In late March, Chinese authorities announced the total lockdown for all citizens living in Shanghai. After several weeks, the situation in the Chinese metropolitan city does not seem to have fully recovered, making difficult the conduction of daily activities and the smooth operation of companies located in this area.
Faced with the current companies’ difficulties of preserving their operations during this period, it became necessary to clarify important questions specifically linked to the handling of labor relations, in order to better respond to this new situation affected by the spread of Covid-19, prevent and control the social and economic development and properly face with the possible labor disputes that may arise during this delicate phase.
In this regard, Shanghai High People’s Court in conjunction with the Shanghai Municipal Human Resources and Social Security Bureau formulated a range of answers to the main questions relating to the handling of labor disputes with reference to coronavirus epidemic.
- Termination or renewal of a labor contract
In case the employer has not the possibility to timely terminate or renew the labor contract in written form due to pandemic, he can proceed by electronic means, otherwise, upon consultation, the period for the termination or renewal of the written contract can be reasonably extended.
- Payment of employees’ salaries
According to the points 4 and 5 of the 做好新型冠状病毒感染肺炎疫情防控期间稳定劳动关系支持企业复工复产的意见》（人社部发〔2020〕8号）- Doing a Good Job in Stabilizing Labor Relations During the Prevention and Control of the Novel Coronavirus Pneumonia Epidemic and Supporting Enterprise Resumption of Work and Production Views provision issued by the Ministry of Human Resources and Social Security:
- In case the employee is tested positive (even asymptomatic) or he had contact with people who has tested positive and he is therefore subject to isolation or medical observation measures, resulting unable to provide normal labor, he has the right to receive his salary for the duration of the period of isolation or medical observation according to what agreed within the labor contract.
- If the employee is unable to perform his work normally due to lockdown measure, the employer may arrange the conditions to allow employees to work remotely, paying the salary as during the employee normal attendance at work.
In case the employer does not provide the conditions to work remotely or the employee is unable to work from home, the employer can, as a first step, give employee the possibility to use the remaining annual leave or compensatory leave (leave earned by working overtime) and consequently pay the remuneration according to the salary standard of the corresponding vacancies.
- In case neither the remote work nor the paid leave conditions are met, upon consultation with the employee relating to the salary payment status, the employer shall pay the salary according to what agreed within the labor contract in relation to only one “cycle” of isolation or medical treatment. If this period lasts more than one “cycle” (meaning 30 days), the remuneration will correspond to the so-called living expenses, which can be agreed between parties but shall not be lower than the minimum salary required by the local law.
- Delay in the payment of salaries
If Covid-19 affects the complete operation and production of an enterprise, causing delay in the payment of employees’ salaries, it can be temporarily deferred after consultation with trade union or workers representatives. In any case, the deferral period generally does not exceed one month.
- Failing in cooperating with government measures or subject to administrative penalties
During the epidemic control period, if an employee is considered criminally responsible or he is subject to administrative penalties for not cooperating with prevention measures imposed by the government, the employer may terminate the labor contract in accordance to the Article 39 of the Labor Contract Law of the People’s Republic of China according to which: “the employer may terminate the labor contract in case of a) seriously violating the rules and regulations of the employer; b) having been pursued for criminal responsibility in accordance with the law.
- Arbitration or litigation
In case a party is unable to apply for arbitration of labor and personnel disputes or initiate a lawsuit within the statutory period due to the impact of Covid-19, the provisions on the suspension of the time limit for application may be applied in accordance with the law. In other words, for all the duration of this exceptional period, the arbitration or litigation could be postponed or suspended according to the relevant rules and laws.
For any kind of assistance or clarification about the points discussed above, Zunarelli Law Firm is available at the following email address shanghai@studiozunarelli.com
China Desk – Zunarelli Law Firm
