COVID 19: Rwanda labor law should change after the pandemic

How Does Pegasus Work?

COVID 19: Rwanda labor law should change after the pandemic

Even though the influx of the coronavirus in Rwanda was unavoidable and had been predicted since the beginning of the year, it is reasonable to say that when it finally hit the country on 14 March, when the first case was recoded employers and employees alike were ill prepared for its full impact. Abruptly and almost in a movie-like fashion, some businesses were shut down or began to operate within limited hours, thousands of workers were sent home on undefined terms while, for others, the concept of working from home, hitherto viewed skeptically by employers, became the new normal.

As the countrywide total lockdown became even louder, the implications of forced leave and massive lay-offs without compensation became the most frequent questions for the company lawyers. The Covid-19 emergency has laid bare various gaps in Rwanda’s labour laws, which need to be addressed through legislative reform.

Let us talk of the article 18 which says that “The suspension of employment contract occurs when termination thereof does not take place, but parties suspend the performance of all or part of their obligations Each party’s obligations which remain during suspension must be provided for under this Law or agreed upon by both parties The suspension of employment contract occurs due to any of the following grounds, 1 º in case of strike or lockout carried out in accordance with the provisions of this Law; 2 º disciplinary layoff of an employee for a period of eight (8) working days; 3 º an employee is sentenced to an imprisonment not exceeding six (6) months or is provisionally detained for a period not exceeding six (6) months; 4 º suspension of the enterprise’s activities as a result of economic or technical difficulties; 5 º suspension for administrative investigation purposes; 6 º suspension of the enterprise’s activities due to force majeure. Other grounds for the suspension of employment contract are set out in the employment contract, in the rules of procedure of the enterprise and collective agreement.” and Article 21 “In case of suspension of employment contract due to economic or technical reasons, an employee cannot be laid off one or more times for a period longer than ninety (90) days during the same period of one (1) year. Upon expiry of the period provided for under Paragraph One of this Article, the employee is considered dismissed, and receives terminal benefits provided for by this Law. The employer may, after informing employees’ representatives in the enterprise, proceed with individual or collective dismissal due to the enterprise’s internal reorganization or restructuring due to economic reason or technological transfer with the aim of preserving the enterprise’s competitiveness and informs in writing the competent labour inspector. In case an employer proceeds with individual or collective dismissal on the grounds provided for under Paragraph 3 of this Article, he/she places employees on the list of those to be dismissed based on performance, professional qualification, experience in the enterprise and legally recognized dependents of each employee” it also challenges employers to review their employment contracts and human resources policies to mitigate some of the risks exposed by the pandemic.One of the most contentious issues arising from the pandemic is how to treat the inevitable lay-offs affecting employees who, for various reasons, are unable to continue working whether from their usual place of work or at home during this period.While it is understandable that the employee has financial obligations to discharge, it is also true that without any work being done the employer has no revenue to pay the wage bill.

Should such lay-offs be treated as redundancies? Redundancy as defined in the law arises where, through no fault of the employee, the contract of employment is terminated at the initiative of the employer because the services of the worker have become superfluous.It is persuasively arguable that such lay-offs do not constitute a redundancy and, therefore, the statutory requirements of redundancy do not apply. This is because unlike in a redundancy, the employer does not initiate the lay-offs and the services of the employee are not superfluous.

On Joblessness or redundancy, The only reason for the lay-offs is that the continued performance of the contract has become impossible due to the covid 19pandemic, a factor beyond the control of either party.Furthermore, a redundancy normally entails a definitive termination of employment for long-term economic reasons.In the present circumstances, however, the intention of most employers is to recall the staff as soon it becomes safe to resume normal operations after the country has been declared free of Covid-19.

A redundancy involves a significant financial burden on the employer. Apart from the normal terminal dues, severance pay could be quite substantial, depending on the number of employees and their years of service.It seems onerous under the present circumstances to require employers to pay severance when, in effect, they have also been rendered jobless by the pandemic.

