Employment

Is Employment Punishable?!

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"Do not make the mistake...of thinking that a worker is a slave and

that he holds his job by his employer's permission.

He does not hold it by permission - but by contract,

that is, by a voluntary mutual agreement.

A worker can quit his job; a slave cannot.-"

Ayn Rand
 

I think everyone agrees that employers create jobs, and consequently the stronger the employer, the greater the number of jobs created.

Who is an employer? A good example would be my neighbor, who:

-Has assumed the risk of starting up a business and taken out a bank loan to open a small store, securing that loan with his flat;

-Has given other people jobs, employing five people in his store;

-Earns income to maintain his family, but is also a source of income for the employees of his enterprise (store).

Some may think that running a store is an easy business. It is not. It involves a set of complex activities: compiling a list of products to be sold in the store, seeking and negotiating with the suppliers of those products; calculating costs, managing finances and bookkeeping; paying taxes, salaries and utility fees; recruiting and supervising personnel, and the like. Any person who sets up any type of enterprise and employs people thus deserves nothing but respect.

As employers are a source of employment, and consequently income (in the form of salaries) for their employee, it is wrong to view the employer and the employee as opposing parties. It is in the best interests of an employee to have a strong employer; strength corresponds to lower costs and higher revenues.

Increased costs for an employer have significant implications. For my neighbor, for example, increased costs might lead to a situation where he is forced to spend additional funds on labor costs instead of repaying his loan. If he were then to default on the loan, and consequently lose his flat, he would be left with no other option but to close down his store, thereby losing the source of income, not only for his family but for the families of his five employees too.

Employees must understand that any increase in costs for their employer creates the likelihood of their own income decreasing. Increased costs also diminish the number of available employment opportunities for job seekers.

Despite these negative implications, recent actions of the Georgian parliament and government are set to significantly complicate labor relations and thereby increase the labor costs of employers. It seems that the simple truth “all genius is simple” no longer applies.

What do I mean by these recent actions of the Georgian parliament and government?

I mean:

-Several legislative initiatives for amending the labor legislation, drafted by the parliamentary committee for healthcare and social issues; and

-Legislative amendments to the Labor Code of Georgia prepared by the Ministry of Justice.

To see how much each of the proposed legislative changes can damage employment opportunities in Georgia, let’s start with a detailed review of the implications that will result from the amendments to the Labor Code as drafted by the Ministry of Justice.

The right to strike will become distorted

Why?

A legislative amendment concerning the right to strike lacks any logic because it:

-Enables a person who is no longer employed to go on strike against an employer.

How come? Is that not senseless?

According to the current Labor Code of Georgia, if an employee has a fixed-term labor contract and he/she goes on strike during that period, the strike is considered illegal after the term of his/her contract has expired. That is absolutely logical, because:

1.A strike is a temporary voluntary refusal by an employee to either partially or fully fulfill his/her obligations under their labor contract;

2.A person whose labor contract has expired is no longer employed and hence, not liable to fulfill his/her contractual obligations;

3.Consequently, if the right to strike is that of an employee and a person whose term of contract has expired is no longer an employee, then it is logical that he/she cannot use the right to strike.

According to the amendment drafted by the Ministry of Justice, however, a person who is no longer employed can undertake a strike against his/her former employer. This is ridiculous.

-The amendment also deprives an employer from the possibility of firing a striking employee who has previously been informed about his/her dismissal.

How?

According to the current Labor Code of Georgia, an employee cannot go on strike after he/she has been informed about his/her dismissal.

The amendment to the Code abolishes the above provision, thereby putting an employer in a precarious situation. Let’s discuss this problem step by step:

1.An employee who has been informed about his/her dismissal can still go on strike;

2.As the law prohibits the termination of the labor relationship during a strike; the employer will consequently be unable to fire a person until he/she has finished the strike;

3.As the duration of strikes are not limited, this means a strike can go on for an indefinite time – theoretically for a year or more. An employer thus may never be able to dismiss a person.

Employers will no longer

announce vacancies

Why?

According to the current Labor Code, an employer is under no obligation to substantiate his/her decision not to recruit an applicant for an announced vacancy.

The amendment to the Code, drafted by the Ministry of Justice, will change this to make it obligatory for an employer to substantiate his/her refusal to hire an applicant for an announced position.

Why do they want to adopt this amendment?

As the theory goes, by requiring an employer to substantiate his/her decision not to employ an applicant, the likelihood of discrimination in pre-contractual relations will be minimized.

