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COVID-19 Mainland China and Hong Kong: Employment considerations

  • 31 January 2020 31 January 2020
  • Asia Pacific

  • Coronavirus

On 30 January 2020, the World Health Organization ("WHO") declared the Wuhan-sourced Novel Coronavirus (or COVID-19) a "public health emergency of international concern" ("PHEIC").

COVID-19 Mainland China and Hong Kong: Employment considerations

This is only the sixth PHEIC declared by the WHO since it was empowered to do so in 2005. The five previous PHEIC declarations arose from: two Ebola outbreaks in Africa, the Zika virus in Latin America; the reappearance of polio in Syria; and the global swine flu in 2009.

A PHEIC declaration gives the WHO a far stronger role in the global response, although its recommendations are not enforceable. Rather, the WHO can exercise strong influence on member states to respond to their coordination efforts and related recommendations, including resources for response initiatives, travel advisories, border closures, etc.

Mr. Tedros Adhanom Ghebreyesus, the WHO Director-General, has commented overnight that "our greatest concern is the potential for the virus to spread to countries with weaker health systems and which are ill-prepared to deal with it". 

Nevertheless, Mainland China now has around 10,000 cases, and over 200 deaths. Hong Kong has 12 cases currently.  

The evolving outbreak presents unique employment issues for businesses. This article sheds light on these legal and practical issues in each of the mainland China and Hong Kong contexts.   

PRC and Hong Kong Government Responses

Due to the outbreak of the Novel Coronavirus, the State Council of the People’s Republic of China (the “PRC”) announced on 26 January 2020 that the Chinese New Year holidays (“CNY Holidays”), which were scheduled to end on 30 January 2020, would be extended to 2 February 2020 as part of the nation-wide measures to contain the spread of the virus. Most recently, and given the fluidity of the situation, some regional governments (such as Shanghai and Chongqing) have announced that the CNY Holidays be extended to 9 February 2020.    

On 28 January 2020, the Hong Kong Government announced special work arrangements for government departments for the period from Wednesday, 20 January to Sunday, 2 February, immediately following Chinese New Year to reduce the risk of the spread of the Novel Coronavirus. Hong Kong Government employees (other than emergency and essential services) are not required to return to the office, but to work from home ("WFH"). The private sector has largely followed suit and adopted the same measures. The date of 2 February is widely expected to be extended to Sunday, 9 February.

The PRC Context

Employers are obligated to extend the CNY Holidays 

Given that the purpose for the extension of the CNY Holidays (as required by the State Council of the PRC) is to contain and control the spread of the virus, employers are obligated to comply with this accordingly. Employers who do not do so may face grave consequences pursuant to Articles 64 and 66 – 68 of the Emergency Response Law of the PRC (“《中华人民共和国突发事件应对法》"), which was promulgated in 2007.

Salary during the extended CNY Holidays 

As mentioned above, employers have an obligation to extend the CNY Holidays in line with the requirement of the State Council of the PRC and accordingly, they shall pay the relevant salaries to their employees based on their employment contracts. If employees had applied for annual leave during this extended period of time, they are entitled to withdraw their leave application.

For those employees who are unable to take leave due to epidemic prevention and control, employers should arrange for days off-in-lieu as set out in the Announcement of the State Council of the PRC. However, how shall one treat / compensate employees who work during the extended CNY Holidays and yet are unable to utilize the days off-in-lieu? This will depend on whether the extended period for the CNY Holidays is considered as "statutory holidays" or as "days off-in-lieu". 

  1. Whilst neither the State Council of the PRC nor the Ministry of Human Resources and Social Security of the PRC (“MOHRSS”) has expressed whether the extended CNY Holidays constitute statutory holidays or days off-in-lieu, the Bureau of Human Resources and Social Security of Wuxi (“Wuxi HRSS”) had issued a Notice on 28 January 2020 which may be informative in this regard. The Notice explained that employees unable to take leave during the extended CNY Holidays nor take days off-in-lieu should be paid at a rate of 200% of their regular salaries. 

  2. In addition, pursuant to Article 2.2 of the Regulation on Public Holiday for National Annual Festivals and Memorial Days (“《全国年节及纪念日放假办法》”, promulgated in 2013)the 1st – 3rddays of the first month of the lunar year are statutory holidays. On this basis, we may reach the conclusion that any statutory holiday shall be so stipulated under the relevant laws and regulations.

  3. In the circumstances, and on balance, it may be viewed that the extended CNY Holidays do not constitute statutory holidays and employees who work during this period but cannot take day off-in-lieu should be entitled to 200% of their regular wages in accordance with Article 44.2 of the PRC Labor Law (“《中华人民共和国劳动法》”, amended in 2018).

