WSG - Articles

Basham, Ringe y Correa, S.C.
March 17, 2020 - Mexico

Coronavirus: COVID -19
by Juan José López de Silanes, Juan Carlos Serra, Carlos Velázquez de León, Luis Luján, Miguel Angel Peralta, Jorge De Presno, Adolfo Athié, Jesús Colunga, Amilcar García, Rodolfo Barreda, Luis Alvarez, Ricardo Evangelista,

During the first months of this year, the infectious respiratory disease known as COVID-19, caused by one of the viruses that conform the coronavirus family, has been disseminated in different parts of the world.

On March 11, 2020, the World Health Organization declared the outbreak of COVID-19 as a pandemic and issued a series of provisional recommendations.

In Mexico, to date, there are twelve confirmed cases of COVID-19 and thirty-seven suspicious cases have been identified so far, which the health authorities of the Country have under observation.

This informative note contains various recommendations over legal aspects that shall be considered as a result of this public health emergency.

1.Labor Law and Social Security Recommendations.

Safety and hygiene.

Employers must have in place a Safety and Hygiene Committee, which is responsible of investigating the causes of the accidents and illnesses within the company and to propose measures to prevent and control them. This Committee, along with the Human Resources Department must be in charge of the communication management system with the employees.
To this date, the Ministry of Health has not issued mandatory measures to be observed by work centers. So far, the Ministry of Health has issued some guidelines to prevent respiratory illnesses in general, such as COVID-19, and those listed below:i.i. Sneeze into the inside of the elbow or into a handkerchief;i.ii. Refrain from shaking hands or cheek-kiss greetings;i.iii. Wash hands frequently;i.iv. Avoid abrupt temperature changes;i.v. Refrain from consuming raw foods;

Medical Examinations.

Employers are legally allowed to ask employees to undergo medical examinations at any time during the employment relationship. In addition, employers may request information of recent travels to a high-risk area or whether they have been in contact with an infected person.
Likewise, employees have the legal obligation to undergo medical examinations. Its refusal, may be construed as a ground for termination of the labor relationship if there is hard evidence.
For such purposes, it is advisable to assess if the employees received a privacy notice regarding the treatment of the sensitive information provided to the employer (i.e. medical examinations). It is a legal obligation for every employer to issue and deliver a privacy notice.
If an employee is suspected to be sick, he/she might be instructed to attend a clinic of the Mexican Institute of Social Security (“IMSS” for its acronym in Spanish) for a health assessment. If a sick leave certificate is not issued by IMSS, employee must return to work.

Personal data protection in the workplace.

Data related to the health status of an individual, pursuant to the Federal Law on the Protection of Personal Data in Possession of Individuals (LFPDPPP for its Spanish acronym), is sensitive personal data. This data is specially protected under LFPDPPP, as its misuse may produce certain discriminatory acts against the data subject, or could produce a damage that may affect its inner circle. Therefore, the LFPDPPP, establishes that before its use, it will be necessary to obtain express and written consent from the data subject.
However, in emergency situations that could potentially harm an individual in his/her person or his/her property or when personal data is necessary for the prevention, diagnosis and provision of health care as in the specific context (COVID-19), collecting such consent is exempted.
Personal data (i.e. identity, symptoms, hotspots trips) collected in the context of COVID-19 should be the minimum necessary and proportional to the purposes for tracing the spread of the virus, report to the concerning authorities, and adopt of relevant measures. It is recommended only to collect personal data from people with a high risk possibility of being infected by COVID-19, or a confirmed infected individual.
It is advisable to the employer to store the collected personal data in an encrypted or pseudo-anonymized manner and with the security measures required to protect the personal data. The foregoing considering that data breach incidents could derive potential discrimination against infected people.
The report made to the authorities, about cases or possible cases, must also be notified to the affected persons (data subjects), and the report shall be done under the expected confidentiality. Other than that, such information cannot be disclosed or shared with anyone else.

Potential workplace closures and home office.

Mexican Federal Labor Law provides that all employers have the obligation to comply with any emergency and preventive measures that could be imposed derived from a health or environmental emergency, such as closures of work centers, schools or public buildings.
We recommend having a home office policy in place in the event that the government orders the closure of work centers. In our experience, employees doing home office are often offered a temporary allowance to pay for internet services and utilities in general.

Payment obligations in case of infection.

If an employee is diagnosed with COVID-19, payment must follow the same rules as a general illness certified by IMSS.
In such case, IMSS must issue a sick leave certificate to the corresponding employee. The certificate must clearly specify the duration of the leave (start / end date). In such event, the employer must pay in full the first three days of the leave and from the fourth day onwards, IMSS will pay a daily subsidy equal to a 60% of the salary reported to IMSS. It should be noted that there is no legal obligation for the employer to pay the remaining 40%.

Travel.

Considering that no sanitary warnings or special measures are being implemented by Mexican government, employees may be asked, but not obliged to refrain from traveling to a high-risk area.
If a trip to China, Hong Kong, South Korea, Japan, Italy, Iran or Singapore is scheduled, it is advisable to:I.First, to review the possibility of postponing the trip; orII.Follow the recommendations published by the World Health Organization (https://www.who.int/es/emergencies/diseases/novel-coronavirus-2019/advice-for-public)

Discrimination Practices.

No individual in Mexico may be discriminated for being diagnosed with COVID-19. If an employee is discriminated on this grounds, employer’s liability might consist of payment of legal severance triggered by a constructive termination attributable to the employer.

2.Contractual and Corporate Recommendations.

Contracts:

As a result of the COVID-19, the following possible contingencies, could arise: closing of work centers, medical sick leaves, production or provision of services stoppages or delays, etc., which could derive in a possible non-compliance of obligations. In this regard, it is advisable for companies to:

Prepare a list of all existing contracts and catalog the levels of impact on the flow of operations that could be produced due to such interruptions.
Review the liability clauses of the contracts applicable to non-compliance, the indemnities that could be updated, the warranties that have been granted, and the applicable exceptions such as Acts of God or force majeure.
Revise the existence of breaches or grounds for termination due to lack or delay in the delivery or provision of services, and the exceptions and qualifications applicable to them, including exceptions such as Acts of God or force majeure.
As a general rule, in case of breach to the obligations set forth in a contract, the party in breach will be responsible for compensating the damages and losses caused to its counterparty or will be obliged to pay the contractual penalty, if such was agreed.
If the breach is an immediate result of an Act of God or a force majeure event, the party in breach will have no obligation to compensate the damages and losses caused to its counterparty, as these are non-foreseeable or inevitable events.
Generally, the Civil Codes of various States in Mexico allow the parties of a contract to set forth exceptions to the provisions governing Acts of God or force majeure events, consequently if the parties agreed in this regard, these type of events will not be able to be deemed as an exclusion of liability.

Corporate:

The General Law of Corporations (LGSM for its Spanish acronym) establishes that the meetings of the companies that are governed by said law must be held at the registered office of the company.
Due to the COVID-19 outbreak, it is possible that some companies are affected by the impossibility of bringing together the Partners / Shareholders at the registered office, so it must be confirmed whether the bylaws of the company provide for the possibility of taking Unanimous Resolutions of Partners / Shareholders in lieu of a meeting so that the company can continue with its day-to-day operations.

The lawyers from the practice areas of labor law, corporate and contracts, privacy data protection, health, as well as risk management are at your service to solve any query that could arise due to the content of the present.

SINCERELY,

Labor Law:

Jorge De Presno

[email protected]

Alvaro Gonzalez-Schiaffino

[email protected]

Luis Alvarez

[email protected]

Health:

Rodolfo Barreda

[email protected]

Ricardo Evangelista