Beijing Addresses COVID-19 Employment Dispute Cases

The Beijing High People’s Court and The Beijing Labor and Personnel Dispute Arbitration Commission together recently released a set of Answers to Questions Concerning the Application of Law in the Trial of Employment Dispute Cases During the Prevention and Control of COVID-19. Below are some highlights from these Answers.

The following principles will be used in handling employment dispute cases:

1. Rule of law.
2. Safeguarding employees’ rights and interests. Supporting the survival and development of employers. Equally protecting the rights and interests of employees and employers. Guiding employees and employees through these tough times together. Promoting “win-win” solutions between employees and employers in resuming work and production.
3. Stressing the importance of negotiation and mediation. Encouraging and supporting employers and employees to resolve wages and other employment-related issues through consultation, with an emphasis on mediation. Dealing with employment relations in a flexible manner.
4. Swiftly handling disputes and streamlining proceedings. Maintaining the stability and harmony of employment relations in Beijing.

Notice the theme here? Flexibility and harmony and mediation, as opposed to fighting and litigation. Now on to some of the specific questions and answers.

What if an employer extended a job offer to an employee before the Chinese New Year holiday and agreed the employee would commence work right after the holiday period but the employee was unable to start per the agreed start date due to the pandemic? When did the employment relationship commence? The parties establish an employment relationship as of the employee’s actual start date. However if the employer has already arranged for the employee to provide labor in a flexible way, the day the employee starts to provide labor will be considered as the employee’s commencement date.

What if because of the pandemic the employer is not able to execute or renew a written employment contract with the employee and the employee demands double wage payments for the employer’s failure to use a written employment contract? If the employer can prove it proposed to the employee that the employee execute or renew the written contract and that its failure to enter into a written contract was caused by coronavirus-related circumstances beyond the employer’s control, the courts will not uphold the employee’s double wage claim.

The employer and the employee may mutually agree to execute a written employment contract in electronic form. The parties must use data messages which can be considered written and electronic signatures considered reliable under the PRC Electronic Signature Law and other applicable laws and regulations. The employer needs to make sure that the generation, transmission, and storage of the electronic employment contract actually meets the requirements of the Electronic Signature Law and other applicable laws and regulations and that the electronic employment contract is complete, accurate, and not tampered with. In addition, the electronic employment contract must comply with the PRC Employment Contract Law regarding employment contracts. If these requirements are met and the employee claims its electronic employment contract is invalid because it is not a written contract, the employee will not prevail and the employer will not be hit with a double wage penalty.

If an employee in a probation period is unable to return to work due to reasons beyond his/her control and the employer is unable to assess whether the employee passes the probation period through flexible methods, the employer and the employee may mutually agree to defer the probation period without violating the Employment Contract Law (which provides that the employer can only impose one probation period on the same employee). The period during which the employee is unable to work is not considered part of the originally agreed upon probation period and therefore the above approach will not be considered as an extension of the originally agreed probation period.

If the actually performed probation period (after deducting the period affected by the pandemic) exceeds the originally agreed probation period, the employee can demand the employer make up for the wage difference for the time period beyond the originally agreed probation period and pay damages for such period according to the Employment Contract Law.

The 2020 Chinese New Year holiday was extended by three more days: January 31, February 1 and February 2. If the employer required a standard-hour employee to work during those three days, the employer may first arrange compensatory time off and if compensatory time off cannot be arranged, the employer must pay overtime at a 200% rate. For an employee under the comprehensive working hours system, the employer first needs to subcontract the hours worked on January 31 and February 1 from the total number of statutory standard working hours for the applicable comprehensive calculation period, and then determine if any overtime pay is owed to the employee. An employee under the flexible working hours system is not eligible for overtime pay if he/she worked during those three days.

If the employer arranges for the employee to work from home or to work flexibly during the period of pandemic prevention and control, it will generally be deemed to be full attendance on the part of the employee, and the employer cannot lower the employee’s remuneration without the employee’s consent.

If an employee is confirmed or suspected of having COVID-19, infected but asymptomatic, or has come into close contact with a confirmed or suspected COVID-19 patient, how should the employee be paid during the quarantine treatment/medial observation period? The employer may choose not to pay the non-guaranteed portions of the employee’s remuneration such as performance-based compensation, bonuses and commissions, and attendance-based car/meal subsidies but must pay base salary and other guaranteed portions of the normal wages and in no event can it pay less than the local minimum wage. If the employer arranges for the employee to work flexibly during such period, the employee shall be paid his/her normal wages.

If the employer suspends production/operation, the employer must pay the employee wages in accordance with the standard provided in the employment contract within a wage payment cycle. If it goes beyond a wage payment cycle and the employee provides labor, the employer and the employee may agree on adjusting the employee’s wages but those wages cannot be less than the local minimum wage and if the employee does not work, the employee must be provided basic living expenses at a rate of no less than 70% of Beijing’s minimum wage.

If the employer can prove that the employee’s being subject to quarantine treatment/medical observation is because the employee failed to obey the government’s pandemic prevention and control measures, and the employee is unable to work during such period, the employer can treat such period as personal days and handle it accordingly. Note that this pretty much requires the employer have a set of enforceable rules and regulations that covers personal days.

