Legal Guide on Labor Issues in Shanghai on Coronavirus Disease(COVID-19) Outbreak

Late 2019 to early 2020, there was a sudden disease outbreak of the Novel Coronavirus Pneumonia (2019-nCoV). In order to prevent and control the epidemic infection, and upon the “Infectious Diseases Prevention Law”and “Emergency Response Law” as well as other relevant Laws and regulations, a number of regulatory stipulations have been issued to adjust the performance of the labor and employment relationship during the outbreak by authorities at all level such as the State Council, departments of the Central Government, the Shanghai Municipal Government and the Human Resources and Social Security Department.

The main regulatory stipulations issued by central government and Shanghai Municipality include:

1.“Circular on the Protection of Medical Staff and Related Personnel Infected by Novel Coronavirus Pneumonia due to Performance of their duties” issued by Ministry of Human Resources and Social Security (Circular No.11 issued in 2020).

2.“Circular on the Proper Handling of Labor Relation Issues during the Prevention and Control of the Pneumonia Outbreak Caused by the Novel Coronavirus Infection” issued by the General Office of the Ministry of Human Resources and Social Security (Circular No.5 issued in 2020).

3. “Opinions on Stabilizing Labor Relations and Supporting Enterprises’ Operations and Productions during the Prevention and Control of the Pneumonia Outbreak Caused by the Novel Coronavirus Infection” issued by Ministry of Human Resources and Social Security (Circular No.8 issued in 2020)

4.“Circular on Extending the Spring Festival Holiday in 2020” issued by General Office of the State Council (Circular No.1 issued in 2020).

5.“Circular on the Relevant Guarantee Policies of Allocating Funds for the Prevention and Control of Pneumonia Outbreak caused by the Novel Coronavirus Infection ” issued by Ministry of Finance (Circular No.2 issued in 2020).

6.“Circular on Delaying Enterprises’ Operations and School Opening in Shanghai” issued by Shanghai Municipal People's Government.

7.“Circular on the Implementation of Supporting and Protective Measures in Response to the Pneumonia Outbreak Caused by the Novel Coronavirus Infection issued by the Shanghai Municipal Human Resources and Social Security Bureau. ”

8．“Detailed Interpretation of Measures for Protecting People and Society in Response to the Pneumonia Outbreak Caused by the Novel Coronavirus Infection” issued by the Shanghai Municipal Human Resources and Social Security Bureau.

9.“Policies and Measures on Supporting Service Industry to Sustain Stable and Healthy Development in Shanghai during the Prevention and Control of the Pneumonia Outbreak Caused by the Novel Coronavirus Infection”

The promulgation and implementation of these stipulations and measures affect all aspects of the labor and employment relationship of enterprises. As such, Shanghai SunHold Law Firm has issued this guidance on legal issues of the labor and employment relationship during this special period to provide effective help for enterprises. This guidance is only a summary based on the existing Laws and regulations, relevant normative stipulations and legal practice, and is only for the reference to concerned clients for their possible decision-making, which is not the unified judgment of judicial practice. For relevant disputes, provided that the Supreme People's Court, labor or other departments issue relevant explanations or opinions, such explanations or opinions shall prevail.

Issue on the extended leave, the postponed resumption period and the payment of wages and remuneration

The legal nature of the State Council's extended holidays and the standard of payment

According to “Circular on extending the Spring Festival holiday in 2020” issued by the General Office of the State Council, the 2020 Spring Festival holiday will be extended till February 2 (the ninth day of the first month of the lunar calendar, Sunday), and work day starts on February 3 (Monday). That is to say, the original working days of January 31 and February 1 are adjusted to days off, and February 2 is a day off without any further adjustment. Therefore, the extension of two-day holiday is a special holiday for epidemic prevention and control, not a statutory holiday, which should be treated as a general day off.

If the employee does not work during the extended holidays, the employer should pay him the normal wage. If the employee works during the extended holidays, it shall be deemed as working overtime . The employer shall pay the overtime wage at 200% of the normal wage according to the provisions of the Labor Law, or arrange the compensatory off on other working days. As for employers taking the flexible working hour system, if an employee works during the extended holiday period, the employer does not need to pay overtime wage.

