Chinese Labor Laws

Chinese Labor Laws - Employment Contracts
Chinese labor laws require employers to prepare an individual written employment contract with each full-time worker.  Employment contracts should be written in Chinese in addition to any foreign language.

When a contract has not been put into writing and an employment relationship is deemed to exist, Chinese law recognizes De Facto Employment, which generally requires that employers owe employees the same duties as those required by law in the written contract.

Failure to conclude a written contract within one month from the date an employee begins employment entitles the employee to 200% of the normal wages.  The contract will be considered open-term if an employment contract is not signed within one year. 


Certain fundamental provisions and information must be included in the contract:

Contract terms
Employee name, place and number of resident ID card or other valid identity documents
Work location and job description
Compensation
Normal working hours, rest periods and leave
Social insurance
Employee protection, expected working conditions and protection from occupational hazards
Any other specific laws/statutes required
“In order to address the increasing labor unrest and widespread media reports of employer abuse of employee rights, the National People’s Congress (NPC), on June 29, 2007, passed the Employment Contract Law, with effect from January 1, 2008…  The Employment Contract Law included significant changes to the [previously] existing legal framework.  The most significant changes being: specific penalties for not signing employment contracts with employees; limits on the use of fixed-term contract to increase job security of employees; specific employee consultation procedures in order to adopt company rules, policies, and regulations; and greater protection for employees who are hired through employment service agencies. 

The overall effect of the Employment Contract Law will be to increase individual employee rights as well as strengthen the structures for collective employee representation.  While employment contracts signed before the effective date of the Employment Contract Law will continue to be valid and effective, the new requirements in the Employment Contract will prevail in the case of any conflict with the provisions in existing contracts” (Baker 2013).
 

Chinese Labor Law - Wages
There is a minimum wage system in China and wages are frequently adjusted and fixed by local governments. 
 
Chinese Labor Law - Termination
Chinese law does not recognize the concept of “at will” employment and therefore employers may terminate employees only under certain circumstances specified in relevant laws.
In certain instances, an employee may be terminated without notice or severance.  These instances include:
 - Employee fails to satisfy employment conditions during probation period.
 - Egregious violation of company rules and/or regulations.
 - Major harm to company’s interest due to employee’s serious negligence of duty.
 - Employee is prosecuted for a criminal offense.
 - Employee has established an employment relationship with another employer, therefore hindering completion of tasks with first employer.  Or employee declines to fix the situation after situation has been brought to employer’s attention. 
 - Employee uses deception or coercion to take advantage of employer and cause loss of employment contract, or make amendment that is contrary to employer’s real intent. 

There are 3 situations that require an employer to provide severance and 30 day written notice of termination:

Employee becomes ill or sustains a non-work related injury and, after receiving sufficient medical treatment, is no longer capable of engaging in the original work or any other work requested by the company.
Employee is incompetent after receiving adequate training or assignment to another position.
Major change occurs in circumstances upon which employment contract was based, thus making performance of contract impossible after arbitrations between parties fail to produce some agreement. 
 

Chinese Labor Law - Working Hours
Normal working hours are 8 hours per day and 40 hours per week.
Workers must be paid overtime compensation when work hour limit is exceeded.  Nevertheless, certain high-ranking managerial and sales staff may be required by to work more than 40 hours per week without receiving overtime compensation.
Employees must receive at least one rest day during a calendar week. 
Overtime payment rates are:
150% of normal wages for overtime on normal workdays
200% of normal wages or paid leave for overtime on rest days
300% of normal wages for overtime on public holidays
Overtime is offered to employees often and employers must consult employees and local labor union, if applicable, before extending overtime hours.  No more than 36 overtime hours can be given to an employee. 
 
Chinese Labor Law - Worker Rights
Annual leave time permitted is based upon amount of time an employee has been with the organization. 
Five days of paid annual leave for those who have worked between 1 and 10 years.
Ten days of paid annual leave for those who have worked at least 10 years but fewer than 20. 
Fifteen days of paid leave for those who have worked at least 20 years.
Annual leave not used during the applicable year does not carry forward to the following year.  When annual leave is not taken, employees must be paid 200% of the average daily wage for each unused leave day.
Beginning 15 days before the projected birth date, female employees are entitled to at least 98 days of maternity leave. 
If the pregnant worker has more than one child during the birth, an additional 15 days is added per child. 
The national retirement ages for men and women are 60 and 55 respectively.