China

 

Employment Guidelines for Employers in China

During the Period of Epidemic Prevention of Coronavirus (III)

Coronavirus (2019-nCoV) has been identified as the cause of a new infectious disease, officially named “Coronavirus Disease 2019” (abbreviated “COVID-19”).  Although the impact of the COVID-19 outbreak continues, employers across China have started to resume workplace operations.   However, for the purpose of epidemic prevention and control, different measures such as traffic control and road closures are still in effect, while international flights have yet to be restored following large scale cancellations imposed by travel bans to and from China.  Due to the widespread transportation restrictions, many employees, both at home and abroad, remain unable to return to their workplaces.

This paper will discuss four common scenarios involving employees who have been prevented from resuming their work due to transportation restrictions. This article was prepared in a Q&A format with the aim to provide employers with business interests in China, with a reference point for dealing with employment related issues stemming from the coronavirus epidemic.

Scenario 1:	Employees cannot return to China in time after a business trip abroad due to cancellation of international flights.
Scenario 2:	Employees cannot return to workplace in time after a domestic business trip due to epidemic prevention measures.
Scenario 3:	Employees cannot return to China in time after taking a vacation or visiting family abroad due to cancellation of international flights.
Scenario 4:	Employees cannot return to workplaces in time after taking a vacation or visiting family in other cities in China due to epidemic prevention measures.

Q1: For employees in Scenarios 1 to 4, can employers arrange annual leave unilaterally?

According to the Opinions on Stabilising Employment Relationship and Supporting Employer’s Resumption of Work and Production During the Period of Epidemic Prevention of the COVID-19 (the “MOHRSS Opinions”) issued by the Ministry of Human Resources and Social Security and other 3 ministries[1], employees under Scenarios 1 to 4 (above) shall be identified as those who are unable to return to their workplace due to the epidemic, and employers may arrange for the employees to take annual leave on the basis of mutual consent.  Many local governments, including Zhejiang province and Guangdong province[2] have successively promulgated regional regulations, which conform to the rules on the taking of annual leaves stipulated in the MOHRSS Opinions, i.e. the employee’s consent is necessary.

However, according to the regulation stipulated by the Beijing municipal government[3] for employees who are unable to return to Beijing and resume work in time due to the epidemic, employers may first consider arranging annual leave for them; for employees who are traveling for business purposes and are thus unable to return to Beijing due to the epidemic, their employers shall pay the normal salary during the period.

In respect of the annual leave, we noticed that in the Beijing regulation, employers are not required to reach a consensus with the employees, and a specific stipulation is prescribed for one particular scenario of salary payment, where employees are unable to return to the workplace due to the fact that they are/were traveling for work.  In accordance with the regulation issued by the Beijing government, we are of the view that employers in Beijing may unilaterally ask employees under Scenarios 3 and 4 to use annual leave.  For employees under Scenarios 1 and 2, employers in Beijing should refrain from unilaterally asking employees to use annual leave.

According to the current regulations of most regions in China, the basic principle for arranging the use of annual leave for employees who are unable to return to their workplace, remains as is, wherein  mutual consent must be reached between the employer and the employee(s).  However, if the local government has promulgated regulations that have different rules, like in Beijing, employers are advised to follow the local regulations and arrange annual leave for employees under Scenarios 3 and 4.  In practice, to arrange the annual leave upon consultation, it is advisable that employers issue an annual leave notice to employees and require them to confirm such arrangement in written form, or by email, which will leave a trace of the consensus in the company’s records.

In addition to the annual leave arrangement, for employees who are unable to return to work, the MOHRSS Opinions suggest the following measures for employers: (1) if possible, employers may arrange for employees to work from home in a flexible manner, such as communication via phone or internet, etc. and (2) for employees who remain unable to provide normal work after exhaustion of all leaves, or for other reasons, employers may implement the measure of Suspension of Work. Under the Suspension of Work, employers shall pay normal salaries within a salary payment cycle; where the Suspension of Work lasts longer than the first salary payment cycle and employees fail to provide their work, employers may pay basic living expenses to the employees concerned, which is equal to a proportion of the minimum wage standard of the place in China where the employees work.

Q2: For employees under Scenarios 1 to 4, as the workload of the employees is not full due to remote work, can employers reduce working hours as well as salary by following the Consultation Procedures?

According to the MOHRSS Opinions, for an employer who suffers from difficulties in production and operation due to the impact of the epidemic, in order to stabilise their employees’ jobs, employers are advised to undertake the consultation procedures to negotiate with their employees, in order to adjust their salary, rotate shifts, shorten working hours, etc.

In practice, to fulfill the consultation procedures, employers are required to circulate the draft plan to the entire staff, solicit opinions from all employees or their representatives, negotiate with the union or employees’ representatives on an equal basis, and announce the finalised plan to all employees (the “Consultation Procedures”).

However, as the labour remuneration relates to the most vital interest of employees in the performance of employment contracts, as far as we are concerned, employers may shorten employees’ working hours and reduce salary, upon mutual consent achieved through negotiation with the employees.

Q3: For employees in Scenarios 1 and 2, shall the employer reimburse employees’ expenses after they have completed the business task, but are stranded at the destination of their business trip?

In situations where the employer has made arrangements for their employees to travel for business purposes, and those employees are left stranded in their respective destinations due to transportation restrictions, we are of the opinion that the reasonable accommodation expenses incurred by employees during the period when they were stranded at the destination of their business trip, shall be reimbursed by employers, in accordance with the company’s internal rules and regulations.  The reasoning being that, were it not for the fact that the employees were required to travel for work at the behest of their employer, they would not have been stranded in the first place. Moreover, if the employees are further required to work remotely, then employers shall also bear the additional costs expended by the employees in the course of communicating, by telephone or internet, in accordance with the performance of their work.

Q4: For employees in Scenarios 3 and 4, shall the employer reimburse employees’ expenses during the period if the employees are required to work remotely?

For employees who are stranded for reasons entirely unrelated to matters of business, but rather due to the cancellation of flights or traffic control measures, the accommodation expenses incurred by employees during this period shall not warrant reimbursement from their employers.  However, if the employees are required to work remotely, we think it is reasonable that employers bear the additional telephone or internet communication costs resulting from the employees’ remote work.

