The Novel Coronavirus outbreak will eventually end, and the situation is getting better now, but its impact will be emerging in the near and coming future. In this connection, we would like to share our comments below for your reference in formulating your plans.01 基本原则 Principles
Except for the national regulations, many local rules and policies are generally issued under the guideline of special treatment for exceptional cases, which may easily result in misinterpretations thereof if you try to interpret them from the perspectives of historical evolution, legal origins or context annotation, etc.
我们倾向于认为，较为务实的应对策略不是期待一个“绝对正确”的解读  ， 而是承认和接受现状的不确定性，基于对业务必须性和优先级的考量， 秉持“底线思维”  规划和开展有关工作。对于存疑的问题在条件允许的情况下宜尽量搁置，避免无谓的争议或消耗，给予容错空间，等待后续澄清口径，再行定论、更正或跟进。
We tend to believe that it is more pragmatic to admit and accept the uncertainty in the current situation instead of expecting an absolutely correct interpretation. In addition, it is also advisable to utilize bottom-line thinking when planning and conducting your potential action plans by consolidating the necessity and priority of business. As far as the condition permits, it is advisable to table issues in question, tolerate reasonable errors and avoid unnecessary back-and-forth argument or consumption. In so doing, employers may have a better position to make further decisions, corrections or follow-ups after those issues are clarified in the near future.
The main coping measure at present is to control the epidemic as a priority. Meanwhile, employees’ legitimate rights should be protected, and the survival and development of enterprises will also be reasonably considered accordingly. We understand that many enterprises are facing imminent challenges from many aspects (including labor costs). However, it is too idealistic if you only revert with emotional reactions or expect to fix the problems by changing the rules.
Instead, it would be more practical to focus on seeking preferential benefits subsequent to the local policies and special support arising from the exceptional cases.
1.3 类似于 2003 年的 SARS，现有疫情对于宏观经济的影响是暂时和有限的， 但对于特定行业，考虑其原有的生命周期和发展态势，需要尽快结合（1） 客户需求；（2）交付能力；及（3）运营成本等要素进行综合考量，以便 对接下来中长期的雇佣安排作出规划。若确实可能需要在一个阶段“轻装 上阵”的，结合前述 1.1 条和 1.2 条的分析后，再行作出“商业决断”。
Similar to SARS which occurred in 2003, this epidemic’s impact on China’s macro economy will be temporary and limited. But for some specific industries, considering their lifecycle and development trends, it is necessary to comprehensively taking into consideration the following elements: (1) customer needs; (2) delivery capabilities; and (3) operational costs and other relevant factors, so as to make a proper employment arrangement in the mid-and-long term. If potential redundancy is really necessary under some circumstances, the employer shall make a business decision pursuant to Sections 1.1 and 1.2 above.
02 关于用工成本管控 Labor Cost Control
The application of existing policies or guidelines will incur the following explicit costs:
Remuneration and Benefits
1）因春节假期延长  或延迟复工  而需支付的“正常出勤工资”或“劳动合同约定工资”；
Attendance salary or salary specified in the employment contract should be paid despite the extension of the Chinese New Year or delayed resumption of work;
2）因隔离治疗期间、医学观察期间以及因政府实施隔离措施 或采取其他紧急措施导致不能提供正常劳动期间而需支付的劳动报酬  ；
Compensation that should be paid during his/her quarantine treatment or medical observation, unable to fulfill his/her employment duties as a result of the government’s quarantine measures or other emergency measures;
Social insurance premiums and housing fund contributions should still be paid during the periods set forth in items (1) and (2) above;
4）因春节假期延长期间加班或提前复工而产生的“加班费”  ， 并且特殊工时（即综合工时和不定时工时）在此种状态下 能否正常适用目前仍然存疑；
Overtime pay during the extension of the Chinese New Year holiday or resumption of work ahead of schedule, but it is still questionable as to whether non-standard working hours arrangements (i.e., comprehensive working hours arrangement and irregular/non-fixed working hours arrangement) can apply under this circumstance;
Payroll costs during the extension due to the medical treatment period, medical observation period, quarantine period or emergency measures taken by the government following the expiration of the employment contract; and
Special beneficial leave entitlement stipulated by the local government (e.g., leave for child-care set by some cities).
Treatment and Labor Protection
1）依照本单位工作年限计算的医疗期  ；
The medical treatment period calculated according to employee’s years of service;
Labor protection expenditure (including but not limited to necessary protective equipment, thermometers, disinfection affairs, protection education), with the specific category and consumption being determined according to local regulatory rules; and
Special allowances or subsidies provided by enterprises.
