Legal Report- COVID-19 and Labour laws Worldwide

Legal Report- COVID-19 and Labour laws Worldwide


In wake of the unnerving outbreak of Covid-19, governments across the world are aiming to mitigate the economic fallout resulting from Covid-19 outbreak. While some federal governments have launched policies tailored specifically to curtail the disastrous effects of coronavirus, others have simply slashed down existing laws to make room for economic progress.

The Firm, in order to assist clients and to provide a clearer picture of the significant changes in labour laws across the world, has prepared this brief legal bulletin.

1) In March, 2020, Prime Minister Imran Khan announced measures to safeguard the most vulnerable and minimize the economic losses effecting businesses and industries across Pakistan. A sum of PKR 200 billion was allotted for labourers throughout the country, the Prime Minister also announced that a sum of PKR 100 billion has been budgeted for emergencies. Despite these measures, impact on workers is stark, it has been estimated that the poverty headcount will rise from 24.3% to a base case of 29%, and in a worst-case scenario to a base of 33.5%. At least three million people will lose their jobs – one million in the industrial sector and two million in services. It has also been noted by Pakistan Institute of Development Economics that projected job losses could reach eighteen million.

Apart from federal relief measures, provincial governments in particular the Sindh Government has promulgated the Sindh Covid-19 Emergency Relief Ordinance, 2020 in order to mitigate the challenges stemming from the lockdown imposed by the Government to control the widespread of the virus. As a result of the lockdown, business activity has come to a halt as operations of most offices and factories all over the country have been suspended. According to the Ordinance, no employee or worker shall be terminated or removed and employer shall pay all employees their due salaries. Period of closure of an establishment may be considered as paid leave. With other provincial and federal labour laws intact, Sindh Government has introduced the Ordinance to protect the working class from financial detriment. However, it is pointed out that the aforesaid proposed Ordinance will not be applicable to trans-provincial organizations. If the operations or presence of an entity crosses from one province to another, or the federal territory, the entity will deemed to be a trans-provincial one. The Ordinance is only applicable to the Province of Sindh.

2) Looking towards Pakistan’s eastern border, Indian states of Uttar Pradesh, Madhya Pradesh and Gujarat suspended 38 labour legislations for period of approximately 3 years. Uttar Pradesh also announced that it has enacted the ‘Uttar Pradesh Temporary Exemption from Certain Labour Laws Ordinance, 2020’ (“UP Ordinance”) to exempt all establishments, factories, and businesses from the purview of all but four labour laws, for three years.

UP has suspended almost all labour laws including the Minimum Wages Act, 1948 that covers more workers than any other labour legislation. Other Acts suspended by the UP Ordinance include Trade Unions Act, 1926; Industrial Disputes Act, 1947; Factories Act 1948; Contract Labour Act, 1970; Payment of Bonus Act, 1965; Inter-State Migrant Workmen Act, 1979; Working Journalists Act, 1955; Employees’ Provident Funds and Miscellaneous Provisions Act, 1952. About eight of the existing Labour Laws are being retained under the UP Ordinance, these include Bonded Labour Act, 1976, Employee Compensation Act, 1923 and Building and Other Construction Workers Act, 1996. Though it is pertinent to point that labour laws related to bonded labour, deployment of women and children and timely payment of salaries have not relaxed under the UP Ordinance. The possibility of more states taking the same measures is likely.

These changes are aimed at reviving industrial growth, which has due to eruption of Covid19 pandemic, declined at an unprecedented rate. With a state of financial emergency resulting from economic stagnation and unemployment rates spiking at 24.6%, states have been presented with an opportunity to follow through with some of the more challenging promises on their policy reform agendas.

3) UK Government has also promulgated the Coronavirus Job Retention Scheme to mitigate challenges faced by the workforce due the pandemic. If a worker or an employer cannot maintain his/her current workforce because his operations have been severely affected by Covid-19, he can furlough employees and apply for a grant that covers 80% of their usual monthly wage costs, up to £2,500 a month, plus the associated Employer National Insurance contributions and pension contributions (up to the level of the minimum automatic enrolment employer pension contribution) on that subsidized leave pay.