What are the wage payment requirements for the employee unable to provide normal labor during the period of delayed resumption of work or unable to return to work because he/she is affected by the pandemic? First, the employer may arrange for the employee to use annual paid leave and other available leave and adjust the rest days in the 2020 calendar year and pay wages accordingly. Alternatively, the employer may negotiate with the employee regarding adjusting the employee’s wages, but it cannot pay the employee less than the local minimum wage. If the employee’s absence is shorter than one month, and neither of the above options are available, the employer may choose not to pay the non-guaranteed portions of the employee’s remuneration, such as performance-based compensation, bonuses and commissions, and attendance-based car/meal subsidies, but it must pay the employee’s base salary and other guaranteed portions normal wages and it cannot pay less than the local minimum wage. If the employee’s absence is longer than one month, the employer must pay the employee according to the Beijing Wage Payment Regulations. Employees stuck in Hubei Province must be paid basic living expenses in accordance with a Beijing government notice implemented in March.

If an employee is sent on a business trip and then is unable to come back to Beijing due to pandemic prevention and control, the employee needs to be paid his/her normal wages during the period of absence. If the employer suspends production/operation, the above rules regarding wage payments during suspension of employer production/operation will apply.

Pursuant to the Beijing government’s February-14 notice on further clarifying requirements for people returning to Beijing during the pandemic prevention and control, an employer may treat as personal days the time of an employee who travels outside Beijing for personal reasons and is subject to quarantine upon return and is unable to work during the quarantine period.

If the employee needs to stay at home to care for a child, the employer may arrange for the employee to work flexibly (e.g., putting the employee on leave and adjusting rest days within the 2020 calendar year) but must pay this employee his/her normal wages. Alternatively, the employer may negotiate with the employee regarding adjusting the employee’s wages, but these wages cannot be less than the local minimum wage. If the above does not work, and the employer’s leave program (such as annual paid leave and any other available leave, including any employer-provided additional leave) has been exhausted, the employer may choose not to pay the non-guaranteed portions of the employee’s remuneration, such as performance-based compensation, bonuses and commissions, and attendance-based car/meal subsidies, but it must pay base salary and other guaranteed portions of the normal wages and in no event can it pay less than the local minimum wage. If the employer suspends production/operation, the above rules regarding wage payment during suspension of employer production/operation will apply.

Note that regardless of the situation, the employer is virtually always required to pay the employee some compensation, which is usually at least the local minimum wage.

What if the employer suspends production/operation because of the pandemic or the employee is unable to return to work due to the prevention and control of COVID-19 and the employer arranges for the employee to be on standby without the employee’s consent? This sort of arrangement is valid because the employee’s standby status is a result of the pandemic, and not the employer’s fault. The parties are encouraged to reach agreement regarding putting the employee on standby, but the employer is not required to obtain the employee’s consent in this situation.

During the period of prevention and control and delayed resumption of work, if the employer arranged for the employee to take annual paid leave and/or other employer-paid leave without the employee’s consent, such an arrangement is still deemed valid because the employer may make such an arrangement according to its business needs. The employer is though expected to take into consideration the employee’s preferences but it is not required to get the employee’s consent.

If an employee submits a resignation letter and the employer fails to process the resignation on schedule due to the pandemic, can the employee retract his/her resignation? Once delivered, the resignation takes effect and the fact that the separation procedures have not been completed by the expected time because of the pandemic does not affect the validity of the resignation.

If the employer fails to have a good understanding of COVID-19-related policies such as those relating to wage payments and employee benefits, resulting in underpayment or omission of payment to the employee, can the employee terminate the employment contract and demand statutory severance on the basis that the employer failed to timely pay employee remuneration in full? The short answer is no, but only if the calculation standard concerning the remuneration during the pandemic prevention and control is not clear and the employer and the employee reasonably disagree on such calculation standard and it is necessary to go through labor arbitration/court to determine whether the employer indeed owes wages to the employee and under these circumstances it can be deemed that there is no malicious intent or gross negligence on the part of employer. In other words, it is a lot smarter and safer to spend the time getting your wage payments right the first time!

If the employer does not provide protective equipment such as masks or disinfectants to the employee who returns to work during the period of pandemic prevention and control, can the employee terminate the employment contract and demand statutory severance on the basis that the employer failed to provide adequate labor protections? The short answer is no, unless the employee’s position or work is related to medical care, pandemic prevention and control etc. and the employer is required by law to provide protective equipment but fails to do so.

If the employer resumes production in compliance with the law and the employee does not want to return to work, the employer may unilaterally terminate the employee for wrongdoing without severance only if it can produce evidence to show that it has reminded the employee regarding returning to work or attempted to persuade the employee to return to work or the employee refuses to return to work without justification.

If the employee intentionally conceals infection or suspected infection of COVID-19 and refuses to cooperate with health checks, or compulsory quarantines or treatments, or the employee refuses to abide by or accept the government’s pandemic prevention and control measures, causing significant social impact or serious consequences, the employer may unilaterally terminate the employee for wrongdoing without severance.

Bottom Line: Beijing is trying hard to balance protections for both employees and employers during these trying times. That being said, if you are an employer in Beijing, be very careful in dealing with the new complications that come with heightened employer and employee protections. Needless to say, these complicated new Beijing employment rules will be keeping China employment lawyers busy for a long time.

We will be discussing the practical aspects of Chinese law and how it impacts business there. We will be telling you what works and what does not and what you as a businessperson can do to use the law to your advantage. Our aim is to assist businesses already in China or planning to go into China, not to break new ground in legal theory or policy.