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State of Emergency, Rights and Responsibilities Of Employers and Employees

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Stefan Tzvetkov is Partner at Tzvetkova & Partners Law Firm, a boutique law practice specialized in the high-tech industry. Stefan has over 10 years of experience in providing assistance and consultancy in all legal matters regarding activities of IT, Tech and Startup companies acting in Bulgaria and worldwide. His main areas of expertise include Corporate & Commercial law, Banking & Finance law and Foreign Investment Law.

 

Layoffs, short-time work and cut paid leave, work from home, reduced compensations… These are all measures applied in companies ever since the coronavirus-related lockdown in Bulgaria and the introduction of “state of emergency” to the mass audience. 

Since March 2020, all companies have been forced to reorganize their activities and update their company policies. No matter the type of the company (start-up or reputable long-standing one), or the number of employees and type of activity, all companies are responsible to take the necessary measures. On the other hand, every employee should be aware of his rights, as well as of his employer’s options.

We decided to put together the answers to the questions that we receive most frequently in our practice in order to help both the business and the employees in the fight with the consequences of the spread of COVID-19.

POSSIBLE CHANGES IN THE EMPLOYMENT PROCESS DURING THE EMERGENCY

Can the employer suspend the work process?

In connection with the declared state of emergency, according to Art. 120c from the Labor Code (LC), the employer is given the opportunity to issue an order suspending the work of the company, its parts, or individual employees (for the whole period or its parts) until the state of emergency is lifted. During the suspension, the employee has the right to receive his/her gross remuneration.

This order may be related to an order of an authority that is prohibiting the performance of specific types of activities and services. However, there is no obstacle to ordering the order solely on the declared state of emergency. 

 

What are the opportunities for paid and unpaid annual leave?

The employee CANNOT be obliged by the employer to take unpaid leave! This leave is granted only at the request of the employee.

The employer is obliged to allow the use of paid annual leave or unpaid leave in case of a declared state of emergency at the request of some of these categories of employees:

 – a pregnant employee or in an advanced stage of in vitro treatment

mother or adoptive parent of a child up to 12 years of age or a disabled child, regardless of age; 

-an employee who is a single father or adoptive parent of a child up to 12 years of age or a disabled child, regardless of age, etc.

– other hypotheses such as: a worker or employee who is under the age of 18, employee with permanent disability of 50 and more than 50 percent, worker or employee with protection upon dismissal;

According to the special Measures and Actions during State of Emergency Act (MADSE), the state of emergency is a sole condition for the application of this hypothesis, giving the right to intervene in the sphere of the employee and obliging him/her to use UP TO ONE-HALF of his/her paid annual leave (Art. 7, para 2).

On the contrary, in the event of suspension of the work of the company, part of the company or individual employees due to the state of emergency, the employer is given the opportunity to provide the employee, including those who have not obtained 8 months at the job, his/hers FULL PAID ANNUAL LEAVE without his consent.

Is the employer entitled to introduce part-time work without the consent of the employees?

In connection with the reduced working hours, in Art. 138 a of the Labor Code, a new para. 2 is created, allowing the employer to establish part-time work for its employees in cases of declared state of emergency. The part-time work may continue for the whole period the state of emergency for the whole company or for a separate unit. In this case, the remuneration due will be in proportion to the hours worked. 

In order to establish part-time work in the company, it is sufficient for the employer to issue an order informing the employees without concluding additional agreements with each of the employees.

The order explicitly states the grounds (Article 138a, paragraph 2 of the Labor Code, in relation to the state of emergency), the period (for the whole period of the state of emergency or for a part) and the part of the company for which part-time work will be introduced (for the whole enterprise or a separate unit), as well as the length of the work hours. It is important to note that part-time work cannot be unilaterally established solely for a particular employee, since the possibility is provided for the whole enterprise or for a separate part of it. The duration of working time may not be less than half the statutory one for the period of calculation of working time (the normal length of weekly working time is up to 40 hours, the normal working time during the day is up to 8 hours).

What are the obligations of the employer in relation to measures for health and safety conditions at work?

The employer is obliged, in view of the specificity of the activity carried out in the company, to take certain measures (included in the internal rules of the company) that he considers most appropriate, in order to achieve the most important objective currently facing each of us, namely the protection of health and life of people. 

