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03 June 2020
The government has adopted exceptional measures to manage the spread of COVID-19 in Lebanon. On 15 March 2020 it announced a state of general mobilisation,(1) under which:
However, certain institutions and businesses, particularly those providing essential goods (eg, supermarkets, bakeries and petrol stations), and the healthcare sector, among others, were exempted from the lockdown. As for the banking sector, operations have been restricted to a minimum. Nonetheless, such institutions must comply with all of the safety measures imposed by the government. As such, they must implement appropriate measures to provide safe working environments and prevent the transmission of COVID-19 in the workplace.(2)
The exceptional measures adopted have had an unprecedented impact on employers and employees, which have been adjusting to the rapidly changing situation triggered by the pandemic and the national economic crisis. Faced with the intensifying economic impact of both crises, business owners have had to introduce adequate changes to the way in which they work. As such, some businesses have considered remote working, hour and salary reductions and temporary staff reductions (eg, paid or unpaid leave). Others have been forced to consider permanent staff cuts or the complete suspension of business activities.
While measures and regulations to mitigate the impact of the pandemic continue to be considered, few have been issued by the government to assist employers. The government has not issued regulations that specifically regulate remote working during the application of precautionary measures or the options available to employers to mitigate the risks.
Therefore, the measures being adopted by employers are primarily governed by the Labour Law.(3) This law regulates the relationship between employers and employees and sets out their respective rights and obligations. In addition, employment matters are regulated by governmental decrees and Ministry of Labour decisions.
Employers and businesses are experiencing severe challenges amid the country's worst economic crisis. The spread of COVID-19 has further aggravated such problems. To mitigate the risks, employers are taking different measures which have significantly affected employees.
Many businesses have embraced remote working to maintain productivity and ensure the continuation of their business activities. However, shifting to remote working also brings challenges which might affect efficiency. No guidelines or regulations have been issued by the government to facilitate remote working and determine mechanisms for its management.
Further, no regulations have been issued regarding the rights and obligations of employers and employees. Thus, employees are expected to retain the rights and obligations under their current employment agreement, unless agreed otherwise, and the mandatory legal provisions.
Annual leave with pay
Employers may require their employees to take their paid annual leave in times of low business activity. In general, and unless contractually provided otherwise, full-time employees are entitled to 15 days' and minors are entitled to 21 days' annual leave with full pay, provided that they have been employed for a minimum of one year.(4) The Labour Law provisions regarding annual leave are mandatory and any agreement to the contrary will be null and void unless it is more favourable to the employee.(5) As such, an employee may benefit from more favourable terms included in their employment contract, the applicable collective agreements, work schedules or internal employment regulations.
Annual leave is typically granted upon the employee's request. However, an employer may wish to initiate an employee's annual leave at its discretion. The Labour Law provides that an employer may determine the timing of annual leave based on work requirements but does not set out the procedure for doing so.(6) Lebanese doctrine considers employers to have the right to determine the timing of annual leave on the basis of work requirements and provided that it does not abuse this right.
Unpaid leave is not regulated under the applicable law. As discussed above, the Labour Law provides for a minimum of 15 days' annual leave with full pay. An employer and employee may agree on additional leave with reduced or no pay. In general, such measures are regulated in the employment contract, work schedules or internal employment regulations. However, a written agreement by the employee is generally sought, particularly as evidence of the arrangement. Case law on this issue is scarce, with the matter remaining largely subject to the courts' discretion and assessed on a case-by-case basis.
Reduction of working hours and salaries
The Labour Law does not explicitly grant employers the right to reduce working hours(7) and salaries(8) in the event of, for example, economic difficulties or the suspension of business activities (eg, COVID-19's impact on business activities). Business hours and the associated salary are generally set out in the employment contract or employee work schedules and internal employment regulations, in accordance with the Labour Law.