Q5: For employees stranded outside China, there is a difference of 6 to 14 hours between their locations and China. How should employers arrange their work?

For employees who are stranded outside of China due to a business trip, family visit or vacation, and based on different time zones where employees are located, it is recommended that the employers distinguish between (1) employees whose local working hours partially overlap with those in China (the “Partial Overlap Employees“) and (2) employees whose local working hours do not overlap, at all, with those in China (the “Non-Overlap Employees“).

Based on considerations wherein employees’ labour remuneration is not to be reduced and where there is merely a negligible increase in personnel costs borne by the employer, it is our recommendation that employers should negotiate with employees with respect to the following terms:

(1) Adjusting the working hours to ensure that Partial Overlap Employees can work with their counterparts in China, at least 4 hours a day and against a correspondingly marked reduction in their salary.

(2) Giving top priority to annual leave, which employees can use for the period that they cannot work concurrently with their counterparts in China.

(3) Employers shall arrange for employees to take rest during periods according to a schedule that is contrary to the rest periods of their counterparts in China. After transportation (by air, rail, etc.) is restored, the employees should be prepared to agree to work on rest days, and for the same length of time in which they rested during working hours over the course of the epidemic, barring the right to claim compensatory time off and ceding the forfeiture of overtime pay for work performed on days of rest.  At present, the municipal governments of Shanghai[4], Beijing[5] and Shenzhen[6] have already issued guidance to encourage employers, and employees, to negotiate and make arrangements for rest days throughout the year on a comprehensive basis.

(4) Applying for the comprehensive working hour system.  The comprehensive working hour system takes the week, month, quarter or year as the unit period and calculates employees’ working hours on a comprehensive basis.  For employees under the comprehensive working hour system, within the comprehensive calculation period, their working hours may exceed 8 hours in a day or 40 hours in a week.

To counter the immense impact of the coronavirus epidemic, the local governments in Beijing, Shandong Province, Guangdong Province, Xiamen, Suzhou, Wuxi and other regions have sought to encourage employers to apply to the human resources and social security departments, seeking application of the comprehensive working hour systems based on their business needs.  With the comprehensive working hour system in effect, employees may take rest, collectively, during the period of epidemic prevention and may work collectively after the end of the epidemic, which ensures the normal operation and production for employers.

(5) For the Non-Overlap Employees, employers may also decide to implement the measure for the Suspension of Work.  Under the Suspension of Work, employers shall pay employees normal salaries in the first salary payment cycle, and pay employees living expenses equal to a proportion of the minimum wage standard of the place in China where the employees work, if the employees do not provide work after the first salary payment cycle.

[1] Opinions on Stabilizing Employment Relationship and Supporting Employer’s Resumption of Work and Production During the Period of Epidemic Prevention of the COVID-19 http://www.gov.cn/zhengce/zhengceku/2020-02/08/content_5476137.htm

[2] The Circular of Zhejiang Provincial Department of Human Resources and Social Security on Actively Combating the Epidemic Caused by COVID-19 and Handling with the Employment Relation Related Issues

http://www.zjhrss.gov.cn/art/2020/1/28/art_1391002_10431.html

The Circular of Guangdong Provincial Department of Human Resources and Social Security on Actively Coping with the Epidemic of Pneumonia Caused by COVID-19 and Handling with the Employment Relation Related Issues

http://hrss.gd.gov.cn/gkmlpt/content/2/2879/post_2879157.html

[3] The Circular of Beijing Municipal Bureau of Human Resources and Social Security on Issues Related to Maintaining the Stability of Employment Relations During Epidemic Prevention and Control http://rsj.beijing.gov.cn/xxgk/tzgg/202001/t20200123_1621260.html;

[4] The Circular of Shanghai Municipal Government to Take Several Measures on Prevention and Control of the Epidemic and Full Support and Service for Employers to Develop in a Steady and Healthy Way.  http://www.shanghai.gov.cn/nw2/nw2314/nw32419/nw48516/nw48580/nw48612/u21aw1424000.html

[5] The Beijing Municipal Government General Office’s Several Measures on Further Supporting to Fight Against the Pneumonia Epidemic of COVID-19.  http://www.beijing.gov.cn/zhengce/zhengcefagui/202002/t20200203_1622987.html

[6] Several Measures of Shenzhen Municipality to Support the Enterprises to Overcome Difficulties due to the Pneumonia Epidemic of COVID-19.  http://www.sz.gov.cn/cn/xxgk/zfxxgj/tzgg/content/post_6723546.html

 

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Zhong Lun attorneys are available to assist you with these and other workplace issues. For more information, visit www.zhonglun.com.

 

What Employers Should Do

During the Period of Epidemic Prevention of Coronavirus (II)

Employers across China are resuming work successively, but the epidemic is not over.  With population flow increasing, local governments in different regions have introduced additional prevention and control measures, such as centralised isolation and home isolation.  This article was prepared in a Q&A format and intends to provide employers in China with a reference for the management of employees, before and after the resumption of work.

Q1: For employees who return to the workplace from other provinces, is it a must for them to have centralised or home isolation before returning to work?

In order to avoid large-scale population flow caused by employees returning to their workplaces, which may further aggravate the spread of the epidemic, many local governments have issued policies for centralised isolation or home-based isolation for people coming from other provinces.  Such isolation is a measure taken by the government to prevent and control the epidemic in accordance with the PRC Law on Prevention and Treatment of Infectious Diseases, the Regulations on Emergency Response to Public Health Emergencies and other laws and regulations.

Local policies in different provinces also set different standards to determine whether people coming from other provinces need to be isolated.  Beijing and Shanghai share the similar standard, which requires people who leave from Hubei Province or have contact with Hubei Province and the people who have a related epidemiological history (including the history of residence or travelling in key areas such as Hubei Province, and a history of having contact with people in key areas who have fever or respiratory symptoms, or those who are pneumonia patients infected with the new coronavirus) need to be isolated centrally or home-based for 14 days.[1]  In Shenzhen, all people coming from the outbreak area need to be isolated centrally or home-based for 14 days.[2]  The most stringent standard is found in Liaoning Province, where all people going to Liaoning from other places need to be isolated at home for 14 days.[3]

We suggest therefore, that employers in different provinces pay close attention to the isolation standards issued by the local government for people coming from other provinces, and timely identify those employees who need or are under isolation, which may make it easier for employers to be compliant with the prevention and control measures to combat the epidemic, and implement proper employment management procedures after the resumption of work.

