The importance of analyzing the labor measures that are desired to be applied to workers to face the economic crisis caused by COVID-19

Posted by: Yury Cerrato | Senior Associate at Alvarado y Asociados

Through these lines, we would like to alert employers about the importance of reviewing with a labor expert any measure that is desired to be applied to workers as a strategy to face the economic crisis that the COVID-19 pandemic has brought, since it is a reality that along with the severe impact that this virus has caused to the health of the world population, it has also caused an economic impact to most companies around the world.

Although in Nicaragua the State has reported very few cases of people infected with the virus and that no special normative have been issued to regulate any situation with the workers of Nicaraguan companies, it is a reality that companies located in this country have been already reached by the economic crisis that this pandemic is causing.

As a measure to face this economic crisis and in order to seek a reduction in costs, companies are adopting certain strategies with their workers. However, many of these strategies, although, at first, seemed to be effective in reducing costs, could ultimately end up being more costly for companies, so employers should be aware of the risks involved with each of them to take their decisions.

Any company might think that the most effective option to reduce costs is to dismiss their workers; however, this brings with it the need to pay workers´ compensation that could decapitalize employers and put them at a disadvantage to overcome these critical moments.

Another alternative that we have observed that some companies want to apply is that of reducing workers´ wages; however, they should bear in mind that Nicaraguan labor legislation does not seem to allow this possibility and its implementation could bring contingencies for companies that result in higher costs for them.

Sometimes we can read articles or publications on the Internet that seem to offer effective alternatives to be adopted in the workplace; However, we must warn the importance for companies to discuss each alternative with their labor advisers, so that they provide them with a broad overview of the legal implications that each one contains, and thus determine what is best for the company.

A clear example of an alternative that has been consulted by several companies is to apply a reduction in salary; however, after the companies know the risks that this alternative entails, which could end in greater economic losses for the company, it does not seem to be as a suitable alternative to apply as it initially seemed.

Companies must understand the legal implications of each case to make their decisions. Depending on the company´s activities, certain strategies could be taken and could work even at this difficult time.

We invite you to contact us so that together we can analyze the best option for your companies and workers and thus seek the best solution to overcome this critical moment that we are experiencing.

Please contact Yury Cerrato at ycerrato@alvaradoyasociadoslegal.com if you need more information. 

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