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The Employment Contract

Force Majeure Clauses in the Employment Contract and the Coronavirus (Covid-19)

Does force majeure leave offer any relief to employees in the current Covid-19 crisis? 

Or does it create even more problems for employers who are already concerned about the many implications arising from the spread of the virus in Ireland?

Force majeure is defined as a “superior force” and is afforded statutory recognition in Irish law in the Parental Leave act 1998 as

13.—(1) An employee shall be entitled to leave with pay from his or her employment, to be known and referred to in this Act as “force majeure leave”, where, for urgent family reasons, owing to an injury to or the illness of a person specified in subsection (2), the immediate presence of the employee at the place where the person is, whether at his or her home or elsewhere, is indispensable.

(2) The persons referred to in subsection (1) are—

(a) a person of whom the employee is the parent or adoptive parent,

(b) the spouse of the employee or a person with whom the employee is living as husband or wife,

(c) a person to whom the employee is in loco parentis,

(d) a brother or sister of the employee,

(e) a parent or grandparent of the employee, and

(f) persons of such other (if any) class or classes as may be prescribed.

(3) When an employee takes force majeure leave, he or she shall, as soon as reasonably practicable thereafter, by notice in the prescribed form given to his or her employer, confirm that he or she has taken such leave and the notice shall specify the dates on which it was taken and contain a statement of the facts entitling the employee to force majeure leave.

(4) Force majeure leave shall consist of one or more days on which, but for the leave, the employee would be working in the employment concerned but shall not exceed 3 days in any period of 12 consecutive months or 5 days in any period of 36 consecutive months.

(5) A day on which an employee is absent from work on force majeure leave in an employment for part only of the period during which he or she is required to work in the employment on that day shall be deemed, for the purposes of subsection (4), to be one day of force majeure leave.

Force majeure clauses in employment contracts

Some executive type contracts of employment may contain a force majeure clause, and most employment contracts will refer to the statutory relief provided for force majeure in the Parental Leave Act 1998.

A force majeure clause will usually have the effect of suspending the obligations of one or both parties in certain exceptional circumstances. That is to say, events like storms or earthquakes or other acts described as “acts of God” may qualify as force majeure events as envisaged by the contract.

However, there is no presumption in Irish law of a force majeure event, thus the parties need to specify what events are intended to be covered by the force majeure clause. Without this clarity the clause may be unenforceable on the grounds that it is void due to the uncertainty and lack of clarity around it.

The precise scope of the force majeure provision will depend on the context in which it is used: ‘A force majeure clause should be construed in each case with a close attention to the words which precede or follow it, and with a due regard to the nature and general terms of the contract. The effect of the clause may vary with each instrument.’ (Lebeaupin v Crispin [1920] 2 KB 714)

Is Covid-19 a force majeure event?

It is worth noting that the phrase force majeure has no recognised or widely accepted meaning in English law.

The question, therefore, of whether Covid-19 is a force majeure event is a question that will almost certainly be determined by the particular circumstances of the contract and what was envisaged, what type of work was involved, whether performance of the contract was genuinely prevented by the coronavirus, and so forth.

The “force majeure event” should be defined in the force majeure clause in the contract. For example:

“Force Majeure Event” means an event, or a series of related events, that is outside the reasonable control of the party affected (including power failures, industrial disputes affecting any third party, changes to the law, disasters, explosions, fires, floods, riots, terrorist attacks and wars).

If a dispute arises, however, it is likely that a Court will interpret the clause strictly and narrowly.

Force majeure clause examples

Example 1

Force Majeure. 

Each Party shall be excused from liability for the failure or delay in performance of any obligation under this Agreement by reason of any event beyond such Party’s reasonable control including but not limited to Acts of God, fire, flood, explosion, earthquake, or other natural forces, war, civil unrest, accident, any strike or labor disturbance, or any other event similar to those enumerated above. Such excuse from liability shall be effective only to the extent and duration of the event(s) causing the failure or delay in performance and provided that the Party has not caused such event(s) to occur and continues to use diligent, good faith efforts to avoid the effects of such event and to perform the obligation. Notice of a Party’s failure or delay in performance due to force majeure must be given to the unaffected Party promptly thereafter but no later than five (5) days after its occurrence which notice shall describe the force majeure event and the actions taken to minimize the impact thereof. All delivery dates under this Agreement that have been affected by force majeure shall be tolled for the duration of such force majeure. In no event shall any Party be required to prevent or settle any labor disturbance or dispute. Notwithstanding the foregoing, should the event(s) of force majeure suffered by a Party extend beyond a four-month period, the other Party may then terminate this Agreement by written notice to the non-performing Party, with the consequences of such termination as if this Agreement had expired (and was not terminated) in accordance with Section xxx.

Example 2

Force Majeure. Notwithstanding anything to the contrary contained herein, neither party shall be liable for any delays or failures in performance resulting from acts beyond its reasonable control including, without limitation, acts of God, acts of war or terrorism, shortage of supply, breakdowns or malfunctions, interruptions or malfunction of computer facilities, or loss of data due to power failures or mechanical difficulties with information storage or retrieval systems, labor difficulties or civil unrest. Notwithstanding the foregoing, in the event of such an occurrence, each party agrees to make a good faith effort to perform its obligations hereunder.

Example 3

Force Majeure. A party shall not be liable for any failure of or delay in the performance of this agreement for the period that such failure or delay is

  1. beyond the reasonable control of a party,
  2. materially affects the performance of any of its obligations under this agreement, and
  3. could not reasonably have been foreseen or provided against, but

will not be excused for failure or delay resulting from only general economic conditions or other general market effects.

Notices

Each party would normally be obliged to serve some notice on the other party and inform the other party as soon as possible of the difficulty or impossibility of performing the contract and suspending it for a time.

Conclusion

A contract of employment may benefit both employer and employee by the inclusion of a “force majeure” clause. However, it is not a silver bullet solution to the Covid-19 problem facing both employers and employees in Ireland.
Here is a link to the Coronavirus guidance for employers and employees on the WRC website.