Government support for business and workers in China

1. What government schemes(s) are available in your country to help employers and workers in the current COVID-19 crisis and for how long?

So far in the PRC, varieties of the policies and schemes are published at both state and local levels for the purpose of stabilizing employment relationships and reducing employers’ labour cost burdens during the COVID-19 crisis.

From the employees’ perspective, the most essential benefit is to guarantee their salary payments during the corresponding period. Employees who are patients, suspected patients or close contacts of COVID-19 and those blocked and unable to return to work because of emergency measures taken by the government enjoy normal salary payments during the corresponding medical treatment period, medical observation period and the blocked period. 

From the employers’ perspective, there are some favourable policies at state level concerning social insurance and housing fund contribution as well as other subsidies that are issued by the Government for employers:

  • As from February 2020, medium, small and micro-sized companies in all the locations can be exempted from the payment of social insurance premiums payable by the employer for the basic pension, unemployment insurance and work-related injury insurance depending on the impact of the epidemic situation and fund affordability in the location for a period of no more than 5 months. The above-mentioned policies apply to all companies located in Hubei Province regardless of the company scales. In the locations other than Hubei Province, big companies can be exempted from paying 50% of the social insurance premiums payable by the employer for the basic pension, unemployment insurance and work-related injury insurance for a period of no more than 3 months.
  • As from February 2020, companies in all locations can be exempted from the payment of 50% of the social insurance premiums payable by the employer for the basic medical insurance depending on the actual situation and fund affordability in the location for a period of no more than 5 months. 
  • Companies suffering from operational difficulties due to the epidemic can apply for deferred payment of social insurance premiums for no more than 6 months in principle without paying late payment penalties.
  • Companies affected by COVID-19 can apply to defer payment of housing fund contributions for 6 months (from January to June) without paying late payment penalties.
  • Companies providing either off-line or online occupational trainings to employees during the periods of stopped work and operation resumption can enjoy training subsidies.
  • If a company meets some requirements including having duly paid the unemployment insurance premium according to law in the past, and its lay-off rate in the previous year is lower than the urban unemployment rate of the location where the company is located, the company can receive subsidies from the government for stabilizing the employment relationships. The amount of the subsidy varies with location, for example in Shanghai, it is 50% of the unemployment insurance premium paid by the company and the employees in the past year.

The above state policies are applied nationwide while each location may issue their specific implementation measures. In some locations such as Shanghai, Chongqing, Shenzhen, Guangzhou, Wuxi, Hangzhou, etc., further additional favourable policies, such as reducing the contribution rate of social insurance and the housing fund, postponing the adjustment date of the social insurance contribution base, and providing special subsidies, have been introduced for the benefit of employers. The effectiveness terms of such policies are subject to the corresponding local policies.

2. What payments are made under the scheme(s) and how/by whom?

For employees, the salary payments are made by their employers as usual. As for employers, they may, if eligible, directly enjoy payment exemptions or receive a refund of social insurance premium and/or subsidies from the government.

3. Which employers and employees are covered?

Please refer to question 1.

4. What procedure(s) does an employer have to follow to be able to take advantage of the scheme(s)?

The detailed processes or procedures vary with locations. Subject to the local implementation rules and requirements, eligible companies may be required to complete corresponding application or recordation formalities before competent authorities onsite or online. The latter is recommended by the government due to the infectiousness of COVID-19. 

5. Are there any other important eligibility criteria?

It is confirmed by the notices issued by the government that companies may adopt certain special measures, including but not limited to the following during the COVID-19 crisis to help them resume production or cut labour costs:

  • If a company encounters difficulties in production and operation due to COVID-19, it may, through consulting and reaching consensus with the employees in a collective way, adopt methods of job rotating, shortening working hours and reducing salaries etc. to avoid or minimize lay-off as much as possible.
  • Companies can arrange for employees who are not able to duly come back to work due to COVID-19 to work from home by means of telephone and Internet, etc. If that is not feasible, companies may arrange for the employees to take annual leave upon consulting with them.
  • If an employee, after taking various leaves and holidays, is still not able to come back to work after one month, upon consulting with the employee, a company may suspend the work of the employee and only pay them a living allowance in the amount of 70% to 100% of the minimum wage at the location, which varies subject to different locations.
  • Companies are entitled to decide, at their own discretion, whether to resume their operation or to suspend their business depending on the status of the prevention and control of the COVID-19 or the economic feasibilities. If a company resumes its operation or suspends its business for no more than one salary payment circle (normally one month), the company must pay employees normal salaries. For a period of more than one salary payment circle, the company can pay employees who do not work only the living allowances in the amount of 70% to 100% of the minimum wage at the location, which varies subject to different locations.

6. Are employees covered by the scheme(s) protected from dismissal?

For the employees who are patients, suspected patients or close contacts of COVID-19 sufferers and those are blocked and not able to return to work because of emergency measures taken by the government, their employment contracts may not be terminated on the grounds of illness, incompetence, the change of objective circumstances or mass lay-off by employers during the corresponding medical treatment period, medical observation period and the blocked period. If the employment contracts of these employees expire during the aforesaid periods, contract terms will be automatically extended until the end of such periods.