The emergence of 2019 novel coronavirus disease (COVID-19) outbreak in China has aroused deep concerns not only from companies who have business in China but also who have business contacts with their Chinese counterparts. We are now in a situation that some companies have partly resumed their work while some are postponing or being required to postpone.  For local business operators, these suggestions and tips are just a few and can provide your company with a reference point on providing specific and effective prevention and control measures for employees. 

Question 1.  Are employees who are restricted at home under supervisory medical observation for 14 days after returning to Beijing from the Hubei province, or after having been in contact with people from that area, permitted to work from home under a flexible work arrangement during this supervisory medical observation period?

In this case, employees, after returning to Beijing from the Hubei province or having been in contact with people from that area, are subject to supervised medical observation for 14 days. During these 14 days, these employees should especially pay more attention to rest and changes in their body condition. They must have their body temperature checked every morning and evening. They must not go out. Once they have any symptoms of fever, fatigue, dry cough, or other symptoms, they should report this immediately. The community is responsible for the supervised medical observation and assisting them to go to the fever clinic of the nearest health medical institution.  Please be aware that the coronavirus incubation period is generally 3-7 days, usually within 14 days. Also, infection is possible before they returned to Beijing. Under these circumstances, we recommend that companies do not arrange a flexible work at a home arrangement with the employee for the time being.

If the employee's body temperature is normal within accepted medical standards, and there is an emergency work matter which the employee can handle at home under a flexible arrangement, we recommend that the employee sign a written work consent form.  During the period, for work done under these circumstances, the company should pay the overtime rate at 200% of the employee's salary.

Question 2.  How should companies pay wages to employees who were unable to work during the 14 days of supervisory medical observation upon their return to Beijing? Such employees had returned to Beijing after leaving the Hubei province or had a history of contact with people from the Hubei area.  Also, these employees had exhibited an average body temperature during this period. How should companies pay such employees for their wages during this period? 

In this case, the employees who remained under quarantine for the 14 days, and who tested for average body temperature, companies should pay their usual wages.

Question 3. Due to the economic impact of the coronavirus epidemic upon a company's operations or production, how should a company arrange personnel matters where a reduction in employees becomes necessary?  How should the salary be paid?

For companies in the catering, accommodation, entertainment, and other industries that need to reduce the number of employees during this transition period temporarily - but as work resumes, the demand for personnel is still increasing over a long-term basis while the epidemic persists- we recommend the following.

1. Companies can first arrange for employees to take annual leave or adjust the rest days of the year. The rest days are unpaid. After the production and operations are resumed once the epidemic is over, companies can arrange the employees' work schedules to appropriately increase the weekly working hours to make up for such used rest days. 

2. Companies can choose to negotiate with their employees for temporarily reducing salaries, rotating shifts, and shortening working hours.

3.  The company can directly negotiate with employees to ask them to stay at home and will notify them to return to work when necessary.

Question 4. What should a company do if its employees fail to return to work or refuse to work in time?

A company should consider each situation on an individual case-by-case basis. The company should send a notice to return to work to employees via email, text message, WeChat, etc. The notice should advise the employee that if she or he fails or cannot return to work as scheduled, she or he shall provide specific reasons.

1. If there are objective circumstances or reasons that prevent an employee from returning to work, an employee must provide the company corresponding proof materials or evidence.  These may include and are not limited to, proof or indication of the quarantine or medical observations relating to an infection or suspected infection of the novel coronavirus or as a close contact of the confirmed patients, the government's implementation of isolation measures or other emergency measures that prevent the employee from working. For such employees, the company shall pay wages usually until the expiration of the corresponding period or the end of the emergency measures. If they meet the conditions of sick leave or personal leave, relevant leave procedures should apply, and the company should pay wages per the applicable regulations of the company.

2. If the employee refuses to return to work and fails to provide a satisfactory reason with evidences within a reasonable time, the company shall notify in writing the employee of the corresponding consequences and urge the employee to return to work within a time limit. If the employee still ignores the notice, the company may terminate the labor contract with the employee under the labor contract, rules and regulations of the company, and after considering the labor union's comments and performing the necessary procedures.

