality Respondents 1919 AD 427 , were the learned judge said, “If a person is prevented from performing his contract by vis major or casus fortuitus, under which would be included the compulsory winding up of his business as an act of State, he is discharged from liability. The moment a contract of employment is signed both the employer and employee assumes certain liabilities (contractual obligations) and in these include payment of salaries and reporting for duty.

Supervening impossibility (force majeure) is the impossibility arising after the formation of a contract. However, this arises at the time when the promisor’s performance is due. Such impossibility usually arises due to facts that the promisor had no reason to anticipate and did not contribute to the occurrence of. Under contract law, impossibility is an excuse that can be used by a promiser as an excuse for non-performance when an unforeseen event occurs after the contract is made which makes performance impossible. It is regarded an act of God in which no one has control over.

The situation we are in has seen both the employer and the employee incapable to perform their obligations, that is in the interest of public health the employee is not able to report for duty and the employer is not generating any or enough revenue to pay salaries. To that end the pain of the lockdown can not be forced down to one part. Both parties should share the burden of the impact of the lockdown.

I find interesting inspiration from the case of National University of Science and Technology Versus National University of Science and Technology Academic Staff and National University of Science and Technology Non-Academic Staff HC 2133/04 were it was cited that

“Legal contracts should be performed and should not be breached at the mere convenience of the other party. If the courts allow this, then it means that contracts will never be fulfilled at all.”

This is a guiding principle of the implementation of force majeure, I have seen some employers who sent employees on annual leave and then suspend payment of the same salaries, or some employees refusing to take leave and the same time demand full salaries at the end of the month.

In the contract of employment if the other party required to perform dies or there is intervention by a vis major or actus del but where the impossibility is temporary the offending party cannot and should not be excused. This is the correct legal position see Peters Flamman & the Co v Kokstad Municipality 1919 AD 427. In Wessels, The Law of Contract Vol I page 773 paragraph 2634 the learned author stated: “If the impossibility of performance is not final but only temporary the obligation may according to the nature of the contract only be suspended and not extinguished.” The lockdown has clear time demarcation thus in respect of the case supra, contractual obligations can be suspended not necessarily extinguished. An employer can suspend payment of salaries for the time period and the employee can also stop coming to work (not on leave) but on the basis of force majeure.

Another case of Watergate (Private) Limited V Commercial Bank of Zimbabwe Judgment No. SC. 78/05 advances a crucial point in dealing with the lockdown as quoted below,

‘It depends upon the circumstances of the case and the nature of the impossibility. In this regard, I can do no better than quote what BOSHOFF JP said in Bischofberger v Van Eyk 1981 (2) SA 607 (WLD). At 611 B-D the learned JUDGE PRESIDENT said: “When the Court has to decide on the effect of impossibility of performance on a contract, the Court should first have regard to the general rule that impossibility of performance does in general excuse the performance of a contract, but does not do so in all cases, and must then look to the nature of the contract, the relation of the parties, the circumstances of the case and the nature of the impossibility to see whether the general rule ought, in the particular circumstances of the case, to be applied. In this connection regard must be had not only to the nature of the contract, but also to the causes of the impossibility. If the causes were in the contemplation of the parties, they are generally speaking bound by the contract. If, on the contrary, they were such as no human foresight could have foreseen, the obligations under the contract are extinguished.”

From the case supra its clear that it might not be a one size fit all but companies can craft workable solutions looking at the actual impact of the lockdown at their business.

Salaries

Whether to pay salaries or not should be decided by the company at works council level. In my analysis we have the following companies

Category A – They are operating full time- Full salaries must be paid out. It’s as usual the company is not affected by the lockdown.

Category B – They have scaled down operations t match the demand or closed some branches. The lockdown has affected the business to a certain percentage. The works council should meet and agree on how they can mitigate the impact.

Category C – They have completely closed down their operations – Still agreements can be done respecting the differences in circumstances but its clear company is not generating any revenue to pay workers unless the company has reserves, they can utilise to cushion themselves.

Leave

All employees who take annual leave are supposed to be paid their salaries unless they have agreed at works council level that the same be waived, however no pay or half pay for employees who took annual leave is not fair on employees, in other words not permissible. Where an employee has been infected by COVID 19 should be given sick leave or special leave (Section 14 &14B of the Labour Act Chapter 28: 01) on full salary and benefits which every is more suitable for the company.

PPE Provision

The employer has any legal obligation to provide a safe working environment, thus Covid 19 is a new hazard at the workplace. The employers have to revisits their PPE matrix and incorporate the new hazard. Thus, for those going to work the employer has the obligation to ensure that the safety of employees is upheld at his establishment through provision of sanitisers, hand washing points, masks, and so on.

Disciplinary Matters

There are certain timelines that some certain procedure you are supposed to adhere to. The Chief justice has issued a communique that the counting of days has been feezed for the 21 days of the lockdown. Thus, is the counting of days resumed after the lockdown, if day 1 was 27 March then day 2 will be 20 April 2020. This will apply to those who have closed down.

It is key that companies understand their operations first as they navigate through this lockdown. Ensure business continuity by watching out on all salient costs and the bottom line. HR Practitioners should desist from a habit of copying and pasting response plan. Rather learn and only borrow what’s applicable to you.

Disclaimer: This is the authors individual opinion; thus, he is not liable of any legal implications of this. This article is legal information and should not be seen as legal advice you should consult before adopting the principles herein. Brenald Chinyowa is an HR Practitioner and writes on his own capacity, for comments inbox to chinyowab@gmail.com (Call or What’s app 0777 897 586) or follow him on Facebook: Brenald Chinyowa.

 

 

 

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