The World Health Organization (WHO) declared on 30 January, 2020, that the outbreak of 2019-nCoV (novel coronavirus) is a "Public Health Emergency of International Concern." This is, in part, an acknowledgement of the geographic spread of the virus and the need for intensified support for preparation and response, especially in vulnerable countries and regions. Further information is available in the WHO statement. On 31 January, 2020, the Centers for Disease Control and Prevention (CDC) in the United States also declared a public health emergency for the U.S.

The outbreak of infection by a novel type of coronavirus at the end of December 2019 unfortunately coincided with the Chinese New Year holiday season. On January 30, 2020, the World Health Organization (WHO) declared the outbreak a “public health emergency of international concern.” With the increasing number of confirmed cases of infection or suspected infection by the novel coronavirus across the country and the millions of people traveling during the holiday, the People’s Republic of China (PRC) government at both the national and provincial levels has issued emergency measures aimed to prevent and mitigate the risk of a large-scale pandemic. In responding to the novel coronavirus, we recommend centralizing all the messages that management would plan to deliver to employees regarding the company’s response plans or related policies or any information concerning government-issued notices or guidance so as to avoid misinformation or misunderstanding of the relevant laws, public heath recommendations, or company policies.

We set out below a brief summary of relevant government measures that have employment law implications for Chinese companies and the China- or Hong Kong-based operations of multinational companies. As the situation is still developing, additional measures may be issued after the publication of this client alert. We advise that businesses keep abreast of any new government updates and additional measures, and act accordingly.

What emergency measures has the PRC government issued?

On January 20, 2020, the PRC government announced that the infection caused by the novel coronavirus has been classified as a Class B infectious disease, which is the same as SARS in 2003, and that it would institute the Class A disease controls, which are the strictest public health measures, to contain the spread of the novel coronavirus. On January 26, 2020, the General Office of the State Council of the PRC released an urgent notice (State Council Notice)3 extending the official end date of the Spring Festival Holiday to February 2, 2020, for employees other than those whose work relates to the prevention and control of the novel coronavirus.

At the provincial level, as of January 29, 2019, a few provinces and municipalities in China have issued notices requiring the resumption of business in general (other than business relating to the prevention and logistical safeguards for fighting against the virus) to be delayed until February 10, 2020, within their respective jurisdictions. These provinces and municipalities include but are not limited to Shanghai,Guangdong,5 Jiangsu,6 Yunnan,7 and Zhejiang;8 and these local government directives are being updated continuously. Companies that need to resume operations for special reasons before the date of resumption of business pursuant to a government directive may petition the local government to seek an exemption by providing an explanation of their business needs and other relevant information, including information on the movements of their out-of-town employees. If such a company’s infectious disease controls are found to be noncompliant or if there is any confirmed case of infection at the company, the government could mandate that the company suspend its operations and/or look into related corporate liabilities.

When will companies in China resume business in general?

In accordance with the above notices, companies in China will be able to resume business either on February 3, 2020, or, if located within one of the above-mentioned provinces or municipalities, February 10, 2020. However, as this is a developing situation, the government might issue additional directives or notices as public health measures, depending on the status of the nationwide effort to control the spread of the novel coronavirus in China.

Do companies have to pay employees who are absent from work due to illnesses caused by the novel coronavirus?

Yes. According to the Notice of the Ministry of Human Resources and Social Security Concerning Proper Handling of Employment Relations During the Period of Preventing and Controlling of Pneumonia Caused by Novel Coronavirus Infection, dated January 24, 2020 (the MHRSS Notice),9 if employees cannot work because they are diagnosed with or suspected to have contracted the novel coronavirus, or are regarded as persons in close contact with any of the foregoing persons, the employer must pay the employees' salary during the period in which they are under medical treatment, medical observation, or subject to other quarantine measures.

Can companies terminate employees who are infected with the novel coronavirus?

No. According to the MHRSS Notice, companies may not terminate or lay off employees who are absent from work while they are under medical treatment, medical observation, or subject to quarantine measures resulting from infection with the novel coronavirus. If an employee’s employment term expires during the above period, the term shall be extended until their medical treatment, medical observation, or quarantine measures are completed or lifted.

