This Lawflash provides multinational companies with operations in the People’s Republic of China (PRC) with some guidance on how to handle the challenging employment issues during this time. The situation is fluid and rapidly changing, and this Lawflash provides insight based on select emergency measures issued through the afternoon of January 31, 2020.
The Chinese government is taking significant steps to prevent the spread of the 2019 Novel Coronavirus (COVID-19). On the morning of January 27, the Chinese State Council declared that the Chinese New Year holiday is being extended nationally through February 2. The Spring Festival Holiday started on January 24 and was scheduled to end on January 30. This means that the previously scheduled workdays of January 31 and February 1 will be considered public holidays.
Employers should be sure that they are tracking local regulations, which local and provincial governments are issuing electronically. Companies in Shanghai, Suzhou, and Guangdong Province have been directed not to open before February 9, and the reopening of schools and universities are being delayed through February 17, which means interns and employees with young school-age children and no home help may not be able to return to work before school resumes. The situation is fluid and changing rapidly.
Below are some questions for companies with employees in the PRC to consider.
If the employee tells you over the phone, get the employee’s telephone number, tell the employee not to come to work and that human resources (HR) will be calling the employee very shortly to discuss the situation. Immediately let HR know that it should call the employee about a COVID-19 issue, but be sure your call to HR cannot be overheard by others. HR should contact the employee to ensure the company monitors the employee’s health status and provides company assistance to the extent possible.
When HR and the employee connect via telephone, HR should advise the employee to follow routine public health recommendations on how to protect against COVID-19 and other flu – in the workplace, at home, in other people’s homes, in stores, and all other public areas. These recommendations include wearing a mask when he/she goes out, especially in crowded areas, washing hands thoroughly and frequently, covering the mouth when sneezing or coughing, avoiding contact with others who are sick, and not sharing towels, utensils, cups, plates, or food with others, etc.
If the employee tells you in person while at work, send the employee to the nearest hospital to seek medical care and contact HR. Let HR immediately know that the employee was directed to report immediately to the nearest hospital and why. Again, be sure that your directive to the employee or your call to HR cannot be overheard by others. HR should record information about the employee in a separate medical file for the employee (not the employee’s personnel file).
Due to medical privacy laws, do not convey any medical information you receive to anyone (not to your own manager, other managers/supervisors, or employees) other than HR. Talk to HR about any questions/concerns you have about the information you receive. To ensure the company (and its managers and supervisors) is following all laws, company policies and public health recommendations, company communications pertaining to COVID-19 should be centralized through HR.
The company will then need to take precautions with respect to all other employees who may have been exposed. These precautions include requesting employees to take their temperature daily and monitor themselves closely for symptoms for 14 days from the initial exposure, wear a face mask and follow other safety and hygiene recommendations. Public health sites may mandate additional actions that the company should take. The company should follow up with the employees on a regular basis to monitor their health status and provide additional assistance to the employees, if needed.
If the employee tells you over the phone, you should advise the employee to call HR. If the employee tells you in person, at work, ask the employee when this occurred, and send the employee to the nearest government-approved hospital for testing and medical care. You should also ensure that you have the employee’s updated home contact information. Inform the employee that HR will reach out to him/her shortly, and give the employee contact information for the HR representative designated to handle these issues. When HR and the employee connect via telephone, HR should advise the employee to follow routine public health recommendations on how to protect against COVID-19 and other flu – in the workplace, at home, in other people’s homes, in stores, and all other public areas. These recommendations include wearing a mask when he/she goes out, especially in crowded areas, washing hands thoroughly and frequently, covering the mouth when sneezing or coughing, avoiding contact with others who are sick, and not sharing towels, utensils, cups, plates, or food with others, etc.
Managers should also let HR know of their discussion with the employee immediately so HR can be sure to speak with the employee.
Companies cannot force employees to return to work before the date announced by the Chinese government (which, as of this writing, is February 3 nationally, and February 9 in Shanghai, Suzhou, and Guangdong Province). Companies that fail to heed this direction may be directed by the local authorities to suspend their operations, and the legal representative and person in charge of the company may be subject to administrative detention under serious circumstances. However, companies may ask employees to work remotely, if possible. Companies may not penalize those employees who did not bring a laptop, for example, with them to enable them to work remotely, if this is not already mandated by company policy.
Companies will be required to pay their employees in accordance with local regulations in this regard. If an employee works under the regular working hours system, which is the default working hours system in the PRC, then the employee may be entitled to overtime pay for work performed during the official extension of the Chinese New Year holiday. Employers have several more weeks to check on whether local regulations require enhanced or overtime pay for work performed during this extended holiday period. At the time of this writing there is no clear national guideline. Rather, whether employees are entitled to double pay for work performed during the February 3-7 period is subject to local regulation. We expand on this in response to the next question.
Companies will need to check the local government regulations for instructions on how to handle this issue.
