Legal Considerations in China

Demand for more flexible working arrangements has been steadily increasing in recent years.  Developments in technology and increasing employee requests for flexible workplaces have led many companies to adopt work-from-home arrangements. In 2020, with many workplaces forced to close down during the pandemic, the adoption of more remote working arrangements has dramatically accelerated. Even as workplaces in China are now gradually returning to normal, many employees and employers have seen the benefits of remote working arrangements and are merging these into their permanent workforce designs.  However, more permanent arrangements are needed to address legal and human resource (HR) policy concerns. Elizabeth Zhou and Hilton Yin of Qinli Legal discuss some of the main issues related to making remote working a permanent option.

Change of working location

Many employers have specific requirements for workplace location. These might be clearly defined in the employee labour contracts, or in other guidelines such as an employee handbooks.  China’s Labour Law does not have any specific requirements relating to employee workplaces, which leaves options for workplace location open to agreement between the employee and employer.  

Employers should bear in mind their employees’ needs while communicating with them on workplace requirements. In addition, employers should carefully review their internal guidelines and contracts to avoid any conflicting or outdated messages on workplace expectations. Beyond that, company culture will also play a key role in formulating actual workplace requirements and should be assessed in addition to the documentation. For example, what behaviours are company managers and leaders modelling for employees in relation to remote work? What expectations do employees have on working remotely and the implications for job performance?

Changes to other HR policies and compensation schemes

In addition to the procedural and policy documents directly related to workplace needs, many other internal HR documents may need to be evaluated in order to facilitate work-from-home schemes. For example, policies related to workplace attendance, schemes related to overtime allowances or other benefits that centre around office surveillance and reporting might need adjustment in a remote working environment. The amendments may not be readily apparent and a robust review of policies and procedures may be necessary to fully integrate company policy with a new remote workplace-friendly system.

Labour conditions under remote working environments

China’s Labour Contract Law requires employment contracts to cover labour protection, working conditions and occupational hazard prevention and protection measures—the ‘labour conditions’—of employees. Employers need to consider if they can provide employees the required labour conditions for suitable and safe performance of their work at home. These concerns might be less of an issue for service companies, particularly where high-performance computers and internet services enable fast download and transmission of electronic documents and eliminate many of the barriers for conference calls. 

Manufacturing companies, on the other hand, would face greater challenges to provide suitable remote working arrangements, as much of the equipment and other inventory necessary for operations are only available at the manufacturing site. These enterprises might consider if surveillance technology can allow supervisors to spend more time working from home, or if supporting roles such as accounting or sourcing departments can benefit from working remotely. Therefore, a careful balance of practical working requirements and compliance with the labour conditions is needed for some industries.

Confidentiality and cybersecurity

Under remote working arrangements, the highly controlled environment of the workplace is replaced by an unknown and uncontrolled environment at the employee’s chosen location, which can increase the risk of highly sensitive information being leaked or hacked. This could be a critical issue for certain enterprises for which confidentiality is a critical requirement, such as a high-technology enterprise or companies that deal with sensitive customer or client data. Companies should make a detailed assessment of their cybersecurity risks in a remote working environment and implement any changes to both technology and HR that become necessary. For example, companies can increase password and encryption protection and utilise a virtual private network. The employer can also set guidelines for different levels of confidential information, even requiring certain highly-confidential activities to be only conducted in the office.

Work-related injury

When an employee is injured, determining if the injury is work-related or not can be complicated. There are three main factors to consider:

1. whether the injury occurred in the workplace;
2. whether the injury occurred during work hours; and
3. whether the injury occurred as a result of the employee’s performance of work duties.

In cases of injuries sustained while working from home, the employee’s domicile might be recognised as a working place if it has been documented as such in the employment contract. A more challenging aspect may be determining whether the injury occurred during work hours, or if it was caused as a result of an employee performing their work duties. For example, if an employee is burned while preparing some hot coffee, it could be difficult to prove the injury occurred during work hours, or if it was related to the performance of the employee’s work duties (unless, of course, the employee is a barista at a coffee shop).

Determining workplace injuries is less of an issue if it occurs in the office, as in practice this will normally be deemed as work-related. Such determination is within the realm of regulators, and therefore beyond both the employee’s and the employer’s judgement. Given the old saying that most accidents occur in the home, perhaps an employer should consider some supplementary commercial medical insurance for cases where the employees might sustain an injury while working from home that is not covered by regular insurance as a work-related injury.

In conclusion, while there are no direct legal barriers to adopting a work-from-home arrangement, there are many legal and policy issues that need to be considered. Companies may wish to undergo a comprehensive evaluation and develop a deployment plan prior to officially implementing a remote working model.

Shanghai Qin Li Law Firm is a Chinese law firm and a member of the Deloitte Legal global network. Our lawyers, who are licensed to practice Chinese law, not only have strong local ties but also a wide vision, being part of a global network. Our local roots and global reach make us a unique service provider in China’s marketplace.

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