What is the Chinese Employee Handbook? How does it differ from the Labor Contract and why you should definitely get one for your Chinese company? Check out the following article.
PTL Group’s vast expertise includes employment services in China. Read more about our HR services in China.
The Employee Handbook in China
For many B2B companies who are starting a business in China, recruitment in China takes a high priority among the many tasks to tackle. Against the backdrop of the difficulty in traveling to China and applying for work visas, as well as the growing availability of local talents, a larger number of international companies rely on hiring complete local teams. Employer of Record (EOR), who provides employment services in China, is a common employment method among international companies hiring in China. Better yet, it can be a good way to start developing your local sales and operations in the new market. The Chinese Labor Law requires you to sign your China employees to at least two main documents – the Labor Contract and the Employee Handbook.
The Labor Contract
A well-formulated Chinese Labor Contract is the first step you should complete when you start employing in China. The contract should be aligned with the Labor & Employment Laws, and therefore, you might be required to update it from time to time, in accordance with newly published regulations.
But other than that, international companies that engage with employment in China should keep in mind that the labor contract is only the first step. Sometimes the labor contract alone is not enough to cover all the key provisions necessary for a workplace. Therefore, the second step – and here is the missing piece of the puzzle – is to draft an internal document that encapsulates all the workplace rules and regulations, known as the Employee Handbook.
The Employee Handbook
The Employee Handbook is a must-have China employment document. It serves as a workplace’s guidelines and expectations manifesto, and it specifies supplemental rules and regulations pertaining to the company’s operation. The Handbook describes in detail the company’s code of conduct; Appropriate office attire; Workplace security rules; Attendance management; Promotion and bonus plans; Internal processes, and more. The content of the Employee Handbook varies between companies, according to each company’s needs and set of values.
The Employee Handbook should help prevent cases of gray areas and vagueness, by adding another layer of protection to the company in the event of a work dispute. It becomes doubly true when the work dispute stems from a “violation” that the labor contract doesn’t address. It is important to highlight that the Employee Handbook serves as a legally valid document that courts might refer to, in addition to the labor contract.
The expectation wasn’t specified, the employee won the dispute
At the end of the day, having both the labor contract and the Employee Handbook is not enough. International companies doing business in China have to ensure that the two documents work together. Putting it differently, you have to make sure the employee handbook complements the labor contract, rather than undermining it.
In one case, an employee of one of our clients submitted a doctors’ notice for sick days and took the time to go on a vacation with his family. After learning about it, the manager was upset and decided to terminate the employee. The terminated employee decided to sue the employer. At the court, he claimed that neither the labor contract nor the Employee Handbook prohibited this action. In other words, the company didn’t have any regulation in place stating this kind of behavior was wrong. The employee ended up winning the case, as the company’s Employee Handbook did not specify that this behavior wasn’t accepted.
The lesson to be learned here is that an effective Employee Handbook should be clear and specific. For instance, remove any doubt by clarifying whether you mean “two days” or “two working days”.
Gain wisdom from the experience of others
At PTL Group, we have revised and re-written our Employee Handbook several times throughout our 22 years of operation in China. Most of the added regulations were based on real-life situations, and our, or our clients’ experiences with employees. Bear in mind that regulations are updated regularly, and hence, your Handbook should too. If you face an arbitration dispute in court, remember that the Labor Law has the upper hand. The Labor contract is second in line, and the Employee Handbook follows right after. Make sure that your employment documents effectively support and protect your company in China. If there is doubt, learn more about our HR services in China and get in touch for further business support in China.
Last updated: January 2023
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