Work stops, but pay continues: Beijing's minimum salary standards dictate the extent to which companies can reduce employees' pay during a halt in production. Graham Brown and Wei Xin shed light on employers' rights and obligations in these circumstances.(Labour Law Forum)

Q: Our company is located in Beijing. Our sales have declined sharply due to the global economic crisis, and we are now facing serious difficulties with our production. Under these circumstances, can we simply reduce our employees' salaries? We may have to suspend our production in the future. If we stop production, do we still need to pay employees salaries as agreed in the labour contracts? Can we terminate employees?

A: According to the Labour Contract Law of the PRC, the provision on salary is an essential clause of a labour contract. We assume that your employee's salary has been agreed in the labour contract between him/her and your company. In this case, the labour contract will have to be amended if your company intends to reduce the person's contractually agreed salary.

If you can reach an agreement with your employee on reducing his/her salary, the labour contract should be amended accordingly. Any amendments to the labour contract must be in writing, and each of you should keep a copy of the revised agreement.

According to the local regulations of Beijing, if an employer stops production or operation within one salary payment cycle, and such a halt is not caused by the employees, salaries should be paid to the employees as if they had worked normally. If the suspension lasts beyond one salary payment cycle, employees could be paid according to the new salary standards agreed between them and the company, based on any work done; however, this should not be less than the minimum salary standards that apply in Beijing (you can visit the official website of Beijing Labor and Social Security Bureau for detailed information on minimum ...