Q2: After resumption of work, if employees are still under isolation, should employers pay salary?  Can employers ask employees to use paid annual leave or treat the isolation period as unpaid leave period?

For employees who are under centralised or home-based isolation due to returning to the workplace from other provinces, we consider such employees should fall within the scope of “the employees who are unable to provide normal work resulting from the government’s implementation of isolation measures or other emergency measures” under Article 1 of the Circular on Proper Handing of Employment During the Period of Epidemic Prevention of the Novel Coronavirus by the General Office of the Ministry of Human Resources and Social Security[4] (the “MOSSHR Circular”).  According to the MOSSHR Circular, employers shall pay salary to employees for such isolation periods.  Many provinces, such as Guangdong, Zhejiang and Shandong have also issued detailed rules according to which employers shall treat employees in isolation as if they had provided normal work during the period, and provide normal salary to such employees[5].  Shanghai also stipulates that employers shall pay salary to employees who are unable to provide normal work caused by isolation measures taken by the government, as if such employees had attended work normally[6].

As such, if employees cannot provide normal work after the work resumption due to isolation, employers shall pay the salary at normal standards.  Also, in view that employees are regarded as having provided normal work during the isolation, employees shall not be treated as taking unpaid leave during the isolation.  In addition, we recommend that employers refrain from asking employees to use paid annual leave for the period during isolation, unilaterally.  Employers shall strictly follow the local regulations in regard to asking employees to take annual leave.

Q3: After the work resumption, can employers ask employees isolated at home to work from home?  Are employers required to pay overtime compensation?

Regarding local governments that require employees who return to the workplace from other provinces to be isolated at home, we believe the purpose of this measure is to identify patients in incubation periods and contain the spread of the epidemic, rather than increasing the rest days or forcing employers to suspend business.  Besides, pursuant to the Opinions on Stabilizing Employment Relationship and Supporting Employers’ Resumption of Work and Production During the Period of Epidemic Prevention of the Novel Coronavirus[7] (the “MOHRSS Opinions”) issued by the Ministry of Human Resources and Social Security, All-China Federation of Trade Union and other institutes, it is clear that employers may arrange for employees to work from home, if such employees are affected by the epidemic and are unable to return to work on time.  Also, some provinces, such as Shenyang[8] and Beijing[9], explicitly stipulate that employees should be permitted to work from home and paid their normal salary.

Therefore, we are of the view that, without prejudice to measures for the prevention and control of the epidemic, employers may require the isolated employees to work from home after resumption of work.

Employers do not need to pay overtime if employees work from home during working hours and on working days.  However, if employees work overtime on working days, or work during rest days and employers do not provide compensatory time off, then employers should pay overtime compensation to the employees.

Q4: If employees have fever, cough or other symptoms and apply for self-isolation, should the company approve?

If employees have symptoms such as fever and cough and require self-isolation due to public health concerns, the employer may advise such employees to undergo a health examination at a hospital, immediately.  After diagnosis, if such fever, cough and other symptoms of the employees are caused by the novel coronavirus, such employees should be treated and isolated by medical institutions.  If symptoms such as fever and cough are caused by other diseases, the company may require the employees to go through the sick leave process in accordance with internal sick leave policies.

However, if employees are unwilling to undergo a health examination in a hospital and insist on self-isolation, the employer may require such employees to report their physical status from home.  If the employer suspects that the employee(s) could be infected, it should report to the disease prevention and control institutions or medical institutions nearby in a timely manner, according to the PRC Law on Prevention and Treatment of Infectious Diseases.

In addition, although the employer has the right to decide whether to approve the self-isolation, under the context of fighting against the epidemic, in the case where it is impossible to arrange for employees to work from home, we recommend that employers consider arranging for employees to use paid annual leaves, paid beneficiary leaves or unpaid leaves on the basis of mutual consent.

Q5: During the epidemic prevention and control period, can employers terminate the employees when their employment contracts expire by the end of the term?

According to the MOHRSS Circular, the employment contract shall be extended beyond expiration in the following cases:

• The employee is a pneumonia patient, suspected patient or is/has been in close contact with the new coronavirus, and his/her employment contract with the employer expires during the period of isolation, medical treatment or medical observation;
• The employee is unable to provide normal work due to isolation measures or other emergency measures taken by the government, and his/her employment contract with the employer expires during the period.

Under scenario (1), the employment contract shall be extended to the expiration of the medical treatment period, medical observation period or isolation period.  Under scenario (2), the employment contract shall be extended to the end of the emergency measures taken by the government.  For scenarios other than the two noted above, where the employment contract expires during the epidemic prevention and control period, the employer may notify the employee to end the employment contract, except those having statutory causes for establishment of an open-ended employment contract or an extension of the employment term.

At present, many local governments have issued local policies to require employees who return from other provinces to undergo centralised or home isolation for 14 days.  In our opinion, if an employee fails to resume work due to centralised or home-based isolation required by the local government and his/her employment contract expires during the isolation period, such circumstances should fall under scenario (2) mentioned above, and his/her employment contract should be extended to the end of the isolation period.  In such case, if the employer has no intention to renew the employment contract, the employer may notify the employee that the employment contract will not be renewed by the end of the isolation period, pay the normal salary to the employee during the isolation period and settle statutory severance at the end of isolation period.

Q6: If employees fail to resume work on time due to the epidemic, what should employers do?

For those who are not pneumonia patients, suspected patients, or in close contact with the novel coronavirus, and are not under isolation, medical treatment or medical observation periods, but still fail to resume work on time due to the outbreak, employers should distinguish the reasons why such employees have failed to resume their work and treat them differently.

• For employees who are unable to resume work due to the emergency measures taken by the local governments (such as traffic control or city lockdown, centralised isolation or home isolation) to prevent and control infectious diseases:

As stipulated by the MOHRSS Circular, “for employees who are unable to provide normal work due to the isolation measures or other emergency measures implemented by the government, employers shall pay wages and salary to them during the said period.”  The departments of human resources and social security of various provinces and cities have promulgated local regulations, which provide that employers should pay normal salary to employees who cannot provide work due to emergency measures taken by the government.