Furthermore, considering probable changes in coming regulatory rules and customer needs, the following "hidden" costs may be incurred:
Operation and Maintenance Cost
Opportunity cost and delayed operating revenue caused by staff shortage;
Cost of abnormal idling time (which is not the suspension recognized by law); and
Cost caused by underperformance due to health or business development concerns.
Time and management costs incurred for employment relationship cases (in relation to sick leave, labor discipline and potential termination, etc.);
2） 疫情防控和维稳而产生的时间及管理花费  ；及
Time and management costs associated with epidemic control and social stabilization; and
Professional consulting service cost.
2.3 尽管我们即将提及的某些潜在“开支缩减”策略在满足相关法律条件的情况下可以单方采取，但考虑到现有的舆论导向和员工士气（无法单纯靠设定KPI 的方式来提振绩效表现），企业的具体决定还需结合自身的企业文化和风险偏好作出。同时，我们也特别提示，“开支缩减”策略在以往的实操中也将往往导致“莫非定律”的效果被放大，可能会导致某些“逆向选择”的出现。故，即使享有单方酌定权，但仍与员工开诚布公地进行协商，避免无谓的纠纷和对抗  ，一直是我们的优先推荐  。
Even though some of the cost saving strategies that we are going to introduce below can be used when the legal requirements have been met, considering the existing public opinion and employee morale which cannot be simply boosted through utilizing KPIs, pertinent decisions shall be made by duly weighing its own corporate culture and risk preference. Meanwhile, it is notable that cost saving strategies in the past practice often led to the magnification of the effect of "Murphy's Law", and thus caused some "adverse selection". Hence, it is always our first recommendation for employers to openly negotiate with employees to avoid unnecessary disputes and confrontations, despite its right of discretion.
In the current situation, employers would try the following strategies after a comprehensive consideration,
（1）由于对延迟复工期间所产生的加班（包括在家办公）的认定尚存有一定疑问  ，故，有关加班待遇的给予可以尝试暂缓，先行向员工承诺以执法部门（即劳动行政部门）或司法部门（即人民法院）的进一步口径为准。
Given the existing doubts towards to the nature of overtime before the designated date of work resumption (including working from home), the treatment for the same can be deferred for the time being. Instead, employer may promise employees its strict adherence to the official information or rules which are going to be issued by the law enforcement department (i.e., the labor administration department’) or the judiciary (i.e., the court) in a later stage.
If the follow-up rules clearly define the same as "overtime" in written form, as this sort of overtime can be offset by time off, the employer can arrange equivalent compensatory leave later.
（2）有特殊工时资质的企业，可尝试向相关劳动行政部门进行求证， 以确定特殊工时在春节延长假期和延迟复工期内能否正常适用， 若可以，则同样可以节省加班成本。
Employers who have eligibility for non-standard working hours arrangements can verify with local labor administrative departments in order to confirm whether this working arrangement is applicable during the extension of the Spring Festival holiday and delayed resumption of work. If so, the cost of overtime pay can be saved.
对于没有特殊工时资质的企业，目前已经产生的加班成本无法在 将来进行统筹或抵消，但考虑到政策利好（即多地基于特殊情势之需要暂时放松了特殊工时的审批），建议尽快进行申请，如此，对将来整个审批周期（一般为一年）内的加班成本都能产生“减 负”效益。
For employers not eligible to utilize such working hours arrangement, the cost of overtime that has incurred cannot be offset or shifted in the future, but considering the good side of the policy (i.e., the examination and approval for non-standard working hours arrangements has been eased in many localities for current special situation), it is still recommended to apply for the approval as soon as possible, and thereby reducing the burden arising from overtime cost within the future approved period (normally one year).
（3）对于因需求不足而临时性产生的冗员，或因人员缺位而导致的临时性交付能力不足，可以尝试通过“外包”或“借调”的方式与关联公司或同行寻求进行调剂  。
For the temporary overstaffing due to insufficient demand, or the deficiency in delivery capacity caused by unplanned worker absence, employers can try to seek for staff supplementation with affiliates or peer companies through "outsourcing" or "secondment".
（4）企业亦可以尝试经由协商，通过在家办公、安排带薪年休假、缩短工时、奖金缓发、临时性降薪等措施抵消因交通管制、隔离或现金流短缺等情形造成的掣肘  。
Through negotiation, employers can also offset constraints caused by traffic restrictions, quarantine, or cash flow shortage by taking measures such as working from home, taking paid annual leave, reducing working hours, delaying bonus payment, temporary salary cuts.
In addition, preferential policies related to labor relations have been introduced in many localities (e.g., postponing the contribution date for Social Security, returning unemployment insurance premiums or granting for employment stabilization subsidies, providing training subsidy, etc.). For this, employers can also consult the authorized local authority and submit required materials for filing.