Employers should suspend work as required by the local government

In addition to the announcement of the State Council of the PRC, the local governments of Shanghai, Guangdong Province, Zhejiang province and other cities (such as Nanjing, Suzhou, Wuxi and so on) have issued Notices to suspend work until 8 February 2020 or 9 February 2020. Save for those deemed indispensable industries such as water, gas, power supply etc., no company shall start work before the suspension period. 

Some municipal governments, such as Shanghai and Nanjing, further demand that employers who intend to start to work "for specific reasons" should file a report to the local epidemic prevention and control offices and that work can only be commenced after approval is granted.

Pursuant to Article 42.2 of the Laws of the PRC on the Prevention and Control of Infectious Diseases (“《中华人民共和国传染病防治法》”, amended in 2013), in the event of an outbreak of an infectious disease, the local government may suspend the work, business and school classes when necessary, subject to reporting to and decision by the government at a higher level. In this regard, to control the further spread of the infectious disease, employers also have an obligation to suspend the work as required by local governments.

Salary during the suspension of work

According to a Notice issued by MOHRSS dated 24 January 2020, employers shall pay employees salaries as agreed in their employment contracts if the suspension of work does not exceed a payment cycle. However, the amount for employees who work during the suspension period differs from region to region.

According to the Shanghai Municipal Human Resources and Social Security Bureau (“Shanghai HRSS”), the suspension of work shall be regarded as "days off. If employees work during this period of time, they are entitled to take deferred days off-in-lieu or 200% of their regular salaries in lieu of. It is also noteworthy that while the Wuxi HRSS stated in the recent Notice that employers should pay regular salaries to employees for work during the suspension period, they are at the same time encouraged to give additional rewards to employees who work during this period.  

Salary for the employees in quarantine 

According to the Notice issued by MOHRSS on 24 January 2020, employers shall pay regular salaries to the employees during the period of quarantine or medical observation period caused by the novel coronavirus.

In addition, employers are not allowed to terminate, during this period of time, the employment contracts pursuant to Articles 40 and 41 of the PRC Labor Contract Law (“《中华人民共和国劳动合同法》”). Further, if an employment contract expires during the quarantine, treatment or medical observation period, its term should be extended accordingly.

Salary for the employees infected by the novel coronavirus

Based on the Notices issued by local governments recently and in line with the relevant laws and regulations, we are of the preliminary view that employees who are infected by the Novel Coronavirus and receiving medical treatment are entitled to salaries in accordance with the Provisions on medical treatment period of sick or non-work related injuries of employees (“《企业职工患病或非因工负伤医疗期规定》”) and relevant local regulations.  

Summary

Employers are obligated to extend the CNY Holidays and further suspend the work in line with the requirements of local governments. 

If employees are required to work during the extended CNY Holidays, employees should arrange for deferred days off-in-lieu or pay 200% of the regular salaries in lieu.

For those employees who work in Shanghai during the extended CNY Holidays, the relevant directions from the Shanghai HRSS shall be of guidance. For employees working in other regions in Mainland China, they shall likewise refer to the relevant Notices issued by the local governments.

The Hong Kong Context

General Legal Framework

The following legislation map out the relevant legal framework in the present context:    

  • The Employment Ordinance (Cap. 57) ("EO")

  • The Occupational Safety and Health Ordinance (Cap. 509) ("OSHO");

  • The Employees' Compensation Ordinance (Cap. 282) ("ECO");

  • The Disability Discrimination Ordinance (Cap. 487) ("DDO");

  • The Family Status Discrimination Ordinance (Cap. 527) ("FSDO"); and

  • The Personal Data (Privacy) Ordinance (Cap. 486) ("PDPO").

Employers' Duties

Employers are under both statutory and common law duties to provide a safe place of work, so as to ensure the safety and health of employees at work.  

This naturally depends upon the type, location and context of work; but for office workers, at present, this is largely being addressed by WFH arrangements. However, some staff are deciding to work from their offices, so it is important for employers to create a plan to address relevant risks. This may partly be satisfied by activating parts of the Business Continuity Plan – particularly regarding remote IT access and operations. 

It will also require employers to follow health advice from regulators and government departments, having disinfected work environments, supplying staff with protection, including medical masks, alcohol and soap-based sanitizers, wipes, etc.

If there is an actual infected member of staff (or staff affected by family infection), far more stringent (and even draconian) steps will be needed to safeguard all employees.

