The Coronavirus Outbreak’s Impact on International Employers

As the world responds to the accelerating 2019 Novel Coronavirus (2019-nCoV) outbreak originating in Wuhan, China—a situation now declared by the World Health Organization to be a Public Health Emergency of International Concern—multinational employers, particularly those with employees based in or traveling to China, are assessing their role in managing workforce impact. In addition to taking precautions to prevent the spread of illness, employers are contending with government-imposed travel shutdowns and advisories, quarantines, border screenings, and extended holidays that may affect local operations and global mobility.

While the disease poses serious ongoing concerns affecting the global workforce, employers are well served to keep perspective and avoid unnecessary alarm or disruption. Here, we offer some analysis and tips to help companies sort through the rapidly evolving situation. While our observations focus on China-based employees, similar principles can be adapted to local laws in other countries.

Key Developments in China and Hong Kong

Key developments for global, Asia, and China employers include travel advisories and restrictions, and extensions of public holidays. Specifically:

• Fourteen cities within Hubei province (where Wuhan is located) are under quarantine and effectively locked down, halting all public transportation, including airplanes, buses, trains, and ferries, and limiting private car travel. Hong Kong has closed many of its borders to China, and many countries worldwide are imposing health screenings on passengers from China.
• The Hubei province police announced that spreading the virus intentionally (such as by “public spitting”) is considered a crime, and that suspected patients who refuse testing or quarantine could be subject to criminal charges.
• Public events are being cancelled, and some businesses are remaining closed.
• On January 27, China’s State Council announced that the Chinese New Year holiday would be extended to February 2 across the country from January 30. Some local governments have imposed even longer closure periods to reduce the motivation for people to travel back from their hometowns to where they work during this critical period.
  • Shanghai announced on January 27 that commercial establishments, government bureaus, and offices would remain closed until February 9.
  • Zhejiang province announced on the evening of January 27 that it is delaying the resumption of work and school to February 9, 2020.
  • Guangdong Province announced on January 28 that it is delaying the resumption of work and school to after February 9 and February 17–24, 2020, respectively.
  • On January 29, the provinces of Jiangsu and Yunnan announced restrictions on nonessential enterprises that will delay work until February 9, 2020.
• The start date of the upcoming semester at schools and colleges around China and Hong Kong will be delayed.
• As of January 24, China has ordered nationwide measures to identify and immediately isolate suspected cases of the new coronavirus on trains, airplanes, and buses. Inspection stations will be set up and passengers with suspected pneumonia must be “immediately transported” to a medical center. The measures apply across all transportation routes as well as customs and border inspections, said the order, which applies across all provinces and regions.
• As of January 23, major Chinese cities have ordered nationwide measures to close inter-provinces highway access. Road checks are in effect on the roads that remain open, which entail individual temperature checks. Light railway and bus routes will run on reduced schedules.

Actions by Other Countries

As of January 27, several countries and agencies are warning against travel to China, including: the U.S. Department of State and the U.S. Centers for Disease Control and Prevention; Canada’s government; the UK’s Foreign and Commonwealth Office; France’s Ministry for Europe and Foreign Affairs; India’s health ministry; New Zealand’s Foreign Affairs and Trade Ministry; Finland’s foreign ministry; the Egyptian Travel Agents Association; Australia’s Government Department of Foreign Affairs and Trade; and Germany’s Foreign Office.

Other countries are beginning to impose internal measures as well. For example, on January 27, Japan designated the new strain of coronavirus as a special infectious disease. This designation will allow the government to adopt measures including the compulsory hospitalization of infected people at one of approximately 400 designated medical institutions in Japan, as well as the disinfection of sites where the virus has been detected.

Airlines have discontinued or cut back on flights to and from China, and the negative impacts on markets and tourism extends throughout Asia.

Considerations for International Employers

In addition to monitoring the ongoing situation, employers may wish to consider implementing certain measures in their workplaces and taking care when responding to related concerns, while remaining mindful of the legal implications. Other than extending public holidays, China has imposed no specific requirements on employers to take action (e.g., reporting illnesses). But employees are still subject to existing laws. For example, China has laws governing matters such public holiday work, overtime, sick leave and pay, annual leave, data privacy, economic restructurings/separations, employee performance management, workplace sanitation/safety, and employee consultation on new policies and procedures.

