Frontline APAC May 2020

In this issue of Bird & Bird's APAC Frontline, we look back at the significant and unprecedented changes that came into effect in the last quarter across Australia, Hong Kong, the People's Republic of China (PRC) and Singapore in light of the COVID-19 pandemic.

Our Legal Updates section examines the key changes introduced by each jurisdiction in response to COVID-19, including the new JobKeeper scheme, and amending the Modern Awards to include access to 2 weeks unpaid 'pandemic leave' and allowing employees to take double the amount of annual leave at half pay in Australia. In Hong Kong, we examine potential claims under the Employees' Compensation Ordinance for employees contracting COVID-19 and guidelines to collecting sensitive personal data during the outbreak. In China, we report on the newly issued State Council Guideline which seek to support the recovery of employment and the implementation of a 2.5 day weekend to encourage consumption and tourism. In Singapore, we look at the Tripartite advisory which provides guidance on the implementation of shorter work weeks, temporary layoffs and adjustments to annual leave, and the National Wages Council 2020/2021 Guidelines on the factors to take into account when reducing wages.

Legal Updates: Australia

As part of its 4-yearly review into Modern Awards, the Fair Work Commission (FWC) recently introduced three new model annualised salary clauses across 22 Modern Awards. The new clauses, which took effect from 1 March 2020, impose a number of onerous obligations on employers in respect of the calculation of annualised salaries, reporting requirements and annual reconciliations.

The decision follows a significant number of high profile underpayment cases in recent years, colloquially known as 'wage theft' cases. Impacted Awards include the Banking Finance and Insurance Award, the Clerks – Private Sector Award, the Telecommunications Services Award, the Hospitality Industry (General) Award, and the Restaurant Industry Award.

Annualised wage arrangements

Impacted Awards fall within one of three categories of model clause.  Whilst there are differences between the model clauses regarding the requirement for employee agreement and the methods by which an employer calculates the annualised salary, the following obligations are common across each of the new clauses:

  1. to record in an annualised salary arrangement the provisions of the Award which are satisfied by the annualised salary and record the method by which the annualised salary has been calculated, including specifying each separate component of the annualised salary and any overtime or penalty assumptions used in the calculation of the annual salary;
  2. to set and record the'outer limits' on the number of overtime hours or other penalty-rate hours which are to be taken as paid for by the annualised salary arrangement;
  3. to pay employees (in addition to the annualised salary) for any hours worked which exceed those outer limits in accordance with the applicable provisions of the Modern Award, noting that any additional amount must be paid in the same pay cycle as the hours worked; and
  4. to conduct a reconciliation of the annual salary paid to the employee against the amount that would have been payable under the Modern Award every 12 months, or on termination of employment. Where a short fall is identified, this must be rectified within 14 days.

Contractual set-off provisions

Despite the introduction of the new model clauses, the FWC has confirmed that the new clauses do not invalidate the common practice of an employer and an employee agreeing to an all-inclusive salary under a common law contract set off provision.

An appropriately drafted set-off clause in a contract of employment therefore remains a viable alternative for employers in order to avoid the complexities associated with the calculation of annualised salaries; in particular setting the outer limits of overtime provisions.

However, significantly, even where employers rely on contractual set-off provisions, the record keeping and reconciliation obligations set out in point 4 above (particularly in respect of overtime) continue to apply.

So what does this mean for employers?

For employers with employees covered by one of the impacted Awards, employers have the option of whether to implement an annualised wage arrangement under the relevant Modern Award, or to (continue to) rely on common law contractual set off provisions.

Whilst the administrative requirements associated with set-off provisions are undoubtedly less burdensome, there are still a number of important steps employers should take in making any such decision:

  • Review employment contracts to check if they do in fact contain an effective set-off provision. Ensure that the provision is clearly drafted to identify the Award entitlements that are 'covered' by the annualised salary.
  • Review systems of recording employees' hours of work that fall outside the employees' normal span of hours to ensure any hours worked in excess of these times, weekends or on public holidays is recorded.
  • Conduct an annual reconciliation of the actual amount paid to the employee compared with entitlements under the Award.
  • Ensure annual Award pay rate increases are adequately covered by the employee's annual salary.

