Amid the COVID-19 pandemic, foreign companies that have business interests in China are facing unprecedented challenges. As the authorities and institutions react, new measures are being put in place daily. In response to the COVID-19 outbreak, the Chinese government has released a multitude of government directives. The new regulations are aimed to offer assistance as well as guidance to the companies to help them manage labor and employment issues in connection with the pandemic.
During the height of the outbreak in February, the Supreme People’s Court of China ordered courts at all levels to guide litigants to file cases or mediate disputes online, encouraging judges to make full use of online systems for litigation, including those for case filing and ruling delivery, to ensure litigants and their lawyers get better legal services and protection.
The employment authorities and courts will refer to the following principles in hearing labor dispute cases:
- Balancing protections for both employees and employers. This means not only protecting employees’ rights to make a living and to be employed, but it also means striving to create conditions for employers’ survival and development.
- Promoting cooperative performance of employment contracts and encouraging parties to negotiate to amend their contracts so as to enable both parties to continue to perform under their employment contracts.
- Seeking common ground via consultations that seek to resolve labor disputes through mediation and negotiation.
- Upholding the stability of employment contract relationships, by among other things, denying claims to terminate employment contracts if it is possible for the parties to continue to perform under the contract.
Companies have gradually resumed business operations in Mainland China. The PRC Ministry of Human Resources and Social Security (“MOHRSS”) issued some guidelines on 7 February 2020 on stabilizing employment relations and supporting enterprises’ resumption of work and production during the COVID-19 outbreak. Many provincial and municipal governments have also issued detailed action measures for employers to follow to prevent the spread of disease in the workplace.
Labor issues. Courts are guided–
To support employers in their adoption of flexible working hours during the pandemic; and
Not to support employers who seek to terminate employees merely on the grounds that they have been diagnosed with COVID-19, are suspected to be infected with or are an asymptomatic carrier of the virus causing COVID-19, have been quarantined, or are from a COVID-19 hotspot.
Layoffs and termination of employees in China during COVID-19–
Under the PRC law, a company may end its employment relationship with an employee by terminating the employee’s employment contract in accordance with the ECL. A company may terminate an employment contract if the employee commits gross misconduct, in which case the company should proactively conduct an investigation to determine if the employee’s misconduct is a terminable offense under company policies and pursuant to the ECL.
If the employee is found to have committed a criminal offense in connection with their refusal to be quarantined or to receive treatment for COVID-19, or for intentionally spreading COVID-19 to endanger the public, or otherwise refusing to cooperate with the government’s disease control measures, the employer may terminate the employment contract in accordance with the ECL.
All the China employers should keep every aspect of the changed law when terminating an employee.