The outbreak of the COVID-19 disease has had a disruptive effect on the global economy especially as it relates the employment status of millions. The International Labour Organisation (ILO), in a preliminary report, has projected that the COVID-19 pandemic will push millions of people into unemployment, underemployment and working poverty.
There is uncertainty as to when the compulsory lockdown in Lagos and Ogun States, and the Federal Capital Territory will be lifted. It is equally uncertain that there will be an immediate upswing in economic activities to enable businesses regain lost ground and trigger economic recovery. Employers are faced with the unpleasant prospect of paying the salaries of largely idle workers (in addition to the attendant statutory obligations), cutting salaries or letting them go. Already, major football clubs in England, Italy and Spain have had to reduce salaries of their players by as much as 70%. Just yesterday, US law firm, Cadwalader Wickersham & Taft, announced that in order to avoid layoffs, it would stop paying partners, cut associate salaries by 25% and impose pay cuts of 10% to 25% on its staff. In Nigeria, a number of business are already faced with these hard but inevitable decisions.
They are asking legal questions arising from the circumstances forced upon them by the COVID-19 pandemic, among which are –
- Can an employer unilaterally reduce the salaries of its employees?
- What should an employer do where an employee refuses to accept a pay cut?
- Can an employer defer the payment of salaries? If yes, how long for?
- Can an employer lay-off staff during the lockdown period?
- What are the legal risks inherent in these decisions?
- How can these risks be averted or minimised?
We have issued a series of general information advisories on force majeure and the doctrine of frustration as they relate to employment contracts, COVID-19 and the ongoing lockdown and will be happy to provide specific advice on these issues as they arise.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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