The situation arising from the coronavirus is still developing in China. In order to limit the spreading of the virus, the PRC State government decided to extend the public holidays of the Chinese New Year, which should have ended on 30 January after a 7-days’ holidays starting from 24 January, until 2 February 2020. In addition, some local governments declared that businesses irrelevant to national economy or people’s livelihood should remain closed for another one week. All companies must comply with these official requirements. Please see below the details.
According to the Notice on Extension of 2020 Spring Festival Holidays issued by the Administrative Department of the State Council on 26 January 2020, the public holidays of the Chinese New Year will be extended to 2 February 2020. These additional two days’ holidays were decided by the central government at the State level. Therefore, they shall be implemented nationwide. During the holidays, all employees are entitled to enjoy rest and do not need to work while the companies shall pay full salaries to the employees. If any employee has to do overtime work, the company must either arrange the employee to take compensatory leave or pay the employee overtime payments later.
At the current stage, companies may be well advised not to arrange employees to do overtime work at the office premises or public areas, except if it is really necessary such as for the purpose of virus prevention and control, especially in those locations (please refer to below) where the local governments already required the companies to remain closed even after the public holidays.
In addition to the extended public holidays, until 28 January 2020, five provinces and cities decided to require companies to continue to remain closed until 9 February 2020. They are Shanghai, Zhejiang Province, Jiangsu Province, Guangdong Province and Chongqing. Exempted are those companies which engage in public utility operation such as water supply, gas supply, electronic power supply and telecommunication service, or in business relating to virus prevention and control such as the manufacturers of medical equipment and pharmaceuticals, or in business relating to the daily life supply such as supermarkets, food producers, etc.
The local governments are entitled to do so according to Article 42 of the Law of the PRC on Prevention and Treatment of Infectious Diseases. Companies are obliged to follow the requirements of the local governments. If a company breaches the law causing any harm or property losses to any person, such company shall bear civil liability according to law. If a company fails to take preventive measures according to regulations causing the occurrence of a serious emergency, in addition to being imposed with a fine of RMB 50,000 to RMB 200,000, the company can also be ordered by the competent authority to suspend business operation, be suspended or revoked with its business license. If a company refuses to implement the virus control and prevention measures leading to the spread of coronavirus or a dangerous spreading situation, according to the PRC Criminal Law, the company or the persons directly in charge or being responsible can even be subject to criminal liabilities.
On 28 January 2020, the Shanghai local government made a detailed explanation about the implementation of relevant policies during the further period of stop of work.
‑ Companies located in the areas and falling into the scope of stop of work as required by the local governments shall continuously remain closed until 9 February 2020.
(1) During the period of stop of work, companies are obliged to pay full salaries to the employees.
(2) The period of stop of work shall be deemed as rest days for the employees. The company can ask the employees to work from home during this period. However, their work shall be deemed as doing overtime work.
(3) If any company has to start to work before 10 February 2020 due to special reasons, the company shall obtain the prior approval from the competent virus control administration authority by submitting an application and supporting documents.
‑ Companies located in the areas which were not closed during the public holidays of the Chinese New Year can continue to work during the period of stop of work as long as they can continuously work under the current situation without having the employees returning to Shanghai from other places and without causing people moving from one place to the other. However, these companies shall still file relevant measures on virus control and preventions with the competent virus control administration authority.
‑ Companies located in the areas where the local governments require the stop of work but engage in the business of public utility operation, virus prevention and control or daily life supply can start their business right after the public holidays. Specifically, the companies which are in the supply chains of products of virus prevention and control are encouraged to open operation as early as possible and to increase their production capabilities. Logistic companies transporting materials relating to virus prevention and control, or the housekeeping services, supermarkets which are related to daily life supply shall open their operation on time.
‑ During the period of the stop of work, as long as the employees work, no matter whether they work from home or work at the company, the company shall either pay overtime payments or arrange the employees to take compensatory leave afterwards.
Please note that companies located in the areas where the local governments do not require stop of work can start their operation right after the public holidays, except if they voluntarily decide to temporally close their operation due to the coronavirus.
Although other locations announcing stop of work polices similar to Shanghai did not publish implementing rules yet, we assume that they will probably follow the Shanghai practice. Therefore, during the extended public holidays and the period of stop of work as required by the local governments, as long as a company asks the employee to work, no matter from home or from the company, the company should pay overtime payments or provide compensatory leave. Further, companies shall not arrange the employees to take annual leave during the period of stop of work except if the employees expressly agree.
All governments including those in the locations where companies are required to remain closed will start to work from 3 February 2020. We suggest that the companies which need to start to work before the time set by the local governments shall get the approval from the competent virus control administration authority in advance. Until now, however, it is not clear yet whether it easy or not for a company to get such approval.
Further, depending on how the virus situation will further develop, both the State and local governments may make new decisions or issue new policies from time to time. We suggest that all companies pay close attention to the changes.