Rui Esperança participates in the IR Global Disputes Virtual Series – COVID-19: Unprecedented Times, Desperate Measures

Foreward by Andrew Chilvers

The coronavirus pandemic has caused governments across the world to take measures that impact the movement of people rarely if ever, seen in peacetime before. Understandably, this has adversely affected businesses and created a host of employment law issues in every country.

When the first case of coronavirus – or COVID-19 – was reported in Wuhan, China in December 2019, nobody could have guessed that within three months it would spread across the globe at lightning speed. Indeed, from the start of March hundreds of thousands of cases of the disease have been reported in more than 160 countries and territories, resulting in thousands of deaths.

The speed of the spread of the virus – declared a pandemic by the World Health Organization on March 11 – caught governments across the world off guard. And many have since reacted with draconian action. This includes travel restrictions, quarantines, curfews and event cancellations, and advising people to avoid all but essential contact with each other for the foreseeable future.

Of course, this has had a tremendous impact on employment and with employment law in ways that have never been seen before. For instance, with employees being told to stay at home, flexible working has become more common than ever, although in some professions it just isn’t feasible. What this means for employers and employees – especially in terms of payment for those employees who have to take time off because they are sick, to quarantine or self-isolate, or to take care of dependents – has never been tested and different jurisdictions are reacting in different ways.

With the COVID-19 crisis and the response to it among different countries evolving daily, employment lawyers are advising employers on what they can or cannot do to safeguard their businesses and their employees under existing legislation. And the disease is spreading faster than laws can be adopted – although some countries are starting to respond quickly to take care of workers and ensure that businesses stave off bankruptcy. 

The coronavirus is moving faster than the law – how are lawyers responding and adapting to this evolving crisis?

From what is known, the government is preparing an economic package for the more affected sectors (tourism, agriculture and several industries), but concrete measures are still unknown. This will likely have an impact in terms of labour legislation although for the time being it is impossible to know-how and to what extent. As this is a rapidly evolving situation, what we see is that lawmakers are trying to delay decisions for those decisions to be as effective and accurate as possible.

Lawyers have to cope with multiple and insistent requests from clients regarding the breach of contracts based on force majeure which we are seeing happening every day. Until now special measures regarding this issue were not taken and clients have to adopt general clauses of force majeure in order to discuss the possibility of breaching valid deals and contracts. All this will likely end in countless and endless litigation within the next few years.

The government shared a Q&A  for employers and employees to know what measures have been passed and what tools can be used to ease problems. The real question here is that reality is more adaptative and quicker than the law and/or the solutions lawmakers create to deal with this pandemic.

How are specific industries or sectors and their employees impacted and what are the potential legal consequences?

Questions turn essentially around having fewer employees to do the work needed and the legal measures entered into force to cope with the virus outbreak. All this brings necessarily a disruptive reality to companies because demand is sharply decreasing which creates a negative impact on business relationships and therefore on several contracts.

Presently, as the outbreak is evolving but has still not reached a peak, companies are extremely nervous because they cannot assess the real economic and social impact of this new reality (new normal?).

Teleworking is the solution every company is envisaging to control the virus spread and keep functioning at the same time, even if economic activity is significantly slowing down. According to the Portuguese Labour Code, teleworking is comparable to “physical” work in what respects rights and obligations and is indeed being adopted widely. Moreover, suspension of labour contracts (lay off) is another forced tool for all companies and/ or industries for which teleworking cannot be used. If that is the case 70% of 2/3 of wages are transferred to social security.

Contributing Advisors