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 insurance. 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 insurance tax in Shanghai (July 2023):

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 based on:

• 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.

Working hours

The legal standard work week in China is 44 hours, with a maximum of eight hours per day. Typically, this entails five full work days, one half-day, and one rest day. However, working schedules vary significantly depending on the industry and specific business needs. Labor-intensive, highly competitive, and customer-facing roles may require longer hours.

An infamous example is the “996” schedule, which entails working from 9 AM to 9 PM, six days a week, totaling 72 hours. This notorious schedule is common in China’s competitive tech sector. Companies that implement the 996 schedules often provide incentives such as meal allowances, taxi reimbursements, and on-site gyms to compensate for the extended hours.

Nevertheless, according to labor contract law, the employing unit in China must ensure that the employee has at least one day off every week.

Overtime Compensation

Employers can demand overtime work, following 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)

At PTL Group, we specialize in HR services in China. Get in touch today and let us support your China operations.

Last updated: Mar 2024