COVID-19: Guidance for employers in China

What has happened so far?

As a measure to contain the spread of 2019 novel coronavirus ('COVID-19'), the General Office of State Council of China declared that the Spring Festival Holiday, originally scheduled to end on 30 January 2020, would be extended to 2 February 2020 (the “Extended Holiday”).

Following this announcement from central government, some local governments, based on the situation, launched an additional requirement asking businesses to postpone reopening until after the end of the Extended Holiday. We also saw in cities and regions such as, Shanghai, Chongqing, Jiangsu province, Anhui province, Fujian province, Shandong province, Shanxi province, and Guangdong province that it was declared that, unless otherwise specified, all businesses must not resume operation earlier than 9 February 2020 the (“Postponement of Reopening of Business”).

Additionally, the Hubei government has announced that it will extend the Spring Festival holiday to February 13 for all Hubei residents and anyone travelling to Hubei during the holiday and work will be resumed from February 14.

To assist businesses in handling the challenging employment questions that could have arisen during this time, as well as looking to the future, we have summarised some commonly raised questions and answers below.

What if employers asked employees to work before the Extended Holiday?

Strictly speaking, the Extended Holiday was not a public holiday. This period was originally designated as official work days but was then altered to be considered rest days in accordance with the State Council notice.

Although employers could not force employees to return to the office during the Extended Holiday, some companies did ask them to work remotely if needed. If this was the case within your organisation, according to Chinese labour laws, if an employee who works under a standard working hour system was required to work remotely on these days, the company will need to provide either equivalent compensatory leave or pay overtime at a rate of 2 times the employees' normal salary.

How should employers deal with the Postponement of Reopening of Business?

Since policies on the Postponement of Reopening of Business are issued by local government at a provincial level, companies have been advised to check local rules for instructions on this matter.

Beijing

Pursuant to the Beijing’s announcement issued on 31 January 2020, enterprises in the industries of: (a) necessary goods or supplies in Beijing for prevention or control of the COVID-19, e.g. production, transportation and sales of medicines, protective equipment and medical devices; (b) public utilities, e.g. water supply, gas supply and communications; (c) necessities for society, e.g. supermarkets, manufacturing and supply of food and logistics; (d) key project constructions; and (e) other industries related to major societal needs arranged for employees to return to normal work before 9 February. Other companies might have adopted flexible work arrangements. The announcement did not specify whether an employer may adjust salaries during the period of 3 to 9 February.

Under the emergency measure issued by Beijing Human Resource and Social Security Department (“Beijing HRSSD”) on 23 January 2020, companies may have arranged for employees who were unable to return to work, or to work remotely, after the Extended Holiday due to the 2019-nCoV situation (for example, some employees may be in the city of Wuhan which is still in lockdown) to take annual leave. After annual leave was used up, employers could have suspended the employee's work upon mutual consent but during suspension the employee should have received a salary of no less than 70% of the Beijing minimum wage.
The measure jointly issued by Beijing HRSSD and Beijing Education Commission stated that an employed couple who arranged for either party to stay home and take care of under aged child(ren), are entitled to full salary and protection against dismissal during this coronavirus outbreak period. Contact terms upon expiration should be extended until the quarantine and other urgent measures come to an end.

Shanghai and most other localities

Pursuant to the regulations of Shanghai, Chongqing, Jiangsu province, Anhui province, Fujian province, Shandong province, Shanxi province, and Guangdong province, enterprises remained closed until 0:00 on 10 February 2020. Shanghai publicised a more detailed explanation and guidance as set out below:

1. Companies associated with: (a) public utilities such as water supply, gas supply, power supply or communications; (b) medical equipment or pharmaceuticals production or sales; and (c) daily necessities such as supermarkets, logistics and food production were excluded from the Postponement of Reopening of Business.

2. These office closure days were considered to be rest days and full salary should be paid during this period. Also, if employees were required to work from home on these days, the employer needed to provide either equivalent compensatory leave or pay the overtime rate at 2 times the employees' normal salary.

3. Companies which needed to resume work before February 10 for special reasons had to provide relevant explanatory materials, report their measures on how they responded to the epidemic situation and had to make a commitment to ensure that the epidemic did not occur within the company. Operation could then be resumed after government approval. In the event of non-compliance with the above, the company would have been ordered to stop operation immediately and held accountable.

Guangdong province also issued a related explanation. In light of the explanation, during the period of the Postponement of Reopening of Business, salaries shall be paid in accordance with employment contracts. Employers shall take all measures not to lay off employees and shall consult with employees to suspend their work if they cannot work remotely, especially for factory workers. Where an enterprise, not subject to the postponement of work restriction, arranges an employee to work overtime at rest days and cannot grant compensatory rest, the overtimes shall be compensated at 2 times the employees' normal salary.

What if any employee is quarantined due to being diagnosed with COVID-19 pneumonia or under mandatory medical observation?

According to the Infectious Disease Control Act and the Notice on Properly Handling Labour Relations during the Prevention and Control of Pneumonia Epidemic Situation of 2019-nCoV, where an employee is quarantined due to being diagnosed with 2019-nCoV pneumonia or under mandatory medical observation, and therefore cannot perform their job duties, employers must pay their salary during the quarantine period.

How do we handle business travel within China or to the Hubei province?

Since the outbreak is a developing situation with new facts coming to light all the time and almost all cities of Hubei province are still under lockdown, it is advised that:

1. business travel to, from and within Hubei province should be cancelled;

2. business travel to, from and within China should remain limited to essential travel only, subject to management approval; and

3. as a precaution, employees who travelled from other regions should be asked to work from home for a period of 14 days before returning to the office.

Are there any measures to support employers in the COVID-19 situation?

Beijing, Shanghai, Suzhou and Zhengzhou have issued local measures to support employers in recent days. The major points are as follows:

1. Employers in Beijing and Shanghai may postpone payments of social insurance contributions from 1 February and must make the back payment of the contributions within three months from the end of prevention of the epidemic.

2. Where a Beijing enterprise incurs operational difficulties due to the situation, the enterprise may consult with employees to adjust salary, arrange work shifts, reduce working hours, suspend work or take related measures to sustain positions and avoid layoffs.

3. Without impacting social insurance entitlements, employers in Suzhou may postpone payment of certain categories of social insurance (pension, unemployment and work-related injury) for up to 6 months and must make the back payment of the contributions afterwards.

4. Employers in Suzhou can request to reduce or postpone tax payment.

We anticipate that more supportive measures will probably be issued by governments over the next few days. If you have any questions or would like more information on the issues discussed above please feel free to let us know.

Many thanks and we wish you a prosperous year of the rat!