To run your company and manage your employees in China, it can be a challenge to be compliant with the Chinese labor law. You may encounter many troubles if you’re not familiar with the labor law and write an inappropriate employment contract in the first place. Here are 3 essential facts to know about labor law in China to facilitate your business.
Your employment contract should cover all the mandatory provisions, 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
The Chinese labor law has specific regulations on these items and you should be well aware of it. Clear and concise langue is needed to avoid vague terms.
Be well aware of working overtime regulations.
The employee’s regulation of working overtime in China is complicated, but the labor law specifies the overtime pay in different categories:
- Works that exceeds 8 hour per normal work day, 1.5 times of hourly wage.
- Hours worked on the weekend, 2 times of hourly wage.
- Hours worked on a Chinese statutory holiday, 3 times of hourly wage.
The Chinese labor law protects all the employee of a company and every employee will be eligible for overtime pay.
Understand employee termination and severance pay.
It can be more difficult for the employer to terminate an employment contract in China than in other country, as China’s labor law prioritizes employee job security. There are three circumstances of terminating an employee:
- Terminating during probation period
- Mutual agreement to termination 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.