Managing the Reduction of Salaries and Working Hours During COVID-19 Pandemic


Table of Contents

At the beginning of 2020, a sudden outbreak of COVID-19 spread across the whole China, casting a shadow over the country’s economic development. Fortunately, the Chinese government took active measures to deal with it, and the epidemic has been basically controlled.

However, although the situation of some Chinese enterprises has recovered, current development of the epidemic in overseas countries go further than China, which shows that the epidemic has caused an indelible impact on the life and economy of the global people.

Of course, most of the enterprises can’t avoid it and are heavily affected by the epidemic.

Talents are the core elements of the development of enterprises, so labor and personnel problems (including salary reduction, economic redundancy, resumption of production and work, determination of industrial injury, etc.) have become the problems that enterprises need to solve while solving the operating difficulties.

Recently, our company has also received many legal concerns from corporate clients on labor and personnel issues under the influence of the epidemic. Therefore, we would like to offer some suggestions and ideas through the following contents.

Continue to read below to know more.

What reasons can the company reasonably arrange for the negotiation of the salary decrease?

During this epidemic situation, the company can decide to negotiate with the employees the reduction of the salary, but it can only arrange that for some specific reasons. Here are some of the reasons used by companies to negotiate the salary decrease for employees:

  • Negotiate with employees to shorten their working hours
  • Negotiate with employees to reduce workload (usually used in factory piecework system)
  • Negotiate with employees to adjust their positions
  • Negotiate with employees to directly reduce the salary standard, etc.

Regarding the shortening of the working hours and reduction of the salary, there are some points to negotiate in the specific:

  1. How many working hours will be shortened per week/month?
  2. How much will the salary be reduced according to the shorter working hours?
  3. For how long will the pay decrease?

What are the reasonable circumstances to adjust the position of the employee and reduce the salary?

There are three essential conditions to legally transfer the position and reduce the salary:

  1. The employer has the legal basis to adjust the work position
  2. Inform the workers of their rights and obligations
  3. Both parties agree to change jobs

Only in line with the above three conditions at the same time, a position adjustment and salary reduction can be performed.

What are the valid reasons for a company to reduce the salary?

According to the law, the following four reasons are justifiable to reduce the salary of the employee:

  1. The worker is unable to engage in the original work after the prescribed medical treatment period has expired due to illness or non-work-related injury
  2. The laborer is not competent for the original job
  3. Unsuitable for the original post after the occurrence of the industrial accident
  4. The employer and the laborer in the labor contract has a clear agreement, the employer has the right to adjust the position for the laborer in accordance with the agreement

In conclusion, if a company wishes to reduce wages during the special condition like current epidemic outbreak, it must obtain employee’s consent and leave a written confirmation. If the employee does not agree, the company cannot unilaterally implement the salary decrease.

How HROne can be beneficial to you

HROne’s service can handle the complete employee benefits for your company in compliance with the local policies and also can take care of the visa for your company’s expatriate employees. As a non-state-owned consulting firm, HROne can directly hire employees for a company not having a legal entity in China by our specialized Employee Leasing / Talent dispatching services.

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