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April 6, 2020
The World Health Organization (“WHO”) declared the outbreak of a new coronavirus disease (“COVID-19”) as a Public Health Emergency of International Concern in January 2020, which was officially characterized as a global pandemic on March 11, 2020.
In this Article, we will try to summarize the legal implications of Covid-19 on the contractual obligations, in general, and on the employment relationships, in particular.
General Legal implications on contractual obligations:
A) Exceptional event of public character:
According to the Civil Code No. 131 of 1948 (the “Civil Code”), in the event the performance of the contractual obligation becomes excessively onerous, but without becoming impossible, as a result of an unpredictable exceptional events of a public character threatening the debtor with exorbitant loss, the judge may reduce the obligation of such debtor that becomes excessive to be a reasonable limit in order to economically balance the contractual obligations. It was also confirmed that the said event includes the spread of a pandemic.
B) Force Majeure:
According to the Civil Code, debtors shall not be liable for any damages resulted from the non-performance of its obligations in the event that the required performance becomes impossible for any reason that is not attributable to and controllable by such debtor including, inter alia, a sudden incident, force majeure and/or fault of third parties.
In light of the above, the COVID-19 Pandemic may be treated as a force majeure event or an exceptional event of public character (as the case maybe).
Legal implications on the employment relationship:
1. Protecting your employees from COVID-19:
1.1. Employers’ obligations:
According to the Labour Law No. 12 of 2003 (the “Labour Law”), employers shall take all the preventive measures to protect its employees from being infected with any virus, bacteria or illness. This obligation includes taking specific mandatory actions.
Furthermore, employers shall, subject to specific criteria, reasonably determine, at its sole discretion, the preventive measures to protect its employees from infectious diseases.
1.2. Employers’ rights:
A) Changing scope of work on temporary basis:
According to both the Civil Code and the Labour Law, employers may amend the provisions of the employment contract on a temporary basis for economic reasons or as a result of an exceptional event of public character or a force majeure event including, inter alia, assigning different scope of work, substantially, differs from the original work of the employee.
B) Annual leaves:
According to the Labour Law, employers have the right subject to certain regulation, determine the dates of the annual leaves depending on the business needs. This being said employers may request their employees to consume their annual leaves during this period.
C) Reducing Salaries:
Employers may, subject to certain requirements, reduce the salaries of their employees either to 50% or to more than 50% (as the case maybe) on a temporary basis.
The International Monetary Fund officially declared that the global economy has entered into a recession as result of the spread of the new coronavirus on March 27, 2020.
According to the Labour Law, employers, subject to certain requirements, shall have the right to completely or partially shutdown the organization or reduce its size.
2. Dealing with infected employees:
According to a recent Ministerial Decree, COVID-19 is now recognized as one of the infectious diseases listed in schedule 1 attached to Law No. 137 of 1958 on the Preventive Measures of Infectious Diseases, as amended (the “Preventive Measures Law”).
According to the Preventive Measures Law, employers are under an obligation to, immediately, report any case of COVID-19 or any suspect thereof to the competent authorities.
2.2. Personal Data Protection:
Employers shall not disclose any personal data of its employees to any other person unless required under the relevant laws and decrees.
2.3. Rights of infected employees:
According to the Labour Law and the Social Insurance Law No. 148 of 2019, employees shall, subject to specific regulations, be entitled to a sick leave up to one hundred and eighty (180) days including weekends and public holidays.