The Fiji government's response to the public health crisis posed by Covid-19 has been swift, and remarkable. At the time of writing this response based on WHO advice has reduced the known cases of Covid 19 in Fiji to 3 active cases bringing the number down from a peak of 18. This is a notable achievement, but Fiji's success has come with a steep economic cost.
In our firm's guidance to employers on 18 March 2020 (available here) published just before Fiji confirmed its first Covid-19 case, we noted that employers and employees may find solutions together to respond to the unprecedented situation. This is based on the premise that employers and employees have the option to work together in good faith to find compromises to employment relationships within the law. The unfortunate reality is that if an employer cannot afford meet wage obligations then employment will end for one reason or another. A little over 2 months after Fiji's first Covid-19 case many of us are aware of a number of Fiji employers who have had no choice but to terminate employment contracts, follow redundancy processes or seek to reduce wages. In exercising all of these options the employer still has the duty to act in good faith.
On 28 May 2020, the Government of Fiji introduced a Bill before the Parliament of Fiji, Bill No. 12 of 2020, that has passed into law as the Employment Relations (Amendment) Act 2020 (“Amendment”). The Amendment has changed Fiji's employment law with the aim of addressing difficulties faced by businesses due to COVID-19. The intention behind the Bill was explained in the explanatory note to the Bill as “to provide for a more realistic work environment which enables the sustainability of jobs and businesses, and to clarify the meaning of “an act of God” in the Act during the COVID-19 period”.
This commercial law update outlines some of the major changes that this Amendment has made to the law, and how it relates to other sections of the Employment Relations Act 2007 (“ERA”) such as termination of employment and redundancy.
This article is for information purposes only and is not and should not be relied upon as legal advice. We strongly recommend that any employer or employee concerned about an employment law problem or issue should seek legal advice.
Changes made by the Amendment
Act of God Defined
The Amendment's biggest change is to bring the Covid-19 within the definition of "act of God" for the purposes of section 24 of the ERA.
Section 24 of the ERA states that an employer must provide work to an employee in accordance with a contract of employment for the term of the contract of employment, and if the employer does not do this it must continue to pay the employee on the same wages as if the employee had performed the day's work unless the:
- employee has broken his or her contract of service; or
- contract is frustrated; or
- performance of the contract is prevented by an act of God;
Under the ERA “act of God” was not defined only appearing in section 24, so the ERA left it to common law to define the term. Essentially the Amendment, by defining the term “act of God” to include a pandemic declared by the Word Health Organization, has made it clear that if Covid-19 has prevented the performance of the contract of employment this would be a good reason for the employer not to continue to offer work to an employee. Indeed, it is reported (here) that this has been confirmed by the Hon Attorney General, Mr Sayed-Khaiyum who is reported to have confirmed: "employers have to prove that they have no work to provide to an employee due to the impact of COVID-19 before laying off the employee".
In noting this, it seems to us that the employer will, in accordance with the duty to act in good faith, have the burden of being able to show that Covid-19 has prevented the performance of the contract, and be in a position to demonstrate this, if required.
Other changes in respect to section 24 of the ERA by reason of the Amendment include rearrangement of words and re-numbering.
Section 24 will, if the Bill becomes law, will read as follows:
24(1) An employer must unless the worker has broken his or her contract of service or the contract is frustrated or its performance prevented by an act of God:
- provide the worker with work in accordance with the contract during the period for which the contract is binding on a number of days equal to the number of working days expressly or impliedly provided for in the contract; and
- if the employer fails to provide work to the worker, pay to the worker, in respect of every day on which the employer so fails, wages at the same rate as if the worker had performed a day's work
(2) In this section, “act of God” includes a pandemic declared by the World Health Organization.”
Definition of COVID-19 and COVID-19 Period
The Amendment also introduces a new Part 20A which is headed COVID-19 Response Measures. The new Part 20A addresses leave entitlements during the COVID-19 period.
COVID-19 is defined as coronavirus disease as named by the World Health Organization on 11 February 2020 (section 245B of the Amendment).
The COVID-19 period has been defined as the period commencing from the operative date (effective date of the Employment Relations (Amendment) Act 2020) and ends when the Minister shall prescribe by notice in the Gazette. The Minister will publish the end of the period only after consultations with the Ministry of Health and stakeholders in key economic sectors which includes the Office of the Prime Minister, and ministries responsible for finance, public enterprises, commerce, trade, tourism and transport and the Reserve Bank of Fiji (section 245B of the Bill).
The Amendment also reduces Paternity leave to two working days from five working days under section 101A of the ERA (section 245D of the Amendment).
A man is entitled to paternity leave provided all other provisions of section 101A of ERA has been met.
Family Care Leave
Under section 245C of the Amendment, a worker is entitled to a minimum of two working days as family care leave. An employer has the discretion to provide more than two working days.
Under section 68A of the ERA family care leave was for at least five working days and applied if the employee had worked for the same employer for three continuous months.
The Amendment provides section 245E which lists various scenarios and how entitlement to paternity and family care leave is to be decided.
Planning Points and the effect of the changes brought into effect by the Amendment
- By including COVID-19 as an act of God an employer who, in good faith, cannot fulfill its duty to provide work to a worker/employee, may stand down the employee and not continue to pay the employee.
- The changes do not, in our view, entitle the employer to terminate employment of the worker/employee by providing a termination letter stating due to COVID-19 his or her employment has been terminated but allows the employer to stand down the employee/worker as the employer is not able to provide work. The ERA still requires any employer terminating any employee to provide a reason and ensure that the reason accords with the contract of employment and the ERA.
- The changes under the Amendment also do not provide guidance as to how an employer is to prove that they cannot fulfill an employers duty to provide work. In our view, the employer will still have the duty to act in good faith and be able to demonstrate the effect of Covid-19 has led to the contract of employment not being able to be performed.
- On the assumption that an employee/worker is stood down for the COVID-19 period without pay, then once the said period ends, the employer may be obliged to bring the employees back to work on the same terms and conditions.
- It should also be noted that if the employer faces dire economic hardship, and for this reason decides it has to restructure its business for economic reasons then Part 19 of the ERA, sections 106 to 108 may be relied upon. However, redundancy and the set procedures must be followed and employers do not always find this an easy task.
These are unprecedented times and more than ever, there is a need for empathy, thoughtfulness and encouragement and we hope a spirit of providing assistance to each other so that Fiji as a nation and its people get through these hard times together.
We encourage employers to engage in open dialogue with their employees and for employers and employees to work together in good faith to determine and agree on the best options. This means that employers should be prepared to be transparent and open with employees if they are proposing reducing wages or time requirements. After all employers still carry the burden of being able to show its employees that the effects of Covid-19 have made the changes proposed necessary.