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Asia employment law bulletin 2021

China

Developments in the light of COVID-19

Protection for both employees and employers during the pandemic

Between January and March of 2020, the Chinese government announced various employment-related policies in response to the COVID-19 pandemic. These policies benefitted both employers and employees. Employers were prohibited from dismissing employees who were confirmed COVID-19 patients, suspected patients or in quarantine. Employers were also not permitted to carry out massive layoffs using the pandemic as a ground. On the other hand, employers benefitted from the Chinese government’s waiver of a part of the employers’ contribution to social insurance and allowed employers to delay such contributions until after the pandemic.

These policies remain in force and continue to be applicable to both the employers and employees a year after they were introduced.

Guidance on workforce sharing

The initial response to address labour surplus or shortages in view of the COVID-19 outbreak was through workforce sharing. This model was first introduced in a district in Shanghai to help employees who were out of work due to their employers’ suspended or reduced operations. In such instances, such employees could be temporarily engaged by another company that needed manpower. The pilot project in Shanghai proved to be a success and was welcomed by both employers and employees alike.  Certain employers were as a result able to reduce their employment costs without undertaking any layoffs, while employers that faced a shortage of manpower, particularly those in the e-commerce sector, benefitted from the temporary engagement of additional workers to meet a surge in business demand.

This solution was later advocated nationwide by the Chinese central government.  In September 2020, the Ministry of Human Resources and Social Security issued a circular, stipulating that all human resources departments were to support workforce sharing in order to achieve job stability and served as a guide to the employers on such co-operation agreements.  Rights and obligations (including the size of the shared workforce, time and place of work, work content, etc.) is required to be specified between the employer with a labour surplus (the Legal Employer) and the employer with a labour shortage (the Host Entity).

Further, the employment relationship between a shared employee and the Legal Employer must not be terminated because of the temporary sharing of workforce.  The Legal Employer remains obliged to pay salaries to its employees, making its social insurance contributions and assume any work-related injury insurance liabilities even though a shared employee suffers a work-related injury whilst working for the Host Entity (though it may seek reimbursement from the Host Entity).  If the employment between a shared employee and the Legal Employer terminates while the Host Entity continues to engage the employee for his/her work, then a de facto employment relationship will be established between the employee and the Host Entity.

Opinions to support flexible employment

The Chinese government is committed to support the development of new forms of employment models which has been credited for containing the COVID-19 pandemic.  In July 2020, the State Council issued the Opinions on Supporting Flexible Employment through Multiple Channels (the Opinions), pursuant to which a whole host of measures are to be rolled out that aim to boost job creation and to raise income levels.  Amongst other things, the Opinions require provincial governments and the ministries and commissions under the State Council to:

  1. expand certain industries where part-time workers are commonly used (e.g., cleaning, retail and construction);
  2. support the development of new employment models (e.g., e-retailing, smart mobility, online education and training, internet healthcare and online entertainment);
  3. support the development of technologies which will facilitate remote working, home working and part-time working;
  4. strengthen public services for employment (e.g., matching employers with labour surplus with employers that require more manpower to participate in workforce sharing); and
  5. encourage online platforms to create more flexible job opportunities, while imposing responsibilities on these platforms to ensure that the rights and interests of employees outside of the traditional employer-employee relationships are protected.

Going forward, it is envisaged that the government departments and local legislative institutions may introduce related regulations to implement the Opinions in the course of 2021, and we expect to see new employment models emerge (in addition to workforce sharing) that allow greater flexibility and we expect this will be much welcomed by both employer and employees.