Question 5: Does the delay in payment of wages due to the prevention and control of the coronavirus epidemic constitute a failure to pay labor compensation on time?

Article 7 of the "Tentative Provisions on Wage Payment" states: "Wages must be paid on the date agreed upon by the employer and the laborer. If such date falls upon a holiday or rest day, wages shall be paid in advance on the nearest working day. Wages must be paid at least once a month, and where a weekly, daily, or hourly wage system is implemented, wages may be paid based on weeks, days, or hours." Due to the need for epidemic prevention and control, the State Council issued a document to extend the Spring Festival holiday for three days to February 2. However, most regions had requested that, except for exceptional circumstances or need, companies resume work on a later date.  For some companies, the extended date results in their failure to pay wages due for this period.

For example, if a company stipulates it will pay the salary for the previous month before the 5th of each month, but due to it the company would not be able to pay the wages on time, can employees use this as a reason to consider that the company has not paid their wages on time, and thereby according to Article 38 of the Labor Contract Law, terminate their labor contract and ask the company to pay economic compensation?

In this situation, new measures extending the date when work is resumed, mandated by the local government to prevent and control the epidemic, is the cause of the company's failure to pay wages on time. A company's failure to pay wages during the postponed resumption of work period due to the epidemic is caused by "force majeure" and cannot be attributed to corporate responsibility. Article 180 of the General Rules of the Civil Law provides that no civil liability arises where failure to perform duties is due to force majeure. Given that force majeure is the statutory exemption for the inability to perform the contract, the company has not defaulted at failing to pay wages on time, and thus not fall in the statutory circumstance of failure to pay wages on time. We suggest the company provide back pay on the first day of resuming work, or as soon when able to pay.

Question 6. After work has resumed, how should a company arrange childcare leave when an employee requests such a leave?

In response to this coronavirus epidemic, various Beijing local government bureaus, including the Municipal Human Resources, Social Security and Municipal Education Commission, have issued a "Notice on Wages of Employees During the Care of Minor Children for Delaying the Opening of School Due to Prevention and Control of the Epidemic Situation."  The Notice is an emergency measure which is authorized by Articles 49 of the Emergency Response Law and  42 of the Law on Prevention and Treatment of Infectious Diseases. These Articles together authorize emergency measures in instances of public health incidents, allowing, among others, the suspension of activities, businesses, and schools. 

Companies should consider exercising the following steps when considering an employee's request for childcare leave:

1. Review the eligibility of the employee applicant;

2. Ask the employee for supporting materials for review, including marriage certificate, child’s birth certificate, proof that the spouse of the employee has resumed work, and evidence that the child's school has postponed opening;

3.  Develop a flexible plan for the employee to use telephones, the internet, and other office methods to do moderate work at home; and 

4.  Arrange payment of the employee's wages based on attendance and performance of the job at home. 

Question 7. Can the company seek a reduction or exemption of the rent due for carrying on operations or production on the premises during the period affected by the epidemic?

The Beijing government has issued specific preferential policies to maintain the production and operation activity of micro, small and medium sized companies (SMEs) during this epidemic crisis. One such policy is rent reduction.

1. Lease of Beijing city and district-owned premises: The February rent will be exempt for small, medium, and micro-sized companies (SMEs) that meet the following conditions. The SMEs have leased Beijing and district-owned premises and are engaged in production and operation activities under government requirements. For these SMEs, if they resume or shut down operations under government requirements or epidemic prevention regulations, and they do not lay off employees or have few layoffs, these SMEs can have exempted the rent for February. For enterprises having leased premises for office purposes, the rent for February is reduced by 50%.

2. Lease of other premises: large commercial buildings, shopping malls, and market operators are encouraged to moderately reduce rents for small and medium-sized tenants during the epidemic period, the amount of which the parties shall agree through negotiation. All districts can provide appropriate financial subsidies to lease companies that reduce or provide exemptions on rents.

The epidemic is a major public emergency that has all the characteristics of force majeure- unforeseeable, chance occurrence, unavoidable, and a natural health catastrophe. Force majeure relieves the parties of liability. It is the statutory exemption for the inability to perform the contract. While it is not the legal basis for a rent reduction or exemption here, parties are encouraged to negotiate rent reduction or exemption under principles of friendly negotiation for overcoming these mutual difficulties.

