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COVID-19 Related Information

Issues of Employment 2: salary payment

Does an employer need to pay salary to its employees whom the employer let stand by at homes due to its suspension of business, in compliance with a request from a prefectural governor for suspension of business or voluntary ban on leaving home to prevent the spread of COVID-19 infection?

Employers have an obligation to pay salaries to employees who have worked based on an employment contract. Even if an employer has an employee take off from work according to the employer's convenience, it is considered as a refusal of the employee's work by "due to grounds attributable to the employer" and the employer is not exempted from its obligation to pay salaries (paragraph 2, Article 536 of the Civil Code). Article 26 of the Labor Standards Act is the similar article providing that "in the event of the employee's absence from work due to grounds attributable to the employer," the employer shall pay a leave allowance equal to at least 60 percent of the employee's average wages.

The provision in the Civil Code refers to the case where the employer had at least some faults, whereas the provision in the Labor Standards Act refer to wider cases including the case of suspension of business due to difficulties in managements or operations occurred in the employer's side regardless of its faults, except the case of force majeure, such as natural disaster or war that could not be foreseen by the employer.

In this regard, whether or not the requests for suspension of business or voluntary ban on leaving home, following a declaration of a state of emergency issued to prevent the spread of COVID-19 infection based on the Act on Special Measures against New Type of Influenza, are considered as the "grounds attributable to the employer" become an issue. The requests for suspension of business based on the Act on Special Measures are not enforceable without any penalties and it is not impossible for the employer to keep its business running. Therefore, it is likely to be considered that the suspension of business was decided by the employer's own business judgment and due to difficulties in managements occurred in the employer's side.

Consequently, even if the employer has an employee take off from work, the employer would not be immediately exempted from its obligation to pay salaries regularly, at least the employer shall pay a leave allowance equal to at least 60 percent of the employee's average wages pursuant to Article 26 of the Labor Standards Act.

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