ETI China Webinar: The Impact of COVID-19 Outbreak on

Local SMEs and Good Practices Sharing

March 16, 2020 London & China

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Agenda

Contents Speaker(s)

9:00-9:10 Opening remarks and ETI pre-webinar survey results sharing

Hannah Bruce, ETI

9:10-9:35 Labour related laws, regulations and good practices sharing during the outbreak

Anderson Zhang, Employment and Industrial Relations lawyer

9:35-9:50 Building up effective system to prevent virus spreading in workplace

Dee Lee, founder of Inno

9:50-10:00 Group Q&A and discussion ETI team, guest speakers

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Pre-webinar survey results sharing

1. Suppliers cannot re-open production due to strict

government approval requirements (77%)

2. Lack of up to date information regarding regulations

and restrictions (58%)

3. Obstacles for implementing ethical trade

requirements (assessment and compliance programs,

capacity building activities, etc.) (58%)

4. Challenges in fulfilling annual sourcing plan (52%)

• Workforce can’t return

• Insufficient risk assessment and poor contingency

planning

• Difficulty in purchasing raw materials

• Transport of goods across provinces to shipping

port

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Pre-webinar survey results sharing

1. Postpone on-site activities, including assessment and visits (73%)

2. Re-negotiate with local suppliers on delivery terms (63%)

3. Seek external and local technical advice (47%)

4. Move sourcing/order to other regions (37%)

5. Others (20%):

• Engaging suppliers to establish contingency planning and

regularly review the effectiveness of preventive measures

• Online refresh training to employees

• Automatic grace period for all Chinese based suppliers

• Communicate directly with Chinese suppliers on what

production they are able to achieve whilst remaining code

compliance

6. Nothing, but just closely watch how things progress (13%)

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Pre-webinar survey results sharing

1. Labour shortage due to mobility restriction

and other quarantine requirements (86%)

2. Conflict between working hour compliance

with delivery pressure (44%)

3. Challenges in setting up effective workplace

infection preventive mechanism (34%)

4. Unclear about working hour and wage

calculation (17%)

5. Special regulations on termination and worker

discipline policies (13%)

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Pre-webinar survey results sharing

1. Developing practical guidance (79%)

2. Recommending local technical resources (52%)

3. Facilitating discussion among members and other

stakeholders (41%)

4. Others (21%)

• Make the analysis and investigation on the

policy and practical difficulties of factories in

provincial level

• To do less under the emergent situation to

give the factory more flexibility in achieving

delivery.

——言中伦 行中虑 法天下——

Impact on MSMEs by Covid-19

Anderson Zhang / Zhong Lun Law Firm

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Strictly Confidential 8

• Requirements on Re-open and Restrictions on Mobility

Part 1

• Wage and Leave

Part 2

• Termination and Pay Cut

Part 3

• Good Practices

Part 4

Contents

9Strictly Confidential

Requirements on Re-open and Restrictions on Mobility

Strictly Confidential 10

Key challenges in China local supply chain

Employees cannot return to work because of quarantine

Re-production needs government approval

High cost to purchase materials

Cash flow crunch

Strictly Confidential 11

Requirements to re-open

• Establish a leading team to prevent and control COVID-19

• Stock masks, disinfectants and other COVID-19 prevention and control materials

• Check each employee’s travel records during the holiday

• Disinfect the work place and keep ventilation

• Report COVID-19 prevention and control situation to relevant government department

Strictly Confidential 12

Circular of the General Office of the State Council on Further Streamlining the Examination and Approval Process and Optimizing Services to Facilitate Enterprises’ Resumption of Work and Production in a Targeted and Stable Manner (March 4, 2020)

Resumption of Work and Production

Simplify the approval and requirements for the resumption of work and production

Vigorously promote online administrative service

Eliminate unreasonable measures of controlling the flow of people and logistics

13Strictly Confidential

Wage and Leave

Strictly Confidential 14

Wage

Overtime Payment

2020.1.31-2020.2.2

Standard working hour

Comprehensive working hour

Flexible working hour

2020.2.3-2020.2.9

Shanghai, overtime payment

Beijing, normal payment

Guangdong, halt operation

Strictly Confidential 15

Wage

Postpone the payment?

Salary is the vital interest of employee

Employers shall pay salary without delay

A: No

Force majeure

Through democratic process

B：Yes

Strictly Confidential 16

Arrange Holidays

Opinions on Stabilizing Employment Relations and Supporting Companies to Resume Production during the Prevention and Control of COVID-19 :

Companies may negotiate with employees to take annual leave, benefit leave and other leaves at first.

Paid Annual Leave

Right to arrange

Unpaid Leave

Employees’ consent

17Strictly Confidential

Pay cut and termination

Strictly Confidential 18

How?

Reaching a Mutual Agreement is always the best way to resolve labor disputes and avoid legal risks.

Strictly Confidential 19

How?

Company management team makes preliminary

plans

Let the plan be discussed by trade union, employees’

representatives or all employees.

Make and sign the collective

agreement

The collective agreement shall be

submitted to the labor bureau for the

record

Go into effect

Strictly Confidential 20

Termination

Can employer terminate employees without compensation if they don’t follow quarantine measures?

Can employer terminate employees from Huber if they cannot come back to work before the deadline date set by the factory?

Can employer terminate workers if they get infected?

Strictly Confidential 21

Layoff

Circular on Handling Employment Relations during the Prevention and Control of COVID-19

Employers cannot terminate the contract in accordance with Article 40 and 41 of the Labor Contract Law

Try best not to lay off employees

Opinions on Stabilizing Employment Relations and Supporting Companies to Resume Production during the Prevention and Control of COVID-19

For enterprises that still need to lay off employees after taking corresponding measures, the employers shall formulate plans, follow relevant legal procedures and properly handle labor relations with employees.