Is overtime pay applicable during the extended public holidays?

The additional non-working days following the Spring Festival Holiday provided by the State Council Notice (i.e., January 31 and February 1, 2020) are considered rest days. If a company requires employees to work on those days, the company should make arrangements for compensatory time off for such employees, or pay overtime at 200 percent of the relevant employee’s salary.

Some of the provincial and municipal measures requiring delay of the resumption of business in general do not specifically state whether the prescribed additional period of closure (that is, from February 3 through February 9, 2020) shall be treated as rest days. The Human Resources and Social Security Bureau of Shanghai, however, clarified in a published Q&A (Shanghai Q&A)10 that the prescribed period is to be treated as rest days for employees. Please refer to the list of local rules regarding date of resumption of business and employee compensation. Specifically, if a company in Shanghai requires employees who are under the regular working hours system to perform work (including working from home) during the extended public holidays, the company must arrange for compensatory time off for such employees or pay overtime at 200 percent of the relevant employee’s salary. It remains to be seen whether other provinces will adopt the same position on this issue. However, the Shanghai Q&A also provides that the prescribed period will not be treated as rest days for those businesses involved in critical functions such as public utilities, or businesses involved in epidemic prevention and control (including manufacturers of medical equipment, pharmaceuticals, protective equipment, etc.), or companies that have operated continuously during the Spring Festival Holiday with no personnel who recently returned to Shanghai and whose operations would not increase personnel mobility in and out of Shanghai.

What is the compensation for employees who do not work during the extended public holidays?

No national level guidance on this question has been issued. Some local rules, such as the Shanghai Q&A, however, state that employees who do not work during the additional holidays and the prescribed period of business closure shall be paid at their salary according to their employment contracts. Companies should comply with local rules. Please refer to the list of local rules regarding date of resumption of business and employee compensation.

If a company’s business operations are seriously affected by the novel coronavirus, what can the company do?

According to the MHRSS Notice, if a company suffers difficulties in business operations due to the outbreak of the novel coronavirus, it may negotiate with its employees to reach an agreement on adjustments of compensation, work shifts, and work hours. The company shall make every effort to avoid layoffs. Companies that have stopped business operations for less than one pay cycle (that is, 30 days) shall pay employees at their base salaries according to their employment contracts. For companies that have stopped business operations for more than one pay cycle, provided that employees continue to perform their routine work, the company shall pay the employees no less than the local minimum wage.11 Companies might also qualify for grants that aim to incentivize employers for taking effective measures to avoid mass layoffs or reduce the scope of layoffs.12

Can a company mandate that employees work from home, or seek medical treatment?

Under relevant Chinese laws, including the Law of the People’s Republic of China on the Prevention and Treatment of Infectious Diseases, employers may not mandate their employees to undergo quarantine or to seek medical treatment.13 Such coercive measures can only be imposed by government agencies at or above the county level. Further, an employer can request but not mandate that an employee work from home, and cannot penalize an employee who is unable to do so – for example, not having remote access to the company’s electronic system or not having a laptop to work remotely – if the mandate to work from home is not already a company policy. However, if a company becomes aware or suspects that an employee is or might be infected with the novel coronavirus, company human resources may advise the employee to see a doctor or stay at home in accordance with the guideline issued by local government agencies (including the center for disease control and prevention and other relevant medical institutions). If an employee refuses to do so, the company has the obligation to report the situation to the local center for disease control, relevant medical institutions, or other competent government agencies.14

Employers should focus on monitoring and adhering to government measures regarding working conditions, because companies have a general duty to keep the workplace safe and healthy for employees and to cooperate with local infectious disease monitoring and control measures. However, employers should also be aware that they cannot unilaterally impose additional restrictions upon employees that could constitute changing the conditions of their employment without their consent.

