Have you been asked to work from home due to COVID-19? Do you worry that you may be laid off or given a salary reduction due to the current global crisis? We are living in very uncertain times, and as many industries aim to take measures to mitigate their losses, they are still taking substantial economic hits to their bottom line. One way many businesses are trying to alleviate their debt being incurred is by reducing their workforce.
Which raises an important question: do employers during these difficult times have the right to lay off their employees on such grounds like force Majeure, or can this be considered unwarranted dismissal?
During the troubling times we are all currently facing globally due to COVID-19, the Egyptian government has taken a number of precautionary measures; including, but not limited to, the application of all the health and safety guidelines set forth by the World Health Organization (WHO). Some of the WHO’s recommendations to reduce the spread of coronavirus are working from home to and imposing a curfew, however the application of such recommendations has resulted in economic hardship nationwide, if not globally as well. The effects of the coronavirus and such measures have adversely effected Egypt’s labor market, given that many business owners, specifically those in the private sector, in order to mitigate losses have had to rely on reducing employee numbers or decreasing their salaries. Business owners that has taken such measures have based them on the groundsof force Majeure.
First and foremost, it must be noted that the current circumstances cannot be considered as those of force majeure that would grant employers the right to terminate employee labor contracts, due to the fact that the current circumstance do not entirely prevent an employee from performing his/her work. The current circumstances, however, may be considered as exceptional circumstances, which would grant employers the right to take extraordinary measures toward his/her employees.
Furthermore, it is worth noting, that in order for employers to be permitted to implement exceptional measures with their employees, during times of exceptional circumstances, two conditions are to be met; namely, that the measures would apply on a temporary basis and do not reduce any employee. Should the latter be permitted, employers may agree on the following with their employees: (1) reducing working hours, and hence reducing salaries if employee salaries are based on actual hours worked, or (2) obliging employees to use their balance of annual leave, or (3) agreeing with the employees to be on leave without pay for a specified period, also known as furlough.
However, should employees reject such offers, the employer must resort to the competent Workforce Office to obtain approvals for partial or total closure, layoffs, or reduction of working hours and salaries, in order to face the strenuous economic conditions. Moreover, employers do have the right to demand the application of Articles 1 and 2 of the Law No. 156 for the year 2002, regarding the establishment of an emergency fund to help face the total or partial closure or the layoffs their companies are enduring due to economic conditions. That said, employees have the right under any of the aforementioned circumstances to receive a subsidy due to the interruption of payment of their salaries.
Once approved by the Workforce Office, the fund will pay the employee salaries (in the form of a subsidy) from the fund until the exceptional circumstances are concluded or for a period of six months. The subsidy is said to be 100% of the employee’s basic salary, at a minimum of Egyptian Pounds 2000 in accordance to Law No. 156/2002 and the Prime Ministerial decree No.1117/2007.
Yet, we are still wondering, how much longer will these circumstances last? Will the employers in the private sector keep following the WHO recommendations until COVID-19 dies out? Or will everything return as usual and only extra precautions shall be exerted?
That being said, employers’ actions regarding employee dismissal and/or salary reductions would depend on the nature of the industry and the effects of the current regulations in place.
Our team is equipped to assist with all your inquiries whether you are an employer or an employee. Please let us know how we could be of assistance; we appreciate that these are difficult times we are going through and we hope that our services can provide you with some semblance of relief that you may require.