Challenges of the Newly Relaxed COVID Policies - What can Companies do？

On 7 December 2022, the Chinese government issued the Circular on Further Optimizing the Implementation of COVID-19 Prevention and Control Measures (“New Policies”). The New Policies lifted most of the controlling measures on prevention of COVID adopted in the past three years. In the coming months a large number of infections are expected.

Companies are facing challenges in dealing with COVID infections at workplaces. In this newsletter, we would like to introduce various COVID HR policies on infected employees and close contacts and the control measures that companies can take in order to protect their employees' health and safety and maintain continuity of their business operations.

1. COVID HR Policies

The Chinese government has issued a number of COVID HR Policies, mainly, at the State level, the Notice on Properly Handling Labor Relationships during the Prevention and Control of Pneumonia Epidemic of New Coronavirus Infection dated 24 January 2020 and the Opinions on Better Supporting the Stabilization of Employment Relationships and Resumption of Operation and Production of Enterprises during the Period of Prevention and Control of Coronavirus dated 7 February 2020, as well as, at the local level, related policies issued by local governments.

According to the New Policies, infected employees with mild symptoms or without symptoms normally will be quarantined at home. They shall quarantine normally for 7 days and will be released from quarantine after getting two negative PCR test results consecutively on the 6th and 7th days. Only those whose symptoms become serious will be sent to designated hospitals. Close contacts shall quarantine at home normally for 5 days and will be released from quarantine after getting a negative PCR test result on the 5th day.

Based on the COVID HR Policies, infected employees and close contacts are entitled to enjoy the following treatments:

(1) If an employee is infected with COVID or becomes a close contact, during the quarantine period or medical treatment period, the company shall pay normal salary to the employee and shall not terminate the employment contract due to the reasons of illness, incompetence, change of objective circumstances or mass lay-off. If the employee's employment contract expires during the quarantine period or medical treatment period, the contract term will be automatically extended until such period expires.

Legally speaking, an employee who is suspected to be infected with COVID shall enjoy the same treatment as those of close contacts.

(2) During the quarantine period, the company can arrange an employee who is a close contact to work from home. If the employee is unable to work from home, the company can arrange the employee to take annual leave or other paid leave, and depending on the provisions in local policies, the company may need to or not need to consult with the employee before making such arrangement.

(3) If an employee is still unable to go to work after the quarantine period or medical treatment period is over, the employee shall apply for sick leave or other leave according to law and company regulations and the company shall pay leave salary to the employee according to law and company regulations as well. This policy will become relevant for employees who have post COVID symptoms or those who are reluctant to come to work due to fear of catching COVID.

2. Control measures to be taken by companies

With the adoption of the New Policies, there will not be a "lock-down" for companies. However, since the Omicron virus is highly contagious, a large number of employees at a company may be infected at the same time, which will affect the company's normal operation. Therefore, currently companies shall, on the one hand, protect their employees' health and safety and on the other hand, keep their business on going. Under PRC law, companies are encouraged to take measures to prevent and control COVID infections by employees at workplaces.

We recommend that in addition to complying with statutory COVID HR Policies, companies shall adopt suitable measures depending on the situation of their employees and the nature of their business as follows:

(1) Supervise the health situations of employees

Since PCR tests are no longer mandatorily required, employees may not quickly realize being infected with COVID or becoming a close contact. In order to reduce the spread of coronavirus at the workplace, companies may take the following measures to supervise the health situations of employees:

i. Require employees to do PCR test and/or antigen test regularly and only enter into the business premises of the company if the test result is negative;

ii. Check the temperatures of employees when they enter into the business premises of the company;

iii. Require the employees to wear masks and keep distance from each other during work;

iv. Require the employees to duly report to the company if they or their family members living together have any symptom such as fever, headache, or sore throat, etc.

(2) Duly arrange those employees who have a positive PCR test and/or antigen test result, those who have any symptoms which are typical for COVID infections and those who might become close contact to be subject to quarantine without coming to workplaces.

In practice, it is difficult to duly and accurately identify who shall be regarded as close contact. However, due to the high contagiousness of COVID, the earlier an infected employee or close contact is isolated, the less the virus will spread at the workplace. Therefore, companies may take quick actions on arranging infected employees, employees who are suspected to have COVID and employees who might become close contacts to leave the company premises as soon as possible.