In Beijing, for example, under the emergency measures issued this week, for those employees who cannot return to work for February 3 when Beijing companies are set to reopen, employers may arrange for them to take annual leave. If an employee cannot return to work for an extended period of time (and presumably has exhausted his/her annual leave balance), then, after consulting with the employee, the employer may suspend the employee's work (because the employee cannot work remotely, such as a factory employee (待岗)), and the employer may then pay the employee no less than 70% of the Beijing minimum wage. Beijing minimum wage is currently RMB 2,200 (approximately $317) a month.
Under the newly issued Shanghai regulations, employers are to treat the extended holiday period (from January 31 through February 9) as “weekend days” or “regularly scheduled rest days.” If employees are asked to work during this time, then the employees are entitled to a premium rate of pay for weekend work (200%) or employers can arrange compensatory time off. For those employees who are sick or under medical observation, the employees cannot work, and they should receive their regular salary during this time.
In Guangdong Province, which includes Shenzhen, Guangzhou and Dongguan, the emergency measures provide that any employee who is sick or under medical observation and therefore cannot resume work should be paid full salary during this time, and employees who work during the week of February 3 through February 7 (inclusive) may also receive regular salary for these days. (With respect to February 1-2 and February 8-9, PRC law provides that work performed on weekends normally entitles employees to receive overtime compensation of 200% for each hour worked or compensatory time off, which choice is at the employer’s discretion.) Employers should arrange for those employees who cannot return to Guangdong Province in time to work and who are not infected with the virus to take annual leave during this time. Employers should take all measures not to layoff employees or conduct a mass layoff during this time and should consult with employees to suspend their work (because the employee cannot work remotely, such as a factory employee (待岗)).
Notably under a national notice and the emergency measures in Shanghai and Guangdong Province, if a company cannot resume operations due to the virus, then similar to the regulations that apply for a “partial shutdown” of operations, the company should pay the employees their full salary for the first full wage payment cycle (which is generally the calendar month in the PRC). If at the end of the first full wage payment cycle the company cannot resume regular operations, then the employer can pay employees at a lower rate. In Shanghai the employer may reduce the employees’ base pay during this period to the minimum wage, which is RMB 2,480 (approximately $357) a month. In Guangdong Province, the employer may reduce the employees’ base pay during this period to as low as 80% of the local minimum wage. In Shenzhen, for example, the local minimum wage is RMB 2,200 (approximately $317) a month.
The municipalities of Suzhou, Chengdu, and Tianjin have also clarified, as Shanghai has, that any work performed during the extended holiday period from January 31 through February 2 should be compensated at 200% or with compensatory time off. In other words, these days are to be treated as regularly scheduled rest days, and would normally entitle employees working on these days to receive overtime benefits, as noted above. Employees who cannot return to work in these jurisdictions because they are sick or due to the government’s emergency measures or the government-mandated delay in the resumption of business operations should receive their regular salary during this period. There is a suggestion that any work performed during this period is entitled to double time, but further clarification is needed.
Employers may consider responding as follows:
The company may respond that HR is monitoring employee absences and will follow its regular procedures requiring a medical release to return to work as well as any additional public health return-to-work recommendations.
Remind employees to wear face masks or cover their mouths when coughing and sneezing and to wash their hands immediately afterwards and after touching public spaces, such as door handles, without gloves, and to ensure that single-use face masks are disposed of appropriately to prevent reuse. In addition, consider undertaking additional surface cleaning by trained cleaners to help reduce the potential for transmission of any colds or flus among your employees. Further consider installing hand sanitizer at or near fingerprint scanners and other doorways.
Companies may check whether local regulations require special precautions to be taken. For example, in the newly issued Beijing regulation, employees who come back from Hubei Province or have had close contact with people in Hubei should accept supervisory medical observation for 14 days and should not go out during this period. For employees who come back from other areas, these employees should monitor their own body temperature for 14 days, and during the 14 days, companies may implement a staggered rush-hour plan and arrange for employees to work from home if possible. In addition, companies may also consider encouraging all employees to work from home to the maximum extent possible, permitting those employees with young children to work from home until the schools reopen (this is currently scheduled for February 17), and reimbursing employees who must report to the office for taxi or private car service in order to avoid public transport.
Finally, companies may require third parties, such as couriers, vendors, clients, etc., who seek to enter company premises, to wear face masks or have their temperature taken prior to entering the work premises in order to prevent potential exposure.
If employees are talking among themselves at lunch, on their breaks, or before or after their work shift, the company cannot regulate what they discuss with one another.
However, as with any employee discussions during working time, managers and supervisors can direct employees to get back to work or direct them to pay attention to their work rather than talking. The company also can assure employees that HR is monitoring employee absences and, if other information is necessary for workplace safety and health pertaining to COVID-19, HR will provide employees with that information.
Finally, we recommend that all employers take caution in making any employment decisions with respect to circumstances related to COVID-19, as additional “emergency measures” are likely to be issued at the national, provincial, and/or local levels to provide greater protections to employees and guidance to employers during this challenging time.
If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers:
Beijing/Shanghai
K. Lesli Ligorner