Labor law during the quarantine period - send the employee on vacation "at his own expense" or dismiss?

Today, in the conditions of forced downtime for many enterprises, business owners are faced with an acute question, What to do with their employees? What to do if there is no income, and no means to pay salaries?

Today we will elaborate on the decisions that can be made in such a case and how to formalize them correctly.

Formalizing the employee’s leave during quarantine 

On March 17, 2020, amendments were made to the legislation, which provided the employers with the possibility to increase the period of an employee’s unpaid leave for the entire period of quarantine. 

At the same time, the period of unpaid leave will not include the already envisaged period of “15 calendar days per year”, and, accordingly, such leave shall be provided at the employee’s request for the entire period of quarantine. 

Why can’t you just send all employees on leave? The key reasons are as follows:

• If the employer decides to send the employee on unpaid leave without the employee’s consent or application, especially if the employee has a child under 14 years of age, this may give rise to labor disputes. 
• In addition, it is prohibited to either impose or force an employee to go on unpaid leave, or to establish unpaid leave under a collective (labor) agreement - this is contrary to labor law.

On the other hand, the owners of those businesses that were ordered to cease their business activities during quarantine have their own reasons to try to keep the employee, rather than just terminate employment relations.

For example, if, for example, a cafe/restaurant/shop or other business stops working, as the employer can’t continue its activities under current conditions. But this can lead to the loss of a good specialist. Therefore, employers are not in a hurry to dismiss their employees, offering them to write an application (which is considered to be the employee’s voluntary wish) and send him/her on unpaid leave for an indefinite period. 

However, the employer must understand that if during quarantine an enterprise or a sole proprietor will improperly execute at least one document, for example, will fail to specify the reason and the new paragraph of the Labor Code, then the Pension Fund may have some questions, when considering the reporting on the Unified Social Contribution. And it will submit information about such an employer to the relevant inspectorate of the State Labor Service. And then the employer may be charged with serious penalties.

Considering the employee’s position - not everybody has an opportunity to stay on unpaid leave for an indefinite period of time, so when some time expires and quarantine is constantly extended, the employees start making logical demands:

• to be paid a part of their salary due to downtime;
• or negotiated resignation. 

In this case, if the human resources inspector or accountant is also on leave, this may give rise to certain disagreements and disputes. Therefore, it is very important to do everything on time.

It is not profitable for the employer to partially pay wages during quarantine, because in this case it will have to pay the unified social contribution at full rate. If an employee is on unpaid leave and gets no income - no unified social contribution shall be paid for such an employee.

Much depends on how much a really “indispensable” specialist creates labor disputes and how this can end up for the employer. Having foreseen these costs in advance, you can find the best possible solution to the problem.

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Termination of employment

The Labor Code still provides for the dismissal of employees for a number of reasons, but not for quarantine. In some cases, termination of employment may be a more “advantageous” option for both the employer and the employee. But in such a situation, it is important to initially understand all the possible consequences. An accurate explanation of the situation by the lawyer can help to agree on mutually beneficial actions of the employer and its employees. 

For example, for the business, which has completely suspended its economic activity - it is better to agree with employees on the so-called “temporary termination of employment”, when: 

• The employer will not incur the expenses, submit reports, pay the unified social contribution;
• The employee will be able to apply to the employment office for unemployment allowance, which on the basis of “termination of employment by agreement of the parties” (Article 36 (1) of the Labor Code) is paid from the day the person applies to the employment office. 

After the quarantine has been completed, the employer may return such employee to his/her former place of work by renewing the employment relations. The Law of Ukraine “On Employment” also provides for the payment of partial unemployment allowance to an employee upon his/her request (subject to the conditions of Article 47 of the Law).

During the quarantine period, the government calls on employers not to dismiss people and offers the following conditions:

• The government is ready to compensate small and medium businesses for their salary costs (no more than the minimum wage) during the quarantine period and within 30 days after its completion.

This assistance will be calculated for each hour by which an employee’s working time is reduced at the rate of 2/3 of the wage rate. 

• The employment office will apply new regulations on the applications of both employees and employers who will apply for this assistance. However, it should be taken into account that employers who have applied for the assistance had to pay the obligatory state social security insurance contributions for the last 6 months before the application.

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Which HR solution will be optimal for your business?

The best solution of the personnel issue shall be selected for each individual business, taking into account the specifics of its economic activity, as well as material capabilities of the employer, in order to avoid legal proceedings and expenses.

It is important to keep in mind the possible negative consequences of careless decisions on personnel issues.

In case of conflict situations, dissatisfied employees may apply in writing to their employers, and to the State Labor Service, referring to the amendments made by the Law of Ukraine No. 540 dd. 30.03.2020 to Article 113 of the Labor Code, namely: “downtime through no fault of an employee, including during quarantine, shall be paid at least 2/3 of the tariff rate of salary”. The employee may also indicate that he/she was forced to write an application for unpaid leave or termination of employment.

Employees can apply for compensation for moral damages, as well as bring the company to unnecessary inspections by regulatory authorities. In such cases, there may be court disputes in which, as we know from practice, the court takes the employee’s side.

Our general recommendations for such a situation include the following:

• First of all, we recommend that all written inquiries must be answered in writing with a clear explanation of the position, and if an error is made, to propose a peaceful resolution of the conflict, because the litigation may involve not only time but also financial costs. 
• Secondly, to obtain the support of employees who can testify in favor of the employer about its lawful actions against the “dissatisfied employee”. 
• Third, to gather all documents proving the employer’s position.

In order to make sure that all the documents are correctly executed, seek for their legal expertise. We offer You consultations on a specific situation of labour disputes and the application of labour legislation with new changes, as well as assistance in the preparation of responses, feedback to the court and other documents.

If You want to effectively solve personnel issues and eliminate any problems with regulatory authorities and after quarantine,don’t hesitate to contact us.