China coronavirus outbreak: what foreign enterprises in Shanghai need to know regarding HR obligations

On 30 January 2020, the World Health Organization (“WHO”) declared the novel (new) coronavirus (named “2019-nCoV”) outbreak in China as meeting the criteria for a Public Health Emergency of International Concern. Director-General of the World Health Organization Dr Tedros Adhanom Ghebreyesus remarked the declaration was made not based on China’s response to the outbreak, but in that the coronavirus may reach countries with weak health care systems, where it could run amok.

The declaration “is not a vote of no confidence in China,” said the Director-General. “On the contrary, the W.H.O. continues to have confidence in China’s capacity to control the outbreak.”

The Emergency Committee convened by the director-general welcomed the leadership and political commitment from the very highest levels of the Chinese government, their commitment to transparency and the efforts made to investigate and contain the outbreak.

How is the coronavirus affecting foreign enterprise in China?

For foreign enterprises in China, one of the significant measures implemented by the Chinese government is the extension of the Spring Festival holiday. On the 27 January 2020, the State Council issued the Notice of the General Office of the State Council on Extending the Spring Festival Holiday of 2020 (“Notice”) which extended Spring Festival from 30 January to 2 February 2020.

The Notice was made to strengthen the prevention and control of the coronavirus, reduce the concentration of personnel, halt the transmission of the virus and further protect the lives and health of the people. Equally, in Shanghai, the Notice of Shanghai Municipal People’s Government on Delaying the Resumption of Business Operations and the Opening of Schools in This Municipality was made on the same day.

The local government notice in Shanghai states has stated that enterprises within the Shanghai Municipality shall not resume work before 24:00 (midnight), 9 February 2020. Excluded from the measure are essential entities involved city operations, epidemic prevention and control, food and other life-necessity supplies and other related businesses necessary to the national economy and people’s livelihood.

In terms of the implementation of the measure and its effect on Shanghai-based foreign enterprises, we offer the following information:

First level emergency response
On 24 January 2020, Shanghai’s first-level response enabled the city to implement emergency measures in an effort to contain the coronavirus. To this end, enterprises in Shanghai are directed to adhere to both local and national measures. It is noted that local measures vary in each municipality or province. Given this, foreign enterprises operating outside of Shanghai should be aware of and adhere to their local measures.

Extended days are counted as ‘rest days’ in Shanghai
Under the authorisations set forth by the Shanghai Municipal Human Resources and Social Security Bureau on 29 January 2020, the extended days off in Shanghai are defined as “rest days” rather than national holidays. Therefore, remuneration for such days shall be paid according to the labour contract between employer and employee. Where the employee works before the resumption date, the employer shall pay double the salary or arrange compensation in the form of rest days.

Working from home is deemed as overtime
Under the authorisation of the Municipal Bureau of Human Resources set forth 29 January 2020, employees working from home according to the requirements of the employer are deemed as working overtime on a rest day. Therefore, such employees shall either be remunerated double the pay or compensated with a rest day.

Moving forward, we advise foreign enterprises in China to remain alert to new measures in response to the coronavirus situation both locally and nationally. We further advise you to pay particular attention in terms of measures which the remuneration of employees under quarantine or those from Hubei who cannot return to the workplace due to imposed lockdown on the Central China province.

If you have questions or concerns related to China Business, Tax or Labour Law or other corporate matters, please contact Horizons at +86 21 5356 3400 or to schedule a consultation session. From RMB 1,500 per session, Horizons can provide insight, expertise and the right solutions for you. 

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