China Labor management QA

Email: pek4ww@evershinecpa.com
or
Beijing Evershine BPO Service Limited Corp.
17D, Oriental Kenzo Apartment C, No. 48 Dongzhimen Outer St.,
Dongcheng Dist., Beijing, China
Dale Chen, Principal Partner/CPA in Taiwan+China+UK will be accountable to your case.
LinkedIn address:Dale Chen

LRC – China Labor Regulations

LRC-CA-20.10
What must be included in the contents of a labor contract in China?

Evershine RD:
According to Labor Contract Law, 2008, arts. 10, 17, 81 and Labor Contract Law, Implementing Regulations, arts. 6-7.

The Labor Contract Law of 2008 tightened the rules governing employment agreements.
Employers must enter a written employment contract with each employee.
The employment contract is required by law and must contain the following information:

The employer’s name and location and the name of its legal representative
The employee’s name and place of residence and the number of his or her resident identification card or other identity document.
The term of the contract
The place of work
a job description
work hours, leave entitlements and rest periods
compensation
social insurance
working conditions, including protection against occupational hazards
Other information that may be required by law or statute

LRC-CA-20.11
Does China arrange labor contract in the fixed term?
What should be the length of the labor contract in China?

Evershine RD:

Yes.
Contracts can either have a fixed term, an open term or a term that expires with the completion of a specific task.
Most employers choose the fixed-term option since employment contracts can be terminated only in accordance with statutory requirements.

Contract Term	Maximum allowable length of probationary period
Less than 3 months	Nil
3 months to less than 1 year	1 month
1 year to less than 3 years	2 months
3 years or more	6 months

LRC-CA-20.20
What is the minimum age for hiring a new employee in China?

Evershine RD:
According to Regulations Banning Child Labor, 2014, art. 2.
Employers cannot employ youths under the age of 16, except in certain arts- or sports-related employment with permission of the parents or guardians.

LRC-CA-20.40
Is it a requirement for employer in China to conduct a pre-employment background check?

Evershine RD:
According to Labor Contract Law, 2008, art. 8.
China’s labor law does not prohibit or restrict employers from conducting reasonable background checks on applicants, although disclosure of certain personal or sensitive information usually will require the consent of the applicant, especially if the information concerns the applicant’s health or other personal matters.

LRC-CA-20.50
Is the Non-Competition indemnity clause in labor contract in China has a legal effect?

Evershine RD:
According to Labor Contract Law, 2008, arts. 23-24.
Employers are allowed to protect themselves against competition and misuse of confidential information by a restrictive covenant in the employment contract.
Employees in possession of company trade secrets can be restricted from being employed by the previous employer’s competitors or running their own competing businesses for a maximum period of 2 years from the expiration or termination of the employment contract.
Employees are entitled to certain financial compensation in these circumstances.

LRC-CA-40.05
What are the regulations on Gender Discrimination in employment specifically for female workers in China?

Evershine RD:
According to Law on the Protection of Rights and Interests of Women, 1992.
China’s Labor law prohibits discrimination based on gender.
Female employees are entitled to the same employment benefits as their male colleagues.
Employers are prohibited by law from entering employment contracts that restrict a female employee’s right to marry or give birth.
Employers are prohibited from reducing wages of female employees or terminating female employees due to pregnancy or maternity leave or because they are nursing.
Employers cannot ask female job candidates about their marital or childbearing status.
Women seeking employment also cannot be asked to take a pregnancy test.

LRC-CA-50.10
Can the employer in China collect, or process data transmitted by employees over the internet?

Evershine RD:
According to Labor Contract Law, 2008, art.8.
There are no laws in China that address employee privacy.
Under the Labor Law, employers are required to collect basic personal information about employees related to their employment contracts.
Employees are obliged to truthfully provide this information.
Employers are also required to keep the personal data of employees confidential and to obtain their consent prior to publicizing their data.
There are no laws in China that address employee monitoring and surveillance.

LRC-CA-60.10
What are the regulations on working hours in China?

