Professional Suggestions by Chinese Lawyers towards Coronavirus: Employers Should Plan, Not Panic

The novel coronavirus rampaging across the world's second-largest economy has disrupted the global businesses and rattled the global financial markets, forcing cities to be cordoned off and companies thus have to shut down. As governments at both national and local levels have taken measures to prevent the spread of the coronavirus, this outbreak has gradually become a major public health safety issue.

In order to prevent the serious spread of the coronavirus, the People’s Republic of China (PRC) State Council announced an extension of the Spring Festival holiday to 2 February 2020, and many provinces in China have requested that enterprises could not resume work until 9 February 2020. The virus and these related measures have raised a number of challenges for employers with operations in China: how to provide safe work conditions for employees; how to adjust the work schedule; the impact caused by these measures on overtime pay; and other relevant issues. This article written by Chinese lawyers in Landing Law Offices, aims at addressing several major matters, taking Shenzhen, China as an example. According to Article 5 of the Regulations on Paid Annual Leave for Employees (职工带薪年休假条例), Article 9 and Article 13 of the Measures for the Implementation of Paid Annual Leave for Employees of Enterprises (企业职工带薪年休假实施办法), Article 2, Paragraph 1 of the Opinions on Stabilizing Labor Relations and Supporting Enterprises to Resume Production during the Prevention and Control of New Coronavirus-Infected Pneumonia (关于做好新型冠状病毒感染肺炎疫情防控期间稳定劳动关系支持企业复工复产的意见) issued by the Ministry of Human Resources and Social Security, China Federation of Trade Unions, China Enterprise Confederation/China Entrepreneurs Association and China Federation of Industry and Commerce, Article 3 of the Notice on Actively Responding to the Outbreak of Pneumonia Caused by the New Coronavirus and Doing Work Related to Labor Relations (关于积极应对新型冠状病毒感染肺炎疫情做好劳动关系相关工作的通知) issued by the Human Resources and Social Security Department of Guangdong Province, Human Resources and Social Security Department of Shenzhen Transmits the Notice on Actively Responding to the Outbreak of Pneumonia Caused by the New Coronavirus and Doing Work Related to Labor Relations (深圳市人力资源和社会保障局转发关于积极应对新型冠状病毒感染肺炎疫情做好劳动关系相关工作的通知), Article 14 of Measures of Shenzhen Municipality to Cope with the Pneumonia Epidemic of New Coronavirus Infection and Support Enterprises to Tide over the Difficulties (深圳市应对新型冠状病毒感染的肺炎疫情支持企业共渡难关的若干措施) and the Notice of the People's Government of Guangdong Province on the Adjustment of the Minimum Wage Standard for Employees of Enterprises in Guangdong Province (广东省人民政府关于调整我省企业职工最低工资标准的通知), and refer to the case trialed by Shenzhen Intermediate People's Court, for example Case No. (2018)粤03民终9167号, telephone consultation records of the Human Resources and Social Security Department of Guangdong Province and the Human Resources and Social Security Department of Shenzhen, and the "latest policy interpretation on the epidemic" open online course offered by Landing Law Office:

If a company in Shenzhen stops work and production due to novel coronavirus outbreak, the employer can arrange for the employees who stop working to take their paid annual leave, but he/she must reach a consensus with the employees. In addition, the Notice of Annual Leave Arrangement shall be delivered to the employees, and the employees shall sign for the Confirmation of Annual Leave Arrangement and send it to the employer (if it is difficult to deliver directly offline, it can be delivered online via wechat, e-mail, video recording, etc.). The employer shall properly keep the written reply, audio-visual materials and other evidence proving the consensus reached by both parties, so as to effectively safeguard the employer’s own rights in case of labor disputes.Legal calculation standard of paid annual leave: employees who have worked for more than 1 year but less than 10 years shall have 5 days of paid annual leave; employees who have worked for more than 10 years but less than 20 years shall have 10 days of paid annual leave; employees who have worked for more than 20 years shall have 15 days of paid annual leave (When the number of paid annual leave days stipulated in the labor contract or collective contract or the regulations of employer is higher than the legal standard, the employer shall execute the contract or the regulations).After the period of prohibiting the resumption of work stipulated by the Human Resources and Social Security Department of Guangdong Province (after 9 February, 2020), when the company in Shenzhen which stops work and production due to novel coronavirus outbreak fails to reach a consensus with the employees who stop work on the arrangement of paid annual leave:

If the company in Shenzhen has not stopped work and production for more than one salary payment period (within 30 days), the employer shall pay the salary according to the standards stipulated in the labor contract. If the basic salary and performance salary are respectively agreed in the labor contract, the employer only needs to pay the basic salary. For example: when the labor contract agreed on the 15th of every month to pay salary, and the company resumes work on 15 February, 2020, this situation belongs to the situation mentioned in this point.If the company in Shenzhen has stopped work and production for more than one salary payment period (within 30 days), the employer shall pay the salary according to the standards stipulated in the labor contract within the first salary payment period. If the basic salary and performance salary are respectively agreed in the labor contract, the employer only needs to pay the basic salary. After the first salary payment period, the employer shall pay the living expenses to the employees, which shall not be less than 80% of the minimum wage of Shenzhen (2,200 yuan/month). The living expenses shall be paid until the company resumes work or the labor relationship is terminated. For example: when the labor contract agreed on the 15th of every month to pay salary, and the company resumes work on 15 March, 2020, this situation belongs to the situation mentioned in this point.Failure to plan for how to cope with this outbreak is planning to fail. Plans made under duress in the midst of a crisis are routinely destined to fall short. Coronavirus infections and measures taken to control the outbreak will impact the ability of businesses and schools to meet many contractual or regulatory obligations they have. It is essential for these entities to consult their lawyers of Chinese law firm during their planning processes. Chinese attorneys across various practice groups of Landing Law Offices are well positioned and prepared to assist clients in crafting strategies to cope with this looming crisis. If you have any question on how your business should plan to respond to a coronavirus outbreak, please contact us.