To operate a company and manage employees in China, complying with Chinese labor laws can be a challenge. If you are not familiar with the labor law and write an inappropriate employment contract first, you may encounter a lot of trouble. Here are some basic facts about Chinese labor law to promote your business.
Your employment contract should cover all mandatory requirements, including:
- Basic information
- Working hours and working site
- Employee termination and severance pay
- Holidays and leave
- Probationary period
- Social insurance
- Other items as required by law
China’s labor law has specific provisions on these, and everyone should be clear. Clear and concise language is needed to avoid ambiguous terminology.
Fully understand the overtime regulations.
China’s regulations on employees working overtime are complicated, but the labor law classifies overtime wages:
- For work exceeding 8 hours per normal working day, 1.5 times the hourly wage.
- Working hours on weekends, twice the hourly wage.
- Working hours on statutory holidays, 3 times the hourly salary.
China’s labor law protects all employees of the company, and every employee is eligible for overtime pay.
Understand employee dismissal and severance pay.
It may be more difficult for employers to terminate their employment contracts in China than in other countries, because China’s labor laws give priority to employees’ job security. Three situations of dismissal:
- Termination of trial period
- Both parties agree to terminate the employment contract
- Termination due to employee’s prohibited behavior
For the third circumstance, the employer can dismiss a Chinese worker without offering severance or any other compensation except the employee’s wage owed.