SANTIAGO (Reuters) - The company that holds the franchise for Starbucks in Chile has suspended the contracts of 90% of its employees in the country, where most cafes are shut as part of efforts to fight the coronavirus epidemic, local media and a union said on Friday.

Mexico's Grupo Alsea ALSEA.MX said it would honor March salaries and pay Chilean Starbucks workers a spot payment equivalent to 10% of their base salaries in April, according to a statement sent to Reuters.

The company said it had made the decision after a new law came into force in Chile that allowed companies to suspend labor contracts during the health crisis and for their workers to receive a limited unemployment benefit with the expectation of their jobs being revived once normal working conditions are restored across the country.

Grupo Alsea said the move was a “responsible measure” aimed at safeguarding positions across more than 120 outlets around Chile and it hoped to restart the contracts once the coronavirus crisis had passed, the statement added.

A union representing Starbucks SBUX.O workers said in a statement sent to Reuters that the suspension affected 1,600 people, around 90% of the franchise's Chilean workforce.

Andres Giordano, president of the union, said the company continued to do business through deliveries and its “arbitrary” action, without discussion with the union, had “heightened uncertainty for workers and their families.”

(This story corrects to reflect 10% April payment is not legal salary)