Evershine RD:
According to Regulations of the State Council on the Hours of Work of Employees, 1995, art. 3.
The standard workweek in China is 40 hours, based on an 8-hour day.
The law required that employees receive at least one full day of rest during the week, although most employers provide 2 days, usually Saturday and Sunday.
The Labor Law allows employers to extend working hours for production or operational needs if the labor union if one exists, and the employees are consulted.

LRC-CA-60.30
What are the regulations on overtime hours in China?
What is the overtime premium rate in China?

Evershine RD:
According to Labor Law, 1995, art.44.
The standard 8-hour workday generally cannot be extended more than 1 hour per day, although up to 3-hour extensions are permitted under special circumstances.
Even with special extension, overtime may not exceed 36 hours in a month.
Works beyond 8-hour workday are entitled to overtime pay based on the following criteria:

Workday	Overtime rate of Regular hours wages
Regular working day	150%
Rest day	200%
Statutory holiday	300%

LRC-CA-60.50
Is it common to pay 13^th month’s salary in China?

Evershine RD:
Although not required by law, many companies in China have instituted a 13^th month salary payment paid during the month of the Chinese New Year or Spring Holiday.

LRC-CA-70.10
What are the regulations on general leave policy for employees in China?

Evershine RD:
According to Regulation on Paid Annual Leave for Employees, 2007, arts. 3, 5.
Employees who have worked continuously for more than 1 year are entitled to paid annual leave, the amount depending on their total work years (not just their years with the current employer).
An employee who has:

Cumulative Work Years	Annual Leave Entitlement
At least 1 year to less than 10 years	5 days
At least 10 years to less than 20 years	10 days
At least 20 years	15 days

Annual leave may be arranged by the employer in consideration of both the needs of the business and the wishes of the employee.

Employers that desire to cancel annual leave because of production or work requirements must first get the consent of the workers and then must pay 300 percent of each employee’s daily wage for each day of annual leave accrued but unused.

LRC-CA-70.20
What are the public holidays in China?
What is the overtime premium rate during public holiday in China?

Evershine RD:
According to Regulations on Annual Holidays.
Employees are entitled to 11 national holidays, the dates of some of which vary year to year depending on the lunar calendar:
Jan 1: New Year’s Day
Spring Festival: 3 days, usually between late January and mid-February
Tomb Sweeping Day: 1 day, usually either April 4, 5 or 6
May 1: International Labor Day
Dragon Boat Festival: 1 day, usually in May or June
Mid-Autumn Festival: 1 day, usually between mid-September and mid-October
National Day: 3 days in early October
Female employees are entitled to a half day of paid leave on International Women’s Day, which falls on March 8.

Every year, the government also provides additional public holidays to make long holiday weeks, known as “Golden Weeks”, for the Spring Festival and the National Day holidays.
Employees who are required to work on a holiday are entitled to 300% of pay.

LRC-CA-70.30
What are the maternity leave policy for female employee in China?

Evershine RD:
According to Special Rules Concerning the Labor Protection of Female Employees, 2012, art. 7.
Under the Special Rules Concerning the Labor Protection of Female Employees, employees who are pregnant are entitled to 98 days of maternity leave.
However, different regions have lengthened maternity leave times in the wake of China’s abandonment of its one-child policy.
In Beijing and Shanghai, women may take 158 days of maternity leave.
Depending on the region, additional leave falls into the following ranges:

Types of childbirth	Additional leave
Difficult childbirths	7-30 days
Late childbirths	7-30 days
Miscarriages	Up to 75 days

Female employees are entitled to at least 1 hour each day during work hours for breastfeeding up to 1 year from the date of birth.
The mother can choose to take this leave as 2 30-minutes breaks or 1-hour long break.
Feeding time is counted as working time.

Parental leave
Shanghai and Beijing provinces offer parental leave, which entitles eligible parents to 5 days of paid leave each year until the child reaches 3 years of age.

LRC-CA-70.40
What are the paternity leave policy for male employee in China?

