Labor Law & COVID-19 in Georgia: What You Need to Know

Today the world is facing a new challenge – to prevent the spread of the novel virus COVID -19 (the virus). The outbreak of the virus first occurred in Wuhan, China in 2019 and has spread worldwide since. On 11 March 2020, the World Health Organization declared the virus to be a pandemic.

The first confirmed case of the spread of the virus in Georgia was identified on 26 February 2020 and since then the number of patients has increased. This lead to adoption of several corresponding governmental regulations to prevent the spread of the virus. On 21 March 2020, the President of Georgia adopted Decree No. 1, which was later approved by the Parliament of Georgia and which declared a state of emergency on the whole territory of Georgia until 21 April 2020 (the State Emergency Decree).

The State Emergency Decree restricts the following rights guaranteed by the Constitution of Georgia: (i) human liberty; (ii) freedom of movement; (iii) right to personal and family privacy; (iv) right to fair administrative proceedings; (v) right to property; (vi) freedom of assembly; and (vii) freedom of enterprise. The State Emergency Decree stipulates that specific limitations to the above listed rights will be provided by the decree of the Government of Georgia (the Government). On 23 March 2020, the Government issued Ordinance N181 regarding Approval of Measures to be Taken for the Prevention of Spreading of the New COVID-19 (the Ordinance on COVID-19). Since its adoption, the Ordinance on COVID-19 has been amended multiple times to address the rapid changes and challenges of the existing situation.

The Government has recently strengthened the security measures and established the Operations Office to be able to better respond to the spread of the virus. The Operations Office will be authorized to establish exceptions to certain restrictions established by the Ordinance on COVID-19. The head of the Operations Office will be appointed and its regulations will be adopted by the Prime Minister of Georgia.

While the Government takes steps to prevent the spread of the virus, restrictive measures have put a strain on businesses, preventing them from being able to satisfy their obligations under contracts. This article aims to provide answers to frequently asked questions and provides general guidance on labour law issues around COVID-19 pandemic.

As the Government response to the outbreak evolves daily, we encourage employers to monitor guidance from the Government, the Ministry of Labour, Health and Social Affairs of Georgia (the Ministry of Health) and the Nation Centre for Disease Control and Public Health over the coming days and weeks.

Health and Safety Measures in the Workplace

The Ordinance on COVID-19 prohibits gathering of more than 3 people subject to certain exceptions, such as hospitals, prisons, offices of defence forces, public transport and conduct of infrastructural and construction works. These restrictions manifest the need for social distancing to help stop or slow down the spread of the virus. According to medical sources, deliberately increasing the physical space between people lessens the chances of catching COVID-19. There are various isolation and quarantine rules for those suspected of having been infected, while the businesses worldwide are encouraged to allow their employees to work from home instead of office.

Generally, Georgian law obliges every employer to ensure that health and safety of its employees as well as third parties that visit the workplace is protected from any damage or harm. Moreover, the employers are required to take measures that avoid or prevent any risks of harm or damage and identify and eliminate the source of such risks.

Moreover, based on recent regulations, all permitted economic activities shall be conducted in compliance with the recommendations adopted by the Ministry of Health. These recommendations are available on their website. Accordingly, businesses that do not fall under restrictions established by the Ordinance on COVID-19 and are unable to have the employees work from home, can continue operation if they adhere to the recommendations of the Ministry of Health.

In light of increased health and safety risks and the need to prevent the spread of the virus, the businesses that continue operations are required to adopt special protective measures in the workplace. These measures have to be set out in the emergency plan. The emergency plan has to consider all possible sources and degrees of risk to which the employees are exposed in their working environment. In addition to the emergency plan, the businesses are further required to adopt isolation procedures and instructions for employees in case one of the employees shows COVID-19 related symptoms.

Status of Employment Agreements

Given the most recent health and safety guidance from authorities, employers should instruct employees to work from home where possible. Where it is not possible to work from home, some employers may conclude or be mandatorily required to temporarily shut down entire facilities, in which case the primary concern will be the question of payment of salaries during the shut-down. In the event that COVID-19 requires a long term or potentially permanent closure of facilities or layoffs of workers, employers should ensure that relevant redundancy laws are consulted. Employers shall also be aware of their options in case the employee tests positive for the virus, needs to be quarantined or self-isolated, or needs to care for an ill family member. These points will be addressed below.

