Five Red Flags for China Employer Rules and Regulations

If you have employees in China, you need written Rules and Regulations to govern the terms of your employment relationships. Since China is not an employment at will jurisdiction, well-crafted Rules and Regulations are critical to giving you a basis for disciplining or terminating an employee. And unenforceable or unworkable Rules and Regulations expose you to regulatory, liability and lawsuit risks.

Though we audit our client’s employment documents year-round, the beginning of each year always brings on an onslaught of such work, as doing so seems to be (and should be) part of every company’s New Year’s resolutions. The following are red flags, that tell you (loud and clear) that you need to revise your Rules and Regulations to avoid future trouble.

1. Your Rules and Regulations are in English only. This is by far the one our China employment lawyers see most often and this is a dead tell that whoever drafted your Rules and Regulations was not familiar with Chinese employment laws. Nine out of ten times, this also means that your Rules and Regulations came from overseas and have no real relationship with China’s employment laws. If you don’t have your Rules and Regulations in Chinese, you essentially don’t have Rules and Regulations. Oh, and just translating your English language documents is not going to cut it. You need bilingual China-centric policies written not just for China, but for your industry and your locality.

2. Your Rules and Regulations are in Chinese only. From time to time, our China employment lawyers are called (usually urgently) to assist a foreign employer whose Rules and Regulations are in Chinese only. The problem here is that none of the key HR personnel understand a word of what the Rules and Regulations say and yet they are expected to make important personnel decisions based on them. The other problem is that these China-only Rules and Regulations are nearly always inadequate. In an ideal world, your Rules and Regulations are clearly written in both Chinese and in English.

3. Your documents haven’t been updated for years. China laws change at light speed and China’s employment laws change even faster than that. The fact that employment laws are incredibly local only increases the odds that your Rules and Regulations are no longer good. You could be exposed to huge risks if you make an employment change (discipline, wage reduction or termination especially) based on Rules and Regulations that have become contrary to law. Also, what made sense for your business years ago may no longer make sense now. For example, if you started your business five full-time employees in one city but now half your 50 person workforce is part-time employees in three different cities, you need new Rules and Regulations. Like right now.

4. Your key employment documents are all over the place, both in what they say and where they are located. You cannot believe how common this one is; we see this maybe 75 percent of the time. I recently did an employment audit for a client where three different people from three different cities gave me three different sets of employment documents and nobody knew which were current nor which employees had been given which. The only solution: start all over with yet another set of documents and make sure every single employee signs on for this new one.

5. You lack signed acknowledgments from your employees confirming receipt of your employment documents. This is much worse than most realize. You need to make sure your employees actually receive a copy of your Rules and Regulations and you have proof that they did so. If you end up having an employee dispute, the employee will virtually always claim never to have received a copy of your employer Rules and Regulations. Without a Chinese language acknowledgment of receipt signed by your employees proving they received your Rules and Regulations, you will have a difficult time justifying your employment decision in front of the arbitrator/judge.

If you see yourself in the above, get cracking.

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.