For seriously affected areas (Hubei Province) where the government adopts traffic control or blockades that prevent employees from returning to work, we consider this to be an emergency measure taken by the government to cut off the spread of infectious diseases, and employers should pay salary to the said employees based on normal attendance.

At present, most local governments require employees who return from other cities, especially those from Hubei Province, to be isolated centrally or at home for 14 days.  We also consider this to be an “emergency measure” taken by the government, and employers should pay employees normal salary during the said period in accordance with local regulations.  Meanwhile, employers can also arrange for employees to work in a flexible way during isolation periods, e.g. home-based work.

• Employees are required by employers to be isolated at home:

Based on concerns of public health and safety at the workplace, employers may require employees with a high risk of infection (e.g. returning from a key area of the epidemic or with symptoms of fever) to isolate themselves for 14 days.  Employers may negotiate with their employees for them to work from home or take annual leaves, but if an agreement cannot be reached, then it is not appropriate to reduce their salary, since it was the employer’s decision to prevent the employees from performing their usual work.

• Employees’ self-isolation based on their own concerns:

As the epidemic continues unabated, there could be a risk of infection if work should resume.  However, if it is not based on the requirements of the local governments and employees apply for self-isolation based on the uncertainty of infection during their return journey, the employer may decide whether or not to approve it.  It is advisable that employers negotiate with employees for an amicable solution, such as arranging for paid annual leaves, beneficiary leaves, or non-paid leaves.

• Employees unable to resume work in time due to other reasons:

For employees who are unable to return to work on time due to other reasons (e.g. illegal road blockade, etc.), employers may refer to the regulations on “Failure to resume work on time due to the epidemic” released by the governments of different provinces.  According to the regulations of Beijing, Henan, Hainan, Guangdong, Zhejiang and Shandong Provinces, upon consultation and mutual consent with employees, employers can give priority to arrange for employees to use paid annual leaves.  If the employee has not returned to work for a relatively long time, the employer may arrange for an employee to wait for work, or suspend the employment contract after consulting and achieving mutual consent with the employee.

Q7: What measures can employers take to mitigate the losses caused by the epidemic?

1. Employers may arrange for employees to work from home, if possible. The employers may improve the work efficiency and quality of home-based employees by setting clear work tasks and requiring feedback.
2. According to the MOHRSS Opinions, employers may negotiate with employees to solve employment and salary issues in the following ways”

• For employers whose employees cannot work from home, they may consult with the employees to first use all kinds of leave, such as paid annual leave, employer’s own beneficial leave, etc.
• If an employer suffers from difficulties in production and operation due to the impact of the epidemic, it may undergo consultation procedures with its employees to adjust salary, rotate shifts, shorten working hours, etc. so as to stabilise the employees’ jobs.
• When an employer is temporarily unbale to pay salary, it can negotiate with the labour union or employee representatives to postpone the salary payments, so as to help reduce the pressure on cash flow.

3. According to local policies, employers may adopt the following flexible employment methods:

• Employers in Beijing may comprehensively adjust the use of rest days within the year, provided that the legitimate rights and interests of the employees are secured.[10]
• In Beijing, Shandong, Guangdong, Xiamen, Suzhou, Wuxi and other cities, employers are encouraged to apply for a comprehensive working hour system in accordance with actual needs of production and operation, and to maintain normal production and operation through centralised work and rest.[11]

In order to improve the efficiency of approval, the Administrative Examination and Approval Bureau of Beijing Economic-Technological Development Area issued a circular on February 6, 2020.  Pursuant to this circular, for the applications of comprehensive working hour system and flexible working hours system, employers registered in the New Town of Yizhuang will experience the trial policy which is known as “approval via the method of notification and commitment”. The Administrative Examination and Approval Bureau will process the applications online, conduct formality review and grant the administrative approval on the same day.[12]

4. Employers may choose to suspend operation and production according to the situation and needs.

Q8: What measures have been adopted by the government so far to help employers to pull through?

With the continuing effects of the epidemic, it is conceivable that many employers will face material loss of income, while the operational costs such as bank loans, rent and salary will continue to become payable on a regular basis.  Consequently, employers will have to find a way to survive this crisis, especially during the epidemic period.  To effectively ease the burden on employers, the Suzhou government has been the first in the nation to announce ten policies (the “Suzhou Ten Policies”)[13] that support employers in small and medium-sized businesses in their efforts to respond to the outbreak and pull through, from the following three perspectives:

• expanding financial support through specific measures that include ensuring employers’ availability to bank financing and lowering the financing costs;
• stabilising employment through specific measures that include providing employers with unemployment insurance subsidies for post stabilisation and delaying employers’ contributions for social insurance; and
• easing the burdens on employers through specific measures that include reducing and exempting employers’ rentals (applicable where state-owned housing for business use are rented) and exempting, reducing or delaying employers’ tax payments.

The announcement of the Suzhou Ten Policies was publicly praised by the Ministry of Commerce, following which, the Shanghai government also released four policies to ease the burden on employers:

• unemployment insurance contributions may be returned to employers, if such employers are qualified and have very small-scale layoffs or none at all;
• the date for adjustment of social insurance contribution basis is delayed for 3 months, from 1 April to 1 July;
• if the necessary documentation has been completed and filed with the social insurance bureau, then employers will be allowed to back contribute to the social insurance within 3 months after the end of the epidemic; and
• if employers (including those in the new industrial formats and the e-commerce sector) organise online training for employees during the suspension of work, such employers will be provided with a subsidy equal to 95% of actual expenses incurred.

Nationwide, in addition to Suzhou and Shanghai, Beijing, Chongqing, Zhejiang, Jiangxi, Guangdong, Shandong, Sichuan, Hainan and Liaoning Province, other provinces have released local policies for easing the burdens on employers during the epidemic period[14].  Among these policies, it is worth noting that, in accordance with policies from the Guangdong Government, employers may receive the applicable subsidy for salary and wages paid to employees during the period when employees receive treatment due to the epidemic or are quarantined for medical observation, and the subsidy standard is no more than 50% of the salary base used for employee contributions of pension insurance.  We expect that more provinces and cities will consider their own conditions for employers in their specific regions and promulgate local policies to support different kinds of employers, in order to help them to survive this epidemic.