（6）最后，若上述措施仍不能有效控制成本，财务指标继续处于“入不敷出”的，恐需考虑停工停产或业务缩减事宜。但，我们郑重提示，“停工停产”对人力资源成本的节省效果有限，企业仍需负担相关薪酬成本及社保成本  ，而且，一旦停工期间较长，往往重挫士气，复工时恐难以召回其中的骨干人员。
Last but not the least, if the above measures are still unable to control costs effectively and businesses continue to struggle to make ends meet, it is high time to consider suspension or business cancellation. However, please bear in mind that the "suspension of operation" has a very limited impact on labor cost saving because employers still need to afford social security contributions and remuneration. Also, once the suspension period lasts too long, it may significantly undermine employee morale, and thus it could be less possible to call back the core talent to reassume their duties.
（7）依照我们的过往经验，除政府责令整改外，企业主动发起的“停 工停产”往往是为了“业务缩减”，乃至“退出”的“过渡”阶段。就此， 因为其牵涉潜在的群体事件管控，我们将在下一章节中详述。
According to our experience, apart from the rectification order made by local authorities, the suspension initiated by enterprises is always for downsizing purpose and it even will be the transition of business deregistration. Because it matters as to collective dispute control, we will elaborate the same in the following section.
03 关于停工及人员裁减 Suspension of Operation and Redundancy
3.1 涉及群体性事件的处置，特别是人员裁减，目前正处于“风口浪尖”。但， 若企业因为自身经营周期或因本次疫情确实遭受重创的，停工停产或人 员裁减决定本身是“求生”的商业决定，不宜过度解读，可以尝试与当地 主管部门沟通，再行定夺。
The handling of collective dispute incidents, especially redundancy matters, will be quite a challenge these days due to political concerns. However, if an enterprise is indeed suffering heavy losses because of its life-cycle or the coronavirus outbreak, it is a reasonable business decision to proceed with suspension or redundancy for survival which should not be overread, and the employer may make its final call after consulting local authorities.
Please kindly note that some supportive policies are conditioned on fewer layoffs or even no layoff. Employers may have to give up such support if they decide to proceed with redundancy.
3.2 现有法律法规对于停工停产并无清楚的界定，亦缺乏统一的标准应当如 何发动停工停产流程。依照我们既往的实践经验，除业务周期特性或产 线维修等情形，在遭遇客观情况发生重大变化的情况下  ，针对整个用 人单位或受影响整体业务部门，经过决策机关（一般为董事会）的决议， 可以进行停工停产。
The existing laws and regulations provide neither a clear definition on suspension nor a unified standard for how to initiate the process. Per our practical experience, except for business seasons or production line maintenance, under the provision of ‘major changes in objective circumstances’, employers can determine to suspend or shut down the entire employing unit or certain departments affected, based upon the resolution made by the decision-making body (generally the board).
Preparations need to be made for the following issues in advance when considering and implementing action plans,
There is still a controversy in practice over whether this provision is applicable to organizational restructuring, business cuts and sharp reduction of orders. Since suspension does not generally lead to the immediate dismissal of employment (though it probably could be a prelusion), we tend to broaden the interpretation properly to include these circumstances on a case by case basis. Its legal risk is that employees have the right to be reimbursed for the lost salary if their employer cannot justify the suspension afterwards.
Can suspension target at a specific person or team? We might say that using suspension targeted at a specific person or team would be a bit far-fetched. It is understandable if it is used as a pushing strategy amid dilemma of negotiations. However, its legality can hardly be guaranteed in formal legal proceedings if the case is escalated.
Does the suspension need to go through the democratic procedure or collective bargaining? Strictly legally speaking, it is required to do so because suspension falls into the scope of "rules and regulations or major matters related to employees’ immediate interests" as defined in Article 4 of the Employment Contract Law (“ECL”) or "major business issues" as defined in Article 18 of the Company Law. However, in practice, its legitimacy is mainly judged on a case by case basis by taking the elements of social stability and social benefits into account so as to avoid a complete and rude denial to its application and stay in line with the principles of humanity, reasonableness and legitimacy.
Is it necessary to secure approval from the labor administrative department for suspension in advance? There is no such explicit provision in law, but in practice, in order to prevent collective dispute incidents, unofficial explanations or filings are required in many localities if a certain number of employees may be affected.
3.4 某种程度上，对于人力成本的最终削减方案就是人员裁减，但此类行为却又是中国劳动法管制最严格的领域  。
In some ways, redundancy will be the ultimate solution on cutting labor costs. However, such approach is also the most tightly regulated one under China’s employment and labor laws.