Further, employers are under both statutory and contractual duties to ensure timely payment of wages, even during periods when the employees are working from home.  

Employers are also reminded that they should continue to comply with the terms of the contract of employment even during an outbreak.

Sick Leave Policy

Employees employed under a continuous contract are entitled to sickness allowance if the following conditions are met:

  • They take four or more consecutive sickness days;

  • The sick leave is supported by an appropriate medical certificate; and

  • They have accumulated sufficient number of paid sickness days.

Generally, the daily rate of sickness allowance is a sum equivalent to four-fifths of the average daily wages earned by the employee in the 12-month period preceding the sickness day.    

The following points are worthy of note:

  • The sick leave will only qualify as a paid sickness day if the employees themselves are sick, but not if they are required to take time off to care for a family member who is sick;

  • An employer is prohibited from terminating the contract of employment of employees on their paid sickness day, except in cases of summary dismissal due to the employees' serious misconduct. Otherwise, on top of paying the statutory compensation to the dismissed employee, the employer will also be liable to prosecution and a fine at level 6 (currently $100,000); and

  • An employer is not required to pay sickness allowance where the employee's unfitness for work is on account of any injury or occupational disease in respect of which compensation is payable in accordance with the ECO.

Discrimination

The infection / suspected infection of the Novel Coronavirus falls within the meaning of "disability" under the DDO.

Employers are faced with the challenge of delicately balancing two competing interests, including the provision of a safe workplace, and the non-violation of discrimination laws in place.

The following measures will likely be considered discriminatory and unlawful under the DDO and the FSDO:  

  • To dismiss employees solely because they have been / are suspected of being infected; and

  • To refuse to arrange interview / hire candidates because they have been / are suspected of being infected, for example because they come from Wuhan.

The following measures will unlikely be considered discriminatory and unlawful under the DDO and the FSDO: 

  • To require employees who have recently travelled to / from the infected regions to work from home;

  • To require employees who have been in contact with those who have travelled to / from the infected regions to work from home.

Privacy  

The medical history of employees is personal data under the PDPO. Employers are required to take all practicable steps to protect personal data against unauthorized access, which generally means the identity of infected employees should not be disclosed. But this has to be balanced against the employer's duty to provide a safe place of work. It is advisable for employers to obtain the consent from any employee concerned before they disclose the names of infected employees.

At times of a widespread outbreak, employers may wish to conduct their own medical scanning / tests on employees / anyone who enters the office premises, or make enquiries with the employees as to their medical health, as part of their overriding objective to ensure the safety and health of persons in the workplace. Employers must be mindful of the privacy implications of such practice, and ensure that the types of medical information collected and the manner of collection are commensurate with the degree of harm faced.

In any event, employers are advised to ensure that employees are informed of whether it is obligatory for them to undergo such tests / answer such questions and the consequences should they fail to comply. .

Work Refusals

Employers may face the situation where employees are reluctant to go to work because they fear for their personal safety / health.

Employees who fear for their personal safety may take annual leave with the employer's consent. Once their annual leave is used up, they may consider discussing with the employer about the possibility of taking additional, unpaid leave. Whether or not the employer will accede to such a request is a commercial decision.

Employees may however run the risk of being dismissed with or without notice if they persistently refuse to return to the office / willfully disobey a lawful and reasonable order respectively. That may prompt an analysis as to whether the employer's requirement to return to work is a reasonable one.

Alternately, in the event that employees reasonably fear physical danger by disease which was outside the contemplation of their employment contract, they can opt to terminate their employment contract under section 10(a) of the EO. They are not required to provide notice / make payment in lieu under such circumstance.  

Whether or not they can terminate their contract of employment under section 10(a) of the EO has to be determined against what was expressly / impliedly contemplated in their contract of employment. It may be easier for an office clerk to invoke the termination mechanism under section 10(a) of the EO, than it is for medical staff in private hospitals, for example.   

Employees' Compensation under the ECO  

The ECO imposes liability on the employer to pay compensation if in any employment, personal injury by accident arising out of and in the course of the employment is caused to an employee.

Employees who contract Coronavirus have to bear in mind the following if they would like to claim under the ECO:

  • They must show that the injury was  by  "accident"  arising out of and in the course of employment.

  • There must be a causal connection between the accident and the injury; and

  • The "accident" must be distinct from the "injury".

Conclusion

The growing epidemic is and will put great strain on many businesses. Businesses are reminded to ensure compliance with the relevant laws for each of their employees when formulating measures to create a safe work environment, but also one in which the business continues to operate successfully.

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