Changes to Australia’s employment laws in response to COVID-19

The coronavirus pandemic has had a major impact on employers across the globe, resulting in unprecedented levels of social restrictions, as governments and health authorities attempt to "flatten the curve". As a consequence of these restrictions, many businesses have been forced to significantly adjust their operations, or in some cases cease trading altogether, leaving them with the task of navigating Australia’s complex employment laws as they look for solutions to continue operations, but also retain their employees.

At the time of writing, Australia has 6,675 confirmed cases and 78 people have lost their lives to the virus. Over the last 24 hours, the number of new cases reported is down to 13, and the curve is ‘flattening’; however, with social restrictions set to continue for at least the next four weeks, likely even longer, it looks like Australia will continue with this new ‘normal’ way of working for the foreseeable future.

In this article, we will look at how Australia’s employment laws have responded to the crisis, and the changes implemented that provide greater levels of flexibility to employers and employees.

Amendments to the Fair Work Act

The most significant change in Australia’s employment laws is the temporary amendment to the Fair Work Act as a result of the government’s new JobKeeper scheme (see further below). As part of the changes, employers who qualify for the Government's JobKeeper subsidy will be able to make what will be known for the next six months as "JobKeeper-enabling directions".

JobKeeper enabling directions allow employers to:

  • direct employees reduce their days/hours of work or not to attend work at all;
  • alter employees’ usual duties or location of work;
  • alter employees' usual work days; or
  • direct employees to take a period of annual leave, which request an employee must not unreasonably refuse.

Amendments to Modern Awards

In order to provide employers and employees greater flexibility to vary working arrangements and deal with the unprecedented challenges arising in these difficult times, the Fair Work Commission (FWC) has implemented a number of temporary measures in many Modern Awards.

Notably, the Commission has made an en-masse variation to 99 Modern Awards to include access to 2 weeks unpaid ‘pandemic leave’ and the ability for employees to take double the amount of annual leave at half pay.

The Commission has also granted temporary amendments to the Clerks – Private Sector Award to provide more flexibility for remote working arrangements, directions around the taking of annual leave and reducing hours.

Each of the Modern Award amendments remain in place until 30 June 2020, unless extended.

Government subsidies

In addition to changes to Australian employment laws, a number of government funded initiatives have been introduced to provide financial support to eligible employers during the coronavirus pandemic.

JobKeeper payment subsidy

Qualifying employers will be able to claim a flat-rate payment of $1,500 per fortnight for every eligible employee on the books from 1 March 2020 until 27 September 2020. Employers will qualify where they expect to experience a 30% reduction in turnover (or 50% for larger business, and 15% for registered charities) compared to a comparable period in the previous year.

Eligible employees include full-time & part-time employees, and casual employees who have been employed on a regular and systematic basis for greater than 12 months.

Boosting cash flow for employers

This subsidy provides support for eligible small and medium-sized business and not-for-profits with an aggregated turnover of less than $50 million that employ people in Australia. Eligible employers will receive between $20,000 to $100,000 in cash flow boost amounts by lodging their activity statements up to the month or quarter of September 2020.

The cash flow boosts will be delivered as credits in the activity statement system, and will generally be equivalent to the amount withheld from wages paid to employees for each monthly or quarterly period from March to June 2020.

Remote working: work health and safety & protecting confidential information

In light of strict social restrictions, a significant portion of Australia’s workforce are now working remotely. Importantly, an employer’s obligations to employees under work health and safety laws remain largely unchanged. That is, an employer still has an overall duty to protect the health and safety of its employees.

