Coronavirus Outbreak: What can companies do in HR management during the epidemic period?

China

Companies will soon resume their operations one after another after the expiration of the public holidays for Chinese New Year and the temporary stop of work as required by many local governments for control of the coronavirus (for details on these, please refer to Law-Now article: Coronavirus Outbreak: What companies shall do with employees’ holidays?). However, after coming back to work, companies must continue to take measures for prevention and control of the virus as required by law (for details on these, please refer to Law-Now article: Coronavirus Outbreak: What should companies do when employees are back to work?) because most locations are still under the status of public health security emergency. The epidemic period creates big challenges for business operation and HR management of companies.

In order to ensure stable employment relationships and help companies to overcome difficulties, until 6 February 2020, the PRC governments at both State and local levels issued some policies or made some public notices to support companies during such difficult period. Please find below some details on what the companies can do in HR management.

Flexibility in Work

• Arranging Employees to Work in a Flexible Way

According to the Notice on Properly Handling Labor Relationships during the Prevention and Control of Pneumonia Epidemic of New Coronavirus Infection issued by the PRC Ministry of Human Resource and Social Security on 24 January 2020, during the epidemic period, companies suffering difficulties in operation and production may, upon consultation with the employees, arrange their employees to work and rest with rotations or shorten their working hours and reduce the salaries of employees accordingly. Such policies apply nationwide.

If a company does not have sufficient workload for its employees or needs to reduce its production capability, the company may reduce its labor costs by adopting such policies. The above notice did not specify whether the consultation with the employees refers to an individual agreement or collective consultation. Currently it is generally understood that the company can consult with the employees by way of collective consultation, i.e. the company does not need to get the consent from each individual employee as normally required by statutory law, but can discuss with the employees’ representatives’ congress or all staff, ask for their proposals and consult with the trade union or the employees’ representatives. As long as most employees do not object the company can implement its arrangements accordingly.

• Adopting the Comprehensively Calculated Working Time System

Under PRC law, the comprehensively calculated working time system means that the employees can constantly work for a certain period of time and rest for another certain period of time. As long as the employees’ average working hours, during a certain period such as one month, one quarter or one year, does not surpass 8 hours per day, the company does not need to pay overtime payments to the employees. As required by law such special working time system is only applicable to some special industries which require employees to work constantly or can be impacted by seasons, and the adoption of such working time system is subject to the approval of the competent labor administration authority.

According to the Notice on Relevant Issues related to Safeguarding the Stabilization of Employment Relationships during the Period of Prevention and Control of Coronavirus issued by the Beijing Human Resource and Social Security Bureau on 23 January 2020, companies may adopt the comprehensively calculated working time system for employees during the epidemic period.

Based on the above, companies in Beijing may consider to adopt such special working time system to the employees, i.e. arranging its employees to take rest during the period when the employees are locked out or when the company does not have sufficient work load due to the impact of the coronavirus, and after the epidemic period, arranging its employees to work overtime, if necessary. Under such working time system, a company does not need to pay overtime payments as long as the average working hours of the employees during a certain period do not surpass the standard working hours. In addition to Beijing, Wuhan and Suzhou also adopted such policies. So far, there are no such policies at other locations. However, we expect that other local governments will follow to issue similar policies.

• Arranging the Employees to Work from Home

The PRC labor law did not provide the mode of “work from home” in the past although in practice many companies already adopted it in their daily work. In the Notice on Further Well-handling the Related Human Resources and Social Security Work during the Period of Prevention and Control of Coronavirus issued by the Beijing Human Resource and Social Security Bureau on 31 January 2020, it is provided that a company may arrange the employees to work from home by means of telephone and Internet and so on and the company shall pay normal salary.

Other local governments such as Shanghai, although they do not specify “work from home” in regulations, in order to reduce the congregation of people, also encourage companies to arrange their employees to work from home during the epidemic period. However, if a company requires its employees to work from home, it shall be deemed as the employees doing full time work and the company shall pay normal salaries to the employees, except if the employees agree otherwise.

• Arranging the Employees to Take Annual Leave

Under PRC labor law, employees are entitled to a statutory annual leave of 5 to 15 working days subject to their accumulative working period with all employers. In most of the foreign invested companies, employees enjoy more annual leave than the statutory ones. Legally speaking, companies are entitled to arrange the employees to take annual leave in consideration of the operation needs and willingness of the employees. However, the law is silent on whether in the situation where the employees are not able to go to work during the quarantine or lock out period as required by the government, the company can arrange such employees to take annual leave or not.

