Just like many other countries, China protects its labor laws and labor rights. In addition to the general national labor laws, which are adjusted by the Chinese government on a periodic basis, China also enforces long lists of provincial laws and supplementary regulations that can be rather confusing to outsiders. As a result, companies can make honest mistakes and pay dearly. When it comes to foreign companies that hire local manpower, the Chinese government is even more strict. There has been a recent increase in the number of foreign companies that have found themselves complicit in legal issues. To avoid this, it is important to pay very special attention to employment regulations.
PTL Group’s vast expertise includes employment services in China. We want to share our important knowledge with you. The following article discusses employment laws in China, from an employer perspective.
Read more about PTL Group’s HR management and recruitment services 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.
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 (June 2020):
Discrimination (recruitment, promotion, working conditions, wages, etc.) is prohibited on the basis of:
- 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
The monthly and hourly minimum wages are adjusted every 2 years, 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.
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
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
Regulations in China change relatively frequently. For the most up-to-date regulations, please check in with us.