The steps that employers can take to meet that duty and minimise risk at a worker’s home will be different to those taken in the workplace; however, effective steps may include:

  • providing guidance on safe home office environments, ergonomics and how to keep physically active;
  • asking employees to complete a self-assessment checklist; and
  • talking to employees regularly to ensure their mental health is also being protected.

The security of company information is a critical consideration where employees are working remotely. Practical measures to protecting company information include:

  • reminding employees of their obligations under relevant IT/data protection policies;
  • prohibiting the use of public Wi-Fi (i.e. working in a café);
  • encouraging the use of VPNs;
  • ensuring company information is not saved on personal computers; and
  • limiting access to non-essential databases.

Legal Updates: Hong Kong

According to a report dated 1 May 2020 issued by the Hong Kong Workers' Health Centre, as of 30 April 2020, there were 74 confirmed cases in which individuals had contracted COVID-19 potentially as a result of their work, including medical staff, bar workers, airline and airport employees as well as band performers. As a consequence, there has been widespread discourse about whether employees should be entitled to protection under the Employees' Compensation Ordinance (Cap. 282, the "ECO") if they contract COVID-19 in the course of their employment.  Some have argued that the law should be amended to classify COVID-19 as a new occupational disease under Schedule 2 of the ECO.

Under the ECO, if an employee sustains an injury or dies as a result of an accident arising out of and in the course of his or her employment, or suffers from an occupational disease prescribed by Schedule 2 of the ECO, the employer is generally liable to pay compensation to the employee.  It is for this reason that employers are required to have employees' compensation insurance.  

In a press release dated 10 February 2020, the Labour Department stated that it was looking into the issue of whether amendments should be made to the ECO.  However, due to the developing nature of COVID-19, it stated that more analysis of relevant medical and epidemiological data is required, given that it would be necessary to clearly specify in the ECO which industries and processes pose a greater risk for contracting COVID-19, as well as the prescribed period within which an employee must have been employed to work in those industries and processes.

The Labour Department also clarified that, whether or not COVID-19 is classified as an occupational disease under the ECO, an employee can still claim compensation under Section 36 of the ECO if it can be shown that the employee contracted COVID-19 by an accident causing him or her to suffer a personal injury arising out of and in the course of employment.

In determining whether becoming infected with COVID-19 amounts to a personal injury, the Labour Department would need to assess whether there was a sufficient causal connection between (i) the employment and the accident, and (ii) the accident and the injury suffered by the employee.  It would not be necessary to show that the accident was the sole cause of the injury as long as it was a contributing factor. 

Given the risk of claims, employers are advised to check whether their employees' compensation insurance adequately covers claims from employees who may have contracted COVID-19 in the course of, or as a result of, their employment, and to ensure that any such claims are promptly notified to their insurance providers. 

Guidelines for Employers and Employees on the Collection and Use of Personal Data in light of COVID-19

In light of the outbreak of COVID-19 being declared a pandemic on 11 March 2020, the Privacy Commissioner for Personal Data has issued guidelines for employers and employees on the collection and use of personal data in a public health emergency (“Guidelines”).

To control the spread of the virus and to protect employees, employers may find the need to implement measures such as collecting health data and travel history from employees, and in the unfortunate event of a confirmed COVID-19 case in the organisation, the employer may have to consider disclosing details of the infected employee to other members of the company.  Social distancing is another important aspect in “flattening the curve” and many organisations have adopted flexible working arrangements, which may require enhanced security measures on data protection. 