In the Notice on Relevant Issues related to Safeguarding the Stabilization of Employment Relationships during the Period of Prevention and Control of Coronavirus issued by the Beijing Human Resource and Social Security Bureau on 23 January 2020, the Beijing local government allows companies to arrange annual leave for employees who are not able to duly come back to work due to the coronavirus. Other local governments such as Guangdong and Zhejiang Provinces also allow companies to arrange employees to take annual leave upon consulting with them.

Based on the above, except for those locations in which local regulations expressly allow companies to arrange their employees to take annual leave such as Beijing, companies which intend to arrange the employees to take annual leave during the quarantine or lock out period as required by the government may wish to consult with their employees. However, during the period other than that required by the government, if any employee is not able to come back to work, companies can arrange the employees to take annual leave.

Suspension of Work/Business

• Suspension of Business

After the expiration of the temporary stop of work which was required by the governments, companies are entitled to decide, at their own discretion, whether to resume their operation or to suspend their business depending on the status of the prevention and control of the coronavirus or the economic feasibilities.

If a company resumes its operation within one month or suspends its business for no more than one month, according to the Notice on Properly Handling Labour Relationships during the Prevention and Control of Pneumonia Epidemic of New Coronavirus Infection issued by the PRC Ministry of Human Resource and Social Security on 24 January 2020, the company shall pay employees normal salaries. If a company does not resume its operation within one month or suspends its business for more than one month, the company can pay those employees who do not work only the living allowances. Different locations adopt different standards of such living allowances. Please find below the relevant information for the following major cities and provinces.

Location Living allowance
Shanghai No less than the minimum wage in Shanghai
Beijing No less than 70% of the minimum wage in Beijing
Jiangsu No less than 80% of the applicable minimum wage at the location
Guangdong No less than 80% of the applicable minimum wage at the location
Zhejiang No less than 80% of the applicable minimum wage at the location

• Suspension of Work of an Individual Employee

According to the Notice on Relevant Issues related to Safeguarding the Stabilization of Employment Relationships during the Period of Prevention and Control of Coronavirus issued by the Beijing Human Resource and Social Security Bureau on 23 January 2010, during the epidemic period, if an employee is not able to come back to work for a long time, upon consultation with the employee, a company may suspend the work of such employee and only pay the living allowance of no less than 70% of the Beijing minimum wage during the suspension period. In addition to Beijing, Zhejiang and Guangdong Provinces and Suzhou city also adopted such policies.

Based on the above, companies in these locations are allowed to suspend the work of an individual employee rather than the entire business during the epidemic period. However, in practice, we consider it difficult to implement because the consent of the employee is required.

Getting Support from Government

• Applying for Government Subsidies for Stabilizing Employment Relationships

The PRC government urges companies to avoid mass lay-offs during the epidemic period. According to the Notice on Properly Handling Labour Relationships during the Prevention and Control of Pneumonia Epidemic of New Coronavirus Infection issued by the PRC Ministry of Human Resource and Social Security on 24 January 2020,if a company meets some requirements such as having duly paid the unemployment insurance premium according to law in the past, and its lay-off rate in the previous year is lower than the urban unemployment rate of the location where the company is located, the company can receive subsidies from the government for stabilizing the employment relationships. Such subsidies for example in Shanghai, amount to 50% of the unemployment insurance premium paid by the company and the employees in the past year.

• Applying for Training Subsidies

According to the public notice made by the Shanghai Human Resource and Social Security Bureau on 3 February 2020, companies in Shanghai providing online occupational trainings to their employees during the period of stop of work can enjoy subsidies in the amount of 95% of the actually incurred training fees.

• Special Social Insurance Policies

According to the Notice on Handling Social Insurance Matters during the Prevention and Control of Coronavirus issued by the PRC Ministry of Human Resource and Social Security on 30 January 2020, if a company fails to duly handle the employees’ social insurance registration and contribution matters due to the epidemic situation, such failure can be made up within 3 months after the epidemic is over and this will not affect the employees’ benefits.

Based on the above, companies which have economic difficulties may delay the payment of social insurance contributions if necessary during the epidemic period.

Conclusion

During the epidemic period, companies have some flexibility to manage their employees based on their own situation in compliance with the law. Many local governments already realized the difficult situation companies, especially small and medium sized companies, are facing and are in the process of issuing new polices to support companies. We suggest that all companies pay close attention to any new developments in this respect.