Translator: Normand Gauthier
As of the end of March, cases of COVID-19 have been cleared in nearly 300 cities of China, and the emergency response level has been reduced. In many industries the rate of resumption of work has exceeded 95%. Enterprises that have not resumed work are also waiting for the opportunity to do so. Although the epidemic is effectively controlled in China, the huge impact of the epidemic situation on the survival and development of enterprises has not been completely eliminated. While the enterprises are trying to reduce cost and increase efficiency, the "problem of money" can easily lead to labor dispute. From the perspective of legal compliance, River Delta Law Firm intends, through comparative study of judicial practice in various regions, to provide a practical reference for enterprises to sort out the "money-related issues" from shutdown to resumption to avoid legal risks.
1. PROBLEMS BEFORE WORK RESUMPTION: HOW TO PAY THE WAGES DURING THE SHUTDOWN
According to the "Notice Properly Handling Labor Relation Issues during the Period for Prevention and Control of the Novel Coronavirus-infected Pneumonia Epidemic" issued by the General Office of the Ministry of Human Resources and Social Security (hereinafter referred to as No. 5 Notice"): "...where an enterprise ceases operation or ceases production in a wage payment period, the enterprise shall pay the wages of laborers in accordance with the standards stipulated in the labor contracts. Where such situation continues for more than one wage payment period: if laborers have worked as normal, the wage paid by the enterprise shall not be less than the local minimum wage standard; and if the laborers have not worked, the enterprise shall pay laborers living expenses..."
Many enterprises have ceased production for a period of time before the resumption of work. They are facing the issue of the payment of wages and living expenses during the shutdown. Due to the large differences in the determination and application of wage payment cycles and living expenses standards, companies need to be paying special attention to:
1.1. Determination of wage payment cycle
How to determine "wage payment cycle after shutdown"? At present, there are no clear legal provisions, and there are different understandings when applied in various locations. There are three main opinions:
Opinion 1: the cycle is the calendar month when the production stopped, and the second payment cycle will start from the 1st of the following month;
Opinion 2: the cycle is determined according to the actual wage calculation period of the enterprise. If the wage calculation period is from the 22 of the previous month to the 21 of this month and the enterprise stop working on February 10, it will enter the second payment cycle from February 22;
Opinion 3: the cycle is calculated from the date of the shutdown, and the cycle length is fixed in accordance with the original agreement between the enterprise and the employees, usually a month, but also a week, day, or hour.
Judging from the past judicial practice, the above three methods are applicable, some selected cases for reference:
The calendar month when the production ceased is a payment cycle
No. 15650 , Final, Civil Division, Intermediate III, Beijing
|After the withdrawal of the "Chinese Food Carnival on the Tip of the Tongue" on October 12, 2018, Chen did not provide labor to the company, but it was caused by the suspension of the company. Therefore, according to law, the company should pay Chen's salary difference of RMB 56,166.30 from August 1, 2018, to December 14, 2018. (18,000 * 3 months + (2120 * 70%) + (2120 * 70% / 21.75 * 10 days)).|
No. 1808 , Final, Civil Division, Intermediate, Bai Se, Guangxi
|As the plaintiff verbally agreed on February 25, 2015, when the defendant was hired as his employee, the payment period should be from the 11th of the previous month to the 11th of next month, i.e., the period for monthly pay period (...) The plaintiff ceased operations on August 18, 2015, due to arrears of rent (...) According to national regulations, 80% of the minimum wage for workers should be paid from September 1, 2015, to 25 December 2015, with a total of four pay periods.|
From the date the production ceased to the end of the current payment cycle
No. 5188 , Final, Civil Division, Intermediate, Nanjing, Jiangsu
...The salary payment period is the calendar month... On July 27, 2016, Liu was notified to stop working the next day, but it was not caused by Liu, thus Liu's salary should be paid for the month until July 31 for an amount of RMB 10,000. After that period, because Liu did not provide labor, the company should pay Liu's living expenses from August 1 to September 13, 2016, for an amount of RMB 2001.93.
