During the epidemic, Chinese enterprises’ producticity have been affected, the workload of employees has decreased, and many people have worked from home. Because the profits declined, some companies chose to reduce employees’ salaries to tide over the difficult time, resulting in a number of labor disputes. This article will analyze the labor law issues in following cases.
Case 1:
Due to the Covid, an apartment company in Shanghai started to work from home in April 2022. In May, the company notified their employees of shut-down, but it still had operating income. Although the finance and some departments could not continue to working, other departments could worked form home as usual and their workload was not reduced. In May, HR notified in the wechat group that all employees’ wages would be reduced by 50% in April, then it would be reduced to the minimum wage standard of Shanghai after May. And then, company requested workers to reply for approval or confirmation about this reduction within a certain period. After seeing the notice, most of employees were angry but reluctantly agree, beacuse they were afraid of being dismissed.
In labor law aspect, reducing the salary is essentially an act of amending the labor contract. According to the Chinese Labor Law and the Chinese Labor Contract Law, the enterprise needs to negotiate with the employee in advance and both sides reach an agreement. But in this case, the company only notified the employee in the wechat group, and the reply option was agree or confirm, which is doubtful whether this is a negotiation. What’s more, the company did not reply to the employee who disagreed.
Besides, according to the notification about properly handling the labor relations during the epidemic prevention and control issued by ministry of human resources and social security of china in 2020 and Notification on the Implementation of Support measures in response to the Covid issued by bureau of human resources and social security of shanghai in 2020, if an enterprise requires its employees to delay their return to work within one wage payment cycle, it should pay the employees wages according to the standard in original labor contract; If the delay period exceeds one wage payment period, the wage paid shall not be lower than the minimum wage standard of the Municipality. Therefore, in this case the salary of April can not be cut and it shall be paid as before. If the company has real difficulties in production and operation after May, it can adjust the salary after negotiating with laborers.
What’s more, according to the Chinese Labor Contract Law and 12 Questions and Answers from Shanghai High Court and Shanghai Municipal Bureau of Human Resources and Social Security on handling labor Disputes related to the epidemic，if an enterprise arranges workers to provide normal work by working from home or telecommute, the employee should be regarded as normal attendance and the enterprise should pay normal wages as usual. If the workload of the staff at home is significantly reduced, the enterprise could adjust the amount of salary through consultation with the staff. In this regard, if the employees were still working at home and the workloads were not reduced after May, it is illegal to reduce the salary to the minimum wage, and the employee can file a labor arbitration.
Case 2:
In March 2020, a medium-sized enterprise in Shandong province was slightly affected, with a little decrease in profit, and some employers changed to work from home. After one month of working from home, the leader of the company issued a notice in the wechat group, which preliminarily decided to lower the basic salary during this period to the local minimum wage standard, and solicited the employees’ opinions. If worker has any objection, he/she can submit it to the human resources department.
After receiving the notice, the employees collectively expressed dissatisfaction and unanimously decided to negotiate with the company leadership. According to a staff: if the wage is reduced to the minimum wage, it is equivalent to about 25% of the original wage. But the workload done at home is not significantly reduced, which is incompatible to that wage. After seeking lawyer’s advice, the employees kept the work records and the notification of salary adjustment. In the negotiation with the company leaders, the employees proposed that if the company insisted on reducing their salary to the minimum wage, they would complain to the relevant supervision department and apply for labor arbitration. After explaining to employees that the company was experiencing difficulties, the two sides agreed to reduce the basic salary by 15% in working from home period.
Different from the first case, although the final salary was still reduced, the range was small and not lower than the minimum wage standard, which was in accordance with the law and also benefited from the consensus and strong attitude of the employees. From the leagl aspect, according to a series of documents issued by goverment, enterprises affected by the epidemic can adjust their employees’ salaries after reaching a consensus with their employees. Negotiation with workers is the premise of salary reduction, and the scale of salary reduction should be determined by the actual situation of the enterprise. If the workload during home working period does not decrease significantly, the original salary should be paid in principle. But, considering the company’s turnover did suffer during the epidemic, the policy allows the company to reduce wages or delay the payment of wages. In this case, the enterprise was not seriously affected and the staff also did not largely reduce the workload, so it is not reasonable to cut the salary to the minimum wage standard. If staff labor arbitration is put forward, the employees have sufficient evidence of workload, in the same time the company has no evidence its operating condition was severely affected, the company will be forced to compensate even be punished. Therefore, after explaining the situation and negotiating, the two parties reached a consensus decision with mutual understanding.
To sum up the above cases, we can draw the following conclusions:
1. Due to the epidemic, enterprises with production and operation difficulties can reduce wages on the premise of consensus with employees.
According to the following provisions:
If the enterprise shuts down and stops production within a wage payment cycle, the enterprise shall pay workers’ wages according to the standard stipulated in the labor contract.
If the shut-down exceeds one wage payment period, the wages shall not be lower than the local minimum wage standards if the employees provide normal work. If the staff and workers fail to provide normal work, the enterprise shall distribute living expenses. The standards for living expenses shall be implemented according to the measures prescribed by all provinces, autonomous regions and municipalities directly under the Central Government.
The specific salary reduction standard shall be determined based on the actual working conditions of employees and the actual operation of the company.
2. If there is no agreement between the parties, the enterprise may terminate the labor contract with the employee and pay economic compensation in accordance with the provisions of the Labor Contract Law due to the epidemic.If the enterprise is to remove labor contract to reduce wages forcibly, the laborer can complain to the relevant department and put forward labor arbitration or litigation.
Legal Basis:
Labor Law of the People’s Republic of China
Labor Contract Law of the People’s Republic of China
the notification about properly handling the labor relations during the epidemic prevention and control issued by ministry of human resources and social security of china in 2020
the Notification on the Implementation of Support measures in response to the Covid issued by bureau of human resources and social security of shanghai in 2020,