Lockdown period and workers’ compensation

April has come to an end and it is the beginning of May, when Workers Day is celebrated worldwide. This week, we faced a dilemma of the most ideal topic to address, including  the consequences of COVID-19, particularly as it relates to payment of salaries or May Day celebration. After careful thoughts and suggestions from […]

April has come to an end and it is the beginning of May, when Workers Day is celebrated worldwide.

This week, we faced a dilemma of the most ideal topic to address, including  the consequences of COVID-19, particularly as it relates to payment of salaries or May Day celebration.

After careful thoughts and suggestions from some friends, we settled on the most pressing issue for workers, which is the possibility of celebrating Workers Day without salaries.  What a sad and frightening situation, particularly since some of us are fasting in the month of Ramadan.

As discussed extensively in previous articles, the coronavirus pandemic has necessitated lockdown of societies and shutdown of businesses.

Technology has come to our aid albeit with limited application.  Some categories of workers are able to work from home, but even that is with a significant reduction in productivity.  Some organisations have merged functions and adopted a ‘shift’ working schedule so as to offer skeletal services.  Few members of staff are asked to come to work for a week and take a break the next week.  Essentially, most staff work for half of the month.

Some organisations also adopted a compressed working scheme, that is, workers work for longer hours, say 12 to 18 hours for a particular period and take break the day after.  All these are in an effort, particularly in certain businesses or industries, to ensure some skeletal operations (partial shutdown).

Indeed, the above scenarios are for businesses that are in the middle position of the impact of the pandemic.  There are other extremes, such as businesses that have faced total shutdown, example, the airline industry, restaurants, hotels, road transport and or haulage, to mention a few.  Another extreme is businesses that are in full operation, such as hospitals, pharmaceuticals, factories producing personal protection equipment, to mention a few.

Businesses that have faced total shutdown have already started announcing that they would not pay workers during this period.  British Airways was the first to announce the suspension of payment of about 40,000  staff.  South African Airways announced that about 5,000 of its staff would not be paid during the lockdown period.  Airk Airways announced that their staff would be paid only about 20 per cent of their monthly emoluments during the lockdown period.  Some airlines in Nigeria informed their staff not to expect any payment during the lockdown period.

Organisations managing to observe partial shutdown have come up with varying degrees of new pay structure during the quarantine period.  Workers who are able to work effectively from home are paid between 75 to 100 per cent of their monthly salaries, depending on the level of contribution,  while other staff who are only able to work sub-optimally are paid between 30 to  50 percent of their salaries.

The magnitude of the impact of the pandemic to labour, and indeed workers, as well as businesses, is still being determined.  However, organisations that have been pragmatic enough to come up with some survival strategies should be commended.  One cannot blame those who announced their inability to pay workers salaries because the shutdown in businesses affected revenues and caused significant diminution in value of assets.

Primarks, a United Kingdom High Street retail shop selling cloths used to make average sales of over GBP650M (Six Hundred and Fifty Million Pounds) monthly but recorded zero sales last month (March 2020)!  If there are no sales there are no revenues (except where there may be an unusual transaction), and where there are no sales there would be no profits and cash flow to pay expenses such as workers salaries.

One may wish to advise workers, particularly unions, to adopt a pragmatic approach in dealing with this challenge.  Organisations that are able to pay something to staff should be commended.  Those that may not be in a position to pay anything to staff should also be appreciated (if they remain in operation) because while the pandemic is still revenging us, we have started witnessing bankruptcies.  Virgin Australia has filed for bankruptcy, which means the end of the road for many of its workers.  Except the airline is taken over by another firm, most, if not all staff, would lose their jobs.

In several countries, Nigeria inclusive, governments have announced certain palliatives for both businesses and individuals.  Reduction in interest payment on loans, extension of the repayment period for loans, moratorium on payment of government fees, surcharges etc, deferment of tax payment, as well as subsidises on payment of salaries to workers, are some of the incentives from governments to businesses.

The United Kingdom is offering a rebate or refund of 80 per cent of salaries of all workers who fulfil certain conditions, such as regular payment of Pay As You Earn tax.

In essence, companies are encouraged to pay their staff, even for the period of lockdown, and government would augment the bill by up to 80 per cent.  The assistance is to encourage businesses not to lay off workers.

In some countries, citizens who may have lost their jobs are offered unemployment benefits, some of whom get even more money from such welfare schemes than their normal salaries.

The Nigeria Employers Consultative Association (NECA), an umbrella body of about 4,000 members, have made recommendations to government to implement what is termed ‘Coronavirus Job Retention Scheme.’  The proposal, if accepted by government, would encourage companies not to lay off staff despite the decline in business due to COVID-19.  Government is requested to pay 60 per cent of salaries of workers for March, April and June, 2020.  There are other incentives suggested for implementation by government so as to aid businesses to survive.

The NECA believes that its proposal is similar to that of the United Kingdom, Denmark, France and South Africa, to mention a few.  Thus it has universal acceptance and Nigeria should key into the scheme.

It also believes that failure to implement this scheme could leave no option in the hands of business owners but to take some drastic measures, such as massive job losses and with attendant consequences.  The idea of the scheme is to save jobs, offer lifeline to businesses so as to ensure continuity.

It is indeed interesting and encouraging that Nigeria is considering the issue of job retention mechanism.  However, while this may be necessary and advisable, what happens to those operating in the informal sector?  Many of these Nigerians are surviving on daily wages and are not on the radar for any relief.  A comprehensive position that is holistic and all-encompassing is required for government consideration.

To workers, the challenges faced during the lockdown period should be an eye-opener.  It should serve as a wake-up call.  Individuals should begin to review their talents and skills.  We shall discuss this in a few weeks to come, on the need to unlock potentials during the lockdown period.  For now, we need to adjust to the ‘new normal’ and the reality of the situation.  Workers would have to adopt some level of austerity measures so as to cope with the sharp reduction in their pay.

We would send a belated Happy Workers Day celebrations next week, God willing.

“Recite: In the name of thy Lord who created man from a clot. Recite: And thy Lord is the Most Generous Who taught by the pen, taught man that which he knew not.”

Give me wisdom and knowledge, that I may lead this people, for who is able to govern this great people of yours?”