The COVID-19 pandemic has revealed a certain degree of inflexibility and lack of vision with regard to employment regulations and rules, especially in Eastern Europe, where countries which were slower to adjust than their Western European counterparts. Unfortunately, Moldova was no exception, and Moldovan businesses have frequently found themselves in positions where there were no obvious legal and commercial options available to their specific situation during this pandemic.
For example, Moldovan legislation provided no real and effective means of allowing employers to change an employee’s work-place or to establish a remote working relationship with an employee without that employee’s written consent. This forced employers to choose between pushing the boundaries of the law and send employees to work from home, even though no legal guidelines existed, or terminating/suspending their employment agreements and, consequently, in many cases, effectively suspending their businesses.
In May, we and other leading businesses participated in a series of discussions with the government to modify and adjust the Moldovan Labor Code to address these problems and to help businesses during this time of need. While not all of our recommendations were accepted by the government, we believe that the amendments that were accepted and implemented have been helpful to those businesses that were able to effectively “work from home” – an arrangement which could not be implemented before the necessary legal framework was added.
For example, a new type of individual labor agreement was introduced: telecommuting. This effectively allowed a working relationship between the employee and the employer in which the employee can perform his/her tasks from home or any other location he or she chooses. In addition, the government created a framework allowing employers, during states of emergency, to temporarily change employees’ work places without amending the employment agreements (which would require the approval of the employee).
During our work advising the World Bank and the Moldovan State on updating the Labor Code, we gained valuable insight into the issues and problems with the current employment rules. With that in mind, we believe that several other amendments should be made to the Labor Code to help employment relationships during pandemics or economic crises. For instance:
Implementing the German “kurzarbeit” (adjusted to Moldovan realities). This would allow an employer to establish a reduced and flexible work schedule for all or some of its employees (without the specific consent of each employee) when the employer’s activity does not have regularity or consistency. Obviously, the eligibility criteria and the effects for the employer would have to be adjusted to the financial abilities of the Moldovan government (for example, a reduction of the percentage of the salary subsidized by the government), while still providing effective help to local businesses and protection to their employees.
Increasing the duration of “technical” unemployment (i.e., the temporary suspension of the employee by the employer, due to economic reasons, where the employee is still paid a percentage of his/her salary, but may be recalled at short notice). Currently, the maximum duration for technical unemployment is four months in a year. However, since we are now beginning our fourth month of the pandemic, this period is clearly too short. Given economics forecast with respect to the prolonged effects of Covid-19 on the global economy, four months would appear to not even cover the actual pandemic period, let alone to allow any time to “recover” from the economic effects.
Transfer. Allowing employers to transfer employees to other divisions within the same town and in the same position, without requiring the employees’ written consent.
Allow work at “0”. Offering employers the ability to pay only for the work actually performed for a maximum period of one month (but not less than the national minimum wage).
We are confident that, in the aftermath of the pandemic, the Moldovan government will be willing to take a more modern approach towards labor regulations as the challenges faced by employers proved detrimental not only to the business community, but to employees and governmental revenues as well. Allowing more flexibility for employers during times like these will help the business community to rebound quicker and, with a little luck, get us all back to normal.
By Diana Neagu, Partner, and Eduard Gurin, Associate, Vernon | David