Coronavirus and What China Employers Should be Doing (and Not Doing) Now

Last week I wrote about new employment rules for dealing with the coronavirus. In my first article, I wrote about the new rules issued by Beijing employment authorities and then the next day, I wrote about the new rules issued by China employment authorities. The Beijing rules apply to Beijing and the China rules apply nationwide. Since those two articles, a whole host of other locales in China have issued their own rules for how employers must deal with their employees during this time. Literally every day, our China employment lawyers are seeing and having to deal with Chinese employment authorities releasing notices and rules to provide requirements and guidance on pressing employment-related issues.

These new rules are throwing wrenches into all sorts of previously planned employment moves.

On January 26, the PRC State Council issued a notice to, among other things, extend the Chinese New Year through February 2. Right after that, a few cities and provinces extended this period even longer: for example, on January 27, the Shanghai government announced that employers cannot resume work earlier than 24:00 on February 9. Guangdong Province has this same timing requirement. The Suzhou government said the earliest work resumption date is 24:00 on February 8.  Those employers that provide necessity public services are excluded from the delayed work resumption dates though. Even something apparently as simple as opening dates has raised a whole host of employment law questions. Can employers require their employees to work from home during this time? If yes, are employers liable for overtime? Can employers ask their employee to go on paid or unpaid vacation during this time? Can they require this?

Following these many new notices came many different unofficial interpretations (mostly by legal practitioners on the Internet), leading to what can best be described as full scale confusion. Then, on January 28, Shanghai labor authorities issued “official interpretations” regarding the meaning of the extended period (from February 3 to February 9). These rules essentially state that these days need to be treated as “regular rest days” (normally Saturdays and Sundays) in that if the employee does work (and the employee should work from home), the employer needs to track such time carefully and count it as overtime incurred during regular rest day, and arrange comp time in lieu of overtime pay for any time worked and if comp time cannot be arranged, it needs to pay them overtime at a 200% rate. The Shanghai authorities’ clarifications were timely and helpful but still some questions stand such as whether there is any difference between the holiday period extended by the State Council (i.e., from January 31 to February 2) and the extended period required by those locales (e.g., from February 3 to February 9 in Shanghai) and if yes, what are the differences?

Our general advice is that employers should provide their employees their normal pay during China’s extended holiday/time off period, at least until further government notice. We are also advising China employers not to ask their employees to use their accrued vacation time or take unpaid leave. Think about it this way. Most Chinese employees do not have many vacation days banked and if you require that they take them all at once and now, they could have no vacation time left for the rest of the year. Some places (e.g., Guangdong) require employers obtain employee consent to take vacation days if the employee is unable to return to work due to the outbreak. In any event, employers during this troubled time need to think twice before making any potentially adverse employer decisions.

Our China employment attorneys have been answering questions from both current and potential clients pretty much non-stop these days regarding what they can and should do. We have been able to provide relatively quick answers to some of the new, coronavirus related employment questions we have been getting. For example, if a proposal is flat out illegal, our response is a simple “don’t do it”. But the majority of the questions require we gather up all the facts, review the relevant employment contracts and the employer’s rules and regulations, research the relevant laws and talk with the relevant government authorities. Needless to say, this slows down answers considerably.

We can though give some general advice for dealing with employment issues right now. China employers facing these new rules and challenges should try their best to stay current on the new rules and laws and comply with them. Above all else this means being aware that your company might be required to comply with new national laws, new provincial laws, and new local laws. See China Employment Law: Local and Not So Simple. These new laws and requirements intended to deal with the coronavirus have been rushed out and most are unclear and lacking in detail. In response to this, our general advice is to err on the side of your employees, both in terms of their safety and their finances.

Think long and hard before you terminate an employee, regardless of whether you will be paying severance. The Chinese authorities have emphasized that they do not want to see workforce reductions or layoffs happening right now. In addition to staying compliant from a legal standpoint, remember that at the end of the day your employees are human beings who want to stay safe and healthy and do not want to be punished for the virus outbreak. Be humane when you make employment decisions during this time. Doing so will pay off not just with fewer lawsuits and governmental problems, but with increased loyalty and respect from your employees.

We will continue to monitor and follow up with updates.