China: A Brief Introduction to Chinese Employment Law

Last Updated: 8 August 2006
Article by Jenny Yan

The current employment law in China is mainly regulated by the PRC Employment Law (PEL) which took effect on 1st January 1995. Local governments make regulations based on their different area's local policies. However, all regulations are guided by the PEL and will be regarded as void if they are conflict with PEL. The PEL has thirteen chapters which cover almost all aspects of employment relationships, such as working hours, holidays, salary, health and safety, training, social insurance and welfare, disputes and discrimination on grounds of race, sex, disability, age.

What follows is a brief summary of the main provisions of the PEL. For a detailed summary, please see http://www.dffy.com/faguixiazai/xf/200311/20031111125547.htm.

Forms of employment contract

Employer and employee are required by the PEL to enter into a written employment contract but an oral employment contract is also enforceable when an employment relationship has actually been formed by conduct.

Term

Employment contracts can apply to a fixed period, an open period, or just to a specific project. However, if an employee has worked for the same employer for more than ten years and both parties want to continue the relationship, the employee has the right to determine whether the contract should be for a fixed term or not.

Normally, an employment contract has a trial period of no more than six months. During that period, the employer may terminate the contract if the employee is found to be unsuitable for the work he is doing.

Confidential information

The law provides that an employer may require an employee to keep business information confidential as a term of their contract. Damages are available to the employer if the employee breaks this or any other term of the contract.

Termination

There are different rules for the parties to terminate the contract. An employer, can terminate on 30 days notice, if

  • the employee is ill or has a non-work related injury and is not able to carry out any of the work which he has been contracted to perform, provided all treatment to remedy the illness or injury has been completed. There is no right to terminate the contract while treatment is in progress;
  • the employee is not suitable for the work he is doing and after training or being given alternative work, he is still not suitable for that work;
  • the contract becomes unenforceable because a 'major situation' has changed on which the employment contract mainly relies. Although the PEL does not define the term 'major situation', the courts have held that the term may include changes in law or policy.

Employees must normally give their employer 30 days notice to terminate the contract. However, they could leave anytime without 30 days notice, if

  • they are in the trial period;
  • the employer forces them to work by violence, threats, or by unlawfully restricting their freedom;
  • the employer does not pay or provide work conditions according to the contract.

Redundancy

There is no equivalent regulation to TUPE (The Transfer of Undertakings (Protection of Employment) Regulations 1981 and 2006) in China. However, article 27 of PEL provides that an employer may dismiss an employee if the company is about to wind up, go into administration (normally within two years), or serious difficulty has occurred with the business which has drastically reduced its turnover. The company must give the union or its entire workforce 30 days notice for discussions to take place and must report the situation to the relevant department of the Ministry of Employment. Redundancy payments are calculated at the rate of one month's pay for each completed year's service.

Working hours and holiday

All employees work eight hours per day and generally no more than 44 hours per week. Employers have to give employees at least one day off per week.

Overtime must be negotiated with the relevant union, but normally not more than one hour per day is allowed. If there is a specific situation which requires overtime, the employer must ensure the employee is fit to do the work. The over-riding limit on overtime is no more than three hours per day, to a maximum of 36 hours per month. Overtime rates are time-and-a-half for normal workdays, double-time for weekends and triple time for public holidays.

Employees have the right to paid leave. The duration of such leave will depend on the type of work, the length of service and local regulations. For example, in Guang Dong province, employees with between one and five years’ service are entitled to a minimum of 5 days holiday and a maximum of 14 days for over 20 years’ service.

Special protection for women and employees between 16 to 18 years old

Hiring employees who are under 16 years old is not permitted.

Women and employees aged between 16 to 18 years cannot be employed to undertake dangerous or physically demanding work. This type of work is regulated by the National Stress Level Table which can be found on the links below: http://www.china.org.cn/chinese/funv/230997.htm ; and http://www.china.org.cn/chinese/zhuanti/shbz/

PEL provides a right to 90 days maternity leave for mothers after giving birth. Local regulations may also allow leave for medical appointments and up to 10 weeks leave prior to giving birth.

Disciplinary action

Where there is a written contract of employment, disciplinary clauses must be included in the contract. These normally provide for an oral warning for minor breaches of discipline, followed by a written warning and finally, dismissal. For serious breaches of discipline such as theft from the employer, instant dismissal is available. Where there is no written contract, the employee must follow the company disciplinary code. Employees may seek arbitration in respect of unfair dismissal claims.

Disputes

There are three ways to solve disputes between employers and employees: mediation, arbitration and litigation. Mediation is not compulsory, but if the dispute is not settled by mediation, arbitration becomes compulsory for the parties before they can actually go to the courts. The parties are required to pass case papers to the arbitration panel within 60 days of the dispute arising. The courts will refuse to hear the case unless this procedure is followed, except where a force majeure has occurred, or there is a reasonable reason which has caused the application to be delayed.

Normally, the arbitration panel makes a decision within 60 days. The parties can either accept the arbitration decision, in which case it becomes enforceable, or they may then ask to be dealt with by the courts, but must apply to the courts within 15 days of receipt of the arbitration panel’s decision.

Future changes

Chinese employment contract law is currently a hot issue, as there are proposals to change the current law. Several procedural steps have been completed since the beginning of last year, after the topic was listed as one of the new laws planned by the National People's Congress Committee in 2005. These procedures include drawing the draft law, its consideration by the National Ministerial Committee and the submission of an application for permission from the National People's Congress Committee in March 2006 for assent. The Committee then opened the issue for nationwide discussion, which is ongoing.

The key issues to be tackled in this new employment contract law are:

  • where the burden of proof will lie when there is no written contract;
  • the rules for calculation of compensation;
  • central and local governments' supervisory role in making sure that the terms of contracts are fair and reasonable in order to protect all the parties legal interests.

This is an area where the law is developing and a better work life balance is being established. These developments will enable China to become a more mature and healthy employment market, as the economy and wealth of the country grows.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions