Payment or non-payment of salaries:
Labour issues arising from COVID-19 lockdown
In a bid to curb the spread of COVID 19, the government of Zimbabwe declared a lockdown starting from the 30th March 2020 to 19th April 2020. A flurry of COVID-19 related regulations have been promulgated but this article is focused on the Public Health (COVID-19 Prevention, Containment and Treatment) (National Lockdown) Order 2020 (hereinafter called The Regulations) and the effect of the lockdown on the employment relationships. An employment relationship is hinged on performance of work or a service by an employee in return for remuneration. The payment or non-payment of a salary is an issue which arises where an employee has, due to a government directive, failed to work. There is a correlation between wages and the sustenance of workers and their dependants hence the need to address the question of whether or not the employer is obliged to pay salaries during the lockdown.
The law on payment of salaries
Section 65 of the Constitution of Zimbabwe provides that every person has the right to fair and safe labour practices and standards and to be paid a fair and reasonable wage. The Labour Act is the principal legislation which provides a regulatory framework for labour relations. In furtherance of employee’s right to fair labour standards Section 6(1) (a) of the Labour Act provides for fair remuneration of employees. It provides that no employer shall pay a wage that is lower than the fair wage specified for such an employee by law or by agreement made under the Labour Act. Section 12A of the Labour Act further makes provision of how remuneration is to be paid, the acceptable forms of remuneration and the deductions that can be lawfully made on an employee’s salary or wage. The Act is however silent on how issues of remuneration are to be tackled in situations where companies are directed to lockdown pursuant to a government directive like the situation currently obtaining in Zimbabwe.
Section 17 of the Labour Act provides for regulatory powers of the Minister of Public Service, Labour and Social Welfare over various matters pertaining to labour or workplace relations. Section 17 (3) provides for matters over which the Minister can make regulations on and the list is not exhaustive. Section 17(3) (u) provides that the Minister can make necessary regulations providing for any other matter relating to or connected with employment issues. At the time of writing this article, the Minister is yet to make regulations on how the payment of wages and salaries accruing over the lockdown period is to be effected.
The Labour Relations (Specification of Minimum Wages) (Amendment) Notice, 2020 S.I.81 of 2020 have been promulgated. These regulations sets the sum of ZWL$2 549.74 as the minimum wage payable to all employees except domestic and agricultural employees. Whilst the regulations were made during the time at which COVID-19 regulations were made, there is nothing in the legislation that indicates that these regulations are specific to the remuneration issues arising from the lockdown.
The common law position is that an employee is only entitled to receive remuneration for work or services rendered to the employer. This rule is generally known as the “no work, no pay’ principle. At common law, an employer is not obliged to pay an employee who has not performed his part of the contract. However, there are a variety of paid leave periods in terms of which employees are paid notwithstanding that they have not rendered a service to the employer.
A reading of the Constitution and the Labour Act indicates that the no work no pay principle is still applicable in our jurisdiction. The statutes do not expressly provide for a departure from the common law principle. The presumption is that the legislature does not intend a departure from the common law unless it expressly legislates against it. The legislature has not expressly legislated against the “no work no pay” principle and as such the import and meaning of the principle applies with full force to the Zimbabwean labour framework. What is apparent is that the existing legislation obliges the employer to fairly and adequately compensate the employees for the work and skills rendered to it.
“There are divergent views on whether or not an employer should pay salaries for the period under which the establishment was on lockdown…”
Is the employer obliged to pay salaries for the lockdown period?
There are divergent views on whether or not an employer should pay salaries for the period under which the establishment was on lockdown. No issues arise in instances where workers have been capable of discharging their duties from home. In such a scenario, the employee is entitled to payment of a salary.
Major concerns are arising where employees cannot work from home and are unable to go to the workplace due to the lockdown directive. What is clear is that the lockdown has affected the availability of some employees to offer their services to their employer. Had it not been for the lockdown, the workers are available to report for duty. The question of whether the employer should pay salaries that accrue during the lockdown period is best answered after looking at the principles that guide the courts in remuneration disputes.
Is the no work, no pay principle applicable to the lockdown situation?
The fact that the no work no pay principle is still applicable in Zimbabwe does not excuse the employers from paying salaries. It is important to explain that this principle applies in instances where the employee has deliberately absented himself from work and or rendering his skills to the employer. An employer cannot rely on the no work no pay principle to justify the non-payment of salaries accruing over the lockdown period. The employees have not deliberately absented themselves from duty and the government lockdown directive constitutes a reasonable excuse for the employees’ absenteeism.
Focus is to be put on the employees’ availability to work as opposed to them rendering actual work to the employer. As long as the employee is ready to tender their services to the employer, the employee is entitled to full remuneration.