The scheme is designed to help employers whose operations have been severely affected by Covid-19, to retain their employees and protect the UK economy. All employers are eligible to claim under the scheme and the government recognizes different businesses will face different impact from coronavirus. If an employer’s business has been badly hit by Covid-19 and he cannot afford to pay the employee, he may use the Coronavirus Job Retention Scheme to send the employees home safe, with the assurance that the government will pay 80% of their salaries. On 12 May, 2020 the government announced that the scheme would now last until October 2020. The Government also agreed to pay 80% to self-employed people out of work due to coronavirus.

4) New Federal Laws have also been enacted in the United States, to contain the damage caused by outbreak of Covid-19 to the workforce of the country. The Families First Coronavirus Response Act (FFRCA) was promulgated to tackle matters of emergency paid sick leave and emergency paid expanded family and medical leave. This law applies to all public employers and to private employers with less than 500 employees. Along with the FFRCA, the Coronavirus Aid, Relief and Economic Security (CARES) Act was also put to effect. This law provides more than $2 trillion in different types of Covid-19 crisisrelated relief for all sectors of the economy. The CARES Act includes significant relief for state and local governments. Direct relief for individuals include enhanced unemployment compensation with additional time and benefits for unemployment related to the COVID19 pandemic. Provisions of this Act that will help workers in additional compensation added to unemployment benefits, extension of unemployment benefits for up to 13 weeks and unemployment assistance for many individuals who do not qualify for regular unemployment benefits. U.S. airlines have also accepted government payroll support under CARES Act, which is conditional on the companies not cutting jobs or pay rates before September 30th , as the sector weathers a sharp downturn in travel demand due to the coronavirus pandemic.

5) The federal government of Canada has also unveiled an emergency support benefit package for employees and employers. The support package is set to include emergency care benefits for employees who are not eligible to receive employment insurance as well as wage subsidies for small businesses. The plan intends to provide 10 per cent of the salaries for small businesses employees for up to three months to a maximum of $1,375, totalling up to $25,000 per employer. The intended goal of the package is to encourage

employers to keep their employees on the payroll during closures and layoffs. The government has also unveiled a tax deferral program of $55-billion to assist employers in meeting their financial needs.

6) In Australia, the regulatory response to the COVID-19 pandemic has arisen from high levels of cooperation between all levels of government, the Australian Council of Trade Unions and key business groups. The impact of business closures and restricted operations are already being seen through widespread stand-downs and layoffs of workers. A wage subsidy scheme for affected employees has been implemented though it leaves out many casual and migrant workers. Norms of workplace regulation have been rapidly adapted to allow businesses to adjust operations and many employees to work from home. Overwork and workplace safety remain of concern for those in essential sectors.

7) It now appears likely that New Zealand will also be heavily impacted by this public health event. That may mean that some employers will need to either temporarily suspend, or close, parts or all of their business. The Government’s stimulus package has also made $5.1 billion of funding available for wage subsidies to support employers who are struggling to retain employees as a result of the impact of COVID-19.

Affected employers are now able to apply to receive a subsidy of $585 per week for a fulltime employee, and $350 per week for a part-time employee, to assist with the retention of staff over a 12-week period. The maximum amount that any one employer can receive under the subsidy is $150,000.00 over this 12-week period.

Given the current circumstances governments, globally are analysing financial and economic affects as well as skyrocketing unemployment levels. Waves of countrywide lockdown and shutting down of export industry have made the economic growth redundant. Given the current atmosphere labour laws are being revaluated and altered to fit the present day setting. While for most governments it is imperative to stabilize the economy, providing relief to the labour class and workforce cannot be overlooked.

We hope you find information in this bulletin useful to navigate through labour laws in state of flux. It is pertinent to understand the above are a generic picture of the ever-developing laws

concerning labour and cannot replace concrete legal advice. The Firm can advise clients on specific queries and impending implications of these changes as required. For further questions and queries, you may contact the Firm at 042-35757353 or via email on info@abdullahandhussain.com We wish you safety and health in these difficult times.