Legal Update
Mar 20, 2020
You're a global employer - what happens next?
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The disruption already caused by COVID-19 is immense, and it is only getting started. HR and Legal departments are being deluged with conflicting information. What can a global employer actually do to stay ahead of the international employment law issues raised by this pandemic?
Where we stand:
- Most global employers now find themselves with a fractured workforce, some of whom are not allowed or cannot get to work, some of whom are trying to do their jobs remotely, and some of whom either have no—or suddenly too much—work to do.
- COVID-19 is currently spreading faster than it can be contained in Europe and North America. China appears to have its initial outbreak under control, as do several island nations in Asia—Japan, Taiwan, Singapore, and South Korea (a virtual island due to its land border with North Korea), but there is fear of a second wave.
- While we can never count human ingenuity out, a vaccine is said to be 12-18 months away. A few antivirals show initially as treatment options, but more studies are needed, and any widespread treatment solution—if one exists—is probably months away at least.
- Two strategies appear to have ‘worked’ thus far to control the spread of the disease: (1) rigorous testing to identify all cases of infection, followed by strict quarantining; (2) uncompromising social distancing. We have to assume the latter will be increasingly deployed until wider testing is available.
Where we go:
- Most countries do not have the resources at this time for rigorous and comprehensive testing. We will see more and more cities, countries, and regions in North America and Europe, and then the rest of the world, implement mandatory social distancing. The trend is for this to basically shut down all but essential commercial services and activities, discourage commuter travel, and advocate remote working arrangements. Once implemented, the time period social distancing stays in place is uncertain.
- There are growing concerns about South East Asia, the Indian subcontinent, Central and South America, and Africa. We expect to see social distancing solutions implemented in these regions too, but less robust governmental and societal structures might mean that the spread of the disease will be harder to control.
- All employers—even those considered essential—will be under pressure to save costs, including labor costs, and balance safeguarding their short-term viable business with longer term sustainability. We expect a significant economic impact as the crisis affects supply chains, customer demand, and financial and credit markets. The crisis will pass, but creative HR solutions are required now in order to ensure longer term viability. Companies have to embrace that.
What to do:
- Speed is critical. There are many countries with protective employment laws that require employers to negotiate with unions and other employee representatives first in order to enact workplace change. Employers must ensure that their lines of communication with these representatives are open and stay working. In many jurisdictions, engagement with representatives must occur before final decisions are made, so care needs to be taken in respect of internal communications and decision processes. The relationship with representatives does not have to be adverse.
- Governments will do what they can to keep as many people employed as possible, including a prohibition on dismissal. The response will vary country-by-country. Employers must stay on top of each country’s government initiatives, in order to access government support as quickly and efficiently as possible.
- Tactics employed in the 2008 financial crisis—including furloughs/unpaid leave, compensation cuts, headcount reduction, reorganization, mandatory vacation, and other leave, etc.—will all be on the table again. Many of these take months to implement in countries with protective employment laws. We hope that governments will take steps to temporarily reduce regulation to make it easier for businesses to implement vital cost-saving measures, but we cannot trust that they will. Prudent employers have started planning now.
- Employers need to protect the health of their active workforces. While home-working is possible for some jobs, many jobs still require an in-person presence at the workplace. The pressure will be on employers to reduce the density of employees in the workplace. Employers will need to determine how to extend their operating hours to spread their workforce out—even moving to 24/7 operations. Regulations about who can work at night and weekends, mandatory overtime rates for night and weekend work, how to respect the needs of those with care responsibilities, and requirements for consent and notification of changes to working hours are just some of the issues that need to be considered. We also expect to see employers being asked to be active in monitoring the health of their employees, and privacy rules will need to be evaluated and accounted for.
- Some employers will look to redeploy inactive parts of their workforce to high demand parts of the business, or perhaps even the business of other employers with a high demand for labor. Employee-leasing rules will need to be evaluated, and permits and licenses obtained in some locations. Online retraining will rise, as will increased use of technology to implement HR solutions.
- The availability of workforces in individual countries will ebb and flow with the course of COVID-19. Countries will not all be implementing social distancing measures at the same time, and employers need to develop strategies to cover sudden, country-specific close-downs and loss of staff due to a prohibition on work. Absences will become common as employees become sick or need to care for sick family members. Such employees are often protected from adverse employment action, and measures will need to be in place to cover their work (e.g. a flexible workforce to call on). Creating positive redundancy and fail-safes across global operations will be key.
- Lessons will be learned from this event that will have a lasting effect on HR practices and documents. We are seeing this already.
We face a collective challenge unlike one seen in generations. However, many of our clients have implemented measures in previous global restructures that remain viable solutions in the current context. Seyfarth’s specialist international employment law team is already advising on the developments of the rapidly changing COVID-19 landscape across the globe and leveraging our collective experience in 170+ countries to assist our clients. Please get in touch with any of the partners listed below if you believe we may be able to help with solutions and recommendations for your business. To stay up-to-date on COVID-19 developments, click here to sign up for Seyfarth’s daily digest.
Please stay safe and well.
