Complying with Corona Quarantine and other Labor Compliance Measures

The picture shows a door that is sealed. Behind this door is an employee that can order food online to be delivered at his compound. He is not allowed to open his door. One time a day, his food will be delivered by an official who opens the door and re-seals it after handing over the food.

Locked in for 2 weeks. Resting or working from home. Paid. Not too bad, is it?

Unless bad news lurks around the corner... Most of us won't get sick. But nobody likes to stay in the unknown, employees nor employers.

Hence this article: what is there to know about Labor Compliance during Corona?

At the time this article is being written (February 12th 2020 10AM) the total amount of Novel Coronavirus Pneumonia (COVID-19) cases that has been reported in China has reached a total of 44,742 with another 16,067 suspected cases. The epidemic currently is still spreading.

The GREENMENT team monitors developments on a daily basis, using the DERA data platform which continuously monitors and analyses how epidemic containment measures are impacting companies’ operations and supply chain. Whenever important developments occur, we summarise key points whenever for our clients and colleagues in the industry.

This article for example summarises new labor compliance risks for manufacturing enterprises:

1.    Post Corona resumption time and requirements

On January 27th, the State Council issued a Notice to extend the 2020 Spring Festival holiday till February 2nd and to start work on February 3rd. Workers responsible for epidemic containment measures who cannot take the holiday should be provided compensatory resting time, according to the “Labor Law of the People`s Republic of China”. Salary compensation during the vacation period should be “guaranteed in accordance with relevant policies”. This means that work between January 31st and February 2nd should be regarded as overtime. Employees working according standard working hours should be provided compensatory resting time, failure of which would require companies to pay them 200% of the normal salary as overtime salary.

Following this Notice and according to the local situation, local governments formulated additional local policies regarding the delayed resumption of work. By the time of releasing this article, “general enterprises”1 in Shanghai, Jiangsu, Zhejiang, Anhui, Hunan, Chongqing, Guangdong, Henan, Hebei, Shandong and other 22 provinces (or cities) should not resume before 24:00 on February 9th. Enterprises in Hubei should not resume before 24:00 on February 13th. Tianjin enterprises shall temporarily not resume, the resumption time will be notified in advance.

Local regulations on how salaries are paid during the delay period vary:

?  Shanghai regulations require that for staff and workers having a rest, enterprises should pay salary according to the standard agreed in the labor contract. Workers responsible for performing epidemic control measures should get compensatory resting time and be payed overtime salary, double the normal salary.

?  Suzhou, Wuxi and Yancheng regulations require that for workers having a rest, enterprises should pay normal salary; for workers working during vacation, enterprises should pay “enough salary in time, and employers are encouraged to give care and reward in an appropriate way”.

?  Zhejiang regulations require that salary during the delayed period should be paid as usual, and this period shall not be regarded as a legal holiday. Only February 8th and 9th shall be regarded as resting days. Employees working at home on weekdays will not be paid overtime salary and employees working on resting days should be paid salary according to the national provisions.

Local governments have also issued requirements for the resumption of work, such as:

?  Before resuming work, a plan for epidemic prevention and control should be formulated and applied for approval according to local requirements; enterprises should carry out sufficient preparation for epidemic prevention before resumption, such as recording the information of employees returning to work and preparing anti-epidemic equipment such as masks, goggles, thermometers and disinfectants.

?  After work resumption, strict implementation of epidemic prevention and control should be done. For example, enterprises should record daily temperature of employees back at work, install a system for recording and reporting every abnormal health condition of employees, and carry out education and training of epidemic prevention methods etc.

2.    Principles for handling labor relations during epidemic prevention and control

According to “Notice on the proper handling of labor relations during the prevention and control of pneumonia caused by novel coronavirus infection” issued by the ministry of human resources and social security:

(1)   COVID-19 patients, suspected patients and close contacts during their isolation treatment or medical observation, or employees who are unable to perform normal labor due to quarantine measures or other emergency measures implemented by the government, should be paid salary as usual. Enterprises shall not cancel labor contracts on the basis of articles 40 and 41 of the labor law. If the labor contract expires during the period, it shall be extended to the expiration of medical treatment, medical observation and emergency measures taken by the government.