Any change of terms affecting an employee's working hours and salary, whether temporary or permanent, typically requires the consent of the parties to the employment contract. However, any agreement between an employee and employer, whether entered into prior to the commencement of work or during the term of the employment, which diminishes the minimum rights legally granted to the employee (eg, the maximum working hours and the minimum wage) will be deemed null.(9)
There is a risk that employees may initiate legal proceedings against their employer before the Arbitration Labour Council regarding any unilateral change to the terms of their employment contract or changes that are deemed to reduce their rights.(10) That said, the temporary reduction of working hours and salaries is taking place with revised agreements being put in place and relevant discharge letters being signed by the concerned employee. However, this approach and the validity of such discharge letters are not risk free. Careful drafting should be considered if an employer pursues this option.
In addition, on 23 March 2020 the Lebanese Central Bank issued Circular 547, which enables banks to grant exceptional loans with an interest rate of 0% to their business clients to assist them in settling their employees' salaries and cover their essential operational or production expenses. The minister of labour has reportedly endorsed such decision and encouraged employers to settle their employees' salaries regardless of the actual working hours imposed amid the COVID-19 outbreak. It remains to be seen whether the government or the Ministry of Labour will implement additional regulations which provide further clarification on this matter.
Temporary suspension of business activities
Certain businesses may consider suspending their business activities temporarily. In doing so, employers may rely on contractual provisions, particularly those relating to force majeure. Lebanese jurisprudence considers that, in certain circumstances, the temporary suspension of employment contracts due to force majeure releases the employer from its obligation to pay salaries during such period, unless a regulation is issued providing otherwise. The courts refer to the general provision provided under Article 624 of the Code of Obligations and Contracts and the suspensive effect of force majeure events on contractual performance. In this regard, Article 624 of the code defines 'remuneration for work or service' as "a contract by virtue of which one of the contractors pledges to work as a subordinate to the other party and under his management against remuneration that this party pledges to give". Few court decisions have considered the extent to which an employer may avail itself of this provision. It is believed that this would require a case-by-case assessment and the existence of a suspension period, as opposed to a period of reduction in working hours or salaries.
Permanent termination of contracts and suspension of businesses
In light of both the economic crisis and the COVID-19 pandemic, many businesses have struggled to stay afloat and have therefore been forced to collectively terminate employment contracts or permanently cease operations. In this context, the Labour Law provides provisions which seek to avoid the haphazard closure of companies and the arbitrary dismissal of employees.
As per Article 50 of the law, employers can terminate some or all employment agreements in the event of force majeure or compelling economic or technical circumstances, provided that they inform the Ministry of Labour 30 days before such termination. In practice this avenue has been used as leverage to bring employee's onboard with a revised working arrangement that avoids the business's closure or a contract's termination for economic reasons. This approach is not without its risks and requires careful consideration.
Further, parties may agree to mutually terminate an employment contract in exchange for compensation agreed by the employee. In this case, the employee should sign a letter of discharge in favour of the employer upon receipt of the agreed compensation.
For further information on this topic please contact Ziad Obeid or Nadine Abi Azar at Obeid Law Firm by telephone (+961 1 36 37 90) or email (email@example.com or firstname.lastname@example.org). The Obeid Law Firm can be accessed at www.obeidlawfirm.com.
(1) Decree 6198 of 15 March 2020 announced a state of general mobilisation initially extending from 15 March 2020 until 29 March 2020. However, the general mobilisation has been repeatedly extended, most recently until 24 May 2020 by Decree 6329 of 5 May 2020.
(2) Occupational health and safety measures imposed by the ministry of labour; Circular 26/1 of 2020 on Occupational Health and Safety at Industrial Establishments.
(7) Id, Article 32. This article grants the minister of labour the right to reduce the statutory maximum working hours for exhausting work or work which is harmful to the employee's health. The law does not specifically regulate the reduction of ordinary working hours; instead, it regulates employees' maximum working hours, including weekly and daily hours.
(8) Id, Article 44. This article provides that the employee's salary must at least be sufficient to cover their and their family's basic needs and must also consider the nature of the work. Further, the salary cannot be less than the statutory minimum wage and must encompass the statutory transport allowance of LBP8,000 per day of attendance in the workplace. Given the circumstances, it may be possible for employers to deduct the transport allowance from the salary of employees not physically attending the workplace, unless the parties have agreed otherwise.
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