Disclaimer: The information contained in this article is just for your reference.  It shall not be deemed as any legal opinion of Zhong Lun and its attorneys, nor does it establish an attorney-client relationship between you and Zhong Lun.  Zhong Lun will not be responsible for any loss arising from your actions or inactions which are decided to be taken based on any information contained in this article.  If you need further consultation, please feel free to contact our labour & employment team via: carol.zhu@zhonglun.com.

[1] Whether People Coming Back to Beijing Could Resume Working Immediately? Different Arrangement for Two Types of People, http://www.beijing.gov.cn/gongkai/hygq/t1615346.htm; Letter of Health Management to People coming to/back to Shanghai, http://wsjkw.sh.gov.cn/xwfb/20200204/4921bb5d37734801837360656d015b32.html.

[2] Letter to People Arriving in Shenzhen, http://www.sz.gov.cn/szzt2010/yqfk2020/szzxd/content/post_6712746.html.

[3] Liaoning Province 30 Measures to Strictly Inspect and Control the Epidemic in Urban and Rural Communities (Villages) Across the Province——14 Days’ Home Isolation for People from Other Province

http://www.ln.gov.cn/zfxx/jrln/wzxx2018/202002/t20200206_3734857.html.

[4] The Circular on Proper Handing of Employment During the Period of Epidemic Prevention of the Novel Coronavirus by the General Office of the Ministry of Human Resources and Social Security

http://www.mohrss.gov.cn/SYrlzyhshbzb/dongtaixinwen/buneiyaowen/202001/t20200127_357746.html

[5] The Circular of Zhejiang Provincial Department of Human Resources and Social Security on Actively Combating the Epidemic Caused by Novel Coronavirus

http://www.zjhrss.gov.cn/art/2020/1/28/art_1391002_10431.html

The Circular of the Department of Human Resources and Social Security of Guangdong Province on Actively Responding to the Pneumonia Caused by Novel Coronavirus and Properly Handling the Employment Relationship related Work

http://hrss.gd.gov.cn/gkmlpt/content/2/2879/post_2879157.html

The Circular of Shandong Provincial Department of Human Resources and Social Security on Actively Coping with the Epidemic Situation of Pneumonia Caused by New Coronavirus

http://hrss.shandong.gov.cn/articles/ch00330/202001/542c8e3d-d4a1-43a0-893a-d8ec93347864.shtml

[6] The Circular of Bureau of Human Resources and Social Security of Shanghai Municipal on Coping with the Epidemic Situation of Pneumonia Caused by New Coronavirus and Implementing Supportive Measures

http://www.shanghai.gov.cn/nw2/nw2314/nw32419/nw48516/nw48545/u21aw1423629.html

[7] The Opinions of Ministry of Human Resources and Social Security, All-China Federation of Trade Union, China Employer Confederation/China Employer Directors Association, All-China Federation of Industry and Commerce on Stabilizing Employment Relationship and Supporting Employers’ Resumption of Work and Production During the Period of Epidemic Prevention of the Novel Coronavirus

http://www.mohrss.gov.cn/gkml/zcfg/gfxwj/202002/t20200207_358328.html

[8] Shenyang Human Resource and Social Insurance Bureau Issued the Policy Regarding Employment Affairs for Enterprise to Follow During the Prevention and Control of Epidemic

http://www.shenyang.gov.cn/html/SY/15614338564231/154753966969186/15614338564231/3856423148629296.html

[9] The Circular on Further Implementing the Matters relating to Human Resources and Social Security During the Prevention and Control of Epidemic issued by Beijing Municipal Human Resource and Social Insurance Bureau http://rsj.beijing.gov.cn/xxgk/tzgg/202001/t20200131_1622080.html

[10] Beijing Municipal Human Resources and Social Security Bureau: Adjusting and Using the Rest Days of the Year Shall be Allowed During the Period of Epidemic Prevention and Control

http://www.beijing.gov.cn/fuwu/bmfw/shbz/ggts/t1615905.htm；

[11] The Circular of Beijing Municipal Bureau of Human Resources and Social Security on Issues Related to Maintaining the Stability of Employment Relations During Epidemic Prevention and Control

http://rsj.beijing.gov.cn/xxgk/tzgg/202001/t20200123_1621260.html;

The Circular of Shandong Provincial Department of Human Resources and Social Security on Actively Coping with the Epidemic of Pneumonia Caused by New Coronavirus and Handling with the Employment Relation Related Issues

http://hrss.shandong.gov.cn/articles/ch00330/202001/542c8e3d-d4a1-43a0-893a-d8ec93347864.shtml

The Circular of Guangdong Provincial Department of Human Resources and Social Security on Actively Coping with the Epidemic of Pneumonia Caused by New Coronavirus and Handling with the Employment Relation Related Issues

http://hrss.gd.gov.cn/gkmlpt/content/2/2879/post_2879157.html

The Circular of Xiamen Municipal Bureau of Human Resources and Social Security on the Issuance of Employment Relations Adjustment and Wage Payment Policy Guidance for Employers During the Prevention and Control of New Pneumonia in Xiamen

http://hrss.xm.gov.cn/xxgk/tzgg/202001/t20200130_2419238.htm

The Circular of Suzhou Municipal Bureau of Human Resources and Social Security on Work Related to Human Resources and Social Security During Epidemic Prevention and Control

http://www.suzhou.gov.cn/szsrmzf/zwgg/202001/0545968f15134bf1a893661850cedb13.shtml

The Answers of Wuxi HR Authority on Issues of the Employment Relations, Wages and Welfare During Epidemic Prevention and Control

http://hrss.wuxi.gov.cn/doc/2020/02/01/2771522.shtml

[12] The Circular of the Administrative Examination and Approval Bureau of Beijing Economic-Technological Development Area on the Trial Implementation of Approval via the Method of Notification and Commitment for the Applications for the Comprehensive Working Hour System and the Flexible Working Hour System

http://kfqgw.beijing.gov.cn/zwgk/tzgg/202002/t20200206_1625672.html

[13] Suzhou Government Ten Policy Opinions on Support to Employers in Small and Middle Size to Pull Through as Response to the Pneumonia Epidemic of the Novel Coronavirus

