Guide to labor in China


i. Labor law

1. What legislation regulates employment law in China?

labor in China is controlled by a relatively comprehensive set of laws, recently added in late 2007 to strengthen the rights of workers.

Major songs include:

– Labour Law of the PRC (1994) (“Labour Law”)

– Labour Contract Law of the PRC (2007) (“Labour Contract Law “)

– Labour disputes and Arbitration Law of the PRC (2007) (” Labour Arbitration Law “) (effective May 1, 2008)

– Trade Union Law of the People’s Republic of China (1994 )

These songs and then added with a myriad of national and local environmental laws, regulations, procedures and circulars.

2. Are there different laws for foreign-invested employers and domestic Chinese employers?

The Regulations for Labour Management in foreign investment companies (1994) regulates employment of Sino-foreign equity and cooperative joint ventures, together with Sino-foreign companies. The regulation very much a mirror of the labor law. In addition, like any non-compliance with labor law will be resolved in accordance with the higher level of law, little reference is made to this Regulation.

II. Labour contracts

1. What are the different types of professional contacts?

Employment in China, like most other countries, is divided into full and part time. According to the Labour contract, part-time is defined as the labor relationship in which the employee works an average of no more than 4 hours a day and no more than a total of 24 hours per week.

employment relationship go hours in this definition are words full time, which is divided into 3 types:

1) maturity, expiry date agreed in the beginning and

2) open / no fixed time, no expiry date provided; or

3) project-based / complete a task :. contract to expire at the end of the pre-defined task or project

2. What are the requirements of the labor contract

According to the Labour Law and the Labour Contract Law, other than part-time, labor agreements shall be in writing and contain the following terms 😕

– name, address and legal representative of the employer;

– name, address and identification number of the employee

– term labor contract

– job description and job site

– working hours, rest and vacation;

– labor remuneration


– labor conditions, working conditions and occupational risk prevention; and

-. other issues according to the laws and regulations

If the labor contract includes a trial period only (sometimes called “probationary contract”), the probation period set out in them, the term labor contract and the probationary period is void.

3. What are the penalties associated with not sign a contract?

A labor relationship begins on the date the employee starts working for the employer, and, by law, it is necessary that a written labor contract shall be completed within one month of the time.

If the labor contract is not concluded within one month from the entry into force, the employer will be liable to the employee for human labor wages, up to 1 year. After 1 year without the written labor contract, are fixed-term labor contracts is considered to be open.

4. What is the maximum probationary period allowed by law

The maximum probation period allowed by law are as follows:

– less than 3 months: no probation period;

[19459002?] – 3 months to 1 year 1 month;

– 1 year 3 years 2 months; and

– 3 years or more or unspecified :. 6 months

5. If I am in the process of establishing a company in China, however, need to hire workers in the meantime, what can I do?

Technically, as China business can not contract, it can not hire workers until it meets all the formal requirements of registration. However, as business requirements dictate that you need staff immediately or soon after you start in China, many foreign companies deal with labor services provider such as FESCO or CIIC to hire employees and then second them to start up their activities. They then either transfer their employment agreements already established or continue to maintain a working relationship service.

III. Wages, benefits and Social Security

1. What are the components of wages

according to the provisional rules for the payment of wages (1994), wages and salaries are comprised of: ?

– wages based on time

– wages based on piece work;

– bonus;

– grants;

– benefits;

– overtime payments; and

-. wages paid under special circumstances

According to the minimum wage provisions (2004) and based on the minimum wage promulgated on site, employers can not pay their workers less than the current minimum wage standard.

2. What are the standard hours of work and when I have to pay overtime?

The standard hours of work in China is 8 hours per day, 5 days a week, for a maximum working time of 40 hours, with two rest days (usually Saturday and Sunday). Any additional requirements of the employer shall be compensated in accordance with the standard specified below:

– Working days: 150% standard wages

– rest days: 200% standard wage; and

– Holidays :. 300% standard wages

3. What are national holidays

National holidays (from 2008) are set out below:

– New Year’s Day ( Jan. 1): 1 day;

– Spring Festival (Lunar New Year, usually January or February): 3 days;

– Women’s Day (March 8): half a day for women;

– Qing Ming Festival (April 5): 1 day;

– May Day (May 1): 1 day;

– Dragon Boat Festival (Day 5 5th lunar month): 1 day;

– Mid-Autumn Festival (15 Day 8th lunar month): 1 day; and

– National Day (October 1 – 3) :. 3 days

4. What are the benefits required by law

Employers are required to provide the following benefits and social security payments to employees

– Basic old age insurance;

– Unemployment

– Medical insurance;

– Maternity insurance; and

– work-related accident insurance

employee and employer contribute together to the first three types of insurance, the employer alone contributes to the latter two, with rates vary by location of employment.

IV. Non-compete and confidentiality

1. all employees can be subject to non-compete obligations?

