Salary payments in times of lockdown in Shanghai – What are the requirements and conditions for Chinese companies under the current preventive measures?

On April 28 of 2022, Shanghai Human Resources and Social Security Bureau – in coordination with Shanghai High People's Court – has issued regulation on handling labor disputes involving epidemics. This relates first and foremost to the regulation of salary payments during the continuing lockdown in Shanghai. In this respect, these regulations only affect companies and employees in Shanghai. We would like to summarize the key aspects of the regulations as follows:

I. Payment of salary

Status of Employee

Novel coronavirus pneumonia patient, asymptomatic infected person, close contacts

Affected by the epidemic or epidemic prevention and control measures and therefore unable to work normally

Lockdown or quarantine

Under isolation treatment or adopted medical observation measures

Is arranged to work from home (telecommute)

Is not arranged to work from home (telecommute), or cannot work from home (telecommute)

Days of unable to work is more than all leaves of the employees

Can work or not

Cannot work

Can work

No arrangement or cannot work

Cannot work

Arrangement and Payment of salary

For period of isolation treatment or medical observation measures

When isolation or medical observation ends, but still needs the medical treatment (cannot work)

Pay salary as normal

  • May arrange the employee to take annual leave or welfare leave,
  • Pay salary in accordance with the regulation of the annual leaves or welfare leaves.

Negotiate with the employee:

  • Pay salary as normal in one salary payment cycle (usually one month),
  • When one salary payment cycle expires but still cannot work, pay living fee in accordance with regulation (not lower than minimum wages RMB 2,590).

Pay salary as normal

Pay sick leave salary

II. Delay in payment of salary

If an enterprise is affected by an epidemic or epidemic prevention and control measures and has difficulties in production and operation, and is temporarily unable to pay salary on time, it may temporarily postpone the payment of salary after consultation with labor-union or employee representatives. The postponement shall generally not exceed one month.

III. Employee’s claim for compensation

If, despite the existing possibility of working from home, the employee refuses to perform such work and, in turn, terminates the employment relationship on the grounds that the employer is unable to provide the contractually agreed workplace, the employee may not claim the statutory compensation payment for the period of employment as part of such termination.

V. Termination by the company

During the period of epidemic prevention and control, the company shall not terminate the employment of employees who are unable to provide normal work due to the relevant measures. If the employee has been equipped by the company to telecommute and there are no other official restrictions on the part of the employee (f. e. isolation treatment), but the employee still refuses to work, termination is possible.

Should you have any further questions on this topic or require assistance with any on-site measures in Shanghai, our experts from Schindhelm Shanghai office will be pleased to assist you at any time.

Dr. Bernhard Heringhaus, Schindhelm Rechtsanwaltsgesellschaft mbH, Osnabrück
Marcel Brinkmann, Schindhelm Rechtsanwaltsgesellschaft mbH, Shanghai