Evershine RD:
Working fathers are eligible for 7 to 30 days of paternity leave depending on locality.
In Beijing, up to 15 days of paternity leave at full pay.
In Shanghai, 10 days of paternity leave.

LRC-CA-70.50
What are the provisions on sick leave, bereavement leave and personal leave for employees in China?

Evershine RD:

Sick Leave
According to Enterprise Workers Illness or Non-Work-Related Injury Medical Period Specified, 1994, art. 3.
Granted between 3 and 24 months depends on total years of work experience, tenure with the current employer, and local regulations.
In Beijing, the amount depends on the employment contract.
In Shanghai, the amount a worker is paid depends on salary and work experience.
As a general principle, however, the amount an employee is paid during sick leave should be no lower than 80% of the minimum monthly salary announced by the local government.

Bereavement leave
Not applicable.

Home leave
According to the 1981 Regulations of the State Council on Treatment for Employees Who Visit their Relatives (Home Leave Regulations), employees who have worked for an enterprise for more than 1 year are entitled to “home leave” (tanqinjia) if they do not live in the same location as their spouse or parents and cannot visit them during public holidays.

Home Leave	Visit conditions
30 days a year + travel to visit time	Visit a spouse
20 days a year or 45 days every 2 years	Unmarried workers visit parents
20 days every 4 years	Married workers visit parents

Home leave is only required for employees who work for the government, state-owned enterprises, and social institutes. Foreign-owned enterprises may grant home leave or not, as management chooses.

LRC-CA-70.60
What are the regulations on pension benefits and social security insurance benefits for employee in China?

Evershine RD:
According to Social Insurance Law.
Employers are obliged to provide their employees (including expatriate employees holding work permits) with 5 types of social insurance and 1 fund benefits:

old-age pension insurance
medical insurance
occupational injury insurance
unemployment insurance
maternity insurance
housing funds

LRC-CA-70.70
What are the regulations on Workers’ Compensation for employee in China?

Evershine RD:
According to Standard for Determining the Seriousness of Work-related Injuries and Occupational Diseases.
The process for reviewing and processing workers’ compensation claims in China entails 4 basic steps:

Health professionals diagnose the injury or illness.
Local labor and social security officials verify that the injury or illness is work-related.
The degree of disability is assessed.
Social security authorities calculate the benefits to be paid.

The criteria for assessing a worker’s degree of disability are primarily addressed by the “Standard for Determining the Seriousness of Work-related Injuries and Occupational Diseases”, which was issued by the Ministry of Labor and Social Security in 1996.

LRC-CA-80.05
Can the employee in China join labor union?

Evershine RD:
According to Trade Union Law, 1992, arts. 5 and 10.
Yes. The Trade Union Law gives all employees the right to join a labor union and provides employees with an implicit right to strike.

LRC-CA-80.06
How to handle labor dispute in China?

Evershine RD:
According to Labor Law, 1995, arts. 77-84.
Labor disputes in China may be resolved by way of consultation, mediation, arbitration, or court proceeding.

Consultation is not required under Chinese labor law, but the worker and/ or labor union can discuss and resolve the dispute with the employer.
Mediation is conducted by committees of the enterprises themselves, by grass-roots mediation institutions or by neighborhood or town mediation organizations.
Mediation is considered to have failed if not completed within 15 days from the date of application.
An arbitration committee—composed of representatives of the government, labor unions and employers—appoints either a tribunal of three arbitrators or in less complicated disputes a single arbitrator to hear the case.
The statute of limitations for arbitration proceedings is one year from the time the dispute began.
If the parties fail to reach an agreement through arbitration or if any party is dissatisfied with an arbitration award, a lawsuit may be filed in people’s court within 15 days from the day the arbitration award is received.

LRC-CA-90.10
What are the regulations on workplace safety and health for employee in China?

Evershine RD:
According to Labor Law, 1995, arts. 52-57; and Law of the People’s Republic of China on Work Safety, 2002.
Chinese labor law requires employers to take the following actions to protect employees’ health and safety:

Establish and administer a system for work safety and health
Comply fully with work safety and health standards and procedures
Take steps to prevent work-related accidents
Educate employees regarding work safety and health
Provide sage and clean working conditions
Provide necessary protective equipment

Employers are required to take precautionary measures to avoid occupational diseases and educate employees about potential occupational dangers by including information in employment contracts and providing health training to affected employees.
Employers must assign special personnel to perform routine testing and supervision of potential risk factors in the workplace, and periodic reports must be provided to local health administrators and employees.
Employers must also arrange regular physical examinations for employees who work in hazardous occupations.

LRC-CA-100.10
What are the circumstances that an employer can terminate an employee in China?

Evershine RD:
According to Labor Law, 1995, Chapter 4.
Under Chinese law, employment contracts can end if:

the term of the contract expires
the parties mutually agree
during the probationary period
for just cause
with proper notice or by paying salary in lieu of notice
mass layoff
terminate the contract for just cause
terminate the contract with proper advance notice
reaches the statutory retirement age or begins receiving his or her old-age insurance pension
employee dies or is declared to be missing or deceased by a court
employer is declared bankrupt
employer loses its business license, is ordered to close, or liquidate or decides to dissolve.

Termination without notice or severance

the employee does not meet the conditions of recruitment during probation period.
upon a serious violation of company work rules.
if the employee has committed a serious dereliction of duty that results in substantial harm to the employer.
if the employee is subject to criminal prosecution.
if the employee establishes an employment relationship with another employer that affects the employee’s ability to perform his or her duties for the initial employer.
if the employee is found to have used coercion or deception in establishing or modifying the contract.

LRC-CA-100.11
What is the notification period for terminating an employee in China?
How much is the severance pay?

Evershine RD:
According to Labor Law, 1995, art. 47.
The law requires 30 days’ notice – or payment of 1 month’s wages in lieu of notice – as well as severance pay.
Severance pay is 1 month’s salary per full year of work plus a half month’s salary for a partial year of work of less than 6 months or a full month’s salary for a partial year of work of 6 months or more.

LRC-CA-100.12
What is the reporting requirement for employer in China to notify the termination of employees to the competent authority?

Evershine RD:
In all cases, employers are required to notify the appropriate labor union, in advance, of a proposed unilateral termination, and the union has the right to request that the employer reconsider its decision.
In addition, within 15 days after terminating an employment relationship, the employer must complete the social insurance transfer procedures and arrange for the employee’s personnel file to be transferred to the new employer or an agent designated by the new employer.
An employer must also issue a written proof of termination at the time of termination.
Local regulations may provide for additional procedures.

LRC-CA-100.20
What are the regulations on mass layoffs in China?

Evershine RD:
According to Labor Law, 1995, art. 41.
Layoffs of 20 or more workers or 10% or more of the total number of the enterprise’s employees are allowed in the following cases:

serious production and business operation difficulties.
restructuring due to bankruptcy.
revision of business methods or introduction of major changes to production, or
a major change in economic circumstances rendering contracts impossible to perform.

The law leaves it to local governments to make decisions on some of these cases, so there is no uniformity in the way standards are applied throughout China.
In many cases, standards only apply to domestically owned enterprises, which makes it easier for foreign invested enterprises to execute mass layoffs.
Employees who are laid off are entitled to severance payments.
When initiating mass layoffs, employers must explain the reasons for dismissals to the labor union or to all employees 30 days in advance.
Employers must consider the opinions of the labor unions or the employees on the dismissals and report the workforce reduction plan to the local labor bureau.

LRC-CA-100.30
What is the time limit for employer in China to pay employees upon termination?

Evershine RD:
The economic compensation shall be paid to the laborer by the employer after the laborer’s work handover is completed.

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E-mail: pek4ww@evershinecpa.com
or
Beijing Evershine BPO Service Limited Corp.
17D, Oriental Kenzo Apartment C, No. 48 Dongzhimen Outer St.,
Dongcheng Dist., Beijing, China
Dale Chen, Principal Partner/CPA in Taiwan+China+UK will be accountable to your case.
LinkedIn address:Dale Chen

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