Not all employees can or will be bound duties not competing with it. The Labour Contract Law restricts employees who may be bound by a non-compete obligations

– management

– Senior technical personnel; and

-. Those employees who have access to trade secrets of the employer

It is necessary that the employee and the employer a written contract, either separately or in the labor contract, with respect to time, scope, territory, compensation of non-compete period and free money damages for Employee violations.

The maximum term for a non-competition 2 years.

2. What are typical compensation claims for non-competes?

However, it is required that compensation is paid monthly to an employee of the non-compete period, the law does not state a standard amount. In practice, it is common to pay at least 50% of the employee’s salary.

3. Are liquidated damages allowed for offenses that do not compete obligations?


V. Withdrawal and ‘layoffs’

1. Under what circumstances can an employee be terminated without notice

employer can terminate the employee without the requirement of notice in the following situations 😕

– the probation period, if the employee is determined to be unfit for the position of

– employee violates substantive rules and regulations of the employer;

– employee carries serious dereliction of duty, graft or corruption cause significant damage to the interests of the employer;

– an employee has an employment relationship with another employer and that the relationship affects complete their projects and he refuses to appropriate corrective action after the proclamation of the employer

– employee used fraud in making the labor contract; or

-. the employee is subject to criminal investigation

2. Under what circumstances does the employee to give notice of termination

employer shall provide written 30 days notice or payment in their place, if it terminates the labor contract under the following conditions 😕

– the employee is unable to perform the original duties or re-assigned duties, after returning from medical leave or non-work-related injury

– the employee is incompetent and remains incompetent after training or adjustment of status; or

-. the occurrence of a major change in the objective situation that was trusted to sign a labor contract, the employee and employer can not agree with the modified terms of the labor contract

3. Under what circumstances may an employee terminate labor contract without notice

employee can unilaterally terminate the employment contract without the requirement of notice in the following cases 😕

– the employer fails to provide labor protection and working conditions in accordance with the labor agreement,

– employer pays remuneration in full and on time,

– employer benefits accordance with the law,

– employer rules and regulations violate laws and regulations, harm the rights and interests of the employee

– employer fraud, coercion or unfavorable position of the employee making the agreement; or

-. other conditions set out in laws and regulations

4. In any case, the compensation is necessary and how much

Liquidation compensation is due to a number of conditions which are listed below:

– dismissal of an employee under the conditions that lead to him? right to terminate the contract immediately (section 3, before);

– termination by the employer under conditions that require written 30 days notice (section 2, previously discussed);

– an employee is terminated due to restructuring or difficulties in business

– labor is said after being proposed by the employer and it is mutually agreed termination;

– temporary work contract expires (unless the employee refuses to renew the contract on terms equal to or better than before judgment);

– termination of the labor contract due to the withdrawal of the business license of the employer, and

– .. termination of the labor contract due to the bankruptcy of

Employers must pay the liquidation amount of wages a month for each year with half salary monthly for each part of

If the employee earns more than three times the average monthly wage of the locality, the compensation will be capped at three times the monthly salary, up to a maximum of 12 months.

5. Can workers ‘terminated’

Under the following conditions collective agreement be terminated due to business difficulties

– restructuring for Enterprise Bankruptcy Law

– serious difficulties in production or operations,

– staff reduction is necessary because of changes in production, innovation or management oriented business style; or

-. Other major changes in economic conditions depend on the time of conclusion of the labor contract, does not make them performaces CD

for large-scale layoffs (20 or more employees, or in smaller companies where employee layoffs are less than 20 employees than the 10% or more of the total workforce), the employer must first explain the situation to the union or all employees (where there is no union) 30 days in advance, and can reduce labor only after considering the views of the union or the employees and announced a restructuring plan to work gift.

VI. Labour arbitration and dispute resolution

1. How are labor disputes resolved in China?

Like most jurisdictions, mediation is the preferred method of dispute resolution, but this is a voluntary process. The Labour Arbitration Law provides that the mediated settlement agreements for wages, medical expenses for work-related injuries, attrition and penalties may be filed in court for enforcement.

Labour Dispute requirements, in accordance with the Labour Law and Labour Law arbitration, must first be submitted to the next job Complaints Committee located in the jurisdiction of the employer. Labor Arbitration Committee shall render its award within 45 days after the dispute has been approved

Arbitration decisions are final for employers in the following cases :. Wages, medical expenses for work-related injuries, attrition and penalties, where the disputed amount does not exceed an amount equal to 12 months of local minimum wage.

employees and employers (except in the cases set out before) may, within 15 days of the arbitration refer the dispute to the court for the hearing of the people.

2. What is the statute of limitations for bringing labor dispute claim?

limitation period is 1 year after the employee knew or should have known that their rights have been infringed, but if a dispute arises under the current labor contract, the limitation period does not start until the labor contract has expired or has been terminated a.


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