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Legal effects of the coronavirus

Employment Law Corona

The novel coronavirus or 2019-nCoV brings with it security policy measures for the time being (1). However, it also entails numerous potential and actual legal risks. Two of these are the focus of national and international attention and will therefore be examined below: (2) Personnel issues and (3) effects on supply chains.

Security masures

To date, no case of coronavirus has been confirmed in Switzerland, so that the direct security policy risk can currently be classified as relatively low. However, the Federal Office of Public Health states that the Confederation, the cantons and the health care system are prepared should any cases occur. There are no travel restrictions as yet, but travel to Hubei province (China) is not recommended. In addition, the Federal Office of Public Health requires persons who have recently been in China to have a security clearance. In contrast to the federal government, however, there is unrest in Ticino because there are 150 confirmed cases of coronavirus in northern Italy and 70,000 cross-border commuters commute to Italy daily. In Italy, schools and universities will remain closed this week as a precautionary measure; in Milan, soccer matches have been cancelled. In contrast, in Ticino, only emergency rooms in hospitals are planned to quarantine patients with flu-like symptoms. Meanwhile, there is no need to close schools, as the carnival holidays have started in Ticino anyway.

If one looks beyond Swiss federal and cantonal policy, the declarations of the World Health Organization, of which Switzerland is a founding member and whose headquarters are in Geneva, Switzerland, are particularly relevant. According to a statement by the World Health Organization at the end of January, companies should take special precautions, especially to protect their employees.

Personnel issues
Obligations of the employer:

  • Duty of care: According to the Swiss Code of Obligations and Labour Law, employers must protect their employees from all health risks in the workplace and minimize the risks. If the employer does not comply with this obligation, he can be held liable for any damage caused to the employee. To ensure the safety of their employees in connection with the corona virus, employers should take appropriate measures to reduce the risk of infection. These may include company-wide guidelines to prevent the spread of infection or the provision of hygiene products such as hand disinfectants. Health and safety should also be a top priority for employers on business trips. For example, major banks have instructed their employees in China to follow the recommendations of the World Health Organization, among other things. At UBS, “homecomers” are encouraged to initially work from home for two weeks. If it is still necessary to send employees to work in China, employers should first assess the health status of employees. In particular, however, they should avoid travel if possible, especially if they are known to suffer from underlying chronic health conditions such as chronic lung diseases (including asthma) and cardiovascular diseases. In addition, employers should inform and train workers on infection prevention practices, such as personal hygiene and health surveillance, and provide them with equipment such as masks and personal disinfectants. They should also ensure that temperature measurements are taken in the workplace in China and ensure that the work area is properly cleaned, disinfected and ventilated.
  • Privacy: Preventive measures taken may violate employees’ right to privacy. Employers should therefore always weigh possible preventive measures against the legitimate privacy interests of employees and choose the appropriate, necessary and reasonable measure. For example, it may be an appropriate measure to subject employees to mandatory temperature controls when the risk of infection justifies it. However, the recording of temperature and other health data of an employee is in principle an intrusion into their right to privacy and may only be carried out in very exceptional cases to protect employees.
  • Duty to provide work: Employees returning to Switzerland may be officially quarantined in a medical facility or asked to isolate themselves for various reasons. If employees are sent into quarantine, i.e. asked to work from home, it must be noted that employees have a right to work. Whether and under what conditions a company can force employees to take leave therefore depends on the type of work, the level of risk involved and the applicable employment contract.
  • Obligation to pay wages: If employees stay away from work due to illness or quarantine, companies can consider various options for the legal structuring of this absence from work. These may include treatment as paid sick leave, unpaid leave or any other mutually agreed structuring that does not violate applicable law. If schools remain closed, parents may need to organise childcare at short notice. Whether or not this is paid for by the employer depends on the individual employment contract.

Obligations of the employee:

  • Duty to work during quarantine: Quarantine is legally considered by the employer’s control room to be equivalent to sick leave, including all legal protections and rights granted to the employee. In fact, quarantine is only ordered if it is absolutely necessary to fight disease outbreaks and prevent epidemics. For the employee, quarantine is a legal obligation; he/she is liable to prosecution if he/she does not comply with it. The employee then has the right (and the legal duty) to stay away from work. In this case, the employee does not have to make up for the work. In the case of self quarantine, i.e. quarantine prescribed by the employer, employees returning from China are asked to stay at home for 14 days to minimize contact with other people. During this time, employees may work at home, but should not leave their home or assigned location. They are also not allowed to use public transportation or leave the country.
  • Obligation to work overtime: In the case of the coronavirus, companies that manufacture medical equipment such as masks and disinfectants are faced with a sudden and drastic increase in demand. As a result, certain employees may have to work longer hours than contractually agreed. In Switzerland, they are obliged to work overtime if the overtime is necessary and reasonable, if it is not physically and mentally excessive and if the working and resting hours are observed. Overtime is paid at a premium of 25%.

supply chain

The following scenario shows how far-reaching and complex the consequences of international entry restrictions can be for companies. A Swiss company sends an employee to China to perform the necessary maintenance at a production facility. The same employee is then required by a customer in the USA to repair a production robot. Although the trip to China was not to a heavily affected region, the employee is denied entry to the USA, so that he cannot repair the robot, resulting in a financial loss for the US customer. How can companies avoid such supply bottlenecks? The first step should always include prevention. Only then should contracts be interpreted and, in an emergency, return to the dispositive law.

The first step – prevention: The first step is to examine your business closely and identify risks in the supply chain that could cause disruptions. Companies that operate in areas with strict deadlines or a high dependency on international work, such as construction companies, will be exposed to greater risk. Even simple preparation can make a big difference in avoiding problems, such as organizing a change of supplier. Open communication is also very important in the case of coronavirus risk. The dialogue should also cover the preventive measures already taken or still to be taken to ensure the safety of all employees working in the risk areas.

The second step is to examine whether the companies must fulfil their contractual obligations towards their suppliers or customers or whether they might be liable for damages.

  • Interpretation of contracts: An invocable contractual clause could be force majeure. These standard contractual clauses allow for the suspension or even performance of mutual contractual obligations due to the occurrence of a disruptive event beyond the control of the party concerned and for which the party could not reasonably have been prepared. Whether a party can successfully invoke force majeure in connection with the coronavirus outbreak depends crucially on the wording of the individual clause. The legal consequences can also raise difficult questions for the parties. Is a travel warning from the Chinese government sufficient reason to invoke force majeure if the supplier refuses to deliver? Swiss courts are generally very restrictive when it comes to affirming force majeure, as such cases should remain exceptional cases in business operations. Although the Chinese authorities have begun to issue force majeure certificates, such certificates are not binding on the court. Whether force majeure can be invoked does not only depend on the event itself; perhaps even more important is the actual impact of the event on the complaining party. In particular, it has a duty to mitigate damages, i.e. it must have made every effort to meet its obligations, for example by seeking suitable alternative buyers for perishable goods.
  • Dispositive legal law: If a contract does not contain a corresponding force majeure clause or if this does not cover the situation, the applicable law is decisive, although in some countries either a specific form of force majeure or possible alternatives are provided for, for example the “force majeur” in French law or the “impediment” provisions in the Vienna Sales Convention. In Switzerland, apart from the Vienna Sales Convention, there is no such regulation in written law; however, in exceptional cases, the Federal Court recognises the so-called “clausula rebus sic stantibus” (unforeseen changes) as well as contractual agreements, which the parties judge to be force majeur.

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