On the occasion of this year’s Christmas Eve, the State Council promulgated the Opinions on Further Stabilizing Employment (Guo Fa [2019] No. 28, referred to as the “Opinions“), providing very detailed guiding opinions on the stabilization of employment present and for the foreseeable future. The Opinions compromise of 26 articles of eight aspects. From the perspective of employment law, let’s go straight to the key points and see what the Opinions mean to the employers.

(Note: For the convenience of reading, articles invoked are only excerpts from the Opinions. We keep the serial number of articles so that you could trace back the original text.)

(i) Strengthen support for enterprises and stabilization of positions. The phased lowering down of the rate of unemployment insurance, and work-related injury insurance will be extended to April 30, 2021. The employee training allowance policy for enterprises having operation difficulties, and the unemployment insurance return policy will also be extended to December 31, 2020. As to the return policy, it applies to employers encountering and having the possibility to survive temporary production and operation difficulty and refusing to lay off or laying off very few employees.

Remarks: Enterprises meeting certain conditions will continue to enjoy appropriate preferential treatment at least one more year.

(iii) Guide enterprises to expand the domestic market. Encourage industrial zones in the midwestern and northeastern regions to establish a close link with the eastern regions where industries are exported, and facilitate an orderly cross-regional transfer of manufacture industry.

Remarks: Under the policies, if employers intend to transfer their production and operation cross-regionally, they must adequately handle a series of employment issues. For example, address relationships with existing employees, recruit new employees in the new place of operation and adjust internal policies and types of employment under local rules.

(iv) Regulate laying off. Encourage enterprises to negotiate collectively with employees to maintain employment relationships by adjusting remuneration, working hours, work shifts, and providing training, etc. Guide enterprises to formulate and implement proper lay-off plans, inform the trade union, or all the impacted employees 30 days in advance. Employers also should pay severance and overdue salary, and contribute the overdue social insurance premiums according to the law.

Remarks: To both maintain employment relationships and rationalize the cost of employment, the necessity to adjust internal policies will increase. Work shifts and training requires that employers should have more flexible and coherent employment management systems. For redundant personnel in a certain period, the use of post waiting, which is the common practice of non-private employers, could be further expanded. The Opinions’ emphasis on the procedures of collective negotiation and economic layoff may also narrow the channels by which employers conduct massive employment termination.

(viii) Develop new driving powers and increase employment opportunities. The Opinions encourage to facilitate investment and industrial distribution in 5G, strategic new industry groups, artificial intelligence, industrial internet, and other fields. It also supports overseas investments made by technologic enterprises.

Remarks: Those measures are significantly positive to employers in the technological and emerging areas. Employment management in such areas should follow carefully, including but not limited to recruitment and training of core employees, incentive plan, non-compete and business secret protection, engagement of high-tech foreign personnel, and cross-border employment, etc.

(ix) Encourage enterprises to recruit more employees. Lower down the threshold for obtaining small and minimum enterprises start-up loans. Specifically, reduce the proportion of newly hired employees to all existing employees to 20%, and the proportion of employers with more than 100 employees to 10%. In regions where conditions permit, employers may be given a one-off recruitment allowance. Requirements for the allowance are explicit: Employers must enter into employment contracts with specific employees with a term of one year or longer and pay their social insurance premiums as required by the law. Employees, in particular, are registered as having been unemployed for more than half a year. The policy should remain valid from January 1, 2020, to December 31, 2020.

Remarks: Specific implementation rules are yet to be improved by local governments. It is advisable to keep an eye on this.

(xi) Support flexible employment and new types of employment. Support employees get jobs by temporary, part-time, seasonal, and flexible work. Study and improve policies to support flexible employment, set forth rules to protect the rights and interest of employees under flexible employment and new types of employment, launch the pilot of occupational injury protection for employees under new kinds of employment, and remove and cancel provisions unreasonably restricting flexible employment.

Remarks: Since its effective date, the PRC Employment Contract Law has inclined to encourage long-term and stable employment relationships, and therefore set forth such provisions as twice salary for failure to enter into written employment contracts and non-fixed term employment contracts. Some people thought that such rules restrict the application of flexible employment to some extent. For the present economic situation, it’s worth noting whether the Opinions relax the strict standards on confirming employment relationship, especially for employees under new types of employment, and whether a more relaxed work arrangement, such as suspension from duty without pay, are allowed.

(xii) Strengthen employment by administration means. Offer more assistance to individuals suffering from re-employment difficulties and provide more public welfare positions. Individuals, after the expiration of public welfare position policy implementation, fail to get stable re-employment, are allowed to continue to enjoy the policy for one more year. This policy will remain valid from January 1, 2020, to December 31, 2020.

Remarks: For massive employee settlement projects, how to help the unemployed to get re-employment is one of the essential issues the local governments and employers concern. The Opinions will help to alleviate such worries to some extent. However, in practice, how should employers seek support from local governments is yet to be considered and discussed from the aspects of law, practice, and sense.

(xiii) Stabilize youth employment. Expand the scale of employment and internship, properly raise the amount of allowance, and support the development of more intern positions.

Remarks: There are already some provisions regarding the recruitment of interns. Employers may consider recruiting interns in some positions under local policies so that they could support the government’s goal of stable employment as well as optimize the cost of employment.

(xvi) Strengthen the building of occupational training infrastructure. Support enterprises and technical schools to build employee training centers, enterprise college, and continuing education base.

Remarks: Employers who are facing phased redundant personnel and in need of production and operation upgrade and transfer of experience to intellectual products may enter closer cooperation with relevant institutions. They may reach their commercial goals by efficiently utilizing those policies. During this process, it is also necessary to avoid disputes by improving internal policies and signing relevant agreements regarding the arrangement for impacted personnel’s rights and obligations.

(xvii) Facilitate full coverage of employment service. Keep close track of the influence of significant projects, engineering, and unique governance on employment. Competent authorities should provide information on the enterprises, which are shut down, closed or merged or which switched to other products, to the local human resources and social security authorities, and formulate measures against massive unemployment if any.

Remarks: For a while in the future, in case of massive employee settlement, in particular, extensive termination of employment, employers are expected to face increasing pressure from local governments, especially local human resources and social security authorities. Therefore, before employee settlement, on the one hand, legal risks should be fully considered, and a thorough and rational settlement plan should be formulated, on the other, proactive communication with local government agencies should be conducted as appropriate.

The promulgation of the Opinions accords with the overall situation of China’s social and economic development. The Opinions set forth both general principles and specific provisions, imposing high requirements on the employers, employees, government, and other agencies. The Opinions have just been promulgated, and the implementation thereof is yet to be seen. The Opinions are expected to have relatively strong influence on employers. Employers should get fully prepared for and keep an eye on the implementation of the Opinions. For example, the making of any significant decision or regulation affecting employees’ interests should be carefully planned and considered, for the avoidance of conflict with the Opinions.

(Thanks to Ms. He Xiaochen’s efforts in the English translation of this article. Note that the translation of the Opinions is for reference only. Please follow the official English version in practice.)

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.