Legal nature and payment standard of wages and remuneration during the period (3rd Feb. to 9th Feb. ) of the postponed resumption of work  Stipulated by Shanghai Municipal People's Government

On January 27, 2020, the Shanghai Municipal People's government issued the “Circular on Delaying Enterprises’ Operations and School Opening in Shanghai”, stipulating that all kinds of enterprises in Shanghai will resume work no earlier than 24:00 on February 9 (i.e. from February 10). Exception applies to enterprises related to the vital national economy and the people's livelihood, which are necessary to ensure the city's normal running (industries in relation to the water supply, gas supply, power supply, communication, etc. ), epidemic prevention and control (industries in relation to manufactures and sales of the medical equipment, medicine, protective product, etc.), and industries that are necessary for people's life (industries in relation to supermarket, food production, and supply, etc.) . The employer should protect the legitimate rights and interests of its employees in accordance with the Laws.

After the leave extended by the State Council, the days from February 3 to February 7 were the normal working days, and the days of February 8 and 9 were the normal days off. However, due to the needs of epidemic prevention and control, Shanghai municipal government stipulated that except for those special industries and enterprises mentioned above that should maintain its normal operation, other enterprises need to postpone the resumption of work. According to the authoritative answer of Shanghai Municipal Bureau of Human Resources and Social Security, the period of the postponed resumption of work shall be deemed as the days off. For the employees taking rest, the enterprise shall pay the wage according to the standard agreed in the labor contract; the employees who perform their obligation in the special industries and enterprises shall be given compensatory leave or be paid overtime wage according to the regulations, in general, it is twice of the normal wage. As for employers who taking the flexible working hour system, if an employee works during the extended holiday period, the employer does not need to pay overtime wage.

In addition, even if the enterprise has arranged the working days in the period of January 31 to February 9 by a payment paid as an annual leave does before the Spring Festival, the annual leave cannot be used to offset the days off of the extended spring festival leave and the days off for the postponed resumption of work. According to the specific policies of the central government and Shanghai Municipality, in our view the annual leave arranged should be withdrawn and treated as the days off.

We suggest that enterprises should give clear notice in writing for arranging certain works to certain employees who to work at home from Feb 3 to Feb 9, so that those employees who don’t maintain full workload would not take any advantage in reporting false workload for the twice wage payment.

At present, some people have raised objections to the wage standard for the special days off. We would suggest that enterprises comply with the specific policies in the special periods. Enterprises may also negotiate with their employees flexible approaches and reach agreements on the wage of this special periods, and then work together to overcome difficulties.

Issue on employees' failure to return to work due to the prevention and control of the existing epidemic by Government

Labor relations during quarantine treatment or medical observation

Circumstances where employers are not permitted to terminate discharge employment contract:

According to Circular No.5 issued in 2020, the employer shall not terminate the labor contract in accordance with articles 40 and 41 of the Labor Contract Law (mainly refers to the medical treatment expiration, incompetence, major changes in objective circumstances based on which the labor contract was concluded and economic layoffs), should the employee be unable to afford normal labor work for who has been confirmed to have the disease of 2019-nCoV , is a suspected patient, or is a close contact to the infected patient, and is under quarantine treatment or medical observation or prevented by other government implements quarantine measures or other emergency measures. During this period, if the labor contract expires, it shall be extended to the expiration of the medical treatment period, the medical observation period, the quarantine period or the end of the emergency measures taken by the government.

In our opinion, the employer shall not unilaterally terminate the labor contract with the employee on the ground that the absence or absenteeism of the employee constitutes a serious violation of discipline due to the government's quarantine measures or other emergency measures.

Circumstances where employers are permitted to terminate the labor contract:

According to the provisions of the Labor Contract Law, both the employer and the employee are entitled to terminate the labor contract through negotiation. The employee is entitled to terminate the labor contract by resignation. For the employee who does not meet the recruitment requirement, seriously violates discipline, seriously neglects his duty,  violates the principle of conflicts of interest, or commits criminal crimes and etc., the employer, based on sufficient proof materials, is entitled to terminate the labor contract even if the employee is under quarantine treatment or medical observation according to Article 39 of the Labor Contract Law, and won’t be bound by the Article 40 and 41 of the Labor Contract Law.