However, companies may wish to follow up the situations of these employees closely, for example, by asking them to duly provide PCR test results. If any employee is found to have recovered, or not to be confirmed as being infected, or completed the quarantine period as close contact, the company can ask the employee to come back to work on site.

(3) Arrange employees to take leave or work in proper ways

For close contacts, the company can arrange the employee to work remotely from home during the quarantine period. If the employee is not able to work from home, the company can arrange the employee to take annual leave or other paid leave the employee is entitled to during the quarantine period. Currently according to the local policies of Beijing and Shanghai, a company is entitled to arrange a close contact who is unable to work at home to take annual leave or other leave the employee is entitled to during the quarantine period without consultation with the employee. But in other locations, if the local policies do not have such provision, the company may wish to consult with the employee before making such arrangement.

As for other employees, companies, depending on their business nature, may wish to take measures to reduce the risks that a large number of employees are infected at the same time. The measures can be the following:

i. Arrange employees to work flexibly or work from home

If a company's business allows employees to work flexibly or work from home, in order to reduce the risks of infection due to commuting with public transportation or gathering at workplaces, the company can arrange the employees to work flexibly such as adjusting the working time of the employees or to work from home during the period of peak of infection in the city.

According to the COVID HR Policies, during the epidemic period, companies are encouraged to arrange their employees to work flexibly or work from home. Nevertheless, except for the close contacts, how to arrange the employees work flexibly, whether to arrange employees to work from home. or which employees can work flexibly or work from home, etc., is fully subject to the decision of the companies.

ii. Arrange employees to do closed-loop production by shifts

If a company's business does not allow the employees to work from home, in order to maintain the production uninterrupted, the company may consider to arrange the employee to do closed-loop production by shifts. I.e. the company arranges a certain amount of employees to stay at the company in an isolated space without contacting any other persons to engage in production for a certain period of time, and then arrange another certain number of employees to take shift for a certain period of time. Under such arrangement, the production will not be interrupted.

In order to improve the productivity in the closed-loop production, the company may arrange the employees on shift to do some overtime work. Or as an alternative, the company may consider to adopt the comprehensive working time system for these employees, under which, the company can arrange the employees on shift to constantly work for a certain amount of time and then arrange them to take rest for a certain amount of time when they are not on shift. As long as the average working hours of these employees during a certain period of time do not surpass the standard working hours, it shall not be deemed as that the employees work overtime. Under PRC law, the adoption of the comprehensively calculated working time system is subject to the approval of the competent labor administrative authority. During the epidemic period, in some locations such as in Beijing, Wuhan and Suzhou, the adoption of comprehensively calculated working time system will be easily approved by the competent labor administrative authority.

Please note that no matter whether a company arranges the employees to do overtime work or be subject to the comprehensively calculated working time system, the company shall always comply with PRC laws and regulations on overtime work and ensure the employees working by shifts to have proper rest.

iii. Suspension of work

If a company considers that currently it is not suitable to continue its operation, it may decide to suspend its operation. According to the COVID HR Policies, in the first month of suspension of work, the company must pay normal salary to the employees. Starting from the second month, the company is allowed to only pay the employees the living allowance. The amount of the living allowance differs from one location to the other, usually from 70% to 100% of the minimum wage at the location.

(4) Setting up company regulations to implement COVID control measures

Since the spread of COVID virus is likely to still continue for some time, in order to ensure the employees to comply with the COVID control measures, companies may wish to set up their own internal regulations in writing and include proper disciplinary measures which can ensure the strict implementation of such measures. Under PRC law, in order to ensure the validity of such company regulations, companies shall follow the collective consultation procedures provided by statutory law and notify employees of these regulations in advance. According to the COVID HR polices, during the epidemic period, the collective consultation procedures can be made on-line or by e-mail.

With the Omicron virus, people infected are expected to recover within 7 to 10 days. Therefore, after the peak of infections in the city has passed, companies are likely to be able to resume their normal business operations. However, since coronavirus as such may not disappear very quickly, therefore, the topics of how to protect the employees' health and safety and the continuity of the company's business operations without being impacted by a large number of COVID infected staff will continue to be important for a certain period of time in the future.