Plan ahead: what labour lawyers are telling companies amid covid-19
Covid-19 landed in Latin America on 26 February, bringing with it an onslaught of labour and employment issues for the region’s companies and workers. Latin America’s top labour lawyers are now advising their clients on how to handle their workforces in the wake of the crisis, as the evolving outbreak presents unique employment issues for businesses.
With significant reliance on commodity exports, tourism and remittances, Latin America’s economies and populations are in vulnerable positions during disease outbreaks like that of covid-19 – so for their part, companies must do their utmost to protect their workforces and businesses the best they can.
Private practitioners say the first measure for companies should be to protect the health and safety of their employees. If they do not do this, companies can be found liable to compensate employees for injuries and losses if proven they were caused at the workplace.
Under Mexican federal labour law, companies with over 100 workers must have a safety and hygiene programme, usually in the form of a committee, in place. In turn, employees have the right to perform their duties in a safe workplace, as well as the right to refuse to work if measures to keep the workplace safe are not in place.
As Mexico is yet to enforce emergency covid-19 measures for companies, partners are advising in-house counsel to do all they can to keep workplaces as clean as possible. “We recommend that employers reinforce safety and hygiene measures in the workplace, from cleaning and disinfecting common areas and furniture, to keeping up the stocks of products such as soap, antibacterial gel, and toilet paper,” says Nadia González, counsel at Galicia Abogados.
In some Latin American countries that have implemented mandatory lockdowns – except for those deemed “essential workers” – companies are having to scramble to implement work from home and teleworking measures for their employees to continue working in quarantine.
In Argentina, which is in lockdown from 20 to 31 March, the country’s labour code (Ley sobre Riesgos del Trabajo, or LRT) establishes regulations to minimise workplace risks and to indemnify employees who become ill or injured at work. Under LRT, private-sector employers must either self-insure their workers or be insured by a work risk insurer. “We’re advising clients that if they allow their employees to work from home, they must inform labour risk insurers of this decision,” explains Enrique Stile, partner at Marval O'Farrell Mairal. “If they do so and they pay full remuneration to their employees, there should not be any legal problem.”
Forming work-from-home agreements between companies and employees is not a simple task; there are several hurdles to overcome. For example, the Brazilian labour code states that if a worker changes their workplace from the office to a remote location, the worker and the employer must sign a written mutual agreement. The agreement must clearly say who is responsible for getting work equipment set up in the remote location and who will pay for it. “We are advising companies to establish a clear policy on this well in advance of asking employees to work from home,” says Andrea Giamondo Massei Rossi, partner at Machado Meyer Advogados. For teleworking, which unlike temporary work-from-home measures, is permanent, companies should review their employee contracts to make sure their policies are clear and formal.
Another critical issue employers must keep an eye on is salaries. In Mexico, labour law dictates that employers cannot unilaterally put employees on unpaid leave because of covid-19. However, if temporary unpaid suspensions are agreed in writing between employers and workers as a preventative measure before new laws are enforced, companies can avoid labour claims. Mexico’s contingency measures related to covid-19 are generally thought to be behind those of many other Latin American countries. Employers can also temporarily put their employees on paid leave without affecting their rights. “Once Mexican authorities say work will be suspended due to the covid-19 outbreak, employers must pay their employees the daily minimum wage for each day that the suspension lasts. But according to the existing law, they only have to do this for a month,” says Galicia’s González.
If the crisis lasts longer than that, the situation in Mexico remains uncertain under current legislation. “If the emergency lasts more than a month, no work needs to be done, nor salary paid. Employers can keep paying regular salaries if they deem it fit,” says Jorge de Presno, partner at Basham, Ringe y Correa. To mitigate the legal uncertainty, partners are advising clients to have clear measures in place as to whether their employees will be paid or kept on in the case that the covid-19 crisis continues for longer than a month. “We’re anxiously expecting government directives to make everything clearer, but in the meantime, we are forcefully suggesting to those clients that do business here to prepare for the worst.”
Some countries have taken a different approach and implemented reductions in working hours – as long as the reductions are mutually agreed between the worker and the employer beforehand. In Costa Rica, if a company can demonstrate the economic impact the covid-19 outbreak will have on its business, a new law dictates they can now reduce the working day by up to 75% and proportionally adjust workers' wages at the same time. “This emergency law is quite novel for Costa Rica,” says Alvaro Aguilar, partner at Aguilar Castillo Love (Costa Rica). “Because it contradicts the country’s traditional labour code, that says the working day and salary cannot be unilaterally modified by the employer to the detriment of the worker.”
In countries where emergency covid-19 legislation has advanced more rapidly, like Argentina or Peru, law firm partners are likely to have an easier road ahead for how to advise their clients. Their advice is simple – make a plan and be prepared for the worst.
For those countries that are behind in enacting emergency legislation to tackle the disease, like Mexico, it remains to be seen how companies will deal with labour and employment fallout. “In the worst-case scenario, if this crisis doesn’t get controlled in time, the legal consequences in Mexico will be drastic,” says Javier Oroz Coppel, GC and general secretary at insurance company AXA in Mexico. “In the meantime, there must be constant communication between companies, labour unions, and firms.”