If the employee who has been confirmed to have a disease of 2019-nCoV, is the virus carrier, or who has close contact with suspected patients in the medical institution refuses to accept medical quarantine and observation or refuses to cooperate with the medical treatment or intentionally spreads infectious diseases and causes other people's infection, the employer is entitled to take disciplinary action, in accordance with the rules and regulations. For employee who commits a crime, the employer is entitled to terminate the labor contract legally.

Where those special enterprises are entitled to require the employees to return to work in advance, to produce the disease protective gears and material overtime or to perform emergency protective measures as required by the government in order to help preventing and controlling the existing epidemic , the employers are entitled to legally extend the work time. If the employees do not return to work as required, the employers have the rights to give a kind of disciplinary punishment of as absenteeism.

When the employee fabricates the terrorist information related to the outbreak of infectious diseases, it may constitute a crime of fabricating or deliberately disseminating false terrorist information. When the employee intentionally disseminates infectious disease pathogens such as 2019-nCoV and refuses to accept quarantine, compulsory isolation or treatment, it may constitute a crime of endangering public security by dangerous means or the crime of negligently endangering public security by dangerous means. Under these circumstances the employers is entitled to terminate the labor contract with the employee legally.

Extension of expired labor contract: according to the stipulations of Circular No. 5 issued in 2020, during this special period, if the labor contract expires, it shall be extended to the expiration of the medical treatment period, the expiration of the medical observation period, the expiration of the quarantine period or the termination of the emergency measures taken by the government.

In our view, the employer is entitled to legally terminate the labor contract with the employee who is confirmed not to be infected with the 2019-nCoV after quarantine observation. However, the employer is not entitled to terminate the labor contract with the employee who is confirmed to be infected with the 2019-nCoV and is under medical treatment until the expiration of the medical or treatment period.

Wages or remunerations during quarantine treatment or medical observation

According to Circular No. 5 issued in 2020, the employer shall pay the employee who is confirmed or suspected to have a disease of 2019-nCoV,  has close contact with the patients who getting disease of  2019-nCoV during the quarantine treatment or medical observation, can’t perform his duties due to the quarantine measures or prevented by other emergency measures implemented by the government,  the employer should pay the employee as if who had performed his/her normal duties.

From our point of view, under these circumstances, the employer shall pay employee basic salary, as well as the fixed amount bonus and subsidy/allowance in his/her salary that he/she is entitled to as if he/she had performed his duties as normal. However, where the amount of bonus and subsidy/allowance is related to and determined upon the performance of the employee or the employer/enterprise, the relevant bonus or subsidy/allowance shall be deducted from salary provided that the employee has not provided any work if the enterprise is confronted with difficulties and does not operate well or has stopped operation or production. We recommend that employers flexibly deal with the salary distribution, by explaining and communicating with employees and reach consensus, to avoid disputes arising thereof.

Issue on wages and remuneration of employees infected by novel pneumonia

Pursuant to Circular No.8 issued in 2020 after the expiration of the quarantine period employees who have to stop working a for medical treatment shall be paid by the standard of prescribed period for medical treatment according to relevant Laws. From our point of view, for employees who are confirmed to have been infected or have other diseases during the period of quarantine and are under medical treatment, employer shall pay them the sick leave payment or disease relief costs during the quarantine observation and medical treatment period.

Issue on wages and remuneration to be paid during the period of home quarantine as required by enterprises or government after Feb 10, 2020

According to Article 39 of the Law on the “Infectious Diseases Prevention”, for employees who are in the key epidemic area or travel via the key epidemic areas, the employer is entitled to require them not to return to work currently, and to require them to conduct medical quarantine observation in the designated place and take other necessary preventive measures, which the employees shall comply with Laws and regulations. According to “Notice on Health Management of People Who Return to Shanghai for Work” issued by Shanghai Municipal Public Health Committee, people who are in the key epidemic areas or travel via the key epidemic areas or who have contact with those from key epidemic areas having fever or respiratory symptom or who have contact with those confirmed to have been infected must stay at home or at the designated place for quarantine observation for 14 days. Currently according to the regulations of some district authorities in Shanghai or neighborhood committee offices or industrial zones people who return to Shanghai from other areas must stay at home for quarantine observation for 14 days before they go to work. In this period stipulated by authorities the employer shall pay them as if they had provided normal works.

