Coronavirus COVID-19 has now infected more than 75,000 people in China and over 1,000 in the rest of the world. Even after the extended holiday and work suspension period following Chinese New Year (reported in our previous article), many businesses continue to remain fully or partially closed for the past month to minimize the spread of the virus. However, more recently, various cities and provinces are adopting measures to try and help to bring businesses back to life under partial quarantine conditions. This includes significant social insurance concessions passed by the Chinese State Council.

Quarantine and travel restrictions continue

Quarantine continues to varying extents in different cities in China, and in some cases even strengthened recently. For example, from February 14, 2020, any individual who travels to Beijing from another province is required to quarantine at home or at a location monitored by the government for 14 days. Chongqing, Fujian, Liaoning, Shanxi, Shanghai Jianshan District and Shanghai Qingpu District have similar rules. If the individual fails to quarantine and causes harm to others, they may face administrative punishment including detention – and even criminal prosecutions if the case is serious.

These quarantine measures continue to affect businesses. Employees who need to quarantine can be requested to work from home, but if there is no work or remote working is not feasible, the employee still needs to be paid, unless the employee consents otherwise or the business shuts down entirely for longer than one payroll cycle.

Restrictions on reopening physical premises

The delay in resuming business activity is also partly attributable to local approval requirements. For example, companies in Guangzhou, Shenzhen, Shanghai, and certain other locations are required to obtain approval from the local authority before they can reopen physical premises. The requirements are not easy to meet and include monitoring the employee's travel history and health, providing difficult-to-procure items such as face masks and hand sanitizers, and signing a strict undertaking on disease control measures.

In Beijing, workers are allowed not to return to work if there is no other person in the family to look after children, as schools remain closed due to coronavirus COVID-19.

Clarity on resuming business

In the last week or so, the restrictions on reopening physical premises have taken a turn in many locations across China as the government tries to make it easier for businesses to resume.

For example, the requirement to obtain governmental approval to resume business in Shenzhen has been streamlined; companies with fewer than 300 employees may file their application directly to the building management to get preapproval. The local authority may audit the company on site later. A similar process is in force in Shanghai.

In Beijing, the local government issued supplementary guidance clarifying that if a worker is unable to return to work due to childcaring responsibilities, the company is entitled to have the worker work remotely, or if remote work is not achievable, consult with the worker and arrange for them to take annual leave or rest days.

Social insurance concession

On February 18, 2020, the State Council made a decision to exempt or reduce companies' contribution of social insurance for a certain period of time to soften the negative economic impact of coronavirus COVID-19. Medium, small and micro enterprises outside Hubei province may be exempt from making contributions to the pension insurance, unemployment insurance and work-related insurance from February to June, 2020. Large enterprises outside Hubei may need to pay only half of these contributions from February to April, 2020. All enterprises in Hubei may be exempt from making these contributions. Before the State Council's decision was made, the Ministry of Human Resource and Social Security issued policies that permit employers to delay their payment of social insurance within a reasonable period, and the implementing rules for this were already published in 12 cities and provinces including Beijing, Guangdong, Jiangsu and Shanghai. We expect that local implementing rules of the State Council Decision will be published soon.

What these developments mean for employers

China is trying to minimize the losses suffered by businesses as a result of the coronavirus COVID-19 outbreak and balance the interests of employees and employers.

Employers should monitor developments on policies on exemption and reduction of payment of social insurance. They should also pay attention to the local requirements on the reopening of physical premises. Local practice varies from city to city, and the requirements are evolving, with the general trend being more relaxed.

Companies may continue to have employees to work from home, and try to avoid assigning their employees to work in the regions affected by coronavirus COVID-19 in order to avoid work-related injury.

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