“Furlough” is quite the buzzword these days. As soon as COVID-19’s effects on business and employment became clear, agile professionals from Ghana to Kenya, Nigeria to South Africa, with an interest in employment, read up on the furlough and adapted it to local conditions and advised client-employers. This has been nothing short of impressive. Furloughing is essentially an Americanism. For many legal systems like England and countries with similar legal systems (like most of the countries mentioned above), it has been a post COVID-19 phenomenon. What does it really mean? Basically, it is when the employer asks the worker to go on a period of unpaid leave because circumstances beyond the employer’s control prevents the employer from paying the worker.
The situation is usually such that if the workers object, the only realistic alternative is to terminate their employment. The pervasive reach of COVID-19 (across the world and into corporate and individual pockets) means the temptation or need to furlough workers has touched many an employment in far-flung places, including Africa where many employment lawyers report that clients are very interested in what menu of options they have in changing their financial relationship with workers until the effects of the pandemic are reversed. The common questions have been about reduced pay, compulsory annual leave, indefinite leave without pay (that is the furlough, really), redundancy and termination (by frustration).
“SUBJECT TO THE LAW”
The existing employment law must obviously permit any kind of change an employer wishes to make to the employment contract. Otherwise the change would be unlawful. So already existing legislation or the employment contract must permit furloughing, if one is being strict about it. But, in many cases and in many countries, there was no existing law even remotely touching on furloughing when COVID-19 crossed their borders. Practical advice has been given to many an employer that they can furlough workers if the business will collapse without it, and if they follow certain risk-reducing steps. It has been suggested that, with no existing ‘furlough’ laws, furloughing “subject to existing law” should be interpreted to mean furloughing must be done fairly and without discrimination. It remains to be seen if the court and employment tribunals will accept this interpretation.
SUGAR-COATING THE PILL
To make an act which is not necessarily lawful more acceptable, some governments of richer countries have acted to soften the blow by stepping in the employer’s shoes to pay up to a certain percentage of the worker’s salary during the furlough period. For example, the British government is paying up to 80 percent of the salaries of some furloughed workers up to a maximum of 2,500 pounds. Even with that, employers and workers (or workers’ representatives) have held consultations and negotiations prior to the furlough. But not all economies can support this soft landing. Most African countries will not be able to do this. Where the governments do not have the sugar to sweeten the bitter pill, employers have more reason to consult and negotiate. Workers are more sensible and considerate than they get credit for.They have seen the havoc COVID-19 has wreaked on businesses. They are likely to negotiate and accept some kind of furlough (even if the government is not guaranteeing part of their salary).
What if the workers do not agree to be furloughed? If the employer forges ahead with it, the workers may have a claim of constructive termination against the employer (on the ground the employer has created a hostile work environment, leaving the worker with no choice but to resign). Would a practical-minded employment tribunal ignore the global viral war which has forced economic hardship on businesses? Will it ignore the fairness in this not necessarily lawful event? Would the tribunals accept that “subject to existing law” must be taken to mean fair and non-discriminatory? Would the fact of the prior consultations mitigate the necessary sin and lesser evil (when the alternative was termination)?
A well-structured and compassionate furlough plan is a wise decision if the employer can show that they can no longer pay the workers. It is not a 100 percent fireproof solution. But it should do. More time should be spent on fighting and winning the COVID-19 war, keeping workers (and other people) safe, and returning life to normal so that businesses can safely recall furloughed workers.
Written By: David A. Asiedu
The writer is a Partner-in-Charge of Commercial Dispute Resolution at ENSafrica Ghana.