(2)   If the enterprise has difficulties in maintaining operation due to the impact of the epidemic, it may, through consultation with the staff and workers, adopt measures such as salary adjustment, job rotation and reduction of working hours to stabilise itself, while reducing layoffs as much as possible. Enterprises under these circumstances can enjoy certain benefits. If the enterprise shuts down within a salary payment cycle, the enterprise should pay salary to the workers according to the standards agreed in the labor contract. In the case of more than one cycle, if employees provide normal labor, the salary paid shall not be lower than the local minimum standard. If employees fail to provide normal labor, the enterprise shall distribute living expenses according to the standards provided by the provincial governments, autonomous regions and municipalities.

(3)   If the party concerned is unable to apply for labor and personnel dispute arbitration within the statutory limitation period because of the epidemic, the limitation period for arbitration shall be suspended. The limitation period for arbitration shall be calculated from the date on which the reasons for the suspension are eliminated. If it is difficult for an arbitration institution to hear a case within the prescribed time limit because of the epidemic situation, the time limit may be extended accordingly.

3.    Geographical Distribution of the Hubei Migrant Workforce

Big Data Analytics of population migration indicates that about 10 million Hubei personnel work in other provinces across the country, with Guangdong province being the top destination, attracting 35.69% of the Hubei migrant workforce. Next are the provinces in the Yangtze River delta, namely Zhejiang, Jiangsu and Shanghai, taking up 13.8%, 7.62% and 5.53% of the population respectively. Provinces neighbouring Hubei, including Hunan, Henan, Jiangxi, Chongqing, Anhui and Shanxi each accommodate more than 1%. Other more developed provinces, such as Beijing, Sichuan and Shandong, also take up significant portions of the distribution2.

Geographical Distribution of the Hubei Migrant Workforce

As illustrated, the provinces with the top three largest Hubei migrant workforce are Guangdong, Zhejiang and Jiangsu, which also are the most prominent manufacturing bases in China. Due to the current provincial lockdown of Hubei, a sharp decline in the number of Hubei workers in these areas is expected, which would likely lead to a labor shortage after the end of the extended holidays.

4.    How to manage labor compliance risk during the epidemic control period?

Fighting the epidemic is still the top priority of enterprise management at present, but business decision makers also have to start thinking about labor compliance issues such as:

1. How to deal with employees unable to perform normal labor, such as patients infected with COVID-19, suspected patients, close contacts under isolation or medical observation, or employees who are unable to perform normal labor due to quarantine measures or other emergency measures implemented by the government during this period?
2. Given the current epidemic, what are the risks and strategies of work resumption and recruitment? What adjustments need to be made?
3. Given the current epidemic, what matters should enterprises focus on and which risks should be avoided in terms of employee working time arrangement and salary payment?
4. During the epidemic, which changes will be made to national employment policies (short-term vs. long-term, subsidy vs. incentives)? What are the risks and opportunities? How should we respond as a business?

Notes:

1)      General enterprises do not include those necessary for the normal operation of municipal utilities (water supply, gas supply, power supply, communication and other industries), epidemic prevention and control (medical equipment, pharmaceuticals, protective equipment production and sales, etc.), life necessity supplies for the public (supermarket stores, industries such as food production and supply) and other related enterprises that are involved in sectors important to the national economy and public well-being.

2)      DERA database & general project of the National Social Science Foundation, "Research on Population Migration, Migration Direction and New Changes based on Big Data" by Zhou Xiaojin, a researcher from the Institute of Economics, Guangzhou Academy of Social Sciences.

Dynamic Risk Management using DERA

DERA is a GREENMENT proprietary database that dynamically monitors government policies and measures in 31 provinces / autonomous regions, 338 cities and over 5,000 information platforms. DERA facilitates focused data collection and screening to evaluate and mitigate impacts of government measures at company and regional level. DERA uses the innovative SSP approach which allows companies to evaluate their business resilience risks in their China operations and supply chains considering multiple dimensions (Site) (Surrounding) (Policy). This is especially relevant in China where external events can be very dynamic and have substantial impact on the business. Examples of such events are the Jiangsu explosion in 2019 and the recent Corona virus outbreak in 2020. DERA is the technology answer to China’s fast digitising environment, using a big data approach for more efficient, cost-effective and proactive risk management. Relying on the DERA big data platform, GREENMENT’s team has created a series of solutions to help customers manage operational and supply chain risk in China’s dynamic business environment.

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