The COVID-19 pandemic and employment relations

The novel coronavirus disease, COVID-19, not only poses risks to human health and lives but is posing major challenges to the world economy and labor market.

Due to the global outbreak of the disease, the Government of Mongolia has declared the semi-heightened emergency preparedness among the administrative and territorial units, state and local administrative organisations, and legal entities on 13 February 2020 in accordance with the Law on Disaster Protection.  

As a result of the preventive measures taken due to the heightened emergency preparedness, including quarantine measures and special employment regime, businesses are being required to make certain changes to their employment relationships.

In particular, all levels of educational institutions and training centers are closed nationwide, no public arts and sports events are organized, and children's summer camps and gaming centers are closed from 26 January 2020 to 30 April 2020.    

In addition, all types of bars, sport, art and culture centers, recreation centers, tourist camps and motels operating in Ulaanbaatar are closed from 26 February 2020 to 30 March 2020, which was then extended to 30 April 2020.

Please refer to the following pages for more information on how idle time is regulated under the Labor Law of Mongolia for organisations whose operations have been ceased or restricted as results of the foregoing measures.

 

SHOULD EMPLOYEES BE RENUMERATED during idle TIME?

If an employee performs another job during idle time, he/she shall be remunerated in the amount suitable for job he/she performed.

If it is impracticable for the employer to assign any job to an employee during idle time, the employee must be paid no less than 60% of his/her base salary and the minimum monthly wage which is currently MNT 420,000.

 

DOES THE OCCURRENCE OF IDLE TIME TRIGGER TERMINATION OF EMPLOYMENT CONTRACTS?

Employer may terminate an employment contract unilaterally if the occurrence of idle time is specifically stipulated in the employment contract to serve as justifiable grounds for termination.

In the absence of such express provision, the employer may only terminate the employment contract on basis of the grounds provided for in the Labor Law of Mongolia.

What should employees do during idle time?

During idle time, an employer may assign one of the following jobs to an employee:

  1. within the organization, a job not specified in his/her employment contract; or
  2. a job in another organisation.

It should be noted that a job in another organisation may only be assigned on the basis of employee’s consent.

What if assigning another job is not possible?

If it is not possible to assign any of the foregoing jobs, the employer shall provide the employee with idle time compensation in the amount specified in a collective agreement. That said, the amount of idle time compensation must be agreed and stipulated in the collective agreement of the relevant organisation.

The amount of such compensation must be:  

  1. not less than 60% of an employee's base salary,
  2. not less than the minimum monthly wage which is equal to MNT 420,000.

Based on the above, if 60% or more of an employee's base salary is less than MNT 420,000, idle time compensation should be equal to MNT 420,000.

What if the collective agreement does not provide for idle time compensation or if the organisation has not entered into a collective agreement?

A collective agreement is an agreement between an employer and employees’ representatives. While an employment contract is concluded with respect to an individual employee, a collective agreement is concluded to ensure that the rights and interests of all employees of the organisation are provided on more favorable terms than guaranteed by law.

As employers are not required to enter into collective agreements, it is common that organizations do not have collective agreements. In such cases, or in case a collective agreement does not provide for idle time compensation, the amount of compensation must also be no less than 60% of an employee's basic salary and the minimum monthly wage of MNT 420,000.

If an employee performs another job during idle time, how should he/she be remunerated?

In this case, an employer shall remunerate the employee in the amount suitable for the job performed. The amount of such remuneration must not be less than average remuneration the employee previously received.

The average remuneration amount above is determined on the basis of the amount of remuneration the employee received for the preceding 3 months. To be specific, the average remuneration amount of an employee will be calculated on the basis of the amounts corresponding to the last 3 months recorded in his/her social insurance book. 

Is it possible for an employee not to receive idle time compensation?

An employee will not be paid idle time compensation in the following cases:

  1. the employee refused to perform another job without any justifiable reason,
  2. the employee contributed to or caused the idle time situation.

