Coronavirus Outbreak I – Legal Obligations for Employers in China

Categories: Labor and Employment Law, Legal Updates | By Peter Pang

Towards the end of 2019, local authorities in Wuhan, Hubei province, identified a cluster of cases of novel coronavirus (COVID-19)-infected pneumonia. Instantaneously declared a Public Health Emergency of International Concern by the World Health Organisation (WHO), the virus is spreading around the world like a whirlwind. As of 24 February 2020, novel coronavirus COVID-19 has made its presence felt in 33 countries and territories around the world, with over 79,561 confirmed cases and 2,619 tragic deaths so far.* As the number of reported cases of coronavirus continues to soar in China (and around the world), government authorities are ramping up preparations to get to grips with this raging epidemic… and so must employers.

(* Latest updates can be monitored at https://www.worldometers.info/coronavirus/)

China is no stranger to handling epidemics (Think of the violent SARS outbreak that hit the mainland back in 2002). Be that as it may, the novel coronavirus COVID-19 outbreak is presenting some unique challenges for many employers in China – particularly when it comes to the treatment of their employees.

Here are some insights into how employers can handle labour relations during this bleak period while staying in compliance with the law. So, let’s explore some of the questions employers may have vis-à-vis their rights and legal obligations on how to plot a course around these challenging circumstances.

Q1 – Are there any health and safety guidelines in place for employers?

No, there is no statutory duress on employers to have a novel coronavirus COVID-19 response plan in place. But, generally speaking, they should still put together a plan of action to augment the safety of employees and to progressively eliminate or minimise risks and hazards, so far as it is reasonably practicable.

Here’s what employers can do to start:

  • Disinfect the workplace on a regular basis.
  • Maintain good environmental hygiene and good indoor ventilation.
  • Ensure there are sufficient supplies of appropriate face masks, alcohol wipes, hand sanitizers, gloves, paper towels, thermometres, disinfectants, and more – with everything easily accessible to all employees.
  • Set up a reliable mechanism for smooth and steady flow of information through the workplace.

Again, these ‘suggestions’ are not mandated by the law, but every employer should still have regards to these in order to curb the very real risk of the spread of novel coronavirus COVID-19.

Q2 – Can employers ask their employees to have their temperature tested?

Yes, but it depends.

Although employers are lawfully permitted to ask an employee to undergo a medical / temperature testing to prevent the spreading of the novel coronavirus COVID-19 and ensure the health and safety of everyone in the workplace, it is only applicable so far as the employee in question voluntarily agrees to it. If the employee refuses to go through the invasive testing and the employer subjects them to disciplinary action, the employer may have to face legal risks. That being said, employers can, of course, reasonably deny any employee who does not acquiesce with such requirement access to the workplace.

Q3- Can employers terminate the labour relationship with an employee during the outbreak?

Article 42 of the PRC Labour Contract Law clearly states that “Under any of the following circumstances, the employer shall not terminate a labor contract pursuant to the provisions of Article 40 and Article 41…during the stipulated medical treatment period of an employee suffering from illness or non-work-related injury.” In simple words, this means that no employer can lay off an employee who is classed as being “under medical treatment” by the law – or someone who is currently receiving medical treatment or is under quarantine or medical observation and meets any of the following criteria:

  • If the employee is confirmed infected with novel coronavirus COVID-19
  • If the employee is suspected of being infected with novel coronavirus COVID-19
  • If the employee has been in close contact with people confirmed or suspected of being infected by novel coronavirus COVID-19

Furthermore, according to Article 45 of the PRC Labor Contract Law, “where a labor contract has expired under any of the circumstances stipulated in Article 42, the labor contract shall be extended and be terminated upon extinguishment of the corresponding circumstances.” This means the labor contract between the employer and employee shall be extended automatically until the expiration of the medical treatment or medical observation or quarantine period or until the government lifts emergency quarantine measures.

Q4 – How do employers deal with employees who can’t return to the work place?

Many employees may not be able to make it work (on time or at all) due to circumstances related to novel coronavirus COVID-19 – perhaps some of them may be under self-quarantine or simply unable to return to work due to quarantine measures imposed by local government authorities. If this is the case, employers are obliged to make reasonable arrangements to allow employees to work in a more flexible way. Here are two ways to do that:

  • Employers may make arrangements for the employees to work from home by means of telephone and the Internet, and so on. However, this “work from home” arrangement shall be deemed as the employees doing full-time work, with the employers continuing to comply with their obligations under the labour contract and paying them wages and other employment-related entitlements as if they were in regular attendance.
  • If work from home is not on the cards, employers may seek to reach an agreement with the employee that they take a period of statutory annual leave or unpaid leave.

On the other hand, if the employee is having reservations about resuming work without appropriate grounds, employers can terminate their employment in line with Article 39 of the Labour Contract Law. Every employee is mandated to comply with their employer’s specific instructions (as long as they are reasonable), and unless there is a valid basis for refusing to attend the workplace, a refusal to adhere to the instruction can mean a breach of contract. So, if the employee seriously flies in the face of the company attendance policies, employers are entitled to terminate their employment unilaterally.

Q5- What if employers suspend their business operations?

If an employer suspends business operations – whether in whole or to a certain extent – during one pay cycle (i.e., cycle that the employer usually issues paychecks to the employee), they are required to pay wages and benefits to employees pursuant to the labour contract. However, if the suspension exceeds one pay cycle, they should pay wages and benefits in compliance with the local rules for salary arrangements during “suspension of production or business” periods:

  • If the employee provides normal work, employers are required to at least pay a salary equal to the current minimum wage.
  • If the employee does not provide any work, employers are required to pay only the living allowances as determined in accordance with the local measures.

THE LAST WORD

As China finds itself gripped by another viral outbreak reminiscent of SARS which broke out in 2002, many employers are asking questions around their legal obligations in the midst of uncertainty about the potential impact of the contagion. If you are seeking specific legal advice or business consultation for individual cases, get in touch with one of our seasoned attorneys and business consultants today.

*Peter Pang serves as the founder and Managing Partner of IPO Pang Xing, an international commercial law firm that has been serving foreign investors for more than 25 years now. Mr. Pang is recognized among both clients and peers for his expertise and decades of experience in FDI-related legal issues such as intellectual property protection, corporate governance, joint ventures, labor law, and M&A.

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