That theory, however, is absolutely unfounded. People are deceiving themselves if they think that any employer choosing not to hire someone on discriminatory grounds would ever be honest and write, for example, “I did not recruit this applicant because of color of his/her skin.” The proposed amendment thus cannot really prevent discrimination in pre-contractual relations; instead it merely increases employer’s costs.

What will the effect of this amendment be?

If this amendment is adopted, employers will refuse to announce vacancies.

Why?

Because doing so will complicate pre-contractual relations by obliging an employer to explain and substantiate to every job seeker why he/she was not recruited.

Let’s take an example: an insurance company I am familiar with recently announced a vacancy. Some 85 people applied for it. Of these 85 applicants, the company selected only one whom it considered matched the requirements and qualifications needed for the

position.

If this amendment of the Justice Ministry is adopted, that insurance company, if facing a similar position in the future, would have to have substantiate their decision not to hire the remaining 84 applicants. Apart from the reality that following this procedure will take a great deal of time, the company will also have to hire a labor and employment lawyer (maybe more than one, depending on the size of the company) in order to have them write legally official substantiations of their grounds for refusing to recruit those 84 applicants.

All this becomes even more complicated if a company is small. Imagine the situation for my neighbor who took a loan out from a bank to open a small store and hired five people. If he announces a vacancy and declines to hire even two or three applicants, he will be obliged to substantiate his decision for the refusals in writing. Moreover, those substantiations must be written properly so as to prevent an applicant from challenging the decision in court. To this end, my neighbor will perhaps have to pay a lawyer to write out such justifications.

The solution employers will find to avoid all these problems, will simply be to refuse to announce any vacancy. By doing so, they would avoid having to write substantiations for those people turned down for jobs, which would require a) good lawyers and b) time – both causing an increase in costs. Employers will also be wary of the possibility that, should lawyers fail to write proper substantiations, they might have to attend court in order to prove the lawfulness of their decisions.

With this amendment, the Justice Ministry seems to care only about the employment of lawyers and is acting at the expense of any other profession.

Dismissal of an employee will become very

complicated, even if the employee

regularly violates his/her obligations

What do I mean?

According to the amendment prepared by the Justice Ministry, an employer will also be obliged to substantiate his/her decision about dismissing an employee.

Why do they want to adopt this amendment?

The theory goes, as before, that by making an employer substantiate his/her decision to dismiss an employee, the likelihood of discrimination in labor relations will be minimized.

This is also unfounded because an employer who does dismiss an employee on discriminatory grounds will never honestly claim, for example, “I dismissed this employee because of color of his/her skin.” Consequently, this amendment, like the previous one, does not really protect from discrimination in labor relations, but merely increases employers’ costs.

What will the adoption of this amendment to the Labor Code entail?

This procedure also increases employers’ costs because, when dismissing an employee, an employer will be obliged to write a formal explanation for which he/she will require a) a good lawyer and b) time.

It is alarming that, according to one of amendments prepared by the Justice Ministry, an employer has no right to even dismiss an employee who regularly fails to fulfill his/her contractual obligations without first issuing a formal warning to that employee and setting an additional term for them to improve his/her performance. Should such an employee then again violate his/her obligations or fail to improve their performance during the term set, the employer will still not be able to dismiss him/her. Next, the employer is obliged to issue one month’s notice to the employee (who may well continue to regularly violate his/her obligations), keep him/her in the job for this additional month and is only able to dismiss him/her after this time has passed.

No international convention prohibits an employer from firing an employee who regularly fails to fulfill his/her obligations. This would cause unimaginable complications for the labor relationship and really is little more than a means of coercing employers.

What will the obligation to issue one month’s notice before the dismissal of an employee entail?

An employee who learns a month in advance that he/she will be dismissed can inflict serious harm on their employer. I am not just hypothesizing, I am aware of such an instance. My friend, an employer, wanted to fire an accountant because of her poor performance. The accountant asked her employer to allow her to stay for two more weeks. My friend agreed. The consequences of this decision were dire. In that two weeks the accountant, who knew she would be fired, was able to seriously damage the company’s books and it took my

friend eight months to rectify the damage done.

It is significant that no international conventions have set a term for giving prior notice. Consequently, the term of notice our employers can observe should be flexible; be a day, two days, a week or any other period of time.

An employee will no longer be allowed to work 10 hours a day in order to receive a higher salary than he/she would receive for eight hours’ work

Why?

The current Labor Code of Georgia sets the upper limit of a working week at 41 hours, if both parties (employer and employee) do not agree otherwise.

