BASHAM NEWS

CORONAVIRUS - COVID -19

Mexico City, March 2020.

During the first months of this year, the infectious respiratory disease known as COVID-19, caused by one of the viruses of the coronavirus family, has spread in various parts of the world.

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

To date, seven cases of COVID-19 have been confirmed in Mexico and approximately 37 suspected cases have been identified and are under observation by the country's health authorities.

The following information note contains several recommendations on legal, labor, health and safety, contractual, and health and safety issues that may arise from this public health emergency.

Recommendations in labor and social security matters.

Health and Safety.

Employers must form a Safety and Hygiene Commission, which is responsible for investigating the causes of accidents and illnesses within the company and proposing measures to prevent and control them. This commission, together with the human resources area, must be responsible for any communication to the rest of the workers.
To date, the Ministry of Health has not issued mandatory measures to be followed in workplaces. For now, only some recommendations have been issued to prevent respiratory diseases in general, such as COVID-19, among which are:
i.i. Sneezing into the inside of the elbow or into a handkerchief;
i.ii. Refrain from shaking hands or kissing on the cheek;

i.iii. Frequent hand washing;

i.iv. Avoid sudden temperature changes;

i.v. Refrain from consuming raw food;

i.vi. Consider taking a vitamin supplement; e

i.vii. Go to the doctor if a flu, fever, or joint pain lasts for more than a week.

Medical examinations.

Employers may ask their employees to undergo medical examinations at any time during the employment relationship and may also request information on whether they have recently traveled to an area at risk or been in contact with an infected or suspected infected person.
In turn, employees are obliged to undergo medical examinations and refusal may be interpreted as grounds for termination of the employment relationship, if there is concrete evidence of such refusal.
For these purposes, it is recommended to verify that each employee has been provided with a privacy notice describing the treatment that will be given to confidential information provided to the employer (e.g., medical examinations). The delivery of the privacy notice is an obligation of the employer.
If it is suspected that an employee may be ill, he/she must be directed to a clinic of the Mexican Social Security Institute ("IMSS") for a health evaluation. If the IMSS does not issue a certificate of incapacity due to illness, then the employee must return to work.

Protection of personal data in the workplace.

Data related to the health status of a natural person, according to the Federal Law for the Protection of Personal Data in Possession of Individuals, are sensitive personal data. This data is specially protected by the Law since its misuse may result in discriminatory acts against its owner, or in a damage that affects his or her most intimate sphere. Therefore, the Law establishes that, prior to its use, the company or employer must obtain the express written consent of the employee/visitor. However, this obligation may be exempted when there is an emergency situation that could potentially harm an individual's person or property, or when such data is necessary to prevent, diagnose, or provide medical care, as can be considered the current situation of COVID-19.
Personal data (e.g., identity, symptoms, travel to at-risk locations) collected in the context of COVID-19 should be the minimum necessary and proportionate to the purpose of virus tracking, reporting to relevant authorities, and taking appropriate action. It is recommended that personal data only be collected from persons with a high possibility of being a COVID-19 case or a confirmed COVID-19 case.
The employer must adopt the necessary security measures to duly protect the personal data, among others, it may use encryption or pseudo-anonymization methods. In addition to the report to the corresponding authorities, which must be made under the expectation of privacy of the affected person and having informed him/her, such information may not be published or shared with anyone else.

Potential closure of work centers and remote work (home office).

The Federal Labor Law provides that employers are required to comply with any preventive measures determined by the government in the event of a health or environmental emergency, which could include the closure of workplaces, schools or public buildings.
It is recommended to have a home office policy in the event that the work centers are ordered to be closed. In our experience, employees working in this modality are offered some temporary compensation to pay for internet services.

Payment obligations in case of infection.

If an employee is diagnosed with COVID-19, the same rules must be followed as if it were a general illness certified by the IMSS.
If applicable, the IMSS must issue a certificate of incapacity due to general illness to the employee, which must clearly specify the duration of the incapacity (start/end date).

In this case, the employer must pay the salary in full for the first three days of the disability and, as of the fourth day, the IMSS will pay a daily subsidy equivalent to 60% of the salary reported to the IMSS. It should be noted that the employer is not legally obligated to pay the remaining 40%.

Travel.

Considering that the government has not implemented special health warnings or preventive measures, employees may be advised to refrain from traveling to a high-risk location, but cannot be forced to do so.
If you are scheduled to travel to China, Hong Kong, South Korea, Japan, Italy, Iran or Singapore, it is recommended that you:I. Review, in the first instance, the likelihood of postponing the trip; or
II. Follow the recommendations issued by the World Health Organization (WHO).https://www.who.int/es/emergencies/diseases/novel-coronavirus-2019/advice-for-public)

Discriminatory practices.

No individual in Mexico can be discriminated against for being diagnosed with COVID-19. If an employee is discriminated against because of this, the employer's liability could consist of the payment of a legal indemnity derived from the termination of the employment relationship for causes attributable to the employer.

Contractual and corporate recommendations.

In the event of an epidemic caused by COVID-19, situations could arise such as: the closing of work centers, medical incapacities, suspensions or delays in production or provision of services, etc., which could result in non-compliance with the obligations contracted by the company and even the payment of conventional penalties or the corresponding damages. In this sense, it is recommended to the companies:

Contracts:

Identify all contracts entered into by the company and catalog the levels of impact on the flow of operations that could be generated as a result of the interruption or delay of activities.
Review the clauses of the contracts that regulate liability for non-compliance with the obligations contracted, the indemnities that would be updated, the guarantees that, if applicable, have been granted, the exceptions, including acts of God and force majeure.
Review the agreements established with respect to the possible termination and noncompliance due to lack or delay in the delivery of goods or provision of services, and the exceptions and exceptions thereto, including the provisions related to fortuitous events or force majeure.
As a general rule, in the event of breach of the obligations contained in a contract, the breaching party will be liable to compensate the damages caused to its counterparty for its breach or to pay the conventional penalty, if agreed.
If the non-performance is the immediate consequence of a fortuitous event or force majeure, the non-performing party shall not be obliged to compensate the damages caused to its counterparty, since such events are unforeseeable or, even if unforeseeable, unavoidable.
In general, the Civil Codes of the various Mexican states allow the parties to a contract to establish exceptions to the provisions governing acts of God and force majeure, so that if the parties so agreed, these types of events may not be invoked as excluding liability.

Corporate:

The General Law of Mercantile Corporations (LGSM) establishes that the meetings of the companies governed by such law must be held at the registered office of the company.

Due to the COVID-19 outbreak, it is possible that some companies may be affected by the impossibility of gathering the partners at the registered office, so it should be confirmed whether the bylaws of the company provide for the possibility of taking Unanimous Resolutions of Partners/Shareholders outside the meeting in order for the company to continue with its daily operations.

The lawyers of the labor, corporate and contract law, health and risk management practices are at your disposal to resolve any doubts that may arise in connection with the present document.

ATTENTION,

Labor:

Jorge De Presno

jorgedepresno@basham.com.mx

Álvaro González-Schiaffino

agonzalez@basham.com.mx

Luis Alvarez

lalvarez@basham.com.mx

Health:

Rodolfo Barreda

rodolfobarreda@basham.com.mx

Ricardo Evangelista