中国人力资源合规与最佳实践指南 2024

TableofContents

Preface

03

AboutDezanShira&Associates

04

Part1|China’sChangingLaborMarket

7

ProminenttrendsinChina’slabormarket

9

StrategiesforrecruitingandretainingtalentinChina

11

Part2|UnderstandingChina’sLaborLaw

Framework

13

GeneralfeaturesofChina’slaborlawframework

14

China’smajorlaborlaws

15

ImportanceofcompliancewithChina’slaborlaws

16

Part3|EssentialStepsforEffective

17

EmploymentManagementandHRComplianceinChina

Theemployeehandbook:Yourpolicycornerstone

20

Hiringandcontractmanagement

24

Payrollmanagement

28

Termination

35

Managingforeignemployees

37

DataprivacyissuesinHRmanagement

38

LeveragingtechnologytoimproveHRandpayrollmanagement

41

AboutDezanShira&Associates’HRComplianceandPayrollServices

44

MeetourHRComplianceandPayrollProfessionals45

GuidetoHRComplianceandBestPracticesinChina6

China’sChangingLaborMarket

1

»ProminenttrendsinChina’slabormarket

»StrategiesforrecruitingandretainingtalentinChina

China’sChangingLaborMarket

China’slabormarket,thelargestintheworld,iscurrentlyexperiencingrapidtransformation.Asthepopulationages,theworkingagedemographicisdecreasingandalternativeemploymentmodelsaregainingprominence.Inresponse,Chinaisactivelyupskillingitsworkforcetoenhanceproductivityandefficiency.Forforeigninvestedenterprises(FIEs)operatingwithinthisdynamiclandscape,understandingtheevolvinglaborenvironmentiscrucialforeffectivetalentrecruitmentandretention—essentialfactorsforsustainedsuccessandgrowth.Moreover,aslaborlawscontinuetoimproveandemployeeawarenessgrows,maintainingcompliancewithChina’slaborregulationsremainsparamount.

AccordingtotheNinthNationalWorkforceSurveyreleasedbytheAll-ChinaFederationofTradeUnions(ACFTU)inMarch2023,China’stotalnumberoflaborershasgrownto402millionpeople

atthebeginningof2022,upfrom391millionrecordedin2017whenthelastworkforcesurvey

wasconducted.

OverviewofChina’sLaborMarket

TotalWorkforce

733.5million

MigrantWorkers**

293million

MonthlyMinimumWage(May2024):

RMB1,450–RMB2,690

TotalLaborers

402million

NewLaborers*

84million

AverageEducation

13.8years

PerCapitaIncomefromWages(2023):

RMB22,053

AverageAge

38.3years

AverageYearlyIncomeof

UrbanResidents(non-privatesector):

RMB120,698

*Referstoworkerswhoprovideonlinedistribution,travel,transportation,housekeeping,andotherservicesthroughinternetplatforms,oftenonalexiblebasis.

**Referstoworkerswhomovefromruralareastourbanareastofindwork.

Source:NinthNationalWorkforceSurvey,All-ChinaFederationofTradeUnions,NationalBureauofStatistics.

GuidetoHRComplianceandBestPracticesinChina8

ProminenttrendsinChina’slabormarket

Ageincreasing,butsoareeducationlevels

TheaverageworkerageinChinaincreasedto38.3yearsin2022from37.1in2017.Theaverageageofindustrialworkerswas38.29,whilethemajorityofprofessionaltechnicalpersonnelwerebetween30and50yearsold,andweremostlyworkingintheeducation,manufacturing,andhealthcareandsocialworkindustries.

Theaveragelengthofeducationofworkersalsoincreasedslightlyto13.8yearsin2022,upfrom

13.6in2017.Over85percentofworkershadahighschooldiplomaorabove,and35percent

hadacollegedegree.

Diversifiedindustrydistribution

Thevastmajorityofindustrialworkers–82.7percent–workinsecondaryindustries,and77.6percentworkinmanufacturingandconstruction.Meanwhile,oneofthenewmajorchangestoChina’slaborforceisanincreaseintheproportionofpeopleworkingin‘newformsofemployment’.Thisconceptissimilartothatof‘gigworkers’intheWest,referringtopeoplewho

providevariousservicesthroughinternetplatformsonaflexibleto-orderbasis,suchasonlinecar-hailingdrivers,couriers,takeawaydeliverydrivers,andothers.Therearecurrentlyaround84millionpeopledoingthistypeofwork,around20.9percentofthetotalworkforce.

