Bihang Wang and Rafael Mello – May 4th, 2020
- CHINA HIGHLIGHTS
China has been taking effective measures to contain the spread of the deadly COVID 19 virus. In the meantime, major enterprises are facing an increasing pressure on their businesses. According to statistics, compared with the rapid increase of unemployment rate in capitalist countries in Europe, United States and South America and the sharp increase of government burden, enterprises in China have dismissed less employees. This means that Chinese enterprises may face more burden from the business crisis as far as workers’ compensation is concerned. Keeping livelihood is essential for workers while they are self-isolated from the deadly spread of CODVID-19. Employers in turn had to reduce the scale of operation and cut the cost under pressure to ensure the survival of their own businesses. In China the wage reduction was an inevitable measure, yet the bottom line of this reduction had to be set by government regulations. According to ‘Circular on labor relation during COVID-19 prevention by the General Office of Ministry of Human Resource and Social Security of the People’s Republic of China’ ([2020]5), three main scenarios were stablished:
- If the enterprise stops production or activity for a period shorter than a wage payment cycle, the enterprise shall pay the employees’ wages according to the standards stipulated in the labor contract;
- If the production or activity stopped for more than one wage payment period and the employee kept providing regular labor, the wage paid by the enterprise to the employee shall not be lower than the local minimum wage standard (g. minimum wage in Beijing is around USD 300,00);
- If the production or activity stopped for more than one wage payment period and the employee had also to stop providing labor, the enterprise shall pay living expenses, which shall be in accordance with the parameters prescribed by the provinces, autonomous regions and municipalities directly under the central government.
The above Chinese regulation not only ensures the basic source of living for workers, but also enables enterprises to retain employees at a lower cost. Besides, in response to the epidemic the Chinese government issued a series of mandatory regulations on cooperation and inspection and sample collection, requiring cooperation from enterprises and citizens. According to the provisions of labor law, if a worker refuses to accept a medical investigation (e.g. medical exam, body temperature measurement, sample collection, isolation treatment) and control measures of infectious COVID19 diseases, the worker could be prosecuted for a crime of endangering public security by dangerous means plus obstructing public affairs and other conducts referred as a crime. According to Article 39, item 6 of the labor contract law of the people’s Republic of China, if the worker is prosecuted and find guilty for criminal conduct the employer may terminate the labor contract without payment of severance pay compensation. It should be noted that the corresponding circumstances of criminal charges require a certain degree of severity. From the perspective of workers suffering from COVID-19 during the epidemic period that shall be subject to the provisions of medical treatment it is a rule in China that the employer is not entitled to dismiss this sick employee. This type of tenure is intended to protect the worker against dismissal during the period of COVID19 treatment even if the contract is expiring. Also according to the regulation, if the worker fails to return to work on time after the outbreak, the employer may terminate the labor contract, except if the laborer is cooperating with the work related to the COVID 19 outbreak.[1] However, if the worker fails to return, the employer shall first verify the reason why the worker failed to return to the work in time. If the employee fails to provide the normal work because is cooperating with authorities by undertaking medical exams, collection of samples, being isolated and going through treatment of infectious diseases (or other emergency measures taken by the government), the employer shall properly handle the situation according to the regulations of the general office of the Ministry of Human Resources and Social Security. Employers shall not unilaterally terminate the labor contract in accordance with the fortieth and forty-one provisions of the labor contract law. If absenteeism is not caused by the above reasons, the labor contract signed by both parties and the legal and effective rules and regulations of the employer shall prevail. In the future, after the outbreak, enterprises may face the requirement of improving labor efficiency while the market demand rises after recovery. In response to the adjustment of working hours after the epidemic, the notice of the Ministry of Human Resources and Social Security allows enterprises to flexibly adjust their working hours within the specified period, and employees may increase their working hours after the epidemic. During the pandemic of Covid 19 , the Ministry of Personnel and Social Affairs has issued a notice on the issue of labor relations while preventing and treating pneumonia during the period of prevention and control of new coronavirus infection. It has allowed enterprises to arrange their employees’ self-adjustment as a paid annual leave or corporate welfare holidays, and encourage enterprises to resume work in the form of remote work and home office. Holidays can be arranged properly by adjusting “rest days” or “annual holidays” according to the actual situation of the enterprise. Finally, any enterprise operating in China must comply with the regulation of government on COVID 19 or otherwise should be punished. In addition to the notice issued by the State Council on the extension of leave, the notice of the local government on the delay of resumption of work is in line with the provisions of Article 42 of the law on the prevention and control of infectious diseases as regards the emergency measures, which are mandatory by law. The employer must comply with the notice unconditionally (except for relevant enterprises involving important national economy and the people’s livelihood, that are subject to other provisions). If the employer fails to comply with the regulations, causing the spread of epidemic consequences, according to the law on public security management penalties, the criminal law of the people’s Republic of China and other relevant provisions, enterprises or individuals will be subject to corresponding administrative or criminal penalties. If the employer forces the worker to return to work in advance, the worker may terminate the labor contract in accordance with Article 38 of the labor contract law and seek economic compensation. There are exceptions for enterprises related to the vital national economy and the people’s livelihood, which are necessary to ensure the city’s operation (water supply, gas supply, power supply, communication and other industries), epidemic prevention and control (medical equipment, medicine, protective product production and sales and other industries), people’s life (supermarket, food production and supply and other industries).