A proposed legislative amendment prohibits agreement between an employer and an employee on any additional working time exceeding 41 hours a week, thereby depriving employees of the opportunity to work 10 hours a day to receive a higher salary than he/she would receive for an eight-hour working day.

Let’s again take the example of my neighbor’s store, where a salesperson works for 10 hours a day and receives a monthly salary of 600 lari. What will happen if the law allows her to work only eight hours a day?

Depriving both parties of the right to reach agreement on work limits will result in:

-Higher costs for the employer because he/she will have to hire another salesperson, or

-Lower revenues for the employer because the store will be open eight, instead of 10, hours a day (if he does not hire another salesperson to make up for those additional two hours), and

-A lower salary for the employee in either of the above cases, because she will not be able to work more than eight hours.

Overtime will no longer be practiced

Why?

According to a legislative amendment, the remuneration for overtime labor shall be at least 1.5 times the normal hourly wage.

For example, if the normal hourly rate is 10 lari, the hourly rate of overtime will be 15 lari. Overtime labor is thus 50 percent more expensive compared to the hourly rate of normal salaried work.

Consequently, if the salary of a salesperson currently costs an employer 100 lari per 10-hour working day, after the adoption of the amendment regarding maximum working hours, two hours of the 10 will be considered as overtime. If this happens, to keep the same employee for the same 10 hours will cost the employer 110 lari – 10 lari more per day. That is an increase of at least 240 lari per month (and if weekends are added then the amount will double at least).

What will the employer do in this situation? Will he hire a new employee for those remaining two hours, thereby keeping his costs from rising? Or will he increase his labor costs by 240 lari a month? I think he will be more likely to hire a new employee and pay him/her the salary for only two hours a day – 20 lari. This decision will decrease the income of the existing salesperson. As for overtime, the employer will always avoid this because it costs him too much. It is as simple as that.

The likelihood of employing women will decrease

Why?

According to a legislative amendment, a pregnant woman cannot be dismissed during the period after she first notifies her employer about her pregnancy until after she has given birth and her maternity leave has ended.

For example, an employer hires a woman for a three-month long project. However, during the course of those three months, the woman becomes pregnant. The employer, who hired her for only three months, is thus unable to dismiss her for a period of nine months – and that is in the best case scenario. In the worst case scenario, the employer will be unable to dismiss the woman for 14 months (a nine month pregnancy period, plus 24-days paid leave, plus four months of maternity leave).

As a woman, such a provision limits my own employment opportunities because employers will be forced to think twice before hiring a woman.

Now let’s discuss a legislative initiative drafted by the parliamentary committee for healthcare and social issues, according to which coercing an employee to leave their job at his/her own initiative is punishable by a fine or up to two years in prison.

Such actions should not be criminalized. Doing so, would give any employee a free hand to sue their employer for forcing him/her to tender their resignation, regardless of whether or not coercion had actually been used. The proposal to criminalize this is nothing more than the intimidation of employers! No international organization has ever demanded that Georgia do anything like that.

The proposed legislative amendments include many other harmful provisions, but unfortunately the format of this article does not allow us to discuss all of these.

Collectively the legislative amendments discussed above can be considered a means of terrorizing employers! By toughening labor relations and increasing labor costs we are intimidating employers and making employment a punishable action. This all may lead to:

-A decrease in employment, or

-An increase in illegal employment, or

-A decrease in salaries, or

-All of the above.

Clear proof of this are the indicators of unemployment in southern Europe. For example, the unemployment rate in Spain has reached 26.2 percent, while in Greece it is 25.4 percent. The youth unemployment rate in Spain stands at 55.9 percent, while in Greece it is at 57 percent. At the same time, in 2012 unemployment rates increased in 15 out of 27 EU member states compared to the previous year.

The legislative amendments discussed above seem to suggest that employers, who have taken the risk of setting up enterprises, created jobs and are the source of income for their employees, are to be rewarded for their efforts with more complicated labor regulations and increasing costs!

I have never been an employer, but, as an employee, I want my employer to be strong – meaning that the business is run at as little cost as possible and that it receives as much revenue as possible. Having a strong employer would increase the likelihood of my having good working conditions, a higher salary and a more stable job. Furthermore, if I were looking for a job, the greater the number of strong employers in a market, the more diverse my choices would be and the chances of finding a good job would be increased.

Let us not fight against employers or threaten them with increased costs. It should always be borne in mind that they create jobs and are the sources of our income!

 

 

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