Can the employment agreement be suspended due to the virus?

In general, the Georgian law does not recognize the employer’s right to unilaterally suspend employment relationships with employees, including to request their employees to take an unpaid leave. Although the State Emergency Decree has been issued, the Government has not adopted any acts that would provide legislative basis for employers to suspend some or all employment agreements. Moreover, the State Emergency Decree does not create any additional grounds for termination of employment agreements, other than those which are set out in the Labour Code of Georgia (the Labour Code).

The Labor Code of Georgia provides a list of the grounds when the suspension of the employment agreement is permitted. The relevant ground for the suspension of work due to the current situation might be temporary disability of the employees if the employee (i) tests positive for the virus; (ii) is in mandatory or recommended self-isolation or quarantine; or (iii) has to care for a dependant.

The above grounds for employee’s absence have to be evidenced by a sick leave certificate or a certificate which has the equal power and are issued by the Ministry of Health at the request of the employee.

Pay Considerations

The employer is obliged to compensate the employee who submits the relevant sick leave certificate during his/her absence in accordance with the terms of the Order of the Ministry of Health on Temporary Disability Expertise and Issuance of Sick Leave Certificates.

Absent any contrary contractual provisions, employees who work from home will also be entitled to their normal pay. The same may apply to employees who are suspended by their employer on health and safety grounds. However, employees who refuse to attend work due to fears about the virus, and cannot work from home, are unlikely to be able to receive the sick leave certificate and may lose their right to be paid. Moreover, these employees may be found to be in breach of their employment obligations.

Unilateral Actions by Employers

Working from home may not be a suitable option for all work types. Some employers may have to temporarily shut down their operations due to health and safety concerns or due to Government requirements. In these cases the status of employment agreements becomes a key concern.

As noted, the Georgian law does not recognize the employer’s right to unilaterally suspend employment relationships with employees, including to request their employees to take a paid or unpaid leave (this is a right of the employee). Furthermore, an employer in Georgia is not entitled to impose reduced hours and pay or request them to work in staggering and split shifts without the agreement of those employees who are affected. Any of these terms have to be agreed with employees and relevant amendments have to be made to a contract of employment or they may be set out in an ad hoc agreement.

Can the employment agreement be terminated due to the virus?

The Labor Code of Georgia provides exhaustive grounds for the termination of the employment agreement. The current circumstances could amount to “an objective occasion when the termination of the employment agreement is justified” or the employment agreement may be terminated “due to economic conditions … mandating the reduction of the workforce”. In both cases, the employer is obliged to notify employees at least three (3) calendar days prior to termination, to pay the employees at least two months’ salary as compensation and compensate them for unused vacation. In pursuing any of the above options, the relevant termination grounds shall be assessed on a case by case basis and the requirements of the Georgian law on elimination of discrimination shall be strictly observed. The employers in Georgia shall further be conscious of Labour Code requirements involving massive layoffs, i.e. termination of more than 100 (one hundred) employees within a span of 15 (fifteen) calendar days.

Termination of an employment agreement is a last resort and if there is any other possible less restrictive way to balance the interests of both parties the employer shall not terminate the contract.

Measures Taken by Various Countries with regard to the Virus

Ukraine

The Ukrainian government declared a quarantine throughout the whole country effective from 12 March to 3 April 2020. The quarantine affected certain aspects of the employment law as the Ukrainian Government introduced the following regulations:

• Generally, an employer does not have the right to require the employee to work from home unless the employee accepts such condition. The new regulations grant the employer such right. However, remote work shall not result in decrease of the employee’s salary.
• In general an employer may grant an employee 15 calendar days of unpaid leave annually. However, due to quarantine the employer is obliged to grant an unpaid leave to a parent or custodian of a child under age of 14. The unpaid leave can exceed 15 calendar days. The employer shall not force employees to take an unpaid leave.
• If an employer closes the business temporarily for commercial reasons it is obliged to continue paying at least two-thirds of the salaries to each employee.
• Unless otherwise agreed with an employer, an employee shall be present at work. Otherwise, the employer has a right to terminate the employment agreement.
• If an employer wants to suspend the work of an employee who is suspected to have the virus it can do so either by the arrangement to work remotely or as paid sick leave if the sickness is confirmed.

