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18
March 2020

Covid-19 – Practical Tips from Penteris – Employment and Contracts

Employment

Working from Home

On 2 March 2020, Poland’s Parliament adopted the (new) Act on Specific Measures related to Preventing and Combating Covid-19, other Contagious Diseases and Crisis Situations Caused thereby, which allows employers to order employees to work from home. The employer should follow the rules governing so-called telework (Labour Code: ‘work performed regularly outside the employment establishment using electronic communication means, e.g. using computers’).

If an employer requires employees to work from home, but is not able to provide appropriate and sufficient equipment for teleworking, employees are entitled to full remuneration.

Labour Costs

Despite the current economic situation, employers are not allowed to place employees on unpaid leave or decrease their remuneration. Please note for businesses that face complete stoppages, remuneration received by employees during the stoppage period cannot be lower than the employee’s base rate salary (or 60% of the salary if the base rate is not specified). A decrease in remuneration cannot result in payment of remuneration lower than the statutory minimum remuneration for work.

Employees Unable to Frequent Work due to Covid-19

Employees infected or placed in quarantine by the Public Health Inspectorate are treated as employees on sick leave and receive remuneration.

For employees who are unable to come to work due to a lack of means of transport (in particular those unable to return to Poland from overseas), the employer is generally not obliged to pay their remuneration.

Reacting to Covid-19 Infections

There is no legal requirement to close an office in case of suspected or confirmed cases of a Covid-19 infection. Obligations to adopt the necessary actions (e.g. quarantine) may be imposed on the employer and/or affected employees by the Public Health Inspectorate. As a result of the general duty to protect the health of employees (if there is a confirmed case of infection), the employer should adopt proportionate preventive measures, such as ordering affected employees to work from home, disinfecting the company’s premises and the suchlike.

If there is a suspected case of Covid-19, the employer may order employees displaying symptoms of infection to take a medical examination. Potentially infected employees may be ordered to work from home.

Contracts

Impossibility to Perform Contractual Obligations

Under Polish contract law, a party is not liable for damage caused by the non-performance or improper performance of contractual obligations if this is a result of circumstances for which the obliged party is not responsible. Unless agreed otherwise by the parties, the responsibility is on the obliged party to prove that it acted with due diligence in order to perform the obligations correctly.

At the same time if the performance of one of the mutual obligations becomes impossible as a result of circumstances for which neither party is responsible, the party who was to undertake the performance cannot demand mutual performance, and if already received, the party shall be obliged to return it to the other party. It is worth mentioning that impossibility may be of a factual or legal character. Therefore, this also covers restrictions introduced by the authorities such as quarantine. If the performance by one of the parties becomes impossible only in part, that party loses the right to the appropriate part of the mutual performance. However, the other party may rescind the contract if partial performance would have no significance for it in view of the nature of the obligation or in view of the intended purpose of the contract.

Unless stipulated otherwise in the contract, in most cases a party objectively precluded from performing a contract may not demand mutual performance from the other party, but on the other hand will not be liable for the non-performance of the contract itself.

Change of Circumstances as a Reason for Amending Contracts

If due to an extraordinary change in circumstances, the performance of contractual obligations entails excessive difficulties or exposes one of the parties to a substantial loss which the parties did not foresee, a court may, having considered the parties’ interests, in accordance with the principles of community life, designate the manner in which the obligation should be performed, the value of the performance or even rule to terminate the contract. If terminated, a court may, as needed, decide how accounts should be settled between the parties.

The party may use this course of action at any time (it is not subject to limitations of time periods of claims) until the obligation (contract) is still in force. This means that if a party fulfils its obligation before lodging a lawsuit it may not demand anything from the other party. Also, if the other party effectively rescinds the contract and e.g. charges the party with contractual penalties, the party affected by extraordinary circumstances will not be able to take advantage of this course of action any longer.

Practical Solutions to Avoid Future Disputes

If the performance of a contract is likely to be impacted by the current situation, parties should collect evidence and record the reasons for particular business decisions being taken in reaction to the current situation. Collecting such evidence in the future, after the crisis has passed, may prove to be more difficult.

Parties are advised to take all possible action to mitigate the damage which can result from a lack of performance of one’s contractual obligations. Potential disputes will focus on ascertaining whether a party defaulting on their obligations acted diligently and in compliance with the principles of contractual loyalty after the extraordinary circumstances occurred. Therefore, the better the affected party acts in the wake of unexpected events, the better the outcomes it can expect.

For further guidance, please contact Jeremiasz Kuśmierz.

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