Author: Erex Chen, Grace Geng
Due to the outbreak of COVID-19, the production and operation of most companies were substantially affected. Some companies have been already in operation suspension for a while. While some companies have chosen to allow employees to work from home, and some enterprises have officially resumed work, we notice a lot of emerging problems in relation to employment issues caused by the COVID-19 such as:
● If employee is isolated due to COVID-19 and fails to get back to work, can the company unilaterally terminate the labor contract?
● The employee is afraid of COVID-19, and insists on staying at his home and refuse to get back to work, can the company unilaterally terminate the labor relationship?
● The company's business is negatively affected by COVID-19, does the company have to pay employee the salary as usual according to the labor contract? Can the company reduce the salary payment?
According to the regulations recently promulgated by various Chinese government departments, we would like to discuss two typical issues in employment management, namely, the feasibility of employment termination, as well as salary payment standard under COVID-19.
I. With COVID-19, the company's right to unilaterally terminate employment contract is restricted
(a) Circumstances where no termination is allowed under COVID-19
According to Notice of the General Office of Ministry of Human Resources and Social Security of the People’s Republic of China on Properly Handling employment Relations during the Prevention and Control of Pneumonia Epidemic of New Coronavirus Infection issued by Ministry of Human Resources and Social Security of the People’s Republic of China dated January 24,2020 (“Notice”), the company shall not unilaterally terminate employment contract with its employee who is unable to fulfill the employment contract due to the impact of the coronavirus. The Notice specifies circumstances where the employment contract shall not be terminated including:
(i) The employee is a COVID-19 patient, suspicious patient, or close contact who is in the isolation medical treatment period or medical observation period;
If the employee is diagnosed as a confirmed case or reported as a suspicious case by hospitals or other medical institutions, and is unable to get back to work or render normal work service during the isolation medical treatment period or medical observation period, he shall present the company with the diagnosis certificate issued by the hospital or the isolation certificate issued by the relevant department, and the company shall not unilaterally terminate the employment contract with him.
(ii)The employee is unable to render normal work service due to isolation measures or other emergency measures taken by the government.
For instance, the city of Wuhan, the most affected city by COVID-19 in China, has taken measures on transportation ban around the city to prevent the spread of the virus, which led to the result the employees located in Wuhan are not able to leave Wuhan and get back to work. For those employees, the company cannot unilaterally terminate the employment contract with them.
In addition, for employee in above (i) and (ii) situations, in the event that his employment contract happens to expire during the isolation period, the labor contract shall be automatically extended until the end of the medical treatment, the medical observation or the isolation measures.
(b) The company is allowed to terminate employment contract with employee who does not get back to work in bad faith
Under the current COVID-19, we also noticed that some part of employees refuse to get back to work because of being afraid of the virus or just take the virus as an excuse for not getting back to work. For these employees, termination of labor contract is possible if the following conditions are met:
1. The company has resumed the work and has informed the employee to get back to work;
2. There are no objective reasons that prevent the employee from getting back to work. Objective reasons, such as the isolation measures taken to the employees due to the COVID-19.
3. The company has reminded the employee to get back but the employee fails to follow;
4. The availability of company regulations in relation to termination in case of absence by the employee.
II. During the COVID-19, how does the company pay employees?
(a) Circumstances where the company shall pay employees as usual
According to the Notice, the employees in the following situations shall be paid as usual:
1. Employee who becomes a confirmed case, suspicious case and close contact shall be paid as usual for the period for isolation medical treatment or medical observation;
2. Employee who is unable to render work service due to isolation measures or other emergency measures taken by the government shall be paid as usual for the period such measures are taken by the government.
1. If the operation suspension is within one salary payment cycle, salary shall be paid as usual no matter the employee has rendered work service or not. Salary payment cycle is usually based on the company rule, for instance, monthly salary payment starting from 1st day to the last day of each month.
2. If the operation suspension exceeds one salary payment cycle, and the employee has rendered work service, the employee shall be paid with no less than local minimum wage. According to our understanding, even if the company’s operation is suspended, the company may still require some employees’ work so as to maintain minimum operation of the company, such as HR/accountant’s work. Such employees shall be paid but the salary payment amount can be discussed and agreed by both parties, in particular the employees are not required to work full time. However, in any circumstances, such employees shall not be paid less than local minimum wage.
3. If the operation suspension exceeds one salary payment cycle, and the employee does not render any work service, the employee shall be paid with living fee. The standard of living fees vary in different areas. Currently the living fee in Beijing is 70% of local minimum wage, namely RMB 1540; Shanghai is equal to local minimum wage, namely RMB 2480; and Guangzhou is 80% of local minimum wage, namely RMB 1680.
For employees who refuse to get back to work because of being afraid of the COVID-19, or take the COVID-19 as an excuse not to get back to work, in addition to the right to terminate the labor contract, the company is entitled not to pay salary for the absence period.
This article is published solely for the interest of friends and clients and should not be relied upon as the legal advice of any kind from us. Should you have any questions about this article, please contact the partner of Mylink Law Office.
Erex Chen, Managing Partner
Grace Geng, Paralegal