Anaya Nolan
China's labour laws are subject to frequent changes, and foreign companies must ensure they understand the provisions of the Labour Code to avoid labour disputes. Labour laws in China are not codified in a singular piece of legislation, but there are two primary sources: the Labour Contract Law (2008) and the Labour Law (1995). These laws define the rights and obligations of both employers and employees, and they are supplemented by local regulations, which can vary between provinces. For example, minimum wage is determined on a local level, and maternity leave varies by region. Foreign nationals wishing to work in China must obtain a Z visa, a work permit, and a residence permit. Labour laws in China cover a range of areas, including working hours, overtime, sick leave, probationary periods, contracts, and termination.
| Characteristics | Values |
|---|---|
| Labour law sources | The Chinese Constitution, the Labour Law (1995), the Employment Contract Law, administrative regulations, judicial interpretations, local regulations, and judicial documents. |
| Labour Contract Law | There are three types of employment contracts: fixed-term, indefinite, and temporary. |
| Fixed-term contracts | Create an employer-employee relationship for a fixed length of time, can be used for part-time or full-time work, and are the most common type of contract. |
| Probationary periods | Allowed for full-time contracts of at least three months, with the salary during this period being at least 80% of the agreed wages or the minimum wage for the area. |
| Working hours | Employees should not work more than 8 hours per day or 40-44 hours per week, with overtime limited to 1-3 hours per day or 36 hours per month, compensated at 150-300% of the standard hourly rate. |
| Termination | Must be based on legal grounds, with 30 days' notice, and severance pay practices unique to China, including a cap on highly paid employees' severances. |
| Minimum wage | Determined by local governments based on the area's economic development and cost of living. |
| Social security | Employers must contribute to social insurance schemes covering pensions, medical and maternity care, work-related injuries, unemployment, and maternity benefits. |
| Leave | Employees are entitled to paid annual leave, funeral leave, family visit leave, marriage leave, and sick leave. Maternity leave is 98 days, with local laws sometimes requiring more. |
| Foreign companies | Must follow the Labor Code and provide contracts in English and Standard Chinese. |
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What You'll Learn
Probation periods and contract types
In China, labour law is derived from a variety of sources, including the central government, local governments, and the courts. The Labour Contract Law (2008) and the Labour Law (1995) are two primary sources of employment law instituted by the central government. The Labour Law defines the rights and obligations of both employers and employees, while the Labour Contract Law ensures the implementation of the employment rules mentioned in the Labour Law.
Probation periods
Probationary periods are allowed in China, but they are subject to certain conditions. For example, if an employee works full-time and the contract lasts more than three months, the agreement may include a probationary period. The salary during the probation period must not be less than 80% of the agreed wages, the lowest salary standard for the same position in the company, or the minimum wage of the area where the company is registered. The duration of the contract determines the length of the probation period. If the contract is less than a year, the maximum probation period is one month. If the contract lasts one to three years, the maximum probation period is two months. For contracts of three years or more, or open-term contracts, the maximum probation period is six months. An employee can only have one probation period; if they are subjected to additional probation periods, the employer must pay compensation.
Contract types
There are three types of employment contracts in China: fixed-term labour contracts, indefinite contracts, and temporary contracts. Fixed-term contracts are the standard labour contracts in China and set an employer-employee relationship for a specific length of time, whether for full-time or part-time work. Part-time employees working under a fixed-term contract cannot work more than four hours per day or 24 hours per week, and they are not entitled to severance compensation. Indefinite contracts have no predetermined end date, and employers may be legally required to use them after an employee has completed ten years of continuous service or two consecutive fixed-term contracts. Temporary contracts are used for roles lasting less than six months, support roles, or substitutions during another employee's absence.
China's labour laws require written employment contracts for all full-time employees. Employers have a 30-day grace period to provide the contract to the employee; failure to do so will result in a double wage penalty for each subsequent month. If a year passes without a contract, it is automatically considered an open-ended contract. Foreign companies hiring Chinese employees should supply the labour contract in English and Standard Chinese, with consistent meanings across both versions.
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Working hours and overtime
It is important to note that labour laws in China can vary based on region and are subject to frequent changes. Local governments hold significant influence in labour law enforcement and are responsible for setting minimum wage rates, which can differ between provinces. Additionally, labour bureaus and inspectorates may face challenges in enforcing labour laws due to limited resources and a focus on economic growth.
To ensure compliance, employers must understand the specific labour laws applicable to their region. The central government's Labour Contract Law and Labour Law form the primary sources of employment law, but local regulations and decrees also play a role.
In summary, China's working hours and overtime regulations aim to protect employees' rights and ensure fair compensation for extended work hours. However, the dynamic nature of labour laws in China requires employers to stay informed about the latest changes and variations across regions.
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Termination and severance pay
In China, termination must be based on grounds permitted by law. Employers must provide 30 days' notice of termination, as outlined in Article 40 of the Labour Contract Law. This law also stipulates that termination can occur in the event of bankruptcy, license revocation, or permanent dissolution of the company. If an employer fails to provide a written contract within 30 days of employment, they are subject to a double wage penalty for each month that passes without a contract. If a year passes without a contract, it is automatically deemed an open-ended contract.
Employees can also terminate their employment by providing a written 30-day notice. Employers have the right to unilaterally terminate an employee's contract immediately due to misconduct. However, employees cannot be terminated at will, meaning they cannot be fired without fault. If an employee is terminated without fault, such as due to illness or injury, the employer must provide 30 days' written notice.
Chinese severance pay practices are unique in that a highly paid employee's severance is capped, which can result in a senior manager's severance being lower than that of a junior employee. Additionally, employees in China are not entitled to organise labour strikes under Chinese law, and labour law is enforced by local governments, arbitration committees, and civil courts.
It is important to note that labour laws in China can vary depending on the region and are subject to frequent changes. Local laws may also require longer maternity leave, and employers are responsible for contributing to social insurance schemes covering pensions, medical care, work-related injuries, unemployment, and maternity benefits.
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Maternity leave and benefits
China's labour law is subject to frequent changes. It is important for foreign companies to understand the provisions of the Labor Code, which outlines the rights and obligations of employers and employees.
Maternity leave in China is a period of paid time off work granted to female employees who are pregnant or have recently given birth. The duration of this leave varies, but it is typically 98 days, with additional days added in most cities and provinces. Foreign workers, however, only receive the standard 98 days and do not benefit from the local extensions. The leave period starts 15 days before the baby is due, and longer leave is granted in cases of difficult births or multiple births. In provinces like Hunan and Hainan, women are entitled to 188 days of paid maternity leave.
Maternity leave in China also includes other benefits such as prenatal check-ups, breastfeeding breaks, and protection against discrimination in the workplace. To be eligible for maternity leave, female employees must meet certain requirements and have worked for their employer for a minimum period, typically at least one year. During maternity leave, female employees are entitled to receive a certain amount of pay, which is based on their average salary in the preceding 12 months. The specific amount of pay depends on the employer's location and industry, typically ranging from 80-100% of the employee's average salary.
Some employers may offer more generous maternity leave benefits, such as longer periods of paid leave or on-site childcare facilities, to attract and retain talented female employees. These additional benefits can also help reduce the stress and financial burden on new mothers, allowing them to focus on their health and their children's needs.
While China has made efforts to improve maternity leave policies, challenges remain for working women. There have been reports of pregnancy-related discrimination, demotions, and even firings during maternity leave or shortly after returning to work. These issues highlight the importance of understanding and enforcing maternity leave rights in China.
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Minimum wage and salary
Minimum wage standards in China are determined by each local government and are subject to change annually or biennially. These standards are influenced by factors such as the minimum living costs of employees and their dependents, the urban residents' consumption price index, social insurance premiums, housing funds, the average salary of employees, and the local economic development and employment status. The minimum wage standards typically consist of hourly and monthly rates for part-time and full-time employees, respectively.
The monthly minimum wage standard applies to full-time employees, while the hourly minimum wage standard is for non-full-time employees, including part-time and temporary workers. As of February 21, 2023, Shanghai had the highest monthly minimum wage on mainland China at 2,590 RMB per month, while Beijing boasted the highest hourly wage at 25.3 RMB per hour. In contrast, Liaoning had the lowest monthly minimum wage at 1,420 RMB per month, and Heilongjiang had the lowest hourly rate at 13.0 RMB.
It's important to note that the minimum wage is just the basic wage, and it doesn't include overtime pay, night shift allowances, high-temperature allowances, special working environment allowances, or meal subsidies. As the minimum wage increases, so do the minimum standards for other employee benefits. For instance, the minimum contribution base for the housing fund in many cities is tied to the local minimum wage standards.
According to China's Labor Contract Law, employees should not work more than eight hours a day or 40 hours per week on average. However, employers can extend the working hours by up to one hour per day after discussing it with trade unions. Additionally, employees are entitled to overtime pay for any extra hours worked. On normal workdays, the minimum overtime pay is 150% of the standard hourly rate, increasing to 200% on rest days and 300% for statutory holidays.
Probationary periods are also worth noting. During this period, employees' salaries cannot be less than 80% of the agreed wages or the lowest salary for the same position in the company, and it must not fall below the minimum wage of the area.
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Frequently asked questions
In China, employees should work a typical five-day work week, and shouldn’t work for more than 8 hours per day or 40 to 44 hours per week. Overtime is limited to 36 hours per month unless there’s an emergency. On normal workdays, the minimum overtime pay is 150% of the standard hourly rate.
In China, employment must involve a written contract to be legal. An employer has a 30-day grace period to provide the contract to an employee. There are three types of employment contracts in China: fixed-term labour contracts, indefinite contracts, and temporary contracts.
Termination must be based on the grounds permitted by law. Otherwise, the labour relationship may be reinstated, and employers may be forced to re-hire terminated employees or pay double severance. Employees must give a written 30-day notice if they wish to terminate their contract.
