With the spread of novel coronavirus, businesses are taking unprecedented measures in order to stay operational and to protect their employees. Wendy Wong and Fiona Loughrey explain the legal challenges posed by working in the shadow of an outbreak

With the number of confirmed COVID-19/novel coronavirus cases in Hong Kong and elsewhere still rising, many employers, often prompted by the government, have taken measures to prevent the spread of the virus. These include implementing work from home arrangements, substituting conference calls for face-to-face business meetings, discouraging use of public transport at peak times and restricting business travel.

In addition, as the outbreak will have an economic impact, steps may need to be taken by some businesses to reduce operational costs.

There are several issues that employers may be contemplating due to challenges posed by the outbreak, and certain related legal considerations. Although the authors address these matters as they pertain to Hong Kong law, there are similar concerns in jurisdictions around the region that are worth considering with respect to the laws in those jurisdictions.

Working from home

Where employers have adopted the Hong Kong government’s recommendation to allow their employees to work from home, in practice, employees appear generally to be happy to do so. In some cases, however, it may be necessary for employers to request certain employees to attend the workplace to perform duties that cannot be done remotely.

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Wendy Wong

Employers should note their obligations to ensure the health and safety of all employees at work as far as is reasonably practicable. Precautions should therefore be taken to safeguard the health and safety of any employees who have to visit the workplace or work on-site, such as making face masks and hand sanitisers available (if the employer can access them) and maintaining good indoor ventilation.

Temperature screening can be considered, and information relating to health and travel history can be requested before allowing entry to the workplace, subject to the relevant requirements under the Personal (Data) Privacy Ordinance, including the applicable notification requirement.

In a few cases, an employee may be unwilling to work from home and insist on going into the office. The employer should try to understand the reason, and explore other measures that can be taken to encourage working remotely. Particularly if special circumstances exist, such that it is necessary for the employer to impose the requirement to work from home as a means to protect the health and safety of other employees and the general public – for example, where the employee lives in a building where a COVID-19 case was diagnosed, or has recently travelled to high-risk areas – we consider it is likely to highly likely that the employer would be viewed by a court as having a legal right to direct an employee to work from home, and to take disciplinary action for refusal.

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Fiona Loughrey

Performance monitoring. Implementing remote work arrangements does make workforce monitoring and management more difficult; employee productivity may be impacted. To address this, it is important for employers to establish clearly, at the outset, what their expectations are in relation to remote working, such as when employees are expected to be online, and whether any flexibility is to be introduced.

Employees should also be provided with appropriate equipment and support to allow them to perform their duties effectively and efficiently while working remotely, such as laptops, mobile phones and access to company systems and applications. Active steps can also be taken by managers to monitor, such as scheduling regular catch-up sessions, as well as setting clear deadlines. Software that can help with time tracking and project management can also be used.

If there is evidence of an employee not performing their duties without reasonable justification, disciplinary action can be taken as per the terms of any applicable policies. Dismissal may be considered, and the general rule is that an employer can dismiss at any time by giving notice or payment in lieu, or by summary dismissal in cases of extreme and blatant misconduct.

Injury sustained while working from home. It is possible that employees may get injured in the course of working from home. They will be entitled to compensation under the Employees’ Compensation Ordinance (ECO) if the injury is the result of an accident arising out of, and in the course of, employment. This, in broad terms, requires the accident to be incidental to the employee’s contract of service and employment.

This is a question of fact, and requires a close examination of the relevant facts and circumstances, such as when the accident took place, where it happened, and what the employee was doing when it occurred. There are no relevant Hong Kong decisions on this to the knowledge of the authors, but two Australian Administrative Appeals Tribunal cases illustrate the meaning of “arising out of” and “in the course of employment” in the context of remote working.

(1) Hargreaves v Telstra Corporation (2011): The employee fell down some stairs twice while working from home. With respect to one of the falls, which happened when the employee left her workstation to go downstairs to seek relief from coughing arising from a respiratory condition, the tribunal concluded that it arose out of employment by reason that: (i) the employee intended to continue working after fetching her medicine; and (ii) her absence from her workstation for necessities of nature was similar to a washroom or meal break.