Latvia

In Latvia certain regulations were implemented relating to the virus. Rules that apply to the employment are the following:

• An employee can address the relevant authority to issue the sick leave certificate if he/she has symptoms of the virus, or had a contact with the COVID-19 infected person and was identified as a contact person, or he/she had to take care of a sick child or if his/her the child had a contact with the COVID-19 infected person.
• An employer can support but cannot force the employees to use unpaid leave.
• An employer is not allowed to reduce the salaries unilaterally.
• If an employer has to close the business and is no longer able to provide work for employees it is considered that the employees fulfilled their obligations and the employer has to disburse the remuneration fully.
• If the situation in the company cannot be improved and an employer is no longer able to provide work for employees the employment contract can be terminated due to the economic reasons.
• The employment contract cannot be terminated during the period of (i) leave; (ii) temporary incapacity and (iii) while work cannot be performed due to other justifiable reasons.
• The Latvian Government issued recommendation for employers to let the employees work remotely. Remote work shall be reimbursed on a regular basis.

Bulgaria

On 13 March 2020, the state of emergency was declared in Bulgaria. On 24 March 2020, new law relating to the COVID-19 was implemented by the Parliament of Bulgaria that grants additional rights to employers. Particularly, these rights are:

• Employers have a right to order distant work unilaterally while previously such decision had to be agreed with the employees.
• Employers are entitled to require the employees to take ½ of the paid leave that is 10 days.
  • Employers are not allowed to reduce salaries unilaterally. However, employers are entitled to reduce the working hours and decrease the amount of salaries proportionally.

Lithuania 

The Parliament of the Republic of Lithuania adopted some measures to aid the employers. Namely, such measures that were imposed are the following:

• Employers have a right to declare a downtime. If a downtime is announced due to the emergency or quarantine in the country an employee may not be required to be present at the workplace; salaries paid to the employees cannot be lower than the minimum monthly salary in Lithuania; working days or hours per day can be reduced.
• Employers can require employees to work from home. If employee does not obey employer’s request he/she can be removed from the office without payment of salary.

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In light of the present circumstances amid COVID-19 it is strongly advisable that the arising employment issues be resolved amicably. The respective employment mechanisms under the legal framework discussed above shall be implemented with great diligence. It is highly recommended to apply the least restrictive measures with regards to the employees and that these measures be consulted with the employees prior to their application. Please note, that the termination of employment should be the last resort to be exercised if the parties fail to reach an amicable solution.

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Note: this article does not constitute legal advice. You are responsible for consulting with your own professional legal advisors concerning specific circumstances for your business.

MG Law Office, through the contribution of partners Archil Giorgadze and Nicola Mariani, joined by senior associates Ana Kochiashvili, Tamar Jikia, associate Mariam Kalandadze, Junior Associate Ana Jikia and Paralegal Lasha Machavariani is partnering with Georgia Today on a regular section of the paper which will provide updated information regarding significant legal changes and developments in Georgia. In particular, we will highlight significant issues which may impact businesses operating in Georgia.

MG Law is the first full-service law firm in Georgia to be founded by international partners. The firm advises a diverse group of Georgian and foreign companies, financial institutions, investment funds, governments and public enterprises.

Among many other areas, the firm primarily focus on the following sectors: Banking & Finance, Capital Markets, Arbitration & Litigation, Labour & Employment, Infrastructure and Project Finance, Energy Law, Real Estate, Tax and Customs, Investment Law, Corporate Law, and Cryptocurrency & Blockchain.

For more information, please visit www.mglaw.ge or contact Archil Giorgadze at archil.giorgadze@mglaw.ge and Nicola Mariani at Nicola.mariani@mglaw.ge

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