DAVIDNIU

Partner

HumanResources&Payroll

BeijingOffice

“China’slabormarket

iscurrentlyundergoing

rapidtransformation.

Understandingthe

prominenttrendsis

crucialforrecruitingand

retainingtalent,aswellas

ensuringcompliance.”

Risinglaborcosts

LaborcostshavecontinuedtoriseinChina,dueprimarilytorisingcostsoflivingandincomelevelsastheeconomygrowsandmovesupthevaluechain.

Theaverageyearlyincomeofurbanresidentsinnon-privatesector(thestatisticalgrouptowhichFIEsbelongto)reachedRMB120,698(approx.US$17,128)in2023.Theindustrywiththehighestaverageincomewasinformationtransmission,computerservices,andsoftwareindustries,withanaverageannualincomeofRMB223,088(approx.US$31,659),whilethelowestwasinthewater,environment,andutilitiesmanagementindustry,withanaverageannualincomeofRMB54,516(approx.US$7,736).TheaveragemonthlywageofamigrantworkerwasRMB4,780(approx.US$678),up3.6percentfrom2022.

TheincreasinglaborcostsinChinacorrespondwithanoverallincreaseinspendingandcostsofliving.AccordingtodatafromtheNationalBureauofStatistics(NBS),China’sdisposableincomepercapitagrewtoRMB39,218(approx.US$5,565)in2023,anominalincreaseof6.3percent

GuidetoHRComplianceandBestPracticesinChina9

year-on-year.Meanwhile,costsoflivinghaveincreased,inparticularinmanufacturinghubs,suchasShanghaiandGuangdongProvince.Inadditiontorisingwagesandlivingstandards,theincreaseincostsisalsobeingdrivenbytheincreaseinemployees’educationandtraining.AsChinastrivestomoveitseconomyupthevaluechainbymodernizingtraditionalindustriesandfocusingontheproductionofhigh-valuegoods,sodoesitsneedforhigher-skilledlabor,whichcomesatahighercost.

Improvingprotectionoflaborrights

Inadditiontocontinuedeffortsonpreventingwork-relatedinjury,ensuringtimelysalarypayment,aswellasbuildingupamandatorysocialsecuritysystem,thelaborauthoritiesin

Chinahavealsobeenrampingupprotectionstocertain‘disadvantagedgroups’.

Forinstance,in2021,China’sStateAdministrationofMarketRegulation(SAMR)issuedpolicyguidelinesthatorderedinternetplatformsprovidingfooddeliveryservicestoensureworkersarepaidtheminimumwage,arenotsubjecttoexcessiveworkinghours,andadheretocertain

safetystandards,amongotherrequirements.

Chinahasalsomademajorin-roadsintotheprotectionoftherightsofwomenintheworkforce.InOctober2022,ChinapassedtheLawontheProtectionofWomen’sRightsandInterests

(Women’sProtectionLaw),whichincorporatesgenderdiscriminationintheworkplaceintothescopeoflaborsecuritysupervisionandfurtherclarifiesthedefinitionsofsexualharassmentintheworkplace,thusstrengtheningtheenforcementofotherlawsandregulations.

Work-lifebalanceandtechnicalupskilling

AnimportantdevelopmentinChina’sworkcultureoverthepastfewyearsisagreaterawarenessofwork-lifebalanceandanincreasingbacklashagainstoverwork.Thisisparticularlytrueinwhite-collarprofessions,perhapsduetothehigherlevelofvisibilityofthesepositionswithinsociety.Anumberofhigh-profileincidentsattechcompaniesinparticularhaverenewedcriticismandbacklashagainstthe“996”workculture.

AccordingtotheACFTUsurvey,itisfoundthatemployeesarealsoplacinghigherimportanceontheirlong-termdevelopment,with95.3percentofworkersinterestedinlearningnewvocationalskillsorknowledge.Thisproportionisparticularlyprominentamongemployeesaged18to40andemployeeswithabachelor’sdegreeorabove.