Unlike in a redundancy where employers are normally prepared for the financial implications, an emergency such as Covid-19 presents a different kettle of fish.Perhaps a better approach would be to treat the termination as having been caused by frustration and thereby release the parties without any punitive liabilities save for payment of the normal terminal dues.

The common law doctrine of frustration simply holds that a contract may be terminated on account of an intervening event which is beyond the control of either party if such event makes the continued performance of the contract impossible or illegal.

During the pandemic, it is impossible for any employer to guarantee the health and safety of his employees as required by law.It would, therefore, be illegal for the contract to proceed.The law should provide a mechanism for carrying out temporary lay-offs during national disasters subject to certain safeguards to protect employees.

The employer should be required to pay the employee a certain reasonable amount, say full salary in the first month, half in the second, a quarter in the third and thereafter no salary until the resumption of normal operations.Where the disaster continues for longer than six months, the contract should be deemed to have been terminated automatically by operation of law without any further liability on the employer.

In the meantime, the employee would continue enjoying medical cover and housing allowance for the duration of the disaster until the contract is terminated.The law should also compel the employer, upon resumption of normal operations, to give priority to the laid off staff and to disregard the period of the disaster in the computation of the years of service. Until then, employers should consider revising their contracts to incorporate the doctrines of frustration and force majeure.

The next most vexing question for employers is whether the days when employees are forced by the pandemic to stay at home without performing any work should be treated as paid or unpaid leave.The most preponderant school of thought suggests that employees should use their annual leave days during this period or take unpaid leave if they have already exhausted their leave entitlement for the year.

Let us look at Article 73 which says “An employer cannot seize the employee’s salary, except for circumstances provided for by this Law. Except for compulsory deductions and other possible charges in accordance with the provisions of employment contract, an employer seizes employee’s salary in case of forced execution of court judgement or in case of voluntary transfer. The employer cannot deduct more than a half (1/2) of an employee’s salary for refunding of any money borrowed by him/her, forced execution of court judgement or in case of voluntary transfer of contributions to an organization to which the employee is a member and the employer must not charge any interest on such amounts payable by the employee. The principle referred to in Paragraph 3 of this Article applies also to the salary paid in advance”.

Recently Rwanda air, UNILAK and different hotels in Rwanda announced that they was going to cut thier employees’ salaries in order to protect the company’s future well-being and to avoid laying off staffs, here the question comes “Is it legal to cut employees’ salaries?”.The rationale for this argument is that it would be double enrichment for the employee to receive full salary while performing no work during the pandemic and still expect to be paid again when they take their annual leave.Other than losing a job, the other big fear among employees at this time is the threat of pay-cuts which many employers are, understandably, considering.

The good news for employees is that wages are jealously protected by law and cannot be unilaterally reduced by the employer without their consent as per article 73 of the labour law which says that “An employer cannot seize the employee’s salary, except for circumstances provided for by this Law. Except for compulsory deductions and other possible charges in accordance with the provisions of employment contract, an employer seizes employee’s salary in case of forced execution of court judgement or in case of voluntary transfer”. That having been said, the reality on the ground is that for financial reasons, continued employment may only be sustained at a lower pay over the period when the business is battling the challenges of the pandemic.

Parties are encouraged to discuss in good faith and agree on a mutually reasonable salary adjustment with the possibility of the deducted pay being reimbursed at a future date after the end of the pandemic.The law should provide that in periods of national calamities which significantly affect the ability of employers to sustain the agreed salaries, the employer shall be entitled to reduce salaries by such a reasonable margin as may be approved by the government in consultation with all concerned bodies.

Most Rwandan employment contracts do not provide for working from home or flexi-hours.Covid-19 has helped employers to overcome their fears and skepticism about this concept which is largely associated with the millennial generation. The post Covid-19 era is likely to be characterized by renewed preference for this lifestyle and an exponential utilisation of technology.

The law should impose reasonable obligations on the employer, including the supply of basic health and safety amenities such as sanitizers, face masks and appropriate furniture.

The law philosophy is that it has to be protecting the weaker side, Covid 19 pandemic have shade more light on how there is gaps in the labor law and some articles favor the strong side, which need to be addressed through legislative reform.