Chinese employment laws can be confusing for foreign employers. On top of language barriers and cultural gaps, the frequently changed regulations make it more difficult for foreign employers to deal with the matter effectively.
Here are 10 golden rules that are worth remembering to save you legal trouble in China:
1) Do not employ illegally by any means!
Valid labor contracts in China are an absolute must. Not only because it is a legal requirement but also because it gets you covered in cases of labor disputes. Ensure that all of your employees, including part-time employees, sign a written (or electronic) and up-to-date contract. And much like you’re used to in your home country, consider adding a non-compete clause to the contract or sign a confidentiality agreement when hiring employees exposed to sensitive information.
2) Localize every single labor contract.
Be mindful that labor laws vary between provinces, therefore contracts must adhere to local regulations. This rule of thumb applies to Hong Kong and Macao (Special Administrative Regions) as well.
3) Mark an end date on labor agreements.
Labor contracts with an end date allow you to terminate the employment more easily, simply by not renewing the contract. However, severance payment is still required. The termination of employment is particularly complicated, so it’s highly recommended to consult with a local and professional HR expert.
4) Update workers’ employment status on time.
Remember to either terminate or renew a labor contract before it expires in order to avoid the imposition of sanctions and prevent a situation in which employees exploit the opportunity.
5) Create an Employee Handbook for your company and have your employees sign it.
Craft an Employee Handbook in China (Article of Association) in order to define specific guidelines pertaining to your workplace and complement the array of duties and rights of the employees and the employer. Ensure to update it from time to time in accordance with national and local regulations changes, and have all your employees sign it.
6) Follow labor law amendments and adjust your company’s policies accordingly.
It could save you money! For example, in 2019’s Q2, some labor laws were updated for the benefit of employers, including a 4% reduction in pension provisions.
7) Conduct background checks.
When recruiting in China, “bother” to spend some time on background checks. Once we conducted a background check that exposed that the candidate was not only working for the competing company, but that he was also the company’s owner, and was trying to get a job to extract information.
8) Document HR-related issues.
Keep proper records of each employee’s HR-related issues, from sick leave, leave days, and time of arrival and departure to and from work, through achievements and complaints to clients’ feedback. These filings will be necessary in the event of labor disputes.
9) Conduct internal operational audits periodically.
Operational audits in China will help you ensure e that all your employment procedures and documents are properly formulated and comply with both national and local regulations. An operational audit in China does involve investment but in many cases, it ends up saving companies unnecessary complications and a lot of money that would emerge in the future.
10) Do not make decisions alone!
Especially those regarding termination of employment. Consult a professional HR team, who will assist, and back you up.
Are you looking for Recruitment and HR services in China?
PTL Group provides comprehensive HR management services throughout the entire employee lifecycle process. Our team is working throughout China and would be happy to assist anytime, anywhere.