(2) Demasi v Comcare (Compensation) (2016): The employee broke her hip during a run, which she took on a break at 9.30am while working from home. The relevant legislation states that an injury would be considered as arising out of, or in the course of, employment if it occurs while the employee was temporarily absent from the place of work during an “ordinary recess” in that employment. The tribunal found that going for a run at a random time of the day did not constitute being absent during an ordinary recess in employment, but suggested that the position might have been different had she gone for a run during a normal lunch break.

In addition, to ensure compliance with the Occupational Safety and Health Ordinance, employers should take reasonable steps to address any concerns raised by employees regarding the suitability of their homes for remote working, and any other associated health and safety issues.

Business travel

It is uncertain how long the outbreak will continue, and there may be instances where a business will need an employee to undertake business travel before the novel coronavirus subsides. Employees have a common law duty to obey the employer’s lawful order, but an order would not be lawful if it presented a serious risk not contemplated at the time the employment contract was entered into.

For example, in the UK case of Walmesey v Udec Refrigeration (1972), the employee refused to go to Wexford in Ireland, an area for which he was responsible pursuant to his employment contract, by reason of his belief that it was a terrorist (Irish Republican Army) stronghold.

Although the tribunal considered the employee’s belief unsubstantiated and held the order to be lawful, it commented that the position might have been different if the employee had been required to go to Belfast, where it would be sufficiently dangerous given the unrest at that time. This decision suggests that, in the present circumstances, an employee could lawfully refuse a direction to travel to a high-risk area such as Hubei province.

With regard to necessary business trips outside mainland China, but within Asia, the employer should, the authors suggest, always consider whether these can be postponed, taking into account factors such as employee safety, the possibility of disruptions due to flight cancellations and/or delays, as well as travel restrictions being imposed on travellers from Hong Kong or elsewhere.

Measures should be taken to ensure the health and safety of employees who undertake business trips during the outbreak, such as the provision of face masks and reimbursement of taxi and/or car rental and fuel expenses (which minimises the need for employees to use public transport).

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Mandatory medical quarantine due to business travel. An employee might need to be placed under mandatory medical quarantine after undertaking business travel requested or approved by the employer. Unless the employee is confirmed as being infected with COVID-19, or unfit for work due to other sickness or injury, he/she would not be eligible for statutory paid sick leave under the Employment Ordinance (EO), and the period during which an employee is subject to quarantine would not qualify as such.

If the employee is able to work remotely while subject to quarantine, remuneration should of course continue to be paid in accordance with the terms of employment. On the other hand, if the employee is unable to work, in theory, the employer may take the position that it is not obliged to pay wages during such period, as the employee is not in a position to perform duties.

However – and although it is too early for there to be any judicial interpretation of this position – the authors consider that it would be risky for the employer to stop paying if the inability to work is not caused by any fault on the employee’s part, and is instead attributable to the employer’s direction. So far, the Labour Department has encouraged employers to make flexible arrangements to deal with these circumstances, including considering granting paid leave.

Infection of virus from business travel. In the unfortunate event that an employee contracts the virus from business-related travel, he/she may be eligible for paid sick leave in accordance with the EO (and/or sick leave pursuant to their terms of employment).

Under the EO, employees employed under a continuous contract are entitled to sickness allowance if: (1) the sick leave is supported by an appropriate medical certificate, and is for not less than four consecutive days; and (2) the employee has accumulated sufficient paid sickness days. The Hong Kong Labour Department has urged employers to consider granting employees paid sick leave even if they have not accumulated sufficient paid sickness days, or have used them up. This is not binding, but is indicative of a pro-employee approach.

As an alternative, the employee may be eligible to compensation under the ECO. Although severe respiratory disease associated with a novel infectious agent is not a prescribed occupational disease under the ECO, the employee may still claim compensation pursuant to the ECO for a disease if it is a personal injury by accident that arises out of, and in the course of, employment. Taking each element in turn:

(1) Injury by accident: Whether there has been an “injury by accident” is a question of fact, and the employee would need to establish that there has been an accident that is distinct from an injury, with the accident being at least a contributory cause and the injury being the effect (Sit Wing Yi Sibly v Berton Industrial (2013)). The definition of “accident” can in practice be construed very widely, although it can be difficult to pinpoint the relevant injury and accident. All relevant facts and circumstances need to be closely examined when determining whether compensation is payable under the ECO.