[14] The Beijing Government General Office Several Measures on Promotion of Healthy Development of Small and Micro Businesses as Response to the Pneumonia Epidemic of Novel Coronavirus

http://www.beijing.gov.cn/zhengce/zhengcefagui/202002/t20200206_1625493.html

The Chongqing Government General Office Twenty Policy Measures on Support to Employers in Small and Middle Size to Pull Through as Response to the Pneumonia Epidemic of Novel Coronavirus

http://www.cq.gov.cn/zwgk/fdzdgknr/lzyj/qtgw/202002/t20200204_4786646.html

The Zhejiang Province Leading Group for Prevention and Control of the Pneumonia Epidemic of Novel Coronavirus Opinions on Support for Employers in Small and Micro Size to Pull Through

http://www.zj.gov.cn/art/2020/2/6/art_1582435_41883603.html

The Jiangxi Province Government Circular on Twenty Policy Measures to Ensure Stable Economic Development as Effective Response to the Pneumonia Epidemic

http://drc.jiangxi.gov.cn/art/2020/2/5/art_14651_1496115.html

The Guangdong Province Government Circular on Several Measures for Support of Employer Resumption of Work as Response to the Pneumonia Epidemic of Novel Coronavirus

http://www.gd.gov.cn/gdywdt/gdyw/content/post_2886230.html

The Shandong Province Government Several Opinions on Support for Stable and Healthy Development of Employers in Small and Middle Size as Response to the Pneumonia Epidemic of Novel Coronavirus

http://www.shandong.gov.cn/art/2020/2/4/art_107861_98285.html

The Sichuan Province Government Policy Measures on Easing the Operational Difficulty of Employers in Small and Middle Size as Respond to the Pneumonia Epidemic of Novel Coronavirus

http://www.sc.gov.cn/zcwj/xxgk/NewT.aspx?i=20200205213409-989944-00-000

The Hainan Province Government Circular on Eight Measures about Support for Employers in Small and Middle Size to Pull Through as Respond to the Pneumonia Epidemic of Novel Coronavirus

http://www.hainan.gov.cn/hainan/yqfkzzzzxxx/202002/f0bc090f19b74608b200fa302cbea4bd.shtml

The Liaoning Province Government Circular on Several Policy Measures about Support for Operation of Employers in Small and Middle Size as Response to the Pneumonia Epidemic of Novel Coronavirus

http://www.ln.gov.cn/qmzx/xxgzbd/gzbs/202002/t20200206_3735311.html

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Zhong Lun attorneys are available to assist you with these and other workplace issues. For more information, visit www.zhonglun.com.

 

Employment Advice for Employers in China

During the Period of Epidemic Prevention of the Novel Coronavirus

The outbreak of the novel coronavirus recently occurred in Wuhan City, Hubei Province and its surrounding cities and affected dozens of other provinces and cities in China.  The Chinese government has taken a series of measures to prevent further spread of the novel coronavirus, including a quarantine of Wuhan City, limiting public transportation, extending Spring Festival Holidays, delaying the resumption of work, etc.  The epidemic situation not only affects the public health and safety, but also challenges employers with having to deal with employment matters during this period.  This paper was prepared in a Q&A form and intends to provide employers in China with best practices and recommendations for the management of employees during the period of epidemic prevention.

Question 1: How to deal with the problem that employees are unable to provide work during isolation due to coronavirus infection, suspected infection and close contact with the coronavirus?

In accordance with the latest regulation released by the Ministry of Human Resources and Social Security of the People’s Republic of China (“PRC MOHRSS”)[1], for patients with pneumonia, suspected patients and close contacts with the new coronavirus who are unable to provide normal work during their isolation treatment or medical observation period, or because the government implements isolation measures or takes other emergency measures, the employers shall comply with the following:

• Employers shall pay wages and salary to the said employees according to their normal attendance.
• Employers are forbidden to unilaterally terminate their employment contracts in accordance with Article 40 (expiration of medical treatment period, incompetency or material change of objective circumstance) and Article 41 (redundancy due to financial difficulties) of the PRC Labour Contract Law.
• If their employment contracts expire, it shall be postponed to the expiration of the medical treatment period, the medical observation period, the isolation period or the end of the emergency measures taken by the government.

Question 2: Shall the aforesaid period be counted as medical treatment period?

Medical treatment period refers to the period during which employer is not allowed to dismiss an employee due to the employee’s absence from work to pursue medical treatment or to take rest due to illness or non-work-related injury.  The medical treatment period accrues, along with the employee’s increased service years and the employee’s sick leave consumes the balance of the medical treatment period.  For employees not infected by the novel coronavirus, the period of medical observation and isolation shall not be counted as the medical treatment period.

However, for employees whose infection by the novel coronavirus has been confirmed, there are different opinions on whether the period of isolation for treatment shall be counted as the medical treatment period.  Some cities in China have clearly prescribed that the period of isolation for treatment shall not be counted as the medical treatment period, such as Tianjin[2] and Xiamen City[3].  While other cities like Dongguan City[4] in Guangdong Province prescribe that, when employees are confirmed to be infected by the novel coronavirus and are absent from work for medical treatment, such employees shall be entitled to the medical treatment period.  As employees may be terminated if their sick leave exceeds the statutory medical treatment period, we would suggest that employers in China pay close attention to the latest opinion or notification announced by local governments in different cities and deal with this matter with caution.

Question 3: Are employers obligated to follow governmental orders on the extension of Spring Festival Holiday and postponement of work resumption?  Is there any risk if employers do not obey such orders?

In accordance with the Circular on Extension of the Spring Festival Holidays in 2020[5] announced by the General Office of the PRC State Department, the Spring Festival Holidays in 2020 have been extended to 2 February.  Afterwards, local governments of different provinces and cities announced local decisions on further postponement of work resumption, successively.  According to the PRC Law on Prevention and Treatment of Infectious Diseases and the PRC Law on Emergency Response[6], for public health emergencies, the government has the right to take appropriate emergency response measures, and employers shall obey the orders or decisions issued by the government and cooperate with the government in taking emergency response measures.  In some cities, such as Shanghai, Jiangsu, Guangdong, Chongqing and Shandong, if the employer is in critical need of resuming work, in advance, for prevention or control of the epidemic situation or for production and business operation, it shall report to authorities according to relevant local regulations.

