As we are all aware that COVID-19 has been affecting not only the production and business activities of many enterprises but also the daily livings of individuals in Shanghai. On the legal issues caused by or in connection with the prevailing pandemic, a series of related research have been conducted by us, which summarize and analyze the difficulties and crises encountered by enterprises and individuals, as well as providing consulting services relevant to these legal issues.
I. As Regards Employment policies
In light of the pandemic prevention and control situation in Shanghai and the specific characteristics relevant to labor relations, the Shanghai High People's Court and the Shanghai Human Resources and Social Security Bureau jointly formulated the “Answer to Various Questions on the Handling of Labor Disputes Related to Pandemic”, which clarifies the principles and specific provisions on the handling of labour disputes in a balanced and stable manner. Our advice for our clients in this regards is as follows:
Q: In view of the pandemic, how could the limitation period of arbitration or prosecution of labor and employment disputes be determined? What should the parties do if they could not normally participate in relevant arbitration or litigation proceedings?
A: According to the relevant provisions of the “Labor Dispute Mediation and Arbitration Law of the People's Republic of China”, the” Civil Procedure Law of the People's Republic of China”, and the ”Emergency Response Law of the People's Republic of China”, if the parties failed to apply for labor and employment dispute arbitration or filed a lawsuit within the limitation period due to the impact of the pandemic, the parties may invoke the relevant provision in the Law to the effect that the limitation period for arbitration would suspend to run and that the time during the affected period would not be counted towards the limitation period for prosecution and arbitration. If the parties failed to participate in arbitration or litigation proceedings due to the pandemic, the provisions on the suspension of arbitration or litigation procedures may be applied in accordance with the law, except as otherwise provided in other regulation.
Brief Comment: A party which demonstrates that its failure to apply for arbitration due to an event of force majeure or other objective reasons during the limitation period for arbitration application, and that the people's court consequentially determined that the period for arbitration application be suspended, the subject limitation period for arbitration application shall resume to run on the day in which the reason for the suspension extinguished. Accordingly, it is advisable for parties to pay due attention to claiming their rights in a timely manner.
Q: During the pandemic prevention and control period, can an employer terminate the labor contract in the event that its employee is being pursued for criminal liability or is subject to administrative punishment such as public security detention for failing to cooperate with the government's pandemic prevention and control measures?
A: During the pandemic prevention and control period, if an employee is pursued for criminal liability for reason of not cooperating with the pandemic prevention and control measures imposed by government, his/her employer may terminate the labor contract pursuant to Article 39(6) of the “Labor Contract Law of the People's Republic of China”. If an employee is subject to administrative punishment such as public security detention due to his/her failure to cooperate with the prevention and control measures of the government department, the employer may terminate the labor contract in accordance with the provisions of the rules and regulations formulated according to law.
Brief comment: in order to terminate the labor contract relationship effectively based on the provisions of the Labor Contract Law for reason that the subject employee is being held criminally responsible for not cooperating with the government's pandemic prevention and control measures, it is advisable for an employer to formulate a relevant management system stipulating specifically that such reason would constitute a cause for termination.
II. Applicability of an Event of Force Majeure
By invoking a contractual force majeure provision, an affected party could be relieved of its legal liability in part or in whole, in accordance with Articles 180 and 590 of the Civil Code of the People's Republic of China. In order to successfully invoke a contractual force majeure provision, an affected party should pay attention to the following points. First, an event of force majeure should satisfy the elements of unforeseeably, unavoidably and insurmountably. Second, if either party is unable to perform the contract due to an event force majeure, it shall timely notify the unaffected party, actively take actions to mitigate the loss of the unaffected party, and to provide relevant evidence within a reasonable period of time. Third, the liability so relieved for cause of an event of force majeure shall be in line with the principle of fairness, and both parties shall fully communicate and negotiate to smoothly perform the original agreement, and to apportion the responsibility equally if an agreement could not be reached.
In addition, we also provide legal advice and litigation supporting services to our clients in relation to property disputes due to pandemic effect. We will do our utmost best to preserve the quality of living of our individual clients and to assist our corporate clients to smoothly resume their production and operation.