Question 8. In the context of the epidemic, can companies delay the payment of their employees' social insurance?

Social insurance, which is payable in January and February 2020, has been extended to the end of March. For industries like tourism, accommodation, catering, exhibitions, education, and training, which are greatly affected by the epidemic, after confirmation by relevant authorities, the social insurance payable during the period affected by the outbreak can be extended to the end of July. During the late payment period, there are no late fees charged.  This arrangement will not affect the normal enjoyment of regular social insurance benefits, and it will not affect personal benefit records.

Question 9. What are the conditions for micro, small, and medium enterprises to qualify for post subsidies and social insurance subsidies?

Micro, small, and medium enterprises can apply for post subsidies and social insurance subsidies per relevant provisions.  They must have recruited registered, unemployed persons, urban and rural people with employment difficulties in the city, signed labor contracts with a term of one year or more, and paid social insurance according to law, fully paid monthly wage of no less than 1.2 times the minimum wage in this city (RMB 2640).

Question 10. Are there any government policies supporting enterprises that are temporarily experiencing difficulties due to the impact of the epidemic?

For micro, small, and medium enterprises that are temporarily affected by the epidemic, but have prospects for development, the government will delay recovery of loans, continue to lend, and not delay making loans. For micro, small, and medium enterprises that have been severely affected by the epidemic and have difficulty repaying loans, the government may extend or renew the loans. At the same time, the government will reduce the overall financing cost by 0.5 percent in 2020 and increase the proportion of small and micro enterprises' renewed loan with non-repayment of principal by more than 20 percent. Also, the government will provide discount loans and subsidies for bonds and financing leases for qualified Zhongguancun innovative micro, small, and medium enterprises.

Question 11:What conditions must be met for an enterprise to receive social insurance premium subsidies?

As the coronavirus impacts business activity in China, the government is pushing support measures.  To support the continued business activity of micro, small, and medium enterprises, the Beijing government is offering steps to help them.  The government is providing social insurance subsidies to those enterprises that are in line with Beijing's industrial development direction policies as well as its state capital’s function. For an enterprise to qualify, it must meet a core requirement of Beijing's industrial growth plans- not laying off workers. If an enterprise increases the average number of employees -- by up to 20% --as compared with the previous year, it will receive a one-time subsidy of 30 percent of three months' social insurance premiums. If the average number of employees ----increases by 20 percent or more ---compared with the previous year-- the enterprise qualifies for a one-time subsidy of 50 percent of social insurance premiums of three months.  

These measures are presently in force.

Question 12:How can enterprises provide specific and effective prevention and control measures for employees who resume work?

Enterprises must provide specific and effective prevention and control measures for employees who resume work at the workplace.  Some practical steps and actions can include:

1.  implementing flexible working systems and stagger work hour shifts;

2.  leverage with technology and arrange for personnel to work from home with the use of telephone, computer, and internet;

3.  implement health and safety protocol in the workplace- require checking body temperatures of employees and invitees upon entering and leaving the offices; 

4.  develop and promote health and safety educational programs for employees;

5.  provide employees with necessary protective supplies such as gloves and respirator masks, especially if the nature of the work and duties of the employee require more social interactive contact;

4.  install sanitizing stations and place sanitizing lotion dispensers at the entrances of the offices, in the office pantry, at customer reception desks; 

5. regularly disinfect public areas and offices; 

6. open windows for ventilation;

7. require wearing masks when two or more people stay in the same room; 

8. conduct video conferencing over face-to-face onsite meetings; 

9.  develop a safety protocol for onsite meetings to ensure a safe and healthy meeting environment-  require  all participants to wear masks; limit the number of participants attending the meeting; limit and reduce the meeting to no more than an hour;  increase the spacing between the seats, and keep the room well-ventilated.

Due to changing situation and government policies and limited time, please understand we may have omitted other information.  If you have any concerns or questions relating to this information or need specific advice, do not hesitate to contact our knowledgeable attorneys at King & Capital for further consultation.