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Novel Coronavirus and Delayed Work Resumption in China
6 February 2020

In order to strengthen the prevention and control of the outbreak of the new coronavirus infection (designated as 2019-nCoV), and to better protect public health by reducing mass gathering, a “Notice of the General Office of the State Council on Extending the Spring Festival Holidays of 2020” (the “State Council Notice“) was issued on 27 January 2020 to extend the 2020 Spring Festival Holidays to 2 February 2020 (the “Extended Holidays”).  According to the State Council’s original holiday schedule, the dates between 24 and 30 January 2020 were rest days; while 31 January and 1 February 2020 were replacement working days.

 

On the same day of the State Council Notice, the Shanghai Municipal People’s Government issued a “Notice of the Shanghai Municipal People’s Government on Delaying the Resumption of Work and the Start of Schools in Shanghai” (the “Shanghai Notice“).  Except for necessary urban operations (eg water supply, gas supply, power supply, communication etc), supply of materials for the epidemic prevention and control (eg medical equipment, pharmaceuticals, production and sales of protective products etc), supply of daily necessities (eg supermarkets, production and supply of food etc), as well as related enterprises in relation to national economy and people’s livelihood, all other enterprises in Shanghai shall resume office no earlier than 9 February 2020.

 

Subsequently, the Shanghai Municipal Bureau of Human Resources and Social Security also issued a “Notice on Implementation of Human Resources and Social Security Support and Safeguard Measures in Response to the Epidemic of New Coronavirus Infection” (the “Notice of Shanghai Human Resources and Social Security Bureau“) for the proper handling of labor during the epidemic.

 

This Update will address major concerns to employers in the PRC on employees’ work arrangements and salary issues in view of the above notices.

 

Payment of Wages during Quarantine Period

According to the Notice of Shanghai Human Resources and Social Security Bureau, if an employee becomes a coronavirus patient, suspected patient or has close contact with a coronavirus patient and cannot attend work during the period of isolated treatment or medical observation as a result of government measures (the period being referred to as “Quarantine Period”), an enterprise will still have to pay the employee’s wages during the Quarantine Period as if normal work attendance, and shall not in accordance with Articles 40 and 41 of the Labor Contract Law terminate the labor contract with the employee.  If a labor contract expires during the Quarantine Period, the expiration shall be postponed until the end of the Quarantine Period, or after the end of the emergency measures adopted by the government.

 

Payment of Wages During Extension of the Spring Festival Holidays

According to the State Council Notice, the Spring Festival Holidays were extended to 2 February 2020.  Since 2 February 2020 was already a rest day being a Sunday, the actual number of Extended Holidays was 2 working days (ie 31 January 2020 and 1 February 2020 being the replacement working days as stated above).

 

According to the “Measures for National Holidays and Remembrance Days” and the “Notice of the General Office of the State Council on Some Holiday Arrangements in 2020”, only 3 days (ie from 25 to 27 January 2020) of the Spring Festival Holidays were statutory holidays while the rest were regarded as adjusted holidays.  Therefore, the Extended Holidays (specifically 31 January and 1 February 2020) are special holidays that were temporarily provided to all employees due to the coronavirus outbreak, and these days should be considered as rest days and not regular statutory holidays.

 

In addition, according to the State Council Notice and Notice of the Shanghai Bureau of Human Resources and Social Security, employees who have to attend work and could not take leave during the Extended Holidays should be granted leave in lieu in accordance with the Labor Law of the PRC. Wages for working during the Extended Holidays shall be guaranteed under the relevant policies.  According to the Labor Law, under the standard working hour system, if an employer arranges work for employees on a rest day, enterprise may arrange leave in lieu for the employee.  Only when the employer cannot arrange leave in lieu, the employee will be entitled to no less than 200% of his wages as overtime pay.  If an employer had arranged for an employee to work during the Extended Holidays, the employee shall be entitled to leave in lieu or overtime pay.

 

Payment of Wages During Delayed Work Resumption

According to the Shanghai Notice, apart from the extension of the Spring Festival Holidays, the current work resumption date is postponed from 3 February to 10 February 2020.  Since 8 and 9 February 2020 are originally rest days, the delayed resumption period refers to 3 February to 7 February 2020 only (the “Delayed Resumption Period”).

 

According to the Notice of the Shanghai Bureau of Human Resources and Social Security, if an employer permits an employee to postpone resumption of work to 10 February 2020, the employees should be paid in accordance with the usual wages stipulated in the labor contract for the delayed period.  If the delayed period is more than one wage payment cycle, the employer shall pay wages no lower than the minimum wage standard (being currently RMB2,480), which is in line with the provisions of the “Shanghai Enterprises Wage Payment Measures”. In addition, if the employer has operational difficulties due to the impact of the coronavirus, it may adopt measures such as salary adjustment, rotation, shortening of working hours through negotiations with the employees.

 

In relation to the period for payment of wages, according to the “Interim Provisions on Wage Payment”, employers should pay wages at least once a month; while for part-time employees, the employers shall pay every 15 days under the Labor Contract Law of the PRC.

 

During the Delayed Resumption Period, some employers may arrange for employees in certain positions (such as consulting, management and sales) to work remotely from home.  In this case, does the employer need to arrange leave in lieu or pay overtime ?  The notices have not addressed this issue.  However, the delayed resumption of work should not be treated the same as special holidays (the extension of the Spring Festival Holidays).  The Delayed Resumption Period (rather than extension of holidays) is based on emergency and health concerns, and should not be treated as statutory holidays nor rest days, as well as special holiday benefits.  If an employer can arrange for employees to perform their duties remotely from home, it is fair and reasonable to consider such flexible working arrangement as normal work attendance instead of overtime work.

 

In addition, for those employees who are unable to work remotely, employers may consider arranging for such employees to take paid annual leave. However, employers should note that according to the “Regulations on Paid Annual Leave for Enterprise Employees”, an employer can arrange annual leave for employees based on the specific circumstances of work taking into account the employee’s wishes.

 

Despite that the delayed in resumption of work may prevent the spread of the coronavirus, it would inevitably affect the productivity and operation of tens of millions of employers in the PRC.  It is expected that the State and relevant departments would clarify issues such as how the Delayed Resumption Period should be treated, how wages for the period should be calculated, and whether the Delayed Resumption Period can be offset against the annual leave entitlement of employees, in order to balance the impact on the employers and the rights and interests of the employees.

 

If you have any questions about the above China Update or legal issues on employment law or business law in the PRC, experienced lawyers in our China Business Department will be pleased to assist you.

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