05 March 2020

Employment law around the coronavirus outbreak in China


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Since the COVID-19 outbreak, many new regulations and policies have been introduced at both national and local levels in Mainland China to deal with the employment issues arising from the pandemic. Below is a high-level overview of some major employment issues to be considered.

General Obligations to Provide Safe and Healthy Working Environment

Employers in China have a general duty to provide employees with a safe and healthy working environment. In addition, employers have legal obligations to prevent and control communicable diseases pursuant to the PRC Law on the Prevention and Treatment of Communicable Diseases and the PRC Emergency Response Law and relevant regulations, which are briefly summarised below:

  • to cooperate with the prevention and control measures taken by the disease prevention and control authority and medical institutions;
  • to provide truthful information to the local disease prevention and control authority and medical institutions;
  • to promptly report any infectious cases or suspected cases to the local disease prevention and control authority and medical institutions;
  • to report to the disease prevention and control authority and carry out sanitary measures for communicable disease prevention and control if the number of mobile employees are 200 or more;
  • not to discriminate against any employees confirmed or suspected to have contracted the communicable disease;
  • to carry out strict disinfection measures in the place contaminated with the pathogens of infectious disease under the direction of the disease prevention and control authority.

Failure to perform the above obligation would result in administrative penalties or even criminal liability for the employers.

Workplace Safety

Companies have gradually resumed business operations in Mainland China. The PRC Ministry of Human Resources and Social Security (“MOHRSS”) issued some guidelines on 7 February 2020 on stabilising employment relations and supporting enterprises’ resumption of work and production during the COVID-19 outbreak.

Many provincial and municipal governments have also issued detailed action measures for employers to follow to prevent the spread of disease in the workplace.

Work from Home
Where the employees cannot resume work in the offices (such as those cross-border commuters between Hong Kong and Mainland China) or the employers have to suspend the operation or production due to the pandemic, employers should, if possible, arrange to have their employees work from home. If working remotely is not possible, employers may consult with the employees about having them take annual paid leave or employer-provided leave first.

Flexible Working-Hour Arrangement
To avoid crowd gathering as much as possible, employers are also encouraged to adopt working hours in a flexible manner, such as shift rotations and flexible commuting times.

Salaries Payment

Salaries for Infected Employees
Employees subject to mandatory quarantine or receiving medical treatment are still entitled to full salary during the quarantine or medical treatment period (“Quarantine Period”), even though they cannot perform their normal job duties.

Salaries for the Business Suspension Period
MOHRSS announced in late January 2020 that, when business operations are suspended due to the outbreak beyond the first salary pay cycle (in most cases, one month), employers may reduce their salary payment obligations, so that they only need to pay working employees a salary which is no less than the local minimum wage standard, and for those employees who are not working, living expenses as prescribed by local regulation.

Local rules may differ so employers should check with the relevant local authorities to ensure compliance.

Reduction/Exemption of Social Insurance Contributions and Deferred Payment of Housing Provident Fund

On 18 February 2020, in order to ease the financial stress faced by enterprises, the State Council decided to reduce or exempt the portion of social insurance contributions borne by employers and defer payments of the housing fund.

Reduction or Exemption of Social Insurance Contributions
Starting from February 2020, Small and Medium Enterprises (“*SMEs*”) in provinces other than Hubei and all enterprises in Hubei, will be exempt from paying premiums on pension, unemployment and work injury insurance borne by the employers for up to five months. For large companies in provinces other than Hubei, the social insurance premiums payable will be halved for no more than three months.

Companies experiencing severe difficulties in production and operation due to the pandemic may apply to defer payment of social insurance premiums for up to six months.

It is expected that provincial or municipal local governments will subsequently issue detailed implementation rules on this.

Deferred Payment of Housing Provident Fund
Enterprises can apply for deferred payment of housing provident funds before the end of June 2020. At the same time, employees who have not been able to make contributions to their housing provident fund due to the pandemic situation will be exempted from paying the overdue penalty.

Employment Termination

Infected Employees
Employees in their Quarantine Period cannot be terminated unless by reason of serious misconduct. If an employee’s contract expires during the Quarantine Period, the employment contract shall be automatically extended until the end of the Quarantine Period.

Lay-off
When experiencing difficulty in business operations due to the pandemic, employers are encouraged to consult with employees to adjust their salary, flexibly arrange employees’ shift rotations, and/or reduce working hours instead of resorting to mass lay-offs.

Going Forward

Given that the pandemic is expected to continue for some time, there is so much uncertainty and the national and local governments frequently issue new regulations and policies dealing with the COVID-19 outbreak these days, employers are encouraged to keep a close eye on the regulatory developments, especially the daily local regulatory updates in the city where they operate, and stay in compliance to the best they can.
Employers should fully cooperate with health authorities, consciously taken prevention measures (such as ensuring access to adequate masks, gloves, disinfectants and thermometers by all employees upon their return to work, and through cleaning of offices and workplaces to provide a safe working environment for employees), and immediately report infectious cases and suspected cases.

Disclaimer: The relevant PRC rules and regulations are often subject to change. Please contact your usual Withers lawyers for the latest update.

Please click here for a comprehensive guide on the Legal Implications for Businesses in Hong Kong and China from the coronavirus outbreak.

Click here to read more insights on how we can weather the coronavirus outbreak with you.

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