Regarding the spread of COVID – 19 virus, additional measures have to be taken to protect the health and life of humans. The World Health Organization (WHO) and the Ministry of Labor and Social Policy (MLSP) have made recommendations to employers to take specific actions to limit, as far as possible, the risk of Coronavirus spread. 

Possible measures, depending on the nature of the work, may include, for example, flexible working hours, shift work, remote work, work from home, etc. 

What is working from home and remote work from a legal perspective? 

The first possibility is related to the fulfillment of work obligations with regards to the production of goods and/or the provision of services. This type of work can be done either at the home of the employee or on another premises outside the workplace of the employer. The employer shall provide the necessary means and materials (Article 107b of the Labor Code).

The second possibility is to organize work outside of the employer’s premises using information technology, aka remote work (Art. 107h of the Labor Code).

If the employment contract is not explicitly concluded for work outside the premises, each side has the right to propose to the other to change the specifics of the workplace. If both sides agree, the mutual consent shall be confirmed with an additional written agreement under Art. 119 LC. 

The provision of Art. 7 of the new law (MADSE), the decision for working at home or remote work depends entirely on the employer. Consent from the employee is not required. The only question will be if the work can objectively be done this way. In order to inform the employee, the employer or the appointing authority is obliged to issue an order specifying the terms and conditions for the assignment, performance, and control of the work.

In this case, only the place of work is changed, without changing the other conditions of the employment contract.

 How can employee–employer correspondence be handled in a state of emergency?

If the employee has been provided with an official e-mail at the start of employment, the employer may issue an explicit order that any correspondence regarding the work process and the labor relationship will be made via the official e-mail. The order shall be sent to the same emails with a receipt for confirmation.

If employees do not have official work e-mails and the same cannot be created, orders can be issued personally for each employee stating that he/she is obliged to provide e-mail for correspondence, following with another order that shall state that any correspondence regarding the work process and the labor relationship will be done electronically to the indicated emails. 

The manner of correspondence may be negotiated between the parties with a specific annex.

It is important to note that when it comes to serving a notice for termination of employment, it should be possible to establish receipt thereof by the employee and the date of receipt. As a rule, the notice is in writing and served against the signature and indicating the date of receipt. If another form of correspondence is agreed in the employment contract, for example by electronic means, there is no obstacle to using this method. Otherwise, it is advisable to send both via e-mail with a receipt and a letter with a return receipt, explicitly explaining what is being sent. The important thing is to be able to prove that it was received by the opposite party and the date.

 

TERMINATION OF LABOR RELATIONS AND COMPENSATIONS 

When are the Mass redundancies and what legal procedure shall be carried out?

Whether there is a massive dismissal will depend on: the grounds for the dismissal, the number of dismissals, the total number of the employees in the company, and the period during which such dismissals are made

According to item 9, para. 1 of the LC “Mass redundancies” are the dismissals on one or more grounds made at the discretion of the employer and for reasons unrelated to the particular employee, when the number of dismissals is:

(a) at least 10 in companies where the list of employees in the month preceding the mass dismissal is more than 20 and less than 100 employees for a period of 30 days;

 (b) at least 10 per cent of the number of employees in companies where the list of employees in the month preceding the mass dismissal is at least 100, but not more than 300, for a period of 30 days;

(c) at least 30 in companies where the list of employees in the month preceding the mass dismissal is at least 300 or more employees for a period of 30 days.

Where during the periods under letters “a” – “c” the employer has fired at least 5 employees, any subsequent termination of the employment relationship, carried out at the discretion of the employer for other reasons and for reasons unrelated to the particular employee, takes into account in determining the number of redundancies under letters “a” – “c”.

The grounds for dismissal referred to in the provision must meet two requirements:

– the dismissal of the relevant grounds is at the discretion of the employer, ie this should not be a reason in which the employer is obliged to terminate the employment contract. These include, for example, redundancies when closing an enterprise or part of it, cutting staff, reducing workload, or stopping work for more than 15 business days;

– the reason for dismissal is not related to the employee himself / herself – his behavior, his personal qualities.

In the case of mass layoffs, the notification procedure provided by law should be followed. Compliance with the procedure is not a condition for the lawfulness of the dismissal, but only for administrative liability. It should be emphasized that an employer who made a mass dismissal in the event of failure to comply with the requirement to notify the EA, is subject to a fine or a pecuniary sanction of BGN 200. for each fired employee.

What restrictions should be taken into account when terminating the employment contract by the employer?

According to Art. 329 of the Labor Code, in the event of the suspension of part of the enterprise, as well as in the redundancy in the state or reduction of the volume of work, the employer has the right of selection and may, in the interests of the production or the service, dismiss workers and employees whose positions are not redundant, for to keep those who are more qualified and work better. Although recruitment is intended as an opportunity for the employer, according to case law, it is compulsory when redundancies affect one or more multiple homogeneous positions, as well as when the volume of work is reduced, in which case the employer must decide which of all employees to fire.

The Labor Code also protects certain categories of employees with regards to their dismissal on specific grounds:

– a worker who is the mother of a child up to 3 years of age;

rehabilitated employees;

– an employee suffering from a disease specified in an ordinance of the Minister of Health;

– employees who had started taking his / her leave;

– an employee who is elected as a representative of the employees in accordance with Art. 7, para. 2 and Art. 7a of the LC for the duration of such quality;

– employee, who is elected as a representative of the workers for safety and health measures at work at the general meeting or from the assembly of proxies in accordance with Art. 6 from LC, for the duration of such quality;

– an employee who is a member of a special negotiating body, of a European Works Council or of a representative body in a European commercial or cooperative society, for the duration of his or her duties.

This protection requires the employer to obtain prior authorization from the Labor Inspectorate. Protection is provided in the event of termination of employment due to: the closure of part of the enterprise or redundancy; reducing workload; lack of quality of the employee for the effective performance of the work; change of the requirements for fulfillment of the position if the employee does not meet them; disciplinary dismissal

What compensation can the employee receive when the employment contract is terminated by the employer?

The compensations payable by the employer may differ and depend on some of the grounds for termination of employment. It is possible that the employment contract may regulate different types of benefits and amounts beyond the statutory ones. The main benefits provided in the LC are:

– Compensation for unused paid annual leave

– Compensation in the amount of the gross remuneration for non-compliance with the notice period, in cases where the employer terminated the employment before the expiry of the period of notice. In the event that the employee fails to comply with the notice period, he or she owes the employer compensation.

– Compensation, in the amount of gross remuneration, for staying unemployed, but for no more than 1 month – in cases where the employee after the termination of the employment contract has lost his job or started working at a lower salary.

Employment and business protection measures

In order to help employers in the sectors and economic sectors affected and to keep the employment of their employees, a legislative measure was adopted for compensation of enterprises the activity of which is suspended due to the declared state of emergency. The Decree adopted the conditions and procedure for payment of compensation.

Employers under any of the following hypotheses will be entitled to compensation:

Sums may be paid under § 6 of the Transitional and Final Provisions of the Emergency Measures and Actions Act, announced by a resolution of the National Assembly of March 13, 2020, as compensation to preserve the employment of employees in the enterprise to an employer who, by reason of the state of emergency has suspended the work of the enterprise or part of the enterprise.

The option under point A. applies to employers who claim compensation for employees insured for the economic activities.

An employer who, by virtue of his order issued pursuant to Art. 120c, para. 1 of the Labor Code, has suspended the work of the enterprise, part of the enterprise or individual employees or established part-time work under Art. 138a, para. 2 of the Labor Code. In these cases, employers will be entitled to compensation if they prove a decrease in sales revenue of at least 20% over the relevant period. For entities established before March 1, 2019 – by not less than 20% in the month preceding the month of submission of the application for payment of compensation, compared to the same month of the previous calendar year. 

For newly incorporated companies (after March 1, 2019) – by not less than 20% in the month preceding the month of submission of the application for payment of compensation, compared to the average income for January and February 2020.

The option under point B. does not apply to employers who operate in the following sectors of the Classification of Economic Activities (NACE.BG-2008). Sector A ‘Agriculture, forestry and fisheries’, Sector K’ Financial and insurance activities’, Sector O ‘Government’, Sector P ‘Education’, Sector Q ‘Human health and social work’, Sector T ‘Household activities as employers, undifferentiated activities of households for the production of goods and services for own consumption ‘, sector U’ Activities of extraterritorial organizations and services’.

Whatever reorganization the company chooses or undergoes, I strongly believe that business growth will continue to happen. So, we will all go through this temporary phase and the business will return to the market with even better ideas, a digitalized workflow, and more comprehensive overall policies.

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