Kym: So, before starting any negotiation with any employees the first consideration is to understand what type of contract, employees have. There are different options in Europe, as there are indeed worldwide. So, first one will be temporary contracts. That would be your either very short term contracts, whether that is on a rolling ongoing basis or whether that would be a zero-hours contract or in many jobs depending on the countries, those sorts of employees will still have rights, even though there is a defined, perhaps end-date to those contracts, which does lead more neatly onto fixed-term employees. Fixed-term employees in Europe, are people who have been employed for a set period of time, and in order to not renew their contract, in many cases, you do have to get them, with notice that their contract will not be renewed. In the best-case scenario on a fixed-term contract, you are able to terminate the contract early it depends on how it has been drafted.
In some countries, if a fixed-term contract has been offered, then, to a large extent an employer is obligated to pay to the end of that contract. So, that situation can be difficult. There are certain countries where I have always recommended to employ people on fixed-term contracts just because the nature of the employment law in that country. Any sort of indefinite contracts so they have different names whether you call it an indefinite contract, a permanent contract. Certain countries have different acronyms that they use. If you are unable to continue to employ them, due to the situation of COVID, then it will essentially either come down to a redundancy situation following that due process a furlough effect is permitted in that country or in mutual termination. They are very much the only options. The situation with COVID, as I said earlier, that contract even though it is an employment contract does still remain intact. And if an employer is unable to pay salary or is unable to meet their minimum obligations and does not go through a mutual termination process, then, ultimately it would end up with legal action being taken against you.
It is a very stressful time, and certainly, from a client-side and also from an employee side people are obviously very panicked and very upset. Certainly, as everyone listening to this webcast will appreciate this has essentially been everything that I have been looking at for the last few weeks, and it is very hard to work through with clients and employees who are going where is my next money coming from, and that comes from both situations but from just the legal perspective that contract is still there, it does still have to be paid. And this goes back to the delayed side of things that we were talking about previously. Any of the changes that you made to contracts, then regardless of the duration of that contract, they still need to be agreed. Yes, it would be so much easier to be able to dismiss or layoff your temporary workers depending on the country, but if someone is in possession of a contract that has no end-date, or has a fixed end-date that is however many months in the future, then that modification has to be agreed, but it would be very much in a country by country basis as to whether you can amend that contract.
And again this goes back to the fact that we were hoping that this will be over shortly so I would always urge caution with any sort of action with this because, do you want to jump potentially then create a worse problem, later down the line.
Do you want to add more there Andrew?
Andrew: A couple of points in there well said about obviously stressful times.
And a lot of concerned employees out there when you are working in remote environments, which do not facilitate that communication and understanding what is happening in the headquarters and what the discussions are. It does create a lot of stress in terms of what is going on.
And there are two things here one is that obviously the employment agreement is typical with your local legal entity. That legal entity has liability in the country that it is incorporated in and those employment agreements do stand against that legal entity, so as Kym said, those rights that exist even if the company is in a situation where it does not have the cash flow, that the obligations are still going to accrue to. The legal entity in that country and allow action against that legal entity in that country. So for the one perspective obviously the legal entity is providing some legal distance from the corporate headquarters because it is in the country but your ability to do business, and those liabilities and those court cases are going to continue as you move forward. The other thing to remember in these circumstances if you are a company that has taken advantage of you employing people through professional employment organizations or employer records. Then the consideration there is obviously the employer, employees and those countries that are not your employees. They are the employees of the PEO or the employer of record they have entered into the employment agreements, the operational circumstances and personal circumstances, affecting those employees are not considered to be aligned with your business because they are employed by the PEO, and it is up to the PEO to take action if anything with the employees but the justification in terms of things like short time work and temporary layoffs is a lot harder because they are not specifically associated with your business.
The PEO has to justify it and you do have to consider in the PEO’s case that they again have to take action, whether it is individual or collectively treating their workforce the same. So you may have employees with that PEO and have circumstances which you are trying to put into effect in terms of, you know, the overall circumstances of your corporation. However, it is the PEO that you have to work with taking actions because they are not sitting in the circumstances, have been able to provide justification as you do.
Do you have any more comments on a PEO perspective Kym?
Kym: Yes, the main one was a PEO is, as Andrew said, that relationship does become very intertwined. Because you have an employee who is working for a client, but is employed by a PEO, and my main piece of guidance there is, you absolutely have to work with the PEO provider for this because there will be a number of contracts. It is not just the contract you know that you signed with the PEO it is the contract with the employee. And whilst clients would want to treat any employees on a PEO in the same way as the payroll employees, by issuing letters and, including them in communications, it is very difficult to do so because ultimately they are not an employee of your entity. Also, from a PEO perspective, as Andrew mentioned, they are treating employees on PEO fairly and equitably is quite difficult when you have a number of clients who perhaps are employed by the same entity, and the repercussions of one client, saying, this is what we want to do, and taking action then immediately afterwards going okay we’ve done this or another client saying that it is very hard. Anyone who has any employees on a PEO who you are considering the fact that you may not be able to pay or you may need to make them redundant or you are wishing to consider to furlough them, so that you are treating them the same as you know your payroll employees. You have to work the PEO provider because ultimately, at best, you will be able to resolve it and an employee would be able to be valued or would move on or in worst case scenarios then there could be, serious legal ramifications not just for the end client, the PEO but also the employee.
Andrew: And it is important to remember that it is mutual discussion that the PEO has to have with the employee, as opposed to the company and the company needs to be very careful in terms of any communications because they are employees of the PEO. And they look to the PEO to come to the mutual agreements and to have the discussions the employee may understand that there are economic problems that the company’s experiencing.
However, in terms of the legal relationship with the PEO, and that is what governs, it will cause issues to the PEO if there is any direct communications further again of varying the terms and conditions of employment, and how that may be represented by the employee. So to some extent the legal liabilities going to those with the PEO. But usually the indemnification agreements between the PEO and the client, as it relates to how they have employed the person. So, again, be careful in terms of how you do that.