COVID-19 Legal Series (4): What Are Employers' Obligations Amid the Coronavirus Outbreak?

How has the enforcement been for these requirements? 

Enforcement has been strict. The authorities are constantly asking for information from companies while they are operating. Companies looking to resume operations in some areas must seek approval from the local health authorities as well. In some cases, companies must do an online record filing of the steps they are taking to ensure employees will not be infected.

Are employers obligated to report suspected cases to the authorities? 

Yes. Under the PRC Law on the Prevention and Treatment of Communicable Diseases (中华人民共和国传染病防治法), employers are obligated to report suspected cases of infection among their employees to the local medical or disease prevention control authorities. These include employees with virus symptoms and those with connections to infected persons.

Typically, the local authorities will request employers provide information about an employee's travel history and acquaintances. To that end, employers should collect this information on a regular basis, especially to find out whether an employee has come into contact with infected persons or visited epidemic hotbeds such as Hubei province.

What are employers' obligations to pay quarantined employees? 

If the employee is unable to return to work, whether it is due to quarantine, medical observation, or other government measures, the employer is obligated to keep paying the employee their normal salary.

If an employee has been released from quarantine but still requires medical treatment (due to some other illness or disease), that would be treated as a medical treatment period where employee will receive reduced wages according to local regulations.

Can employers order employees to work from the office?

Yes, as long as the employer meets the local requirements to reopen their office. If those are met, then employees do not have a justified reason to refuse. The employer can then handle those employees who do refuse in accordance with their company policies. It is therefore very important for employers to check what the company policies say about these types of situations.

What are the different implications for an employer if an employee is infected at work versus at home? 

There is no difference in most cases because you can rarely say for sure how someone got infected. The government has said that simply contracting the virus would not be considered a work injury or an occupational illness. The one exception is for medical personnel or those involved in disease prevention and control.

Even if the infection can be traced back to work, the employer's liability will depend on whether the company was at fault. The company may be subject to administrative fines for not taking the necessary steps to reduce transmission risk. But as long as the company follows the government requirements, the likelihood of the company being punished for an employee being infected is drastically reduced.

Would employees be liable if they spread the virus at work? 

Depends on the reason for the transmission. If the employee has "intentionally spread" the virus, for example by leaving quarantine and entering the office premises, then they could be subject to criminal penalty of between three to ten years imprisonment. If the transmission is less intentional, say the employee failed to sanitize or wear a mask, they could still be sentenced to three to seven years imprisonment. But as long as the employee makes best faith efforts to comply with government requirements, then they would avoid criminal liability even if they spread the virus.

What does the law say about laying off employees during this period? 

Legally, in most cases, there are no special regulations protecting employees against layoffs during this period. The one exception is for employees unable to work because of some anti-epidemic government measure. They are protected against any type of layoff unless they committed some serious misconduct.

However, in these trying times, there are social and political implications for implementing mass layoffs. Public relations is one factor, as there may be backlash from the general public and on social media. Politics is the other factor, as the Chinese government is encouraging employers not to implement layoffs but to reduce their costs through other means. All this means that companies must carefully consider whether to do layoffs, even if they legally can do so.

What other ways to reduce costs are there?

One method is to arrange for employees to use their annual leave now. Another method is to arrange "rest" for the employees, then have them work extended hours later on when operations resume. In China, this is referred to as a "comprehensive working hours" system, where employees work fewer hours during low periods and more hours during busier periods. As long as the average working hours do not exceed the standard working hours, the employer will not have to pay overtime.

Another method recommended by the government is to consult with employees about reducing their wages or having them take unpaid leave. However, the government has been vague about what consultation means in practice. Does the employee need to agree? What happens if they refuse? Some companies may want to unilaterally take such action, but that could be subject to challenge.

Have there been lawsuits brought against employers by their employees? 

We have not seen any lawsuits so far. However, there have been several contentious situations where companies have ordered their employees to return to work but the employees have refused, despite the government approving the resumption of operations.

One example of a case we are dealing with right now is an employee who traveled back to North America for the Chinese New Year period. However, she must be in Shanghai to perform her role. The company is demanding she return to China, but she is refusing. So the company is now considering what course of action to take.

Are multinational companies (MNCs) in China dealing with these issues differently? 

Basically MNCs and local businesses are facing the same types of dilemmas. One difference we have observed is that Chinese companies are being more aggressive with putting their employees on unpaid leave because there is no work to do, even though that is legally questionable and may be challenged by employees. The MNCs are trying to be more compliant with the regulations.

How adequate have China's employment and labor laws been during this period?

For the most part, most areas of the law are clear. The government has been proactive in issuing employment guidance to employers. The biggest area of uncertainty is for companies whose business have been seriously hit, what they can do is to reduce costs almost immediately. If the company wants to be good to its employees and avoid layoffs, what other measures can they implement and do they need employees' consent? That is the biggest area where clear guidance and direction from the government is needed.

Looking forward, could these employment issues get worse, especially as the impact on businesses becomes clearer with time? 

The situation could worsen depending on the industry. The central government is pushing employees to return to work because of the severe economic disruption. However, local governments are still somewhat hesitant because they do not want another outbreak happening on their watch. We are likely to see a slow and gradual resumption of business over the next month or so, assuming no further major outbreak.

We have not seen companies take any dramatic action yet as most are still waiting to see how long this outbreak will last and what the full impact on business will be. Many companies have started planning for worst-case scenarios and considering whether and how to implement redundancies in case the situation does not improve in the near-term.