Growingdemandformoreflexibleworkarrangements

Ashifttomoreflexibleworkarrangementsiswellunderway.Thishasalottodowiththepsychologicalchangesofworkersinthepost-pandemicera.

GuidetoHRComplianceandBestPracticesinChina10

First,thediversificationofcurrentsocialemploymentformshasimpactedthetraditionaleight-hourworkingday.Underthesamesalarybenchmark,personalfreetimehasbecomeincreasinglyimportantforworkers.

Secondly,psychologicaladjustmentduringtheepidemichasintensifiedworkers’reflectionuponplanningtheirlives.Inthefaceofaglobalpublichealthemergency,peoplehavebecomemorecognizantoftheshortnessandfragilityoflife,andthishasforcedthemtotakestockofthethingsthatmatterthemosttothemandhowtoliveamorefulfillinglife.

Remoteworkforcebecomingmorecommon

AnothertrendobservedinChina’slabormarketisthat‘telecommuting’hasbeenadoptedbymoreandmoreemployers.Telecommuting,alsoknownasteleworking,referstothepracticeofworkingfromalocationoutsidethecompany’soffice.Throughtelecommuting,acompany’sworkforceisdistributedacrossacountryorregionanddonotworkintraditionaloffices.Thedistributedemployeesmaytelecommuteforlongperiodsoftimeormaychoosetotelecommute

onlytemporarily.

Thankstotelecommuting,thetalentpoolhasgreatlyexpandedirrespectiveofthelocationoftheenterprise.Recruiterswill,however,needtoadoptnewhiringpracticesandexpandtheirsearchfarbeyondthetraditionalgeographicboundariestheymightoncehaveadheredto.It

alsoprovidesjobopportunitiesforpeoplewithdisabilitiesandmobilityproblems.Themodelcouldappealtopeoplewhoneedtoworkflexibly,suchasparentswithyoungchildren.

StrategiesforrecruitingandretainingtalentinChina

Buildingemployerbrandingandcultivatingcompanyculture

Employerbrandvalueisincreasinglygainingwidespreadattentionandrecognitionandhasbecomeoneofthebestindicatorsofaworkplacecultureforjobseekers.Establishingastrongemployerbrandwillhelpyourcompanystandoutinthejobseekermarketandultimatelyhelpyouattractandretainbettertalent.

Companycultureisanindispensablepartofanycompany.Itcancreateapositiveworkplaceenvironment,improvethestaff’sculturalexposureandethicalstandards,andallowinternalemployeestonaturallyformacohesiveandtightlyknitteam.Companyculturecanhelpenterprisesplayapositiveroleintheworklivesoftheirstaffaswellasassistinrationallyallocatingenterpriseresourcestoimprovecompetitiveness.

GuidetoHRComplianceandBestPracticesinChina11

Toeffectivelybuildagoodcompanycultureandapositiveemployerbrandimage,wesuggestadoptingthe“4P”strategies,namely:People,Product,Position,andPromotion.Theseconceptscanbeunderstoodasfollows:

•People:Identifyingthetypeofpeopleanddesiredskillsandexpertiseyourcompanywantstoattract–toinformthedevelopmentofyourbrandimage.

•Product:Regardingthecompanyasaproductandidentifyingyourcompany’suniquesellingproposition,suchaswhatexperiencesandbenefitsyourcompanycanofferemployeesandprospectiveemployees.

•Position:Identifyingyourcompany’sbrandpositioningintheemploymentlandscapeandrefiningyourbrandmessageusingconciseandeffectivelanguage.

•Promotion:Promotingyouremployerbrand–remember,yourcurrentemployeesareyourmosteffectiveadvocatesandthebestresourceforpromotingyourcompanyasanemployer.

Adoptingstrategiestoretaintalent

Retainingtalent,especiallyexcellenttalent,isatoppriorityforanyenterprise.Keepingemployeesloyal,productive,andemployableisanimportantskillforeveryleaderandHRdepartmentto

havetoday.

Thefirsttactictoimproveemployeeretentionistoincreaseflexibilityandsetboundaries.

