China: Employers Shall not Suspend Employment Contract On the Grounds that COVID-19 Pandemic Constitutes Force Majeure
A logistic company (the “Employer”) has suspended operation since 3 February 2020 in accordance with the COVID-19 pandemic prevention and control measures implemented by local government. As an employee of the Employer, Mr. Zhang (the “Employee”) did not receive salary at the end of February and was informed by the HR department that his employment contract had been suspended. The Employee filed to the arbitration committee claiming for salary of February, but the Employer argued that the employment contract was suspended due to force majeure. Both the arbitration committee and the court ruled in favor of the Employee and opined that (1) force majeure is a statutory clause under PRC civil laws to exempt equal parties from contractual obligations, but PRC labor and employment laws do not introduce a force majeure exemption clause since the employment relation is a subordinate asymmetric relationship, which is different from civil relationship between two equal civil parties; (2) if the Employer simply suspends employment contract due to force majeure, it would directly impact the employee’s source of income and livehood; and (3) where the employment contract is not performable due to the COVID-19 pandemic, employers and employees may amend employment contract upon mutual consent instead of suspending employment contract unilaterally.
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