Noteworthy changes regarding the employment law in times of the coronavirus in China

last updated on 19 February 2020 | reading time approx. 2 minutes

​In order to prevent the spread of the new coronavirus, the State Council of the PRC (People’s Republic of China) decided on the 27 January 2020 to extend the Chinese New Year holiday until 2 February 2020. The local government in Shanghai extended the holiday until the 9 February 2020. As a precaution measure by the government in Shanghai, enterprises have to remain closed during this time. This poses a substantial challenge for the affected enterprises. In what follows, we will provide an overview of the employment law measures and their effects.

• Do enterprises have to remain closed during the extended Chinese New Year holiday?

• Which companies are affected?

• Are working days on the weekend intended to compensate for the additional days off? How is work during the extended Chinese New Year holiday regulated?

• Can employees be ordered to work in the company or to do Home Office during this time?

• Can the payment for overtime hours be replaced with compensatory time-off?

• How are employees treated according to the employment law, that are under quarantine measures or hindered to work because of local transportation or traffic barriers? 

Do enterprises have to remain closed during the extended Chinese New Year holiday?

According to the “Law on Prevention and Control of Infectious Diseases” and the “Emergency Handling Law” of the PRC, national and local governments are entitled to take such measures. Therefore, the affected enterprises have to follow the order and remain closed.
 

Which companies are affected?

It depends on the local measures taken. For example in Shanghai, most companies have to stay closed up until 9th February 2020. However, there are some exceptions:

• Industries which are directly connected to the daily life such as utility companies (water, gas, electricity, telecommunications, logistics, supermarkets, as well as companies that are supplying and providing groceries) are obliged to start business on the 3rd February 2020.
• Companies in the supply chain for pharmaceuticals and products needed in the field of medicine such as protective masks, -clothes, -glasses etc.
• Companies which were active during the Chinese New Year.

All companies that are starting business before 10th February 2020 have the obligation to register at their local authority.
 

Are working days on the weekend intended to compensate for the additional days off? How is work during the extended Chinese New Year holiday regulated?

No, it is not intended to compensate the extended holiday with work on the weekend.
 

Employees who are ordered to work during the extended holiday by their employer will receive equivalent days off as a substitute, or a 200 per cent payment (equal to the treatment for overtime hours on weekends).
 

Can employees be ordered to work in the company or to do Home Office during this time?

This question cannot be answered across-the-board. If the affected company is obliged to remain closed, the work of the employees will be treated equal to overtime hours on weekends. Hence, the employer could order Home Office under these circumstances.
 
In cities which are not obliged to follow these measures such as Beijing, employers can order their employees to do Home Office as an alternative to work at the company, without being required to pay equal to overtime hours. However it is uncertain, considering the employment protection laws, whether employers can obligate their employees to work at the company during the current situation. Companies are therefore recommended to only obligate workers in special cases (see above ), and allow Home Office in all other cases.
 

Can the payment for overtime hours be replaced with compensatory time-off?

Yes, as already exemplified, employers can replace the claim of overtime hours with days off, instead of granting monetary compensation.
 

How are employees treated according to the employment law, that are under quarantine measures or hindered to work because of local transportation or traffic barriers?

There are no uniform rules for this. Basically, employees should be paid as if they meet the requirements of their working duties in all of these cases. In other words, the stipulated salary continues to be paid. In addition, employers are not allowed to terminate the employment contract because of these reasons. However, depending on the location, employers have various options:

1. Ordering work through Home Office if possible, or
2. Ordering to take annual leave, or
3. Compensate through work on Saturdays when the quarantine period is over. If the duration of the quarantine period is relatively long however, then the specific case must be examined in more detail.