It should be noted that the idle time compensation must be distinguished from an employee’s salary. In the cases mentioned above, an employee will not be paid idle time compensation, but that fact alone does not serve grounds for not paying employee’s salary or deducting any amount from employee’s salary.

What can an employee do if he/she was not paid idle time compensation or was paid in the lower amount?

An employee who is not paid idle time compensation or is paid in the amount less than 60% of his/her base salary and the minimum monthly wage may claim for compensation. If a dispute arises in this regard, the employee may file a complaint with the Labor Dispute Settlement Commission within 3 months from the date he/she became or should have become aware of the violation.

Furthermore, a misdemeanor proceeding may be initiated against the employer for the violation of the Labor Law, and such employer may be subject to a fine in the amount equal to MNT 5,000,000.

Should employers pay social insurance contributions during idle time?

Employers must pay social insurance contributions in proportion to the amount of idle time compensation and/or the remuneration of jobs assigned to employees. However, a decision of special meeting of the Government was issued on 27 March 2020 for the purpose of supporting the private sector during the Covid-19 outbreak, pursuant to which all business entities are exempt from the payment of social insurance contributions for a period of 6 months starting from 1 April 2020 to 1 October 2020.

Will there be any changes in the employment relationship of employees with children?

Yes. Measures such as to provide conditions and opportunities to work from home or to provide paid leave must be taken for pregnant women and mothers of children under the age of 12 by all business entities and legal entities regardless of their type.

Further, daily working hours of mothers and single fathers of children under the age of 12 who are employed by local administrative organisations, organisations within the jurisdiction of the capital city and industries owned by the capital city must be reduced by 1 hour, and such employees must be paid full remuneration.

Decision to implement the above measures until the end of 30 March 2020 was then extended until 30 April 2020.

            Does the occurrence of idle time trigger the termination of an employment contract?

This is depends on the terms of the employment contract entered into between the employee and the employer. An employee is entitled to leave the job with 30 days’ notice (unless otherwise provided in the employment contract) from the date he/she submits his/her resignation letter to the employer. As for employers, unless the occurrence of idle time has been expressly stipulated to serve as grounds for the termination of the employment, the employer may only terminate the employment contract on the basis of the grounds provided for in the Labor Law.

If the employment contract does not specifically provide for idle time, the parties may amend the employment contract on the basis of mutual agreement. In this regard, an amendment agreement to the employment contract must be made in writing and signed/executed by the employee and the employer. In this case, the employee must voluntarily accept the terms of the amendment.

Further, the employment contract may be terminated anytime on the basis of mutual agreement between the employer and employee.

Under what terms can an employer terminate employment contracts?

Under the Labor Law, the occurrence of idle time does not constitute ground for termination of employment contract at the initiative of an employer. However, the employer may terminate the employment contract by (i) abolishing the position or (ii) reducing the number of employees. In this case, the employer must pay the employee an allowance equal to his/her average salary for 1 month or more months.

For the purpose of terminating an employment contract on the basis of the grounds above, the abolishment of the employee's job or position within the organization must be factual or genuine. Accordingly, the employer should update the organisational structure of the employer. Following this approval, the employer must give a written notice to the employee regarding the termination of the employment contract. To avoid any dispute regarding wrongful termination, it is advisable for employers to have the employee confirm the receipt of such written notice by his/her signature.

Following the written notice of not less than 1 month, the employer may terminate the employment contract by issuing a written order in this regard. The order should clearly state the ground for termination of the employment contract and will be handed over to the employee.   

Ts.Bulgan, Kh.Ulziibuyan

 

If you have any questions concerning the above, please feel free to contact us.

Avinex Partners LLP

Suite 702, The Downtown Building, Sukhbaatar district, 1st Khoroo, Jamiyan Gun Street 18-1, Ulaanbaatar, Mongolia

Tel: +976 7777 0033/7777 7021

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