If employers do not obey or cooperate with the emergency measures taken by the state and local governments for epidemic prevention and response to emergencies, and resume work in advance without permission, then according to PRC Law on Prevention and Treatment of Infectious Diseases and PRC Law on Emergency Response[7], the following legal liabilities may be assumed:

• Civil Liability: If employer’s violation of laws and regulations leads to the spread or prevalence of infectious diseases or expansion of the harm, and causes damages to personal rights or property of others, civil liability shall be borne according to law.
• Administrative Penalty: Suspension of operation, suspension or revocation of permit or business license may be ordered, and with the fine above RMB 50,000 but less than RMB 200,000; if the situation amounts to violation of security regulation, the public security authority will impose penalties in accordance with applicable law.
• Criminal Liability: In accordance with Article 330 of PRC Criminal Law, where employer violates PRC Law on Prevention and Treatment of Infectious Diseases, fines may be imposed and the responsible person(s) may also be sentenced to imprisonment for 3 to 7 years.

Q4: What is the nature of the extended Spring Festival Holidays and the postponement of work resumption? How should employers pay the salary and wages during these periods?

Regarding the extended Spring Festival Holidays, the Circular on Extension of Spring Festival Holidays in 2020 provides that, with regards to employees who are unable to take leave due to prevention and control of the epidemic, employers should provide compensatory time off in accordance with the provisions of the PRC Labour Law, and the salary and wage of unused leave should be secured and implemented according to relevant policies.  Since compensatory time off is only provided to employees who work on rest days, the extended Spring Festival Holidays (i.e. 31 January and 1 and 2 February 2020) should therefore be treated as rest days.  If employees work during the extended Spring Festival Holidays, employers need to arrange compensatory time off or pay an overtime salary at the rate of 200% of the employee’s normal salary, if compensatory time off cannot be arranged.

As for the delay of work resumption, it is a measure taken by the government to deal with emergencies of public health.  However, local governments in different regions have enacted different policies to define the nature of the period of the delayed work resumption (the “Delayed Period”) and how salaries should be paid during the Delayed Period.

• Under the Shanghai government’s decision, the Delayed Period is treated as rest days, and the employer should pay salary to the employees who take rest during the Delayed Period in accordance with the standard agreed in employment contracts, and should additionally arrange compensatory time off or pay overtime salary at the rate of 200% of normal salary, to employees who work during the Delayed Period[8].
• Under the government decisions of Guangdong Province[9] and Shandong Province[10], the Delayed Period is considered as suspension of work and operation, and employers should pay normal salary to employees if the suspension does not exceed one wage payment cycle.
• In Suzhou City[11] and Wuxi City[12], during the Delayed Period, it is viewed that employees are providing normal work, and therefore employers should pay normal salary to the employees for their work in the Delayed Period.

Unlike Shanghai, so far, no other provinces and cities require employers to provide compensatory time off or pay double salary to the employees who work during the Delayed Period.

Q5: Can employers arrange for employees to work at home during the Delayed Period?  Are employees entitled to overtime compensation under different working hour systems?

The purpose of the Delayed Period is to effectively reduce the concentration of people and to block the spread of the epidemic.  We believe that arranging for employees to work from home does not violate the original intention of taking the measure of Delayed Period, so we consider that the risk of violating the epidemic measures is not high.  We point out that the labour administration departments in Beijing and Shanghai even encourage employees to work from home.

However, local regulations are different as to whether overtime compensation is required for employees working from home during the Delayed Period.  According to the Beijing regulation, employers are required to pay normal salary to employees who work from home during the Delayed Period[13], while the rules in Shanghai stipulate that employers should provide compensatory time off or pay overtime compensation to employees who work during the Delayed Period[14].  Suzhou and Wuxi also stipulate that employers should pay normal salary in full and on time to employees who work during the Delayed Period and encourage employers to provide additional rewards to the employees in an appropriate manner.  If the delayed Period involves a rest day, it shall be implemented in accordance with relevant national regulations. (i.e. provide compensatory time off or pay overtime salary for work on rest days)[15].

In summary, we recommend that if the employer arranges for employees to work from home during the Delayed Period, for employees under standard working hours, they should first pay wages in accordance with the regulations of the local labour administration. If however, the relevant regulations have not been issued locally, the employer may temporarily refer to the principle of “normal pay on weekdays and pay off or overtime on rest days” in order to pay employees; explain the situation to them; and execute reissuance or adjustment according to the new regulations issued by the government.

For employees under flexible working hour systems, since they are not applied to standard working hours system, employers are not required to pay overtime salary to employees if they work during the extended Spring Festival Holidays and the Delayed Period.

For employees under comprehensive working hour systems, employers need to determine  employees’ working hours during the extension of the Spring Festival and the Delayed Period and should pay them overtime compensation at the rate of 150% of normal salary for the work hours that exceeded the statutory standard working hours.

Q6: Can employers arrange for employees to take annual leave during the Delayed Period?

As mentioned above, due to different interpretations of the nature of the Delayed Period in different cities, we suggest that local regulations should prevail as to whether employers may arrange for employees to take annual leave.  We believe that in Shanghai, Suzhou and Wuxi, where the days in the Delayed Period are regarded as rest days or “normal working days” employers cannot therefore arrange for employees to take annual leave during the Delayed Period.  However, the Delayed Period is defined as a “shutdown period” in Shandong and Guangdong province.  Thus, we are of the view that, upon the consent of the employees, employers in these two provinces may arrange for employees to take annual leaves during the Delayed Period without violating mandatory requirements.

Q7：If employees fail to resume work on time due to the epidemic, what should employers do?

According to the regulations of Beijing, Henan and Hainan provinces, enterprises can give priority to the arrangement of annual leave for employees; according to the regulations of Guangdong, Zhejiang and Shandong provinces, enterprises can give priority to the arrangement of paid annual leave for employees after consultation with the employees for their consent and agreement.  Beijing also stipulates that in case of long-term inability to return to work after being affected by the epidemic and long-term failure to return to work, the employer may arrange for employees to “wait for work” after consultation with the employees.  During the period of “waiting for work”, the employer shall pay the basic living expenses according to no less than 70% of the minimum wage standard of Beijing.