(1770 + (1770/ 21.75 days × 9 days)) × 80% There is no basis for Liu's claim that his normal salary should be paid until August 27, 2016, which is not supported.
No. 0920 , Final, Civil Division I, Intermediate II, Tianjin
The court of the first instance found that the defendant closed the company door on February 16, 2012, and the plaintiff was unable to perform his duties(...) 2. The salary payment period of the defendant is a calendar month (1-30 days per month, one cycle), monthly pay around 10 days...
The Court believes that: in addition to the defendant paying the plaintiff's salary of RMB 15,855 in a salary cycle of February 2012, according to the document of the Tianjin Municipal Human Resources and Social Security Administration, "Notice on Adjusting the Minimum Wage Standard in Tianjin", from April 2011 to April 2012, it was RMB 1160 per month, and April 2012 was adjusted to RMB 1310 per month. The defendant shall pay the plaintiff a salary of RMB 1,160 in March 2012 and a salary of RMB 22,270 in April 2012 to August 2013 (RMB 1310 x 17 months).
One month from the date of the shutdown
(according to the agreement can also be week, day, hour)
No. 23083 , Final, Civil Division, Intermediate, Guangzhou, Guangdong
|Hou began holiday on November 26, 2018. According to Article 39 of the "Guangdong Province Wage Payment Regulations", from November 26 to December 25, 2018, the company should pay RMB 10,170 according to normal working hours and from December 26, 2018, Hou's living expenses will be paid according to the standard of RMB 1680. The company has paid Hou Zhiheng a salary of RMB 8475 and December 2018 from December 1 to 25 according to the above salary standard. The living expenses after December 26, RMB 280, in compliance with the law, will be confirmed by this court.|
No. 4674 , First, Civil Division, Chongqing
|The plaintiff stated that it was suspended due to the defendant's reasons and that he worked normally until November 3, 2015 (...) Therefore, the salary of the plaintiff from November 4, 2015, to December 3, 2015, should be RMB 12,000. If the unit stops work or production and is not because of a laborer, and the worker does not provide normal labor, the court determines the laborer's wage standard by reference to 75% of the minimum wage standard during the unit period of shutdown. The salary from December 4, 2015, to April 13, 2017, should be RMB 18,202.50s...|
Pudong New District
No. 15228 , First, Civil Division I, Pudong,
The plaintiff said: (...) the plaintiff's salary payment cycle was from the previous month's 26th to the 25th of this month. The plaintiff paid the defendant according to law with the normal salary from January 21st to January 25th in January 2009. The period from January 26 to February 25 is the second salary payment cycle after the suspension of production...
The Court considers: (...) in this case, the plaintiff arranged for the defendant to stop working from January 21 to February 25, 2009, and should pay the defendant's salary from January 21 to February 20, 2009, in accordance with the original salary standard...
At present, the mainstream view in judicial practice in Shanghai is that "a wage payment cycle" should be calculated from the date of the shutdown. If the enterprise is affected by the epidemic and has no ability to pay wages, it can negotiate with the trade union or employees' representatives to postpone payment to reduce the pressure on cashflow. The length of the extension is determined by the labor administrative departments of the provinces, autonomous regions, and municipalities directly under the Central Government according to local conditions. For example, the "Method on the Salary Payment by Enterprises in Shanghai" stipulates that, "After consultation with the labor union or employees' representatives of the enterprise, it may be possible to postpone the salary payment within one month, and all laborers shall be notified of the time of the deferred payment." The "Regulations on the Protection of Workers' Rights and Interests in Chongqing" stipulates, "... it may postpone the salary payment with the prior written consent of the workers or the trade union of the unit 5 days before the agreed salary payment date and if the extension is more than one month, the Workers' Congress shall also be requested to agree, but the maximum shall not exceed two months."
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.