Flexibilityisoneofthethingsmostemployeeswillfocuson.Youngerworkersprefertobemeasuredbyperformanceratherthantime.Aflexibleschedulethatincludestheoptiontoworkfromhome,flexiblestartandfinishtimes,paidvacations,careerbreaks,choiceoflocation,andshorterweeklyworkinghoursareattractiveperksthatcompaniescanoffertoseekandretaintoptalent.

Thesecondtacticistomakeworkfunandgivegoodfeedback.Whethertheyareattheofficeorathome,leaderscanhaveabigimpactontheiremployees’work.Peoplewhoarehappyatworkwillstaylonger.Thecompanyshouldalsoprovidegood,actionablefeedbackandmotivationinatimelymanner.Feedbackiscrucialforemployeestolearnandgrowandhelpstofosterloyaltyandretainemployees.Peoplealsoneedtoreceiverespectandapprovalfortheirwork,whichcancomefromconstructivefeedback.

Employeeincentivescanhelpsatisfythevariousneedsofstaffandstimulatetheirenthusiasmforwork,sothattheymaintainapositivemood,enablingthemtofullyexploretheirpotential.Thiswillnotonlyimprovetheefficiencyofthecompanyitself,butalsoempoweritsemployeestoachieveprofessionalprogressandachievements.

GuidetoHRComplianceandBestPracticesinChina12

2

UnderstandingChina’sLaborLawFramework

»GeneralfeaturesofChina’slaborlawframework»China’smajorlaborlaws

»ImportanceofcompliancewithChina’slaborlaws

UnderstandingChina’sLaborLawFramework

China’slaborlawframeworkiscomplex,notonlyduetoitscontentandscopebutalsobecauseitcontinuallyevolvestoalignwiththecountry’ssocio-economicdevelopment.Additionally,localvariationsarecommon–whilethecentralgovernmentestablishesseverallawsthatmustbefollowed,numerousbylawsandregulationsareinstitutedatthelocallevel.

Undersuchcircumstances,understandingthegeneralfeaturesofChina’slaborlawsystemisimperativeforevaluatingtheresourcesneededtoensureHRandpayrollcomplianceintheChinamarket,inadditiontoknowingthemajorlaborlaws.

GeneralfeaturesofChina’slaborlawframework

Ingeneral,China’slaborlawframeworkfeaturesthefollowingpoints:

•Emphasisonprotectingworkers:China’slaborlawstendtoprioritizesafeguardingworkers’rights,recognizingtheiroftenvulnerablepositioninlaborrelations.Forinstance,theselawsestablishminimumwagestandardsandensurethatworkershavereasonableworkinghours,vacationtime,andaccesstosocialinsurancebenefits,therebysecuringtheirfundamentallaborrights.

•Emphasisonemployerresponsibility:China’slaborlawsnotonlyrequireworkerstoadheretorelevantlabordisciplineandregulationsbutalsoemphasizetheresponsibilitiesofemployersinensuringlaborprotection.Employersmustestablishrobustoccupationalsafetyandhealthsystems,providesafetyeducationtoworkers,andfurnishnecessaryprotectiveequipmenttosafeguardworkers’physicalhealthandsafety.

•Primacyofmandatorystandards:China’slaborlawsprimarilyrelyonmandatorynorms,withspecificlegalprovisionsdictatingthelaborprotectionstandardsandrequirementsthatemployersmustcomplywith.

•Integrationofsubstanceandprocedure:China’slaborlawsaddressbothsubstantivecontentandproceduralaspects.Whilesafeguardingworkers’rights,theyalsorequireemployerstofollowproperproceduresduringemployment,includingcontractformation,modifications,andterminations.Thisensuresthelegalityandstabilityoflaborrelationships.

•Adaptationtochangingtimes:AsChina’ssocio-economicdevelopmentandlabormarketevolve,laborprotectionlawscontinuallyupdateandimprove,makinglaborcomplianceinChinamorechallenging.

•Localvariation:Localregulationscansignificantlydifferacrossprovincesandmunicipalities.Employersmustbeawareofregionalnuanceswhenimplementinglaborpolicies.Forinstance,differentcitiesmayhavedifferentminimumwage,socialsecuritycontributionstandards,numberofmaternityleavedays,andmedicaltreatmentperiