11 June 2020
Brunei

Introduction: The outbreak and the Bruneian perspective

In these precarious and unprecedented times, it is already anticipated that the spread of COVID-19 will result in a major disruption to global markets. Indeed, a recession is already underway, sending ripples across borders with certain local-specific ramifications, primarily affecting the private sector especially since it is predominantly made up SMEs, micro and home businesses, and startups − which, without sufficient government stimulus packages and bailouts in place, may bear the brunt of the most severe impacts as our economy backslides into further instability and, what could be, an impending collapse. Trade has since been exposed to a heightened risk of deficits and debts with the working people (specifically those in lower-income percentiles, employed in vulnerable industries, and lacking career security) first to be sacrificed as collateral damage in the desperate bid to cover shortfalls and keep stocks alive.

Against this grim backdrop, establishments and enterprises are bracing themselves to mitigate the financial devastation and destruction left in the wake of the current health emergency which has decelerated, made stagnant, and/or regressed business functionality and performance coupled with losses resultant from supply chain issues and customer demand. Notwithstanding that the pandemic has triggered a conflict between the need to preserve business continuity on the one hand and fulfilling duties of care on the other by maintaining not just the employees themselves but also their overall wellbeing and welfare, especially so when prevailing socio-economic inequalities are being now thrown into sharper relief further exacerbating wealth disparities, reconciliation cannot simply be reduced to crude counter-measures which prioritise profit over people.

The struggle: In whose interests do we serve?

As companies scramble to protect the comforts of executives and shareholders, mounting economic costs are made to precede human costs with institutive actions such as wage deduction, forced unpaid leave, suspension of payment commitment, and premature termination of staff given antecedence to undertake the smooth running of business (or, rather, flow of surplus). In light of this, it is important to ensure that both employers and employees remain aware of civil liberties that are enshrined in labour laws to avoid perpetrating or becoming victims of any act of injustice.

The regulatory legislations under Brunei’s Employment Order, which came into full force in 2009, were consecrated to identify and protect the rights of employees in various matters, particularly as they pertain to notices, unfair dismissal, work hours, medical and annual leaves, additional renumeration, and as such. These stipulations have sanctified certain thresholds which make it so that companies are held accountable in safeguarding the integrity and equitability, at all times, of the material and social conditions of their employees. Amid this, however, commercial actors are looking to abscond themselves from this legal and moral responsibility, with lawful reasons or otherwise, by relying upon potential avenues of existing remedies for avoiding or rendering null altogether obligations owed to employees. Two such apparatuses lie in the common law doctrine of frustration and the presence of a force majeure (“FM”) clause.

A Bruneian guide to the ethical limitations of force majeure and the doctrine of frustration

To the detriment of workers, there is no hard and fast rule as to the situations which warrant the enforcing of either provisions by the Courts or relevant tribunals and the privilege of adjudicating a determination remains within the discretionary powers of individual companies. Nonetheless, whether or not COVID-19 constitute an FM event or justify the frustration of employment contracts is subject to strict terms and conditions, and on balance it has extremely limited applicability due to sterner objective tests allowing for the discharging of employees, which is in part resultant from the ritual manipulation of both principles by employers to evade contingent liabilities. At this juncture, it is important to note that whilst they are generally enforceable, the matter of laying off, furloughing, and retrenching employees must therefore be approached with caution to avoid prejudicial abuse by adhering to and administering the proper protocols as well as refrain from any violation of an employee’s right to security of tenure.

That being said, where a contract has become unprofitable or undesirable as a result of the COVID-19 crisis, or in the event that a number of employees is made redundant (which must be illustrated in good faith before abolishing their positions), companies may wish to cushion fiscal blows and woes by streamlining i.e. downsizing their rota. This must first be addressed in three parts before necessitating further action:

Why?

Establishing if FM applies depends on the specific wording of the provision. Though its definition is generally inclusive, certain contracts may render the list of plausible FM events exhaustive. Should a pandemic be taken into consideration as an FM event is then entirely reliant on if a contract has made such specifications, the absence of which may give rise to impugn.

Further, as it also pertains to frustrating a contract, the key question is whether the outbreak makes carrying out contractual obligations ineffectual, or only more difficult. If it merely delays the employee’s performance rather than wholly depriving them of the faculty to perform hence substantially undermining the whole benefit of their contract, or simply increases the expenditures of doing so, the validity of either FM or frustration is doubtful at best. Accordingly, in this instance, it is important to note that a change in economic or market situations which makes the contract less lucrative or performance more onerous do not automatically vindicate the triggering of both principles.

If a company elects to declare that it is no longer economically fit to fulfil its duties as employers, they then carry the burden of proving this contention by providing all correlative evidence vis-à-vis any relevant statements, data, reports, or projections in order to demonstrate that managing its workforce is no longer sustainable for the business to stay afloat in the long-run. In a similar vein, the company must be able to show that it has expended all efforts to its best and reasonable endeavours and diligence in seeking alternative solutions without resorting to formal dispute resolution mechanisms.

How?

Should a company be able to satisfy the requirements to terminate a contract prematurely on grounds of FM or frustration, they may do so accordingly. To the contrary, employees must remain employed unless they are no longer essential for just or authorised causes and, most importantly, only after observance of procedural due process to minimise the risk of an unfair dismissal claim.

In a termination for just cause, due process involves the two-notice rule:

  • an enquiry must be made into the motives for terminating an employee, and this investigation must be conducted ethically to safeguard the sanctity of findings which shall be without detriment to any prevailing liberties or obligations of either parties arising or existing up to the tentative date of termination, or any remedies of both with respect thereto;
  • a notice of intent to dismiss specifying the grounds for termination, and giving said employee reasonable opportunity within which to explain their side;
  • a hearing or conference where the employee is given opportunity to respond to the charge, present evidence or rebut the evidence presented against them;
  • a notice of dismissal indicating that upon due consideration of all the circumstances, grounds have been established to justify termination.

As for a termination for an authorised cause, due process entails a written notice of dismissal to the employee specifying the grounds in a timely manner before the date of termination.

In furtherance to both cases of termination, the employee is eligible for payments of severance and indemnity or nominal damages. An important caveat to flag up is that an employee’s termination may be questioned through grievance machinery which can be subsequently brought forward into arbitration proceeding a civil lawsuit that will incur significant costs. For this purpose, a reconnaissance of grounds for termination must be able to substantiate the legitimacy of motives which warrants an employee’s removal from the company before it is executed.

When?

Whilst it is easy to forget that employees are ultimately people with livelihoods and family and whose survival are entirely dependent on paychecks, companies should always take heed to provide notice to their employees ahead of time prior to discharging them so that they may be able to prepare arrangements to abate their own personal financial setbacks following job loss.

Conclusion: Paving the way towards a more just and sustainable future for workers

As COVID-19 lays bare stark realities of inequalities with the increasingly disproportionate distribution of the world’s resources and wealth further exacerbating deplorable disparities and widening the gap between the rich and the poor, consigning already marginalised communities of workers evermore vulnerable to a collapsing market, it is imperative all the more so to safeguard the labour force from corporate exploitation and injustices. It is hoped that by appealing to the basic humanity of employers, they can keep themselves cognizant of the implications of termination at the expense of leaving the common people without a safety security net to bear the brunt of a global crash at the behest of the affluent who want to preserve hold of their stakes in the imminent recessionary reckoning.

These are challenging times for all of us. Although we must all be ready to anticipate a “new normal”, this transition calls for more compassion and solidarity with the most socially, economically, and politically defenseless who helped build our communities, and not allow employers to unlawfully deprive employees of their jobs, compensation, or dignity. Now more than ever, we must learn to value human lives over the need for profit.

If you have any questions or require additional information, please contact Rozaiman Abdul Rahman and Najeehah Binti Hamid (corresponding author) of ZICO R.A.R (a member of ZICO Law).


This information is for general information only and is not a substitute for legal advice.