Local rules regarding date of resumption of business and employee compensation during the prescribed period of closure

The following are some of the local rules that have been issued by provincial or municipal governments. The list is not meant to be exhaustive, and contains information released by the local governments up to February 2. As discussed above, January 31 and February 1 are extended holidays and are treated as rest days like February 2, which is a regularly scheduled rest day, for the purpose of employee compensation. As such, companies should arrange compensatory time off or pay 200 percent of the relevant employee’s regular salary for work performed from January 31 through February 2. We recommend monitoring and adhering to specific government announcements or directives also for information regarding whether companies should require 14-day home quarantine and self monitoring of body temperature (medical observation period) for employees who return from Hubei or have had close contact with those who visited Hubei within 14 days prior to arriving at the particular city. During the medical observation period, employers should pay employees their salary as usual and arrange for employees to work flexibly at home to complete work duties. Please refer to the list of local rules regarding date of resumption of business and employee compensation.

Questions for Companies with Employees in Hong Kong

What are the general legal duties of an employer in terms of the health and safety of its employees?

Under the Occupational Safety and Health Ordinance (Cap. 509), an employer must, as far as is reasonably practicable, ensure the safety and health of all of its employees at work. Under common law, an employer must also take reasonable care to ensure that the workplace is safe.

In view of the seriousness of the novel coronavirus, what issues does an employer need to consider when implementing a “work from home policy”?

Employers should strike a balance between its legal duties to care for the health and safety of employees on the one hand, and the need to ensure business continuity and its contractual duties to its customers and clients on the other hand. If business can be conducted by remote access, this would be the recommended course to take. If, however, there are tasks that cannot be performed remotely, employers should implement appropriate measures before directing employees to report for duty at the workplace. These measures would include, for instance, a clear guideline on regular office disinfection, provision of required supplies (say, masks or disinfectants), and identification of high-risk employees (including those who have recently traveled to affected areas, or pregnant employees). Employers should also consider setting up rosters for employees to report duties on separate days or at flexible hours, etc.

What preventive measures should an employer take in a workplace?

For guidance on the preventive measures to be taken in the workplace, employers may refer to the “Health Advice on Prevention of Severe Respiratory Disease associated with a Novel Infectious Agent in Workplace” issued by the Centre for Health Protection of the Department of Health in Hong Kong.

Is an employer bound by its obligations under the employment contracts where employees are unable to come to work due to the need to be quarantined?

Yes. An employer will continue to be bound by its obligations under the employment contracts.  For employees who need to be quarantined due to health concerns, the usual contractual provisions on sick leave entitlements (or, in the absence of which, the relevant provisions in the Employment Ordinance) will continue to apply. However, for employees who are quarantined solely because of their prior contact with persons infected, or suspected to have been infected, with the novel coronavirus, pending any specific directive to be issued by the Labour Department (as was the case back in 2003 during the time of SARS), these employees may not be entitled to paid sickness leave under the Employment Ordinance, but employers may wish to give special consideration to such cases due to the special circumstances.

Can an employer collect data from employees regarding their recent travel history and any symptoms that may be relevant to the novel coronavirus?

Yes. An employer can ask (but cannot compel) employees to disclose their recent travel history and any symptoms of the novel coronavirus and it would be prudent to set out the purposes of collecting the data in the request (if they are not covered in the employer’s existing personal data policy), such as assessing the risks of outbreak of the disease in the workplace; implementing control measures; ensuring a safe and healthy working environment; or sharing of the data with governmental authorities, insurers, and health care providers involved in treating the employees.

What are the employer’s obligations in relation to the retention and disclosure of any data so obtained?

Any data so obtained by the employer is regarded as personal data under the Personal Data (Privacy) Ordinance. The employer should be mindful of its own personal data policy and the relevant provisions of the Ordinance, including Data Protection Principle 3, which provides that personal data cannot be used for a purpose other than its original purpose of collection or its directly related purposes unless it is with the prescribed consent of the data subject (that is, the relevant employee).

Is it discriminatory for an employer to ask an employee who is suspected to have contracted the novel coronavirus to stay at home and take paid leave?