2020.1.24 2020.2.7

22Strictly Confidential

Good Practices

Change salary

structure

Shorten working

hours

Arrange rest days

Strictly Confidential 23

Strictly Confidential 24

Change Salary Structure

Fixed Salary Mode

Basic Salary

Performance Salary

Performance salary

performance of the

individual employee

completion of departmental work targets

economic performance

of the company

严格保密 25

Relevant policies to arrange rest days

Beijing

• Measures to Further Provide Support in the Battle for Prevention and Control of the COVID-19 Outbreak: Implement flexible employment policies and allow companies to comprehensively adjust the use of rest days during the year

Shanghai

• Several Policies and Measures to Prevent and Control the COVID-19 and Support the Stable and Healthy Development of Service Companies in Shanghai: allow comprehensive adjustment of annual rest days

张根旺 ©保留所有权利-中伦线上微课资料 未经许可请勿转发

Strictly Confidential 26

Shorten working hours and cut salary

Shorten working

hoursCut salary Save cost

Strictly Confidential 27

Shorten working hours and cut salary

from "work five days and rest two days" to "work four days

and rest three days"

from standard 8 hours a day to 5

hours or 6 hours a day

Which is better?

严格保密 28

Q&A

Individual Bio

◼ Partner:

Anderson Zhang（张根旺）

Anderson has extensive experience in practicing within the field ofemployment and industrial relations. He regularly provides legal counsellingadvice to all types of enterprises in terms of compliance management.Anderson also assists clients in emergency and crisis response. He advisesmultinational corporations on the proper application of workforce restructureand employee transfer plan in M&A transactions. He is also proficient inproviding counselling service in relation to dismissal, termination andvariation of employment contract. Anderson is expert in coaching PRCemployment law issues for employers.

Qualification

Admitted in China

Accolades

CCH China Annual Best Labor

Lawyer Finalist (2011)

Legal 500 Highly Recommended

Labor Lawyer (2019)

Education

LLB, Liaoning Technical University

Master of Human Resource

Management, Renmin University,

Experience

Anderson is now a Partner of Zhong

Lun Law Firm based in Shanghai

office.

29Strictly Confidential

We Look Forward to Working with You

Contact Us

Anderson Zhang, Partner

D: +86 21 6061 3191

M: +86 135 6449 6437

F: +86 21 6061 3555

E: andersonzhang@zhonglun.com

10-11/F, Two IFC, 8 Century Avenue, Pudong New Area, Shanghai 200120,

P.R.China

30Strictly Confidential

—LEGAL SOLUTIONS FOR CHINA BUSSINESS—Strictly Confidential

THANK YOU!

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Q&A

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Useful resources

• WHO, Getting your workplace ready for COVID-19

https://www.who.int/docs/default-source/coronaviruse/getting-workplace-ready-for-covid-19.pdf

• WHO, ePROTECT respiratory occupational health and safety

https://openwho.org/courses/eprotect-acute-respiratory-infections

• ILO, Guidelines on Decent Work in Public Emergency Services (English only)

https://www.ilo.org/wcmsp5/groups/public/---ed_dialogue/---sector/documents/normativeinstrument/wcms_626551.pdf

• Sharan Burrow, General Secretary of the ITUC, Phil Bloomer, Executive Director of Business & Human Rights

Resource Centre

https://www.business-humanrights.org/en/covid-19-–-time-for-governments-brands-and-employers-to-protect-supply-chain-

and-precarious-workers-from-hardship-and-infection?mc_cid=35a0fc334b&mc_eid=6d87afa27d

• Business and Human Rights Resource Centre – COVID 19 In depth area

https://www.business-humanrights.org/en/covid-19-coronavirus-outbreak/

• China Briefing, China’s Support Policies for Businesses Under COVID-19: A Comprehensive List

https://www.china-briefing.com/news/china-covid-19-policy-tracker-benefiting-business-enterprises-comprehensive-

updated-list/

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Some useful resources (China)• 全国复工复产支持政策一键查

http://www.gov.cn/zhengce/qiyefugongfuchanzczlc/index.htm

• 上海疾控中心新型冠状病毒肺炎防控健康指南（企业版）http://www.scdc.sh.cn/b/27357.shtml

• 广州市新型冠状病毒肺炎预防和控制工作指引（第七版）http://www.gzcdc.org.cn/news/view?id=4024&cate_id=32#_Toc34987452

• 《关于做好新型冠状病毒感染肺炎疫情防控期间稳定劳动关系支持企业复工复产的意见》人社部发【2020】8号http://www.gov.cn/zhengce/zhengceku/2020-02/08/content_5476137.htm

• 《关于在疫情防控期间做好企业集体协商工作的工作提示》2020-2-17 上海市总工会、市企联、市工商联http://www.labour-daily.cn/shsldb/hq/content/0093461ea138c001e80b6c92bf95ed90.html

• 国家卫健委《工业企业新冠肺炎防控临时指南》视频http://www.nhc.gov.cn/xcs/kpzs/202003/8a5e42ea49384ef2b00298cf997f8ddc.shtml

• 《关于印发广东省劳务派遣单位和用工单位复工复产新冠肺炎疫情防控工作指引的通知》http://www.szcdc.net/rdzt/xxgzbd/xxdt/202003/t20200313_19055497.htm

• 广州市疾病预防控制中心复工复产相关指引http://gzcdc.org.cn/news/view?id=4002&cate_id=32

• 广东省人民政府关于印发应对新型冠状病毒感染的肺炎疫情支持企业复工复产若干政策措施的通知http://www.gov.cn/xinwen/2020-02/07/content_5475760.htm?allContent