• Internal implementation of China’s public holiday extension: While not explicitly stated, the extended Spring Festival holiday is likely to be regarded as “public holiday” status, meaning employees are not required to work or use their annual leave time. They may even be entitled to premium public holiday pay if they work, which means 150 percent to 300 percent of the regular rate, though white-collar employees are unlikely to raise the issue. Beyond that, employees who have traveled over the Spring Festival holiday may not be able to return to the office—so employers can anticipate requests to work remotely or to extend leave even beyond the extended holiday. Employers can likely place employees on unpaid leave in some situations, as the inability to work is outside their control.
• Processing employee personal data: Consider checking the types of data employees have consented to have collected and be transmitted, and as needed, request additional consent to collect and process relevant data (such as health-based data, typically anonymized when necessary to protect workplace health and safety or comply with laws). China employers can ask employees to disclose a coronavirus diagnosis, and this request would likely be upheld there, though other countries’ data-privacy laws may not allow employers to require it. China’s data-privacy regulations are nonbinding advisory guidelines without penalties, but employers typically observe them. As such, most employers collect employee data through a consent form, and may want to avoid any collection and/or processing of employee data outside that consent. Employers may want to request that employees update their contact information including emergency contact information.
• Permitting more remote work: Allowing employees to work remotely is often a good option where feasible. Therefore, employers may want to advise employees of guidelines about protecting company information and assets, while also reminding employees about being available and responsive as usual. Employers may also want to take the opportunity to remind employees that permission to work remotely can be discontinued based on circumstances.
• Reinforcing good hygiene practices on-site: Consider encouraging sick employees to stay home (or go home), and if they may have been exposed to the virus, to seek medical treatment. Provide supplies such as hand sanitizers and no-touch thermometers, and in situations where there is a heightened likelihood of transmission or it would otherwise not cause unwarranted panic, other supplies such as surgical masks.
• Handling sick leave: Check your local sick leave reporting policy, and consider circulating a reminder about it. Sick leave reporting procedures requiring a medical certificate to take sick leave are highly recommended in China, so if you do not have a sick leave reporting policy, consider communicating one now. On the other hand, it is often confusing to update or change an existing sick leave reporting policy in response to a specific outbreak like this, though occasionally a temporary policy may be warranted. While some foreign employers use a U.S.-style “paid time off” system in China, this will not be enforceable to the extent it requires employees to use a combined annual and sick leave bank. Consider confirming that employee accruals are accounted properly for sick leave and annual leave, and that the accruals comply with Chinese legal entitlements.
• Managing business travel: Consider minimizing required business travel, particularly in and out of China. If there is a business travel necessity, be prepared to articulate it and offer additional support to the traveling employee (such as a higher service class to minimize contact with other travelers). If an employee expresses hesitation about traveling to China, avoid requiring that particular employee to go. Many companies have border operations that involve employees crossing between Hong Kong and China frequently, so these operations will be particularly affected.
• Managing expatriate assignments in China: Employers with expats in China may wish to consider offering temporary or longer-term relocation outside of China, or accommodating requests to leave China. Employers may also want to check an employee’s assignment documentation for procedures regarding early assignment termination and relocation expenses. If expats do not cooperate with company requests or directives, employers may need to consider negotiating them out of the organization or having them sign waivers acknowledging that they refused assistance or relocation.
• Dealing with decreased productivity and/or performance: The virus is likely to impact productivity on a group and individual scale. Employers may need to adjust sales and/or bonus targets in some situations to account for unforeseen circumstances and consult their sales plans to determine the parameters. Handling day-to-day performance issues in China may become challenging as well, as an employee may argue that a productivity-related issue is tied to the outbreak and that the employee cannot be penalized for it.
• Layoffs and other cost-saving measures: Businesses may wish to explore cost-saving measures, and while universally known circumstances like these likely afford some flexibility, companies should be aware of the legal protections that exist. Chinese law is particularly protective of employees when it comes to terminations. (In general, employers considering measures such as temporary or permanent layoffs often negotiate and pay for such measures, which would include having employees agree in writing to any package.) Now, employers may need to put preexisting plans on hold and for the time being will face challenges in initiating new restructuring initiatives unless their economic situations are dire, as the uncertainty may make employees reluctant to agree to separations. In China, employers considering an extended shutdown or furlough must generally pay employees at least a partial salary during the furlough period and must consult with unions or employee representatives before doing so. Requiring employees to use their vacation time may be a good option to explore as well—employees are more likely to be understanding and accepting of such measures in a situation so obviously driven by external factors, particularly when it will allow them to keep their jobs longer-term.
• Dealing with disciplinary issues: While employers should be reasonable in responding to employees’ concerns, employers may need to discipline for attendance violations, refusal to comply with directions (such as to go home when ill or to see a medical doctor for certain symptoms), or abuse of remote work and/or other accommodations implemented in connection with the virus. Check your disciplinary policies to make sure situations like these are covered.
• Responding to concerns or incidents with care and flexibility: In situations where there is no HR or office administration infrastructure locally, employers may wish to designate a contact person available to respond to relevant inquiries.

China Employers Suspecting Coronavirus or Receiving Reports of an Employee’s Diagnosis

Employers also may want to prepare to respond if an employee reports a coronavirus diagnosis or if they suspect the presence of coronavirus in their workplaces. For China employers, some response considerations include the following:

• Employers are permitted to require a medical certificate to use sick leave.
• Employees may be entitled to special leave that does not count against their sick leave, particularly if quarantined or hospitalized.
• Employees are protected from discrimination due to illness, so employers cannot use this as a basis for termination. In addition, employers cannot let fixed-term contracts expire for that reason.
• Consider warning other employees as applicable, while taking care to protect personal privacy. Let the diagnosed employee know that you will be sending the communication or work with the employee to do so in a way that the employee finds comfortable.
• Encourage employees who think they may have been exposed to monitor their own health, work from home if feasible, and seek testing if they develop symptoms. If an employer believes an employee is a danger to the workplace, the employer can require the employee to stay home and can consider disciplinary action (in accordance with company regulations) if the employee refuses a legitimate request to seek medical attention for symptoms.