We have summarised the salient points of the Guidelines below:

  • General approach:

    • While there may be a legitimate basis for collecting additional personal data to control the spread of disease, employers must still adhere to the data protection principles ("DPPs") under the Personal Data (Privacy) Ordinance ("PDPO") in collecting and processing personal data for COVID-19 purposes.
    • This means, for example, that the collection and processing of employees’ personal data must be specifically related to and used for the purposes for which it is collected.The scope of data collection and duration of retention must also be necessary, appropriate and proportionate to the purposes to be achieved.
    • The least privacy intrusive measures should be adopted.Generally speaking, a self-reporting system is preferred to an across-the-board mandatory system where health data is collected indiscriminately.
    • If the collection of such data is not covered by an organisation's existing privacy notices, a fresh Personal Information Collection Statement (PICS) must be provided at the time of or before the data collection to inform employees of the data being collected, the purposes for such collection (e.g. protection of public health), and the classes of persons (e.g. public health authorities) to whom their data may be transferred. It is also a good and ethical practice to inform the employees in the PICS how long the data will be retained by the employer.

  • Temperature or other health data: It is generally justifiable for employers to collect temperature measurements or limited information about medical symptoms that may be related toCOVID-19 from employees and visitors solely for the purpose of protecting the health of those individuals.

  • Travel history: Given the global spread of COVID-19, it is generally justifiable for employers to ask for travel data from employees who have returned from overseas, especially from high-risk locations.The data collected should be purpose-specific and must not be excessive.

  • Third-party disclosure:

    • Personal data collected by employers for the purposes of managing the COVID-19 outbreak must not be used or disclosed for other unrelated purposes, unless express and voluntary consent is obtained or statutory exemptions apply.
    • In the event that an employee contracts COVID-19, the employer may inform other employees, visitors, the property management company, etc. about the fact of an employee has been infected with the virus, but it will not be considered necessary or justifiable to disclose the name or other personally identifiable information of the infected employee.
    • However, under DPP 3, it will not be considered a contravention of the PDPO for an employer to disclose the identity, health and location data of infected individuals to the Government or health authorities solely for the purposes of tracking down and treating the infect employee, and tracing his or her close contacts.

  • Data retention: Personal data collected for the purposes of managing issues related to COVID-19 must be permanently deleted once the purpose of collection has been fulfilled (e.g. when there is no evidence suggesting that any employees have contracted COVID-19 or have had close contact with an infected person after a reasonable period of time).
  • Data security measures: Employers must adopt all practicable steps to safeguard personal data collected (e.g. by storing it in a locked cabinet, encryption, restriction of access, etc). This is particularly important for medical and health data which is sensitive in nature and may cause significant harm to the data subject if the information is not adequately protected.
  • Data security for working-from-home arrangements: Flexible working arrangements generally entail the transfer and use of documents and data away from the workplace, which may result in increased risks to data security.Employers should establish formal procedures governing the handling of personal data to minimise transfers of information outside the physical or digital work environment, e.g. to require approval to be obtained before transferring files from work to home, the redaction of personal data from documents prior to transfer, encrypting files, ensuring that home internet connections are secure and maintaining logs to record the movement of data.

The full Guidelines are available here.

Legal Updates: PRC

State Council Issued Guideline to Ensure Employment in light of COVID-19 Impact and Deputy Minister Urges to Stop Discrimination against Hubei Laborers 

On 18 March 2020, the State Council has released a guideline to support and further the recovery of employment in light of the impact of the COVID-19 outbreakthe Guideline”).

The five core measures introduced by the Guideline include prioritising employment, assisting migrant workers in returning to work, expanding job duties for college graduates, ensuring social security to those in need, and improving professional training and employment services.

Following the issuance of the Guideline, the Deputy Minister of Ministry of Human Resource and Social Security emphasised in a press conference that workplace discrimination against people from Hubei or other areas hardest hit by COVID-19 must be prohibited.  Employers who arbitrarily reject applicants from Hubei or dismiss employees from the province must be "resolutely corrected in accordance with the law".

PRC labor laws prohibit workplace discrimination based on ethnicity, sex, religion, disability, social background and health. Regional discrimination, although not explicitly prohibited in written laws, has been prohibited resolutely in judicial practices. Termination made on the ground of regional discrimination will be deemed illegal and the employer will have to reinstate the employee and make backpay, or to pay double-severance if the employee rejects the reinstatement. If regional discrimination occurs during the hiring stage, the party who perpetrates the discrimination will have to make a public apology and/or compensate the applicant for the losses suffered (including mental loss fees).

