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China Employer Year-end Review: Check These Nine Things Off Your List

Saturday, November 5, 2016 5:51
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China employer auditWith the end of the year fast approaching, many of our clients are starting to contact us to help them conduct their various year end reviews/audits, one of the most important of which is the employer-employee audit. The following are some of the basic things you should have on your employer-employee review list:

  1. Employment contracts. Do you have a written contract with every single one of your employees, including part-time employees? Are all of your employment contracts current?
  2. Employer rules and regulations (aka employee handbook). Do you have a set of rules and regulations? More importantly, does what you have work for China? Has it been made available to all your employees? Have your employees signed a receipt proving they actually received it?
  3. Dispatched employees. Are you in compliance with the labor dispatch laws? Do you have more dispatched workers than the statutory maximum? Are you using dispatched workers for positions that should be filled by a regular employee? Are you using dispatched workers when you could directly hire them as your own employees?
  4. Female employees, especially those who are pregnant or nursing. Are you providing the labor protections and conditions required under relevant laws? Are you providing maternity leave in accordance with the law?
  5. Working time, rest and vacation days. Have you made arrangements so your employees can take their vacation days? Are you making sure your employees who are designated to work under the standard working hours system do not exceed their standard working time? Are you making sure that  whenever it is necessary to incur overtime, the employees follow your internal procedure and you pay the employees for their overtime? Are you current on the alternate working hours system renewal? Are you giving your employees on these systems enough rest and due consideration to their health
  6. Employee compensation. Are you meeting the minimum wage requirements? Note that several provinces and cities, including Shanghai, Jiangsu, Chongqing recently raised their minimum wage standards. Are you paying your employees on time? When you withhold payment from an employee, do you explain the reasons to the employee and document the situation so you will be able to show your action was reasonable and lawful?
  7. Social insurance contributions. Are you making all mandatory social insurance contributions? In places where employers are required to make contributions for expats, are you paying into the expats’ social insurance accounts or have you otherwise made arrangements in the employee’s contract (provided it’s permissible in your locale)? The good news is that China is going to modify the base for social insurance contributions, which will ease the burden on employers. The bad news is that many of the companies we review are in compliance with applicable rules on this.
  8. Employee non-competes. Do you have signed employee non-competes from all of your employees who might harm you by competing with you? What about non-solicitation agreements?
  9. Employee terminations. Are you handling all of your employee terminations according to law? Do you document your employee terminations? Do you timely transfer your terminated employees’ files and social insurance accounts?

Bottom line: If you are not in compliance with the Chinese labor laws, get in compliance as soon as you can. China is only getting tougher on employer violations.

We will be discussing the practical aspects of Chinese law and how it impacts business there. We will be telling you what works and what does not and what you as a businessperson can do to use the law to your advantage. Our aim is to assist businesses already in China or planning to go into China, not to break new ground in legal theory or policy.


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