In consideration of the Prevention and Control of the existing epidemic the employer is entitled to require the employees to postpone their work or stay at home for the quarantine and the observation or remote online work from home or do paper work at home after Feb 10, 2020, under which circumstances the employer shall pay them as if they had provided normal works. The employer who is not equipped for the remote online work from home may have its employees to use the paid welfare leave, or adjust the schedules of its t days off within the year, or arrange employees to take paid annual leave or to direct employees to take some personal leave, or negotiate with employees for the post-waiting and the corresponding wage rate. For those employees who are confirmed not to be infected by 2019-nCoV, upon expiration of medical quarantine and observation, the employer shall arrange them to return to work.

Issue on Labor relations and wage standard for employees who fail to return to work on time due to traffic restrictions

When employees are unable to return to work on time due to traffic control or other preventive  measures, they should  explain the situation to the employer in time, and go through the formalities of applying for leave required by the rules and regulations of the enterprise. In this case the employer is not entitled to terminate the labor contract with the excuse of absenteeism and discipline violation, but it is entitled to request the employee to provide the hospital's diagnosis and medical treatment document, the community or village committee's written supporting statement or regional traffic restrictions notice and other materials.

When the employees are unable to return to work as required for a long time due to traffic controls, or the employee returns to work in Shanghai from key epidemic areas and has to stay at home for quarantine observation for a long time, the employer may arrange them to work at home, to take paid annual leave,  or to take the welfare leave if the employer has such inner policies, , or , or may adjust its day off schedules  within the year, or may discuss with the employees for a post-waiting nd the corresponding wage rate or direct the employee to take personal leave.

Wage standard to be paid by employer who has to stop production under the influence of coronavirus outbreak

According to “Circular on the Proper Handling of Labor Relation Issues during the Prevention and Control of Pneumonia Outbreak Caused by the Novel Coronavirus Infection, “Circular on the Implementation of Supporting and Protective Measures in Response to Pneumonia Outbreak Caused by the Novel Coronavirus Infection issued by Shanghai Human Resources and Social Security Bureau”, and article 12 of “Measures of Shanghai Municipality for Payment of Wage by Enterprise”, where an employer further postpones the restart of operation after Feb 9, 2020 due to the impact of the epidemic, and such a postponed period falls within the same pay period as the holiday, the employer shall pay the employees at the wage standard stipulated in the labor contract. In other instances, the employer may pay the employee at the wage rate newly agreed by both parties based on the amount of work the employee has done, but employer shall not pay the employees at the wage standard lower than the local minimum wage standard. Some enterprises who meet the required conditions are entitled to apply for government subsidies for their contribution in maintaining staff stability according to regulations.

When an enterprise affected by the existing epidemic has difficulties in its production and operation, it may discuss with its employees to adjust salary, or arrange work shift, or shorten working hours, or take other measures in order to maintain staff stability and avoid any layoffs or a layoff with a large number.

In our view, the difficulties in the production and the operation faced by the employer due to the impact of the existing epidemic constitutes a major change in the objective situation based on which the labor contract was concluded pursuant to article 40 (3) of Labor Contract Law.  In the case where two parties cannot reach agreement on adjustment of salary, work shift, shortening of working hours, the employer is entitled to terminate the labor contract legally after notifying the employee in writing 30 days in advance, or pay one extra month salary as well as the economic compensation.

Pursuant to article 10 of “Measures of Shanghai Municipality for Payment of  Wages by Enterprises”, when the employer who is really faced with difficulties in its production and operation are unable to pay salary on time due to insufficient cash flow, it may delay paying salary by one month after reaching consensus with the labor union through consultations. The employer shall notify the employee of the day on which the salary will be paid and report it to the competent department for filing. If there is no competent department, the employer shall report to the administrative department of the municipal or district/county labor and social security for filing.

Issue on the determination of Work-related injury caused by 2019 novel coronavirus infection

Pursuant to the “Circular on Implementation of Supporting and Protective Measures of the Medical Staff and Related Personnel Infected by 2019-nCoV due to Performance of Their Duties” (Circular No. 11 issued in 2020) issued by the General Office of the Ministry of Human Resources and Social Security, if any of the medical staff and related personnel is infected by 2019-nCoV in performing their work of medical treatment and disease prevention, they should be deemed to be a work-related injury and shall have the right to enjoy the benefits of work-related injury insurance. For those participating in work-related injury insurance, the benefits shall be paid by work-related injury insurance funds and employers pursuant to the relevant Laws and regulations. For those not participating in work-related injury insurance, the benefits shall be paid by the employers at the standard stipulated by relevant Laws and regulations.

