With employees gradually coming back to work in China in the wake of the outbreak of the novel coronavirus, this alert summarizes recent regulatory and policy developments. Because of the changing nature of the situation, this alert is intended only as general information as of February 9, 2020 and should not be taken as legal advice. For further details, please refer to our regular Chinese-language updates, posts on the JunHe WeChat feed, and our English-language update of January 31, 2020.
The State Council issued a notice on January 26, 2020 extending the Spring Festival Holiday to February 2. Since then, the national government has not issued subsequent national rules or guidance regarding when employers may resume operations, thereby leaving the date of “return to work” to local authorities. Many local jurisdictions issued notices delaying the resumption of work until February 10 with exceptions for essential industries or services. Additional employers were allowed to open earlier upon approval.
With some local exceptions, including Wuhan and Wenzhou, the delay in the resumption of work has not been further extended. Thus, if health and safety requirements are met, most employers could require employees to go back to work at the current time. However, given that many employers may not be able to meet the health and safety requirements, many employees are hesitant to return, and employers are concerned with legal liability if employees get infected at work, many employers are not requiring employees to report to work this week with still other employers are pushing the return out further, preferring employees to work from home to the extent possible.
Several local jurisdictions, including Guangzhou, have issued rules requiring employers to seek approval with local authorities before they can resume operating. These rules require employers to set forth the measures they have taken to ensure employee health and to prevent the spread of the novel coronavirus. Employers may be required to make available medical equipment (e.g., infrared temperature detectors, thermometers, face masks), conduct employee health monitoring, rotate work schedules, facilitate remote work arrangements, adjust air ventilation, restrict office access to non-employees, and make arrangements for employees to not eat together in groups.
In response to issues relating to the resumption of work, the Ministry of Human Resources and Social Security, the All-China Federation of Trade Unions, the China Enterprise Confederation/China Enterprise Directors Association, and the All-China Federation of Industry and Commerce (collectively representing government, labor, and employers) issued a joint notice on February 7. Key points of the notice include:
Employers are encouraged to engage in dialogue and consultations with employees before employees return to work. Employers are also encouraged to arrange for employees to work at home if employees cannot report to the work location or the employer otherwise cannot start operations.
If working from home is not possible due to the nature of the employer’s business, after consultations with employees, the time not worked may be treated as use of statutory annual leave and use of any additional discretionary leave provided by the employer. This provision indicates that an employer may have the discretion to require employees to use leave during the current time.
If employees are unable to return to work after using all available leave, and employer operations have been suspended for at least one pay period (which is usually one month), employers may take advantage of rules that permit paying employees an allowance after the first month, usually 70%-100% of the local minimum wage.
Employees who have complied with health and safety requirements, and are unable to persuade employees to return to work, may handle the matter “according to law.” This provision indicates that employers, pursuant to their company rules, could terminate employees who unjustifiably refuse to return to work.
Employers suffering production or operation difficulties are encouraged through “democratic procedure” to engage in consultations with unions and employees to reduce salaries, adopt shift schedules, and reduce working hours in order to maintain levels of employment. In addition, employers who cannot make salary obligations may negotiate with unions or employee representatives to delay payment.
Dispatched employees may not be returned to agencies on account that the workers cannot perform work during the current situation.
Confirmation that employers are obligated to pay 200% overtime or give time off in lieu to employees who worked during the extended Spring Festival holiday period of January 31-February 2.
Numerous local regulations have been issued regarding the obligation of individuals to report where they have traveled and whether they may have been in contact with infected persons. Employees who have been diagnosed with the novel coronavirus would be required to be treated.
The following summarizes the rules for Beijing, Shanghai, Guangzhou, and Shenzhen that could require an employee who is not infected to be quarantined. Generally speaking, an employee could complete a quarantine at home.
A person is required to undergo a 14-day quarantine if, within 14 days of arrival in Beijing, the person has been in Hubei province or had contact with a person who was in Hubei (within that same 14-day period). Employers are required to continue to pay employees during a quarantine period.
Persons who have been in other areas of China are not required to be quarantined but should still have their temperature taken and monitor their health status during the 14 days after arriving in Beijing. In a notice issued February 6, people who have been in “high-risk areas of the epidemic” (areas that are not defined) are recommended not to come to Beijing.
Persons who have been in “key areas of the epidemic” (which is undefined), persons who have been in close contact with individuals who have been in such areas, and persons who have been in close contact with individuals who have infected or suspected to be infected are required to be quarantined for 14 days. Although not stated in the notice, the relevant period for presence in “key areas” is understood to be 14 days prior to arrival in Shanghai. Any period of quarantine is paid leave.
While the general rule in Shanghai is that persons who have visited other areas may go to work without quarantine, the Shanghai districts of Jinshan and Qingpu have issued notices requiring 14-day quarantines for all persons returning from outside the city, including persons coming from abroad.
Persons who have been to “key areas of the epidemic” (which is not defined) within 14 days prior to arriving in Guangzhou are subject to a 14-day quarantine. Employers are obligated to pay full salary during such a quarantine. Persons who have visited other areas are not subject to quarantine and therefore may attend work.
Individuals arriving in Shenzhen from the place “where the epidemic occurred” (which is not defined) are subject to 14-day quarantines. Employers are required to pay full salary. Individuals who have visited other areas are not subject to quarantine and may attend work.
With a national resumption of schools originally scheduled for February 17 (and international schools beginning earlier), education authorities have order postponement of all schools, with some schools not beginning until at least March 2. The delayed start date will place a large burden on working parents, particularly those who rely on caregivers or relatives who may be currently prevented from traveling.
In response to this need for childcare, Beijing municipality issued a notice providing that an employee may stay home on paid leave to care for school-age children during a delay in school re-opening if there is no other adult family member available to care for the children. During this period, employees are protected from termination and their employment contracts automatically extend. The notice says employees can be “encouraged” to work while they are at home. To date, Liaoning province is the only other jurisdiction that has provide for a similar leave.
In Shanghai, an official from the municipal-level labor union stated at a press conference on February 9 that employers and employees are encouraged to consult with each other to find amicable solutions to the issue of employees having school-age children at home during a school closure. These remarks indicated that Shanghai—unlike Beijing—will not require employers to grant childcare leave to employees. The Shanghai official also stated that employers and employees should discuss salary during a childcare leave, thereby indicating that any leave an employer grants does not need to be fully paid.
In efforts to ease financial pressures on employers, the central government and local authorities have taken steps to reduce social insurance contribution obligations.
On January 30, 2020, the Ministry of Human Resources and Social Security announced that the 2020 adjustment of employee social insurance contribution bases will be postponed from April 1, 2020 to July 1, 2020. During April, May, and June, employers should make social insurance contributions based on the 2019 figures. In addition, an existing policy is extended giving employers who do not lay off employees a refund 50% of unemployment insurance contributions.
Beijing municipality extended the adjustment of social insurance contribution bases until August for employers in industries that are hit particularly hard, such as tourism, transportation, entertainment, and hotels.
In Shanghai, among other financial and tax measures announced on February 7, employers may delay tax declarations for up to three months. Employers may also delay making social insurance contributions for their employees until three months after the end of the epidemic, after proper filing with the social insurance authorities. In addition, the employee medical insurance contribution will be temporarily reduced by 0.5 percentage points in 2020.
In Suzhou, small and medium-sized employers facing temporary difficulties that are unable to pay social insurance premiums may defer payment of contributions for pension, unemployment insurance, and occupational injury insurance for up to six months after approval.