Local Governments Encouraging the Implementation of a 2.5 day Weekend.

To stimulate tourism and consumption, some provinces (e.g. Anhui, Zhejiang, Hebei, Jiangxi) and cities (e.g. Nanjing, Longnan, Lichun) are encouraging enterprises to implement a 2.5 day weekend. The new measures are voluntary and companies have the right to decide how to implement them according to local rules and actual circumstances.

PRC labor laws require employees to work 40 hours per week. The employees who get a 2.5 day weekend may be asked to make up for the hours during other times of the week and the additional hours performed during the weekdays will not be deemed as overtime.

Shanghai Issued Judicial Explanations to Guide Hearings of Labor Disputes Related to the COVID-19 Outbreak

Recently, the Shanghai High People's Court and Shanghai Human Resource and Social Security Bureau jointly issued an explanation rule on handling labor disputes related to the COVID-19 outbreak (the "Shanghai Rule"). 

Under this Shanghai Rule, an employer may adjust the position and salary of the employees, delay the payment of salary, impose furlough, rotation, or shift arrangement, and suspend operation, if (i) the employer has gone through the statutory democratic process and consulted with the employee representative congress, trade union, or employee representatives regarding such arrangements and (ii) the arrangements are reasonable and fair, and are only applicable during the COVID-19 outbreak period.

Legal Updates - Singapore 

Tripartite advisory on managing excess manpower and responsible retrenchment

This advisory was updated as of 11 March 2020 in view of COVID-19, to include further guidance on the implementation of shorter work weeks, temporary layoffs, and adjustments to annual leave, variable bonus payment and monthly variable component of an employee's wage.

Shorter Work Week: With employee consent, Companies can request employees to take up to 50% of their annual leave, and implement a reduction in work week that doesn't exceed 3 days and does not last for more than 3 months at any one instance. This does not affect the parties' ability to mutually agree on different arrangements.

Temporary Layoff: With employee consent, Companies can request employees to take up to 50% of their annual leave, and implement a layoff period that does not exceed 1 month at any instance subject to review, during which employees will be paid not less than 50% of their wages during the layoff period. This does not affect the parties' ability to mutually agree on different arrangements.

National Wages Council 2020/2021 Guidelines (W.e.f 1 April 2020 to 30 June 2021)

Employers should consider the following measures in order of priority when reducing wages: 

  1. First, reduce non-wage costs, and consider measures to utilise and manage excess manpower (e.g. employers can focus on training and upskilling employees, adopt Flexible Work Schedules or support affected local employees who wish to seek a second job by implementing job-sharing arrangements, shorter work week , or temporary layoffs.)
  2. Second, make full use of Government support to offset business and wage costs.
  3. Third, consider salary reductions.
  4. Fourth, consider retrenchment as a last resort.

Mandatory Notifications on Cost-Saving Measures

All employers registered in Singapore, with at least 10 employees who have implemented costs-saving measures resulting in employee's salaries falling below (i) 75% of the gross monthly salary for local employees or (ii) 75% of the basic monthly salary for foreign employees, must notify the Ministry of Manpower of these chances within 7 days after implementation.

Advisory on Collection of Personal Data for COVID-19

All employers are permitted to collect, use and disclose Relevant personal data (including NRIC/FIN/passport numbers), for the purpose of carrying out contact tracing and other response measures. Employee consent is not required as such personal data are necessary to respond to an emergency that threatens the life, health or safety of other individuals. However, employers must nonetheless comply with the data protection obligations under the PDPA (e.g. ensuring reasonable security arrangements are in place and that the personal data will not be used for other purposes without the consent of the data subject or permitted under law).


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