(2) Arises out of, and in the course of, employment: As mentioned under the above-mentioned subheading, “Injury sustained while working from home”, this is also a question of fact. It is noteworthy that an accident resulting in injury that happens while an employee is, with the express or implied permission of the employer, travelling by any means of transport for the purposes of, and in connection with, employment is expressly deemed to “arise out of and in the course of employment” under the ECO.

In any event, upon becoming aware that an employee who has recently been or is on business travel is infected with COVID-19 , the employer should notify the Commissioner for Labour in accordance with the ECO, given that the notification obligation applies irrespective of whether the accident gives rise to any liability to pay compensation. It will also be necessary to notify the employer’s insurer.

Cost reduction measures

In the midst of the economic downturn due to the virus outbreak, some employers are starting to look for ways to reduce operational costs. Measures that can be taken may include:

  • Requesting employees, particularly those who cannot perform duties remotely, to utilise paid annual leave during times when they are directed not to attend the workplace;
  • Placing employees on unpaid leave;
  • Reducing employees’ remuneration; and/or
  • Effecting a redundancy.

Annual leave. An employer has the right to determine the times at which statutory annual leave – which ranges from seven to 14 days, depending on length of service – is granted, subject to consultation with employees and confirmation of the arrangement by written notice of at least 14 days (or any agreed shorter period).

The right of employers to unilaterally appoint the days on which contractual annual leave – i.e., those granted in addition to statutory annual leave – is granted would depend on the terms of employment; past practice may also be relevant. In case of doubt, the legally safest approach would of course be to seek employee consent to take annual leave on the designated days.

Unpaid leave. The EO does not provide employers with the right to place employees on unpaid leave. The legal position is that, if employees are ready and willing to work, they must continue to be paid in accordance with the terms of employment, even if no work is provided by the employer. Accordingly, the implementation of any unpaid leave arrangement is subject to employee agreement.

Where employees have agreed to take unpaid leave, statutory rights and obligations continue to apply during the unpaid leave period, including the employer’s duty to make payment with respect to statutory holidays to eligible employees. In relation to contractual rights and obligations – such as the accrual of contractual annual leave – these are determined in accordance with the applicable terms of employment, or, in the absence of such terms, subject to the employer’s determination. For clarity and certainty, employers are encouraged to clearly communicate with employees the parties’ rights and obligations during the unpaid leave period.

Reduction of remuneration. Generally speaking, any variation of contractual terms that is detrimental to employees would require their acceptance. Certainly, employees must agree (expressly or impliedly) to any proposed reduction in contractual remuneration, such as base salary and any contractual commissions, allowances and bonuses.

On the other hand, the employer may exercise its discretion to adjust any discretionary remuneration, subject to any applicable terms in the employment contract and/or the relevant policy or plan, bearing in mind: (i) its obligation to exercise discretion reasonably; and (ii) that when determining whether a payment is discretionary in nature, the label will not be conclusive (for example, a bonus labelled as discretionary can still be argued as contractual in nature if there is a custom or practice of paying consistent and regular bonuses over time).

Redundancy. It is crucial that the selection criteria applied must not be, or be perceived to be, discriminatory on the ground of any protected characteristics, being sex, pregnancy, disability, marital status, family status and race. Notably, an individual who has, had, or is suspected of having, COVID-19 is subject to protection under the Disability Discrimination Ordinance, and this protection extends to the associates – such as spouse or parents – of such a person. It is therefore important that, during the selection process, an employer does not take any actual, potential or suspected exposure to the novel coronavirus, by an employee or their family members or close associates, into account.

covidThere are also limited statutory prohibitions on termination, which apply to, among others, employees who have served notice of pregnancy, who are on statutory sick leave, or who have a pending claim under the ECO. Any cases giving rise to high risk of legal exposure should be handled with care, and a mutually agreed cessation of employment may have to be considered.

Finally, employees who are made redundant must of course be paid all termination entitlements in accordance with their terms of employment and the EO, including severance payment, if applicable.

While employers consider legally viable solutions to tackle the operational difficulties arising from the coronavirus outbreak, they should be mindful that the Hong Kong Government has urged them to be compassionate, give due consideration to individual employees’ circumstances, and make flexible work arrangements. A fair balance needs to be struck between the legitimate interests of employers and employees in order to achieve the best possible outcome for all parties.

Wendy Wong is a managing associate in and Fiona Loughrey is a partner in and the head of Simmons & Simmons’ Hong Kong labour and employment practice