The obligation to pay an employee is not dependant on actual production or performance but the contractual obligation arising from the contract of employment. It should be noted that the lockdown did not result in termination of the employment contracts and as such the employer is obliged to pay salaries.
Can an employer rely on the defence of supervening impossibility to pay salaries?
It is buttressed that the payment of a salary is a contractual obligation that the employer ought to fulfil. It has been argued that the employer can successfully raise the defence of a supervening impossibility, in particular vis major, to pay salaries due to the COVID-19 induced lockdown. Whether or not the court will consider this defence will depend on the circumstances of each case. It is submitted that the employer is not discharged from performing its contractual duties owing to the current lockdown.
Vis major is a principle which excuses a party from liability where a delay in performance or non-performance of its obligations is attributed to the occurrence of certain supervening events. It is clear that the COVID-19 pandemic and the subsequent lockdown was not a reasonably foreseeable event to both the employer and employee. In order to successfully rely on this defence, the employer ought to show that the impossibility to pay salaries is linked to the COVID-19 lockdown.
In the case of Beitbridge – Bulawayo/Railway Private Limited v Commercial Union Insurance Company of Zimbabwe Limited SC 91/07, the court stated that the general rule in our law is that as a result of vis major or other supervening physical or legal act performance of a contract has become impossible through no fault of the debtor, the obligations under the contract are extinguished.
There are exceptions to this general rule and impossibility of performance will not always excuse non-performance of a contract. In terms of the common law, the contract is extinguished if it is impossible for a party to discharge its obligations under the contract permanently. In the Beitbridge case, the court further stated that regard must be had to the agreement between the parties as its terms guide the courts in making a determination on whether or not the supervening impossibility or frustration has the effect of extinguishing obligations under that agreement.
From the foregoing, it is submitted that the vis major defence is not absolute. The burden of proof lies on the employer to show that its failure to pay was on the grounds of vis major. It is also critical to bear in mind that the contract of employment itself would be looked into to ascertain if the defence of vis major is available to the employer. To quote what the court said in the Beitbridge case, “it is important to remember that, as with many principles of the law of contract, principles may be excluded by contract. In other words, it is the contract itself to which regard should be had. Further, it must be clear from the evidence that performance is impossible, not merely undesirable or uneconomical as stated in Standard Chartered Bank Zimbabwe Limited v China Shougang International SC39/13.
The position in other jurisdictions
In South Africa, the Basic Conditions of Employment Act (75 of 1997, as amended) and the Labour Relations Act (66 of 1995, as amended) specify that employees are not entitled to be paid during the lockdown period if they are not working.
The South African government has however introduced a measure to ensure that employees are paid during the lockdown period. This is in terms of The Special Temporary Employee/Employer Relief Scheme (TERS) administered by the Unemployment Insurance Fund.
The TERS only avails to employers who have had to close their businesses due to the lockdown and cannot afford to pay their employees. The employers may apply for money from government pay salaries. The scheme covers a period of up to 3 months-during the lockdown, and also afterwards if companies continue to struggle with their cash flow.
The question of whether or not the employer is obliged to pay salaries for the lockdown period is arising due to the gap in the law. The Labour Act is silent on how employment contracts are to be treated in the event of national disasters which result in the lockdown like the one that has besieged the nation. The Minister is urged to expeditiously make appropriate regulations to bridge the gap in the law. This will assist in addressing the confusion and uncertainty on how employers are to handle salary obligations for employees who are unable to work from home during the lockdown period.
It is admitted that some employers are already struggling to run their enterprises as going concerns owing to the problems that are apparent on the economic landscape such as hyperinflation and shortage of foreign currency. Payment of salaries where one has not been in operation is punitive on the already struggling employer. Employers are therefore urged to engage the government, through their various associations, for assistance and subsidies directed towards the salaries accruing during the lockdown period. Government subsidies and tax relief will mitigate the socio-economic losses that the employers will incur.
The employer is obliged to provide remuneration and where he is unable, employer should utilise the following options at its disposal:-
- The employer can engage its employees, through the Works Councils where appropriate, and agree on a sustainable continuity plan which plan would address the downward review of salaries. The parties can reduce their mutual agreement into writing to avoid possible lawsuits being filed against the employer.
- Employer can make an application , to the relevant NEC, for exemption from payment of minimum wages
- The employer can utilise the provisions of the Act and introduce short -time employment and shift systems in a bid to lower the salary or wage bill
- In the event that the lockdown period is extended, the employer can apply for the retrenchment of the employees as the employer would be unable to sustain the expenses and overheads that the business will be incurring
It is clear that these are unprecedented times in the Zimbabwean labour law. It is clear from the above discussion that the employer is obliged to pay salaries that accrue over the lockdown period and that the government ought to mitigate the losses emanating from the lockdown period. Employers are urged to follow due process to address their incapacity to pay salaries as the employment contract cannot be unilaterally tempered with.