Employment Laws in China

Employment Laws in China

Alongside the social benefits that employees are entitled to in China, there is a legal framework that allegedly protects them against employer exploitation.

Foreign employers must comply with these regulations, and should not attempt employee recruitment in China without knowing them. They can also use these regulations to attract skilled employees via competitive wages and improved working conditions. By all means, there is a significant advantage in working with a reliable local employer of record, who can ensure compliance with all the laws’ requirements.

Compulsory Social Benefits

In addition to the monthly salary paid by employers, the latter are also required to provide employees with various social insurances. Similarly to Western countries, the tax paid on insurance is divided between the employer and the employee.

The following is a breakdown of the social insurances’ tax in Shanghai (December 2022):

Learn more about social benefits contributions in the comprehensive financial guide for foreign companies in China.

Probation period

The law defines that an employer can only impose one probation period on an employee. Its duration changes according to the contractual employment term. The employee’s wage during the probation period shall not be lower than the minimum wage for the same position by the same employer, nor may it be lower than the minimum wage of the locality where the employer is located. In any case, the wage shall not be lower than 80% of the wage stipulated in the labor contract. If an employer dissolves a labor contract during the probation period, they still need to conduct a proper termination process.

Anti-Discrimination Laws

Discrimination (recruitment, promotion, working conditions, wages, etc.) is prohibited on the basis of:

• Age
• Gender
• Health condition (e.g. disability)
• Marital status
• Household registration (Hukou)
• Sexual orientation
• Ethnic origin

Sexual Harassment Prevention

Following the global #MeToo movement, the law requires employers to take active measures against sexual harassment in workplaces.

The Freedom of Association

Employees in workplaces with more than 25 people may organize only under ACFTU – the single legal form of association, which is government-affiliated.

Once a trade union is established, the employer is obliged to support it and allocate 2% of staff salaries to its activities.

The Right to Strike

There is no explicit prohibition on striking, although the right is absent from the labor laws. The sanctions for a strike or other collective protests are:

• Public shaming
• “Violating a public order” charge
• Termination of employment several months after the strike

Minimum Wage

The monthly and hourly minimum wages in China are adjusted every year, based on living standards and cost of living in different provinces.

To shrink economic gaps, the government has set a few mandatory guidelines. For example: the minimum wage must embody at least 40% of the local average wage.

Overtime Compensation

Employers can demand overtime work, in accordance with specific needs and the employee’s physical condition. Maximum work extensions: 3 hours/day and 36 hours/month.

• Daily: at least 150% of the employee’s average hourly wage or swap of leaves
• Weekend: at least 200% of the employee’s average hourly wage or swap of leaves
• During national holidays: at least 300% of the employee’s average hourly wage

Leave

The average individual annual leave is 5-15 days, depending on accumulated work years. Other types of leave include:

• Maternity leave
• Marriage leave
• Funeral leave
• Paternity leave
• Childcare leave (1-3 years old)

Last updated: January 2023

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