EMPLOYMENT LAW IMPLICATIONS DUE TO COVID-19 OUTBREAK IN ALBANIA

Article by Oltion Myftari, Senior Associate, CR PARTNERS

During the past weeks, the Government of Albania HAS adopted several measures to combat the spread of COVID-19, which included the suspension of the academic year in both private and public institution; temporary suspension of all air and sea traffic fist from Italy and then from many other countries; the closure of bars, coffee shops, restaurants, fast foods and other retail business activities; restriction of movement for the entire population within a limited time etc. These measures taken by the government have obviously affected directly or indirectly the employment sector because many included the suspension of the business activities and some others the restriction of movement for the population, making it difficult or impossible for employees to be present at the work premises in full time mode.

After the Government adopted the above-mentioned measures, many questions have arisen as to will happen to employment relationships and how the businesses should react to be compliant with the Albanian Labor Code.

Financial measures taken by the Albanian Government.

For many, the revenue lost in this period puts sudden pressure on working capital lines and liquidity. It goes without saying that the shortages in liquidity will impact the salary monthly budget in the upcoming weeks.  In circumstances where businesses are sometimes not operating and employees are not working as a result of the COVID-19 outbreak, the government financial measures are crucial in order to mitigate the damage caused to employment.

On 27.03.2020 the government adopted a decision of the Council of Ministers no. 254 which aims to provide financial support to small business employees. This decision sets out how salaries will be allocated to small business employees, the categories that will benefit and the conditions to be met. The total amount that the government will distribute in the form of wages and unemployment payments is ALL 5.85 billion (approx. EUR 46.6 million).

Beneficiaries of the package are: i) Self-employed; ii) One family member of the self-employed; iii) Employees of the self-employed; iv) Employees of the companies.

The government has set three (3) conditions to be met, in order to benefit from the financial support, which are the following:

1. a) Businesses should have ceased activity in accordance with the relevant orders of the Minister of Health and Social Protection issued for this purpose;
2. b) Businesses should fall under the simplified income tax regime and/or income tax;
3. c) Businesses should have declared income, according to the income tax / simplified income tax return, for 2019, is up to ALL 14,000,000 (fourteen million), approx. EUR 111,500 (one hundred and eleven thousand and five hundred)”.

The financial assistance to self-employed, unpaid family workers and employees under this decision shall be equal to the minimum wage in force, ALL 26,000 (twenty-six thousand) per month.

This financial support package, although a solution for many people affected by the government measures, does not cover all the employees specter in Albania as companies which annual turnover is above ALL 14,000,000 and have a large number of employees do not qualify for such financial support.

What choices do employers have under the Labor Code?

It is important to note that the Albanian Labor Code (“Code”) does not provide specific rules in case of an epidemic outbreak or any other event that may be considered as a Force Majeure.

Remote working

Although not having a specific procedure to be followed, many employers have applied the method of remote working. Work from home under the Albanian law is considered as an alternative working condition that allows the employee to work from home.  Considering that this working regime cannot be applied by every employer, as their activity does not allow it, work from home, although a good solution does not solve the employment issue created because of the COVID-19 outbreak. 

Annual Leave

The annual leave is another option used by the employers to avoid the presence of employees at the workplace during this period. The general principles embodied in Article 93 of the Code state that the employer may determine the date of the commencement of the annual leave, taking into account the employee's wish. This right has been given to employers since they are the responsible persons who are aware of the volume of work being undertaken by the company, and also to determine the priority as to when the work must be executed. This right is given with a view to prioritize continuity of work. In view of this principle, the converse is also applicable during this period of slowdown caused by the outbreak of COVID-19, where there is a discontinuity of work. Therefore, given the above information, the employer can determine the date of commencement of an employee’s annual leave during the COVID-19 outbreak.

The above mentions measures cannot be considered as a long-term solution, therefore in case of an extension of the pandemic crises, other solutions should be considered.  

Unpaid leave

In light of the COVID-19 outbreak and the resulting mandatory closures, many employers are attempting to compel their employee to take an ‘unpaid leave’. Unless the parties agree that the employee will be taking an unpaid leave, an employer’s instruction to enforce unpaid leave on his employees will constitute a breach of the Labor Code and the employment contract given that the employer will be failing to pay the employee’s salary (in accordance with the terms of the employment contract).

Termination of employment agreements

In some other cases, especially in companies with large number of employees, employers have taken drastic measures by firing employees collectively without observing the dismissal procedure. However, such terminations will be governed by the provisions of the Labor Code and the relevant employment contract(s) and considering that the relevant legal framework does not provided that pandemic or any other Force Majeure are classified as a just cause to
immediately terminate the employment relationship, employers are likely to provide full compensation for such termination.

Reduction of monthly salaries

Given that some businesses have suffered a decline in their economic activity, many employers have started reducing the employee’s salaries by offering employees a reduction of their weekly working hours.

From the legal point of view, an employer is entitled to reduce its employees’ salaries only in cases the employer is insolvent, pursuant to the Article 124 of the Code (i.e. cases when the employer cannot pay its obligations to the employees because of difficult financial conditions). Nevertheless, although employers are in financial crises, their obligations to employees should have priority over all other obligations. The reduction of the salary should be followed by an amendment to the employment agreements, stipulating the reason for the reduction, the amount reduced, the specific period of time which this amendment will stay in force as well as the possible reduction of the working hours, such amendment requiring the consent of the employee.

Employer’s rights in case of a Force Majeure event.

Although employees are the most vulnerable of these employment crises, it is obvious in the current circumstances that, the actions taken by employers are a direct consequence of the overall government actions to contain the spread of the COVID-19 outbreak. 

On 24.3.2020 the government has declared the state of natural disaster in the Republic of Albania, meaning that COVID-19 pandemic is officially considered a Force Majeure event.

Article 129 (3) of the Code, provide the possibility for employers not to pay their employees’ salaries, in case they cannot assign work to them, because of an ongoing Force Majeure event. Hence, in case employers have suspended their activity because of the COVID-19 outbreak, and as a result employees are not performing any of the works provided in their employment agreements, failure to pay salaries will not be considered as unlawful or as a breach of the employment agreement.

However, in the case of businesses that are still operating, the implementation of the abovementioned provision is strictly related to the fact as to whether the Force Majeure event has directly affected that business.  Employers of the businesses not directly affected by the Force Majeure event cannot rely and cannot adopt the application of the Article 129 (3) of the Labor Code.