The arrival of coronavirus and its impact on the economy in Kenya was inevitable.
With the immediate measures taken in March to prevent and control the spread of Covid-19, thousands of workers were asked to work from home. The subsequent economic recession has rendered employment contracts temporarily or even permanently difficult to uphold for many employers and a new unwelcomed norm emerged. Some employees have been forced to leave their company, some got pay cuts or were asked to take unpaid leave without any compensation.
The arrival of coronavirus and its impact on the economy in Kenya was inevitable. With the immediate measures taken in March to prevent and control the spread of Covid-19, thousands of workers were asked to work from home. The subsequent economic recession has rendered employment contracts temporarily or even permanently difficult to uphold for many employers and a new unwelcomed norm emerged. Some employees have been forced to leave their company, some got pay cuts or were asked to take unpaid leave without any compensation.
What does the law say in this situation of Force Majeure? What can employers do and what can employees expect from their company?
Advocates Henry Faraji, specialist in corporate, employment and labor law, and Johnson Kariuki, specialist in corporate and commercial law, answered some of the most asked questions in our recent webinar. Here are some of the main highlights:
A) ‘Force Majeure’
"Force majeure as quoted by Advocate Henry is an unforeseen event where one contracting party is not able to perform or fulfil their obligations due to unforeseen circumstances."
A force majeure clause can be invoked subject to various conditions. However, if an employer intends to invoke force majeure due to COVID-19, they must be able to prove a clear performance impossibility linked to COVID-19, that they could not have foreseen beforehand.
You CAN NOT rely on force majeure if:
- It is not expressed in the contract in written form;
- The clause is present in the contract but does not cover the current coronavirus pandemic or governmental actions,
In this context, instead of relying on Force Majeure, the contractual parties should undertake various measures to mitigate potential contractual liabilities that the COVID-19 made temporarily or permanently impossible to perform.
B) Frustration
In the absence of a force majeure clause in a contract, employers can rely on the doctrine of frustration, it automatically terminates the contract and neither party will no longer be bound to their obligations.
The main purpose of frustration is to avoid unfairness where there is a momentous change in circumstance and neither party is at fault.
2. Employment Contracts.
The current measures that have been taken to fight and control COVID-19 have several effects on the current employment contracts/relationships. Advocate Johnson highlighted the various related legal issues:
A) Leave
Unpaid leave: The Employment Act is silent on the matter of unpaid leave. Advocate Jonhson suggests the employer consult with the employee, and if the employee consents, the employer must issue formal writing on the mutually agreed changes to the employee.
Borrowed paid leave: There is no provision in the Employment Act for leave taken from another year, the law only provides for the current calendar year. Advocate Johnson advised a mutual agreement when taking this approach.
B) Pay cuts
"An employer cannot unilaterally change the terms and conditions of an employment contract if the change is going to be detrimental to the employee. If an employer decides to implement pay cuts, written consent from the employee is necessary."
C) Redundancy
During this period, many employment contracts will be terminated on account of redundancy.
Section 2 of the Employment Act defines redundancy as “the loss of employment, occupation, job or career by involuntary means through no fault of an employee, involving termination of employment at the initiative of the employer”.
These circumstances can occur for example if the employer has ceased, or intends to cease continuing business, or if the requirement for the employee to perform a specific type of work, or to conduct it at the usual, has ceased or diminished.
However, if the termination of employment arises from the above definition or examples, Section 40(1) of the Employment Act provides the 7 procedural legal requirements to be met by the employee.
As earlier stated, these are just some highlights, for more detailed information, you can re-watch the webinar here. The intent of the contents of this article is to provide general guidance on the subject matter. Seek specialist advice about your specific circumstances.
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