According to PRC Regulations on Paid Annual Leave for Employees, employers shall arrange annual leave for employees based on specific conditions of production and work and take into account the wishes of the employees.  Therefore, we believe that for employees who are unable to return to work on time due to the impact of the epidemic, the employer can arrange for annual leave in advance, after communicating with the employees.  However, when employees fail to return to work for a long period of time, in the situation of epidemic prevention and control, it is not appropriate to directly identify employees for absenteeism.  Instead, they should work with the employees to negotiate and adopt measures such as “waiting for work” or suspension of employment contracts.

Q8: If employees are suspected of new coronavirus infection, what should employers do?

According to the provisions of Article 31 of PRC Law on Prevention and Treatment of Infectious Diseases, employers or individuals who discover patients with infectious diseases or suspected patients with infectious diseases, shall promptly report to the nearby disease prevention and control institutions or medical institutions.  Therefore, employers shall immediately report to the nearby disease prevention and control institution or medical institution when they learn that an employee is suspected of having been infected with the new coronavirus.  Then, according to the provisions of Article 39 of the aforesaid law, professional medical institutions shall take measures, such as isolating suspected patients and requiring close contacts to submit to medical observation and related measures in designated places.

Q9: What measures can be taken if employers cannot maintain normal operations or have difficulty operating due to the epidemic?

Where employers have difficulty with maintaining their business operations or productions due to the epidemic, it is advisable to take the following measures, so as to lower costs and in order to manage and pull through:

• Based on consensus between employers and employees, employers may adjust salary, rotate duty and shorten working hours.
• Qualified employers can apply for post stabilisation allowance. According to the applicable regulation[16], for employers that meet with certain requirements, the corresponding local government may grant allowance for post stabilisation equal to no more than 50% of the total amount of unemployment insurance contribution paid by the employer and its employees in the previous year.
• Employers may also shut down operations. Where employers shut down operations within a salary payment cycle, they shall pay employees the normal salary as stipulated by the employment contracts.  Where employers suspend operations for more than one salary payment cycle, if employees provide normal work, employers shall pay employees their salary, and at a rate which is not otherwise lower than the local minimum wage standard; or if employees do not work, employers shall pay the employees’ basic living expenses equal to 70% to 100% of the local minimum wage, based on the regulations of different cities.

Q10: During the special period, what else can employers do to avoid the spread of the epidemic and ensure the safety and health of the employees?

To avoid the spread of the epidemic, protect the safety and health of the employees and to create a safe and hygienic environment for work, employers may take the following measures during the period of epidemic prevention:

• Request and collect information about the health and travel status of their employees. Employers can require all employees to confirm their health status and whether they have had close contact with infected patients or have traveled to the areas affected by the outbreak.  For employees who have symptoms such as cough or fever, employers may arrange for them to work from home or take sick leave, depending on employees’ application and specific conditions.  For employees with a history of travel in epidemic areas or who have had close contact with infected patients, employers may arrange for them to work from home.
• Ensure sanitary conditions within the workplace. Employers may distribute face masks to employees, check employees’ temperatures before work and sterilise the office regularly.
• Develop emergency plan. In case of new coronavirus infection or suspected infection, the employer shall take actions in accordance with the emergency plan, immediately.

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[1] The Circular on Proper Handing of Employment during the Period of Epidemic Prevention of the Novel Coronavirus by the General Office of the Ministry of Human Resources and Social Security

[2] The Circular on Proper Handing of Employment during the Period of Epidemic Prevention of the Novel Coronavirus by Tianjin Human Resources and Social Security Bureau

[3] The Policy Guidance on Employment Handling and Salary Payment during the Period of Epidemic Prevention of the Novel Coronavirus in Xiamen City

[4] The Circular on Several Matters Related to Stabilization of Employment during the Period of Epidemic Prevention of the Novel Coronavirus by Dongguan City Human Resources and Social Security Bureau

[5] http://www.gov.cn/zhengce/content/2020-01/27/content_5472352.htm

[6] Article 41 of the PRC Law on Prevention of Infectious Diseases and Article 56 of the PRC Law on Emergency Response

[7] Article 77 of the PRC Law on Prevention of Infectious Diseases and Articles 64, 66 and 67 of the PRC Law on Emergency Response

[8] The Authoritative Answers to the Questions on Delay of Work Resumption from Shanghai Municipal Human Resource and Social Security Bureau by Shanghai Municipal Human Resource and Social Security Bureau

[9] The Answers to the Questions on the Salary During the Extended Spring Festival Holidays, the Period of Delayed Work Resumption and the Isolation of Novel Coronavirus Infected Patients, Suspected Patients and People in Close Contact with Patients issued by the Human Resources and Social Security Department of Guangdong Province

[10] The Interpretation of the Provincial Policies on Employment Relationship During the Period of Postponing Work Resumption issued by Human Resource and Social Insurance Bureau of Shandong Province

[11] The Circular on Implementing the Matters relating to Human Resources and Social Security During the Prevention and Control of Epidemic Issued by Suzhou Human Resources and Social Security Bureau

[12] The Circular on Implementing the Matters relating to Human Resources and Social Security During the Prevention and Control of Epidemic Issued by Suzhou Human Resources and Social Security Bureau

[13] The Circular on Further Implementing the Matters relating to Human Resources and Social Security During the Prevention and Control of Epidemic issued by Beijing Municipal Human Resource and Social Insurance Bureau

[14] See 8

[15] See 11 and 12

[16] The Circular Relating to Unemployment Insurance Supporting Companies to Stabilize Positions by Ministry of Human Resources and Social Security, Ministry of Finance, National Development and Reform Commission, Ministry of Industry and Information Technology

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Zhong Lun attorneys are available to assist you with these and other workplace issues. For more information, visit www.zhonglun.com.

Zhong Lun attorneys are available to assist you with these and other workplace issues. For more information, visit www.zhonglun.com.

If you have any questions, please contact the following representative:

Carol Zhu, Partner
Zhong Lun Law Firm
carolzhu@zhonglun.com
+86 6061 3081