Based on our past experience, the economic retrenchment stipulated in Article 41 of the ECL is less likely to be approved. Therefore, it is not the mainstream approach in prevailing practice. The mass one-one mutual termination by batches and termination due to the occurrence of a major change stipulated in Article 40 (3) is widely adopted. Therefore, we will focus on the latter in our discussion.
3.5 协商谈判成功的关键在于花了多少心思在对方身上，关注对方的猜忌与不安，而不是顾影自怜自己的“理直气壮”和“慷慨”  。
The success of negotiation lies in how much attention has been duly spent on the counterparty, focusing on employee’s reluctancy and anxiety, instead of on your own "uprightness" or "generosity".
在协商解除过程中，出现“漫天要价、落地还钱”的情况是正常的，建议积极制定预案和反制措施。而且，除非预算“无限”充足，协商不成的概率也是存在的。因此，比起孤注一掷的“押宝”理想的协商后果，也必须“一颗红心二手准备”，永远准备一个Plan B  。
During negotiations, it is a commonplace for employees to demand more money beyond the scope as stipulated in the law. It is advisable to plan proactively and prepare countermeasures in advance. Unless the budget is unlimited, the possibility of failure to reach a consensus does exist. Therefore, in contrast to taking an all-or-nothing bet, it is necessary to prepare a Plan B as an alternative option.
有效的沟通都是有结构、有流程的，即发和即兴的沟通只是“聊天”而已， 不能起到传递信息或者说服的目的。员工关系沟通的流程性和结构性是 尤其明显的，这也是法律要素被引入的重要原因。
Communication will only be effective with a proper structure and process. In contrast, free communication without full preparation is just a small talk and cannot achieve the purpose of delivering proper information and convince the employee finally. The communication during employment relationship matters are always procedure- orientated and filled in with structures or designs clearly, and that is why the legal elements shall always be considered.
The following checklist is provided for the reference when preparing termination negotiations,
Background investigation materials and personal files;
Summary of performance of employment contracts (including reporting lines in previous positions);
Documents that match the reason for the negotiation (i.e., material that is supportive of the necessity to termination as a result of the epidemic);
Coordination with other participants;
Time and venue;
Termination agreement or other documents to be served;
Handover matters/outstanding matters (especially those related to confidentiality);
Security/response plan for aggressive behaviors.
3.7 在协商不能达成一致的情况下，潜在的单方解除将成为谈判砝码或者Plan B。
In the case that no agreement can be reached through negotiation, the potential unilateral termination will become a leverage or Plan B.
根据《劳动合同法》四十条第三款，劳动合同订立时所依据的客观情况 发生重大变化，致使劳动合同无法履行，经用人单位与劳动者协商，未 能就变更劳动合同内容达成协议的，经提前三十日通知或支付代通知金， 可以单方解除劳动合同。
According to Article 40 (3) of ECL, the employer may terminate the employment unilaterally, if any major changes occur to the objective circumstance based on which the employment contract was concluded, rendering this contract unperformable, and the employer can terminate the employee unilaterally if it fails to reach an agreement on amendment with him/her, by giving a 30-day notice or make a payment in lieu of notice.
According to the evidence rules, even if the outbreak has met the standard of force majeure, the employer still needs to prove how the coronavirus outbreak results in a loss of foundation to continuously perform the contract, i.e., the causation between the dismissal and the occurrence of the epidemic.
特别需要注意的是，即使满足了“客观情况”发生了重大变化，也不意味着用人单位立即取得了解除权，在此之前，从“要式”法律行为的角度， 用人单位必须安排对“原合同的变更协商”；否则，会被认定因“程序瑕疵” 而界定为违法解除。
It is important to note that even if the major change test is satisfied, it does not mean that the employer immediately has the right to terminate the contract. Prior to this, for following statutory procedural requirement, the employer should negotiate with the employee concerning the revision of the original contract first. Otherwise, it will be defined as wrongful termination on the grounds of procedural defects.
In the event of termination as a result of a major change, the following procedures or evidence shall be properly fixed,
The employee is aware that the major change has occurred;
The employee knows that his/her position or the department has been eliminated (or other facts that lead to the failure to continue to perform the original employment contract);
The employee knows that the employer has arranged internal opportunities (but they failed to reach an agreement) and provided outplacement service (if any).
Please again note that, if the number of affected employees is substantial subject to the internal guidelines of the local labor authority, though it might not be the economic retrenchment defined by law, it is still highly recommended to properly communicate with the local labor administrative department beforehand.
This article is only for providing information purpose, not a formal legal opinion, and shall not be construed as any form of engagement between the reader and us. If there are any other or contrary opinions or instructions from competent authorities or people's courts subsequently, the applicable opinions or instructions shall prevail.