Local opinions on key labour dispute issues during COVID-19 pandemic

1. Salary payment during business or production suspension period

According to current national and local regulations, normal salary agreed in the employment contract must be made to employees for the first payment cycle during the suspension. After the first payment cycle, the company is allowed to reduce salary or pay living expenses when suspension continues. However, the three locations have slightly different opinions on the procedure of deciding the salary payment standard.

In Shanghai, a consultation process was introduced in the opinions , ie, companies can decide the payment standard via democratic consultation with employee representative committees, trade unions or employee representatives.

The Guangdong opinions require companies to negotiate with employees on salary payment. If no mutual agreement can be reached, the company is allowed to terminate the employment contract unilaterally, but is obliged to pay statutory severance to the affected employee.

The Beijing opinions encourage the company to negotiate with employees but do not strictly require the two parties to reach consensus. The new salary payment standard can also be decided via consultation process.

We suggest that companies should collect and retain evidence which shows their fulfilment of suspension requirements.

2. Arrangement on salary reduction and working hours adjustment

With respect to the procedure on position change, salary reduction, delay in salary payment, working hours reduction, duty rotation, duty suspension, business or production suspension, in the Shanghai opinions , companies are required to reach a consensus on these matters through consultation and negotiation with employee representatives committees, trade unions or employee representatives according to statutory procedures. Reached consensus which is fair and reasonable can become the applicable basis for arbitration or judgement during the COVID-19 period.

The Guangdong opinions define these matters as variation of employment contract. If these changes cannot be mutually agreed between the parties, companies are allowed to unilaterally terminate the employment contract on the grounds stipulated in Article 40 and 41 of the PRC Labour Contract Law and pay statutory severance to the affected employees.

The Beijing opinions have not provided any regulation in this regard. We recommend that, in practice, companies should make changes according to the compulsory procedure on varying employment contract, i.e., the change can only be implemented with employee consent.

3. Arrangement on holiday

With respect to statutory holiday and beneficial leave offered by companies, companies are allowed to arrange them directly and inform employees accordingly. But for unpaid leave or leave which the employee’s entitled salary is reduced, companies must obtain the employees’ consent before implementing the arrangement.

In short, the local opinions on these labour disputes during the pandemic are different. We suggest that companies should pay attention to local opinions , and refer to different opinions depending on the specific situations in practice.

If you would like to obtain more information, please do not hesitate to contact any of the individuals listed or your usual contact at Simmons & Simmons.

See our Coronavirus (COVID-19) feature for more information generally on the possible legal implications of COVID-19.