- BRAZIL HIGHLIGHTS
On March 22nd, 2020, it was issued by the Brazilian government the Provisional Measure 927 (“MP 927/2020”) an after that on April 1st, 2020 the Provisional Measure 936 (“MP 936/2020”) was also issued by Brazilian government. Both provisional measures were issued to face the state of public calamity recognized by the Decree Law no. 6 of March 20, 2020, and the public health emergency with international relevancy due to the COVID-19 by stablishing temporary labor measures so companies could manage in a better way the chaotic situation imposed by this crisis. The MP 927/2020 provisioned exceptional and temporary parameters about the following subjects:
- teleworking, remote working and similar,
- anticipation of individual vacation,
- collective vacation concession,
- utilization and anticipation of holidays,
- use of hour-bank system in favor of employee and company,
- suspension of administrative requirements in occupational safety and health,
- “12 hours work per 36 hours rest” working journey at health places after individual agreement,
- definition that Covid-19 isn’t a workplace-related illness (what was found unconstitutional by Supreme Court at the end of April 2020)
- extension of collective agreements and conventions,
- maintenance of measures already taken by the employers,
- deferment of FGTS collection by the employer.
It is important to mention that the following commented measures are applied exceptionally during the public calamity recognized by the Decree Law no. 6 from 2020, as ruled by MP 927/2020 as “force majeure” for labor purposes. Another important and polemic aspect is that the employers will be able to execute individual agreements that diverge from other related laws (collective, legal and regulatory instruments) under the express objective of “guarantee the permanence of the job”. Below are some of the most relevant issues addressed by MP 927/2020. Teleworking It has been stipulated the possibility of the employer determinate teleworking, remote working or any other kind of out-of-the-office working in accordance to its exclusively method and without the necessity of individual or collective agreements, as well as without previous registration of amendment in the individual labor contract. Individual or collective paid vacation The permission to the concession of paid vacation with a previous notice of 48 hours, as well as the possibility of postponing the vacation, even when the period of concession has not finished yet. Also, when the individual vacation concession during the time of public calamity happens, it has been stablished the possibility to the employer choose the additional payment of a third over the vacation until the legal term for the payment of the 13th salary. The term to pay the vacation also has been changed to allow the payment until the 5th weekday after the beginning of the vacation. About the collective vacation, the employees will have to be warned with at least 48 hours before, not being required any labor union notice or from the Ministry of Economic and its Labor Office. Holiday´s anticipation The anticipation of non-religious federal, state and municipal holidays for immediate enjoyment is allowed, which must be communicated to the employee at least 48 hours in advance with the express indication of the holidays to be taken advantage of. Compensatory time (“banco de horas”) and negative compensatory time (“banco de horas negativo”) The MP 927/2020 has also allowed the institution of special arrangement to compensate overtime regardless of individual or collective agreement. The compensatory time in special and individual arrangement will be valid during the period of public calamity and the compensation must happen until 18 months after the end of the state of public calamity. It’s important to notice that the rule, besides the traditional compensatory time which computes the overtime for then compensate future days-off, specially aims ruling the interruption by the employer of its activities and then account the no working hours to compensate in the future i.e. after the end of this crisis the working hours not fulfilled by employees could be demanded by company as an overtime work. Covid-19 will not be a workplace-related illness or accident The MP 927/2020 also has stablished that in the cases of Covid-19 contamination will not be considered as a workplace-related illness or accident, except upon proof of a causal link. Nonetheless the Supreme Court declared this provision as unconstitutional and now to determine that the cause of contamination is related or not with work activities will depend on medical evidence and even judicial discovery. FGTS’ payment deferral The MP 927/2020 stablished the suspension of the requirement of FGTS’s collection by the employers for the months of March, April and May of 2020 with due to, respectively, April, May and June of 2020. In other words, for the next 3 months the employers can collect or not the FGTS. This rule applies to the employers regardless their number of employees, tax system, juridical nature, activity field or previous adherence. Some secondary obligations are relevant to enjoy this benefit. For example, companies must declare and recognize such amounts as due, it being assumed that MP 927/2020 brings here an obligation to declare information in e-Social. For the amounts duly declared, the companies may pay the deferred FGTS as of July 2020 in 6 monthly installments, without adding interest, correction, charges or fines. The MP 936/2020 provisioned exceptional and temporary parameters about the following subjects:
- Reduction of workday with reduction of wage (25%, 50% or 70%).
- Suspension of the employment contract by maximum period of 60 days (lay-off).
- Benefit to the worker via unemployment insurance when there is a reduction of more than 25% or suspension of the contract.
As the first provisional measure (MP 927/2020) aimed to provide practical solutions to issues related to work routine (e.g. teleworking, compensatory time, paid vacation) the second provisional measure (MP 936/2020) intended to address the reduction of companies’ activities it self by allowing reduction of workday and wage and non- paid layoffs as well as social security benefits paid by Brazilian government. Both MP 927/2020 and MP 936/2020 brings exceptional measures that must be always practiced with the objective of the job preservation. The use of the measures in a different context of this one, even when in the calamity time, for sure will create future judicial developments with uncertain consequences. [1] In China, it is now still required for self-isolation of at least 12 days if moved from or ever been to another city within 1 month.