There is no unlawful discrimination under the Disability Discrimination Ordinance if the employer asks an employee who displays symptoms of the novel coronavirus to stay at home and take paid leave.

Can an employer introduce internal policies on holding physical meetings and checking temperature all visitors entering the workplace?

It is essentially a matter of reasonableness. In view of the current outbreak and the potential risk to the health and welfare of employees, it would be a reasonable measure to restrict the holding of physical meetings, or to introduce the relatively non-invasive form of screening by way of checking temperatures.

Will requiring additional cleaning under existing contracts amount to a unilateral variation of contract?

It depends. If an employee whose job duties do not cover cleaning is required to take up this additional duty on a frequent and regular basis, they may have a basis to dispute that the change of duties constitutes a variation of contract. However, if the cleaning is more for personal hygiene or is part of the collective effort of the company and all employees to enhance the hygienic level of the workplace, it might, subject to the actual circumstances, not amount to a unilateral variation of contract.

Is an employer obliged to allow staff who have taken leave during the period the office is working via remote access to cancel their leave?

It depends on the actual circumstances of each case. In the case of an employee who is unable to perform their job duties via remote access in any event, for instance, one who is traveling, the employer is entitled to continue treating them as being on leave. Flexibility in treatment is advised, however, for employees whose need to take leave has since been superseded (for instance, employees whose travel plans get aborted) and who continue to work by remote access. After all, it is a matter of reasonableness depending on the underlying facts.

Does an employer have any obligation to put in place skeletal staff during the period of any “work from home policy”?

There is no obligation as such on the employer, and this depends on work requirements. Employers should strike a balance between the health and safety of employees and the need to ensure business continuity. If the employer sees a need to put in place skeletal staff in the office, the employer should ensure the safety of employees who need to report for duty in the office. On this, please refer to the question above regarding the implementation of a “work from home policy.”

Does an employer need to review any employee compensation policy for coverage of any claims for reimbursement of medical expenses from contracting the novel coronavirus?

Under the Employees Compensation Ordinance (Cap. 282) (ECO), an employer must notify the Commissioner for Labour of any accident or prescribed occupational disease (within seven days in the case of death, and within 14 days in the case of incapacity) in the manner stipulated in the ECO. While the novel coronavirus is not currently one of the compensable occupational diseases prescribed under the ECO, an employee shall have the right to recover compensation under the ECO with respect to a disease that is not a prescribed occupational disease if the disease is a personal injury by accident arising out of and in the course of employment. Hence, depending on the circumstances, it remains possible for an employee who has contracted the novel coronavirus arising out of and in the course of employment to be covered by the ECO. In handling non-prescribed occupational diseases, the Labour Department will assess whether the employee has accidentally contracted the disease arising out of and in the course of employment, taking into account the medical records, relevant information of the case, and the provisions of the ECO. In the event of a dispute that cannot be resolved with the Labour Department’s assistance, the final decision rests with the court.

Can an employer dismiss an employee (whether by summary dismissal or otherwise) who has contracted or is suspected to have contracted the novel coronavirus

 Where an employee is taking paid sick leave pursuant to the Employment Ordinance because they have contracted or are suspected to have contracted the novel coronavirus, the employer cannot terminate the employee's employment contract during such period taken as paid sick leave, unless summary dismissal is justified (such as for serious misconduct, fraud or dishonesty). If the employer is found to have wrongfully dismissed the employee, the employer is guilty of a criminal offense and is liable to pay statutory compensation to the employee under the ordinance.

Is an employer entitled to direct its employees to produce a health clearance doctor’s certificate before coming to work?

This is essentially a matter of reasonableness. Depending on the circumstances, an employer may ask an employee to produce a health clearance certificate from a doctor before returning to the workplace - for instance, employees who have traveled to affected areas or have shown symptoms of the novel coronavirus. On the other hand, it could be seen as unreasonable and burdensome if all employees are directed to produce such a certificate irrespective of their individual position or risk exposure level. Each case must therefore be considered on its own facts.

Additional References

Additional information and guidance can be found on the following websites: