Durch Gregory Sy, Grandall zugelassene Gruppe

I. Beschäftigung-Gesetz-Gesetzgebung

1. Welche Gesetzgebung regelt Beschäftigunggesetz in China?

Beschäftigunggesetz in China wird durch einen verhältnismäßig kompletten Satz Gesetze geregelt, vor kurzem ergänzt spätem 2007, um Arbeiterzu verstärken' Rechte.

Hauptgesetze schließen ein:
- Arbeitsrecht der Volksrepublik China (1994) („Arbeitsrecht“)
- Arbeitsvertrag-Gesetz der Volksrepublik China (2007) („Arbeitsvertrag-Gesetz“)
- Arbeitsschlichtung und Debatte-Auflösung Gesetz der Volksrepublik China (2007) („Arbeitsschlichtung Gesetz“) (wirkungsvolles 1. Mai 2008)
- Gewerkschaft-Gesetz der Volksrepublik China (1994)

Diese Gesetze und dann ergänzt durch eine Myriade der nationalen und lokalen Gesetze, der Regelungen, der Masse und des Rundschreibens.

2. Gibt es unterschiedliche Gesetze, die fremd-investierte Arbeitgeber und inländische chinesische Arbeitgeber regeln?

Die Regelungen auf Arbeitsmanagement in der Auslandsanlage Enterprises (1994) regelt Beschäftigung durch Sino-fremde Billigkeit und kooperative Joint Ventures, zusammen mit Sino-fremden Aktiengesellschaften. Die Regelungen spiegeln sehr viel die des Arbeitsrechts wider. Zusätzlich da jede mögliche Unbeständigkeit mit dem Arbeitsrecht entsprechend dem hochgradigen Gesetz behoben wird, wird wenig Bezug auf diese Regelungen genommen.

II. TARIFVERTRÄGE

1. Was sind die unterschiedlichen Arten der Beschäftigungkontakte?

Beschäftigung in China, wie den meisten anderen Jurisdiktionen, wird in ganztägig und teilzeitlich geteilt. According to the Labour Contract Law, part-time employment is defined as a labour relationship in which the employee works, on average, no more than 4 hours per day and no more than the aggregate of 24 hours per week.

Employment relationships which exceed the hours in this definition are termed full-time employment, which is further divided into 3 types:

1) fixed term: expiry date agreed upon at outset;
2) open-ended / non-fixed term: no expiry date stipulated; or
3) project-based / completion of defined task: contract to expire on completion of pre-defined project or task.

2. What are the requirements of a labour contract?

According to the Labour Law and the Labour Contract Law, other than part-time employment, all labour contracts must be in writing and contain the following terms:

- name, address and legal representative of the employer;
- name, address and identification number of the employee;
- term of labour contract;
- job description and work site;
- working hours, rest and vacation;
- labour remuneration;
- social insurance;
- labour conditions, working conditions and occupational hazard prevention; and
- other matters stipulated by laws and regulations.

If the labour contract contains a probationary period only (sometimes called “a probationary period contract”), then the probation term set out therein is deemed to be the term of the labour contract and the probationary period is invalidated.

3. What are the penalties associated with not signing a written employment agreement?

A labour relationship commences on the date on which the employee commences work for the employer, and by law, it is required that a written labour contract be concluded within one month of this time.

If a labour contract is not concluded within the one month of commencement, the employer will be liable to the employee for double labour remuneration, of up to 1 year. After 1 year with no written labour contract, fixed-term labour contracts are deemed to be open-ended.

4. What is the maximum probationary period allowable by law?

Maximum probation periods allowed by law are as follows:

- less than 3 months: no probation period;
- 3 months to 1 year: 1 month;
- 1 year to 3 years: 2 months; and
- 3 years or more or open-ended: 6 months.

III. WAGES, BENEFITS AND SOCIAL SECURITY

1. What are the components of wages or salaries?

According to the Provisional Regulations for the Payment of Wages (1994), wages or salary are composed of:

- wages based on time;
- wages based on piece-work;
- bonuses;
- subsidies;
- allowances;
- overtime payments; and
- wages paid under special circumstances.

According to the Minimum Wages Provisions (2004) and based on the minimum wage standards promulgated locally, employers may not pay their employees less than the current minimum wage standard.

2. What are the standard working hours and when am I required to pay overtime?

The standard working hours in China are 8 hours per day, 5 days per week, for a maximum working period of 40 hours, with 2 rest days (typically Saturday and Sunday). Any additional requirements by the employer must be compensated according to the standard set out below:

- Working days: 150% standard wages;
- Rest days: 200% standard wages; and
- Holidays: 300% standard wages.

3. What are the national public holidays?

National public holidays (as of 2008) are set out below:

- New Year’s Day (January 1): 1 day;
- Spring Festival (lunar new year, typically January or February): 3 days;
- Women’s Day (March 8): half day for women;
- Qingming Festival (April 5): 1 day;
- May Day (May 1): 1 day;
- Dragon Boat Festival (5th day of 5th lunar month): 1 day;
- Mid-autumn Festival (15th day of the 8th lunar month): 1 day; and
- National Day (October 1 – 3): 3 days.

4. What are the social security payments required by law?

Employers are obligated to provide the following benefits and social security payments to employees:

- Basic old age insurance;
- Unemployment insurance;
- Medical insurance;
- Maternity insurance; and
- Work-related injury insurance;

The employee and employer jointly contribute to the first 3 types of insurances, while the employer alone contributes to the latter 2, with rates varying based on location of employment.

IV. NON-COMPETE AND CONFIDENTIALITY

1. Can all employees be subjected to non-compete obligations?

Not all employees can nor should be bound by non-competition obligations. The Labour Contract Law limits employees who may be bound by non-compete obligations to:

- senior management;
- senior technical personnel; and
- those employees who have access to business secrets of the employer.

It is required that the employee and employer conclude a written agreement, either separately or in the labour contract, with regards to term, scope, territory, compensation during the non-compete period and liquidated damages for employee breach.

The maximum term is 2 years.

2. What are the typical compensation requirements for non-competes?

Although it is required that compensation be paid on a monthly basis to the employee during the non-compete period, the law does not state a standard amount. In practice, it is common to pay at least 50% of the employee’s wages. 

3. Are liquidated damages permissible for breach of non-compete obligations?

Yes.

   
This is the first part of the Grandall Legal Group Guide to Employment Law in China, next week we will publish the second part.

Gregory M. Sy is a partner / foreign counsel with Grandall Legal Group. His practice includes general business advisory for SME’s in China, particularly in the areas of international corporate structuring and transactions. Representative clients include the Consulate of the United States of America in China (Shenyang), Embassy of Brazil, various publicly listed companies (NYSE, LSE, DAX, and BSE), along with numerous other SME’s operating in a wide range of industries. Mr. Sy obtained an LL.B. from the University of Victoria, and is admitted to the New York bar. Gregory publishes extensively on a variety of China legal issues for international and local publications, and has recently acted as chief editor for Martindale’s China Law Digest. You can contact Gregory at gregsy@grandall.com.cn or learn more about the firm at www.grandall-profile.com.