Covid19 a force majeure

Dismissal. Termination of employment. Lay-off. Close down. Expiration of contract. Rationalisation. Cut back. Force majeure.

What does it all mean for you?

Yes, we all know there is a pandemic war going on, and yes, we know that there has been an edict that went out from Cabinet that everyone must stay indoors to defeat an enemy the like of which few now alive have ever known. The last one was in 1918-20, when between 50 and 80 million people died.

Little useful guidance has come down to us from then to help in this – not from the health nor the industrial relations point of view. But it is vital that people, both employers and their representatives and workers and their representatives, do understand at least what the terms mean, because for many – both employers and employees – this is a life-or-death situation.

With the economy shut down, there is no production. With no production, there is no work. Without work there are no profits. Without profits there is no tax revenue to support government services or government contracts, no public or private wages and salaries, and without them there is no personal income with which to buy food and medicine; and without them there is death.

I wish it were not so. I wish everything to sustain life were free or provided by a caring government cadre. But that is not how our particular world is organised. Until we change it for something better, this is what we have to deal with.

We have been told which services are essential and which businesses are considered essential. These are also listed in the Industrial Relations Act (1972) as a service to be provided for the public that is necessary to sustain health and life. These included water and sewerage, scavenging, electricity, internal and external communications, fire, health and hospital services, civil aviation and a public bus service.

Notice these are still not always available for the entire country, and some not at all.

Essential industries were seen as vital to supply employment to citizens and taxes to government: to support essential services. They include all the essential services plus port operations, oil and gas and petrochemicals, sugar, public transport and – do not laugh – the iron and steel industry.

Well, that was in 1972. We had high hopes for the country, for our government in the hands of our own people: honest, loyal, upright and able to determine which organisations were essential and must therefore remain open.

People in the non-essential sector – employers and workers – are genuinely uncertain now about the future of their businesses and of their jobs, for if there are no businesses, for most of us there are no jobs, and the commitment to provide a living back at independence was not to provide jobs only for public servants, but for all of us.

As businesses have been locked down, some assume that employees who are sent home have lost their jobs, which is not necessarily true. If the company or organisation closes down, yes, the job is lost completely and no severance pay is due, according to the Appeal Court, because there is no company to pay it. This is called retrenchment. As many organisations are not going to be producing anything, hence not earning anything, many will be going out of business, so retrenchment will be taking place, through no fault of the employees or the employers. It is what is called force majeure, like an earthquake or a hurricane or an act of God.

Some companies may have insurance to compensate against fire or flood or civil unrest, but force majeure and acts of God are outside the scope of most insurance companies. Pandemics are acts of God.

If only part of the business has to close, employees may be put on a lay-off. A lay-off is different from a retrenchment, because with a lay-off the implication is that within the foreseeable future the business can recover and take back its employees. If the company can afford it, they may pay the laid-off employees half or a third of their wages during the lay-off period, This can last for a few weeks or a few months, depending on what causes the drop in business.

A few collective agreements have provisions for lay-off, which will set out the period of time these payments will continue. Most agreements do not have lay-off specifications. None in TT have provisions to cover a pandemic. Since no one knows how long the pandemic will last, no one can tell whether at the end of it any company will survive and/or will have the funds to pay lay-off or severance pay. Much will depend on the ability of banks to provide financing.

A rationalisation implies a reorganisation of the business, which may result in loss of employment or a change in terms and conditions of some or all employees in order to keep the business going. This is almost inevitable following what we hope will be the end of the pandemic, or at least the "lockdown" aspect of it. Again, much will depend on markets and banks’ willingness and ability to provide financing. Government grants are not meant to restore failed businesses for more than a recovery period.

For people under an employment contract, the employment comes to an end when the contract does. If the contract is a sub-contract tied to a government or core business contract, it will usually come to a complete end when the core contract does. Some employment contracts provide for a bonus payment at the end of the contract period. This may provide income for employees for a few months, but not longer. In a pandemic situation, many major contracts just lapse and no one gets paid.

Historically, when this kind of industry collapse happened, Trinis would just give the industry a bligh and go abroad to look for work. But when the entire world is suffering from a pandemic, this may be difficult to do.