If an employee other than medical staff who is designated by employer to work in the key epidemic areas is infected by 2019-nCoV, he or she may file an application to the administrative department of Labor Security for identification of the work-related injury pursuant to the article 14 (5) of Regulation on Work-Related Injury Insurance (2010 Revision)stipulating that “ the employee is injured due to work on work-related travel ”. If an employee other than medical staff who is designated by employer to be a volunteer is infected by 2019-nCoV, he or she may file an application to the administrative department of Labor Security for determination of the work-related injury pursuant to the article 15 (2) of Regulation on Work-Related Injury Insurance (2010 Revision) stipulating that “he is injured in an act to protect national interest or public interest such as emergency rescue and disaster relief”. In our view if an employee on work travel or as a volunteer is infected by 2019-nCoV he or she shall probably be determined to have a work-related injury.

In our view if an employee other than a medical staff is infected by 2019-nCoV in workplace, he or she should probably be determined to have normal injury rather than work-related injury. However, if an employee other than a medical staff is infected by 2019-nCoV in workplace at worktime and dies immediately or within 48 hours after emergency medical treatment, he or she may file an application to the administrative department of Labor Security for determination of work-related injury.

Labor Dispute Case Acceptance and the Statute of Limitations

Pursuant to the article 3 of the “Circular on the Proper Handling of Labor Relation Issues during the Prevention and Control of the Pneumonia Outbreak Caused by the Novel Coronavirus Infection” (Circular No. 5 issued in 2020) issued by the General Office of the Ministry of Human Resources and Social Security.

If a party concerned impacted by the epidemic is unable to apply for a labor arbitration within the Statutory arbitration period, the Statutory arbitration period shall be suspended and shall not be continued until the date suspension is eliminated.

If the Labor and Personnel Dispute Arbitration Institution impacted by the epidemic is unable to hear a suit within the statute of limitations, the statute of limitations may be extended accordingly.

Pursuant to many circulars of the Labor Dispute Arbitration Commissions in different districts of Shanghai and the circular of Shanghai High People’s Court any party in labor dispute is entitled to file an application to extend the hearing for the self-quarantine or medical observation.

The Emergency Protective Measures before and after the Work Start & the Collection of Employee’s Information

The employer shall timely conduct a thorough inspection of its safety protective measures in its area. The employer shall take the effective health-protective measures for those who may have a contact with the infectious virus in their works and provide them with a reasonable allowance pursuant to the article 64 of “Infectious Diseases Prevention Law”, and is encouraged to, together with its labor union, offer the protective equipment such as the masks to employees.

Pursuant to article 31 of “Infectious Diseases Prevention Law” all entities and individuals shall promptly report to the competent Disease Prevention and Control Institution or medical institution if when they detect an infected person or a person suspected with infection. Pursuant to article 54 of the law mentioned above Administrative Department of Public Health is entitled to enter the entity and site of the epidemic occurrence to investigate, and to consult and copy the relevant document and collect the sample in performing its duty. The entity to be inspected shall cooperate with Administrative Department of Public Health without making any obstacle or refusal.

Therefore, the employer is entitled to collect information about the employees’ travel and health condition to the reasonable extent to satisfy its need for prevention and control of the epidemic spread, such as the information regarding the place where the employee has been during the Spring Festival, the people the employee has contact, or whether the employee has a fever. Nevertheless, the employer should take confidential measures to prevent from the illegal disclosing of the information collected. The employer shall cooperate with the Administrative Department of Public Health on supervision and inspection, report to the Administrative Department of Public Health without any delay if the epidemic outbreak occurs and provide the relevant data.

We recommend the employer should ventilate and disinfect its workplace frequently according to the prevention and control measures in handling the existing epidemic issued by the relevant authorities and the medical institutions. In addition, the employer should inform and educate its employee about the knowledge of the existing epidemic and the protective measures in order to protect its employees effectively via using various means such as WeChat, emails, mails, etc.

We hope this guidance is helpful for you to solve employment legal issues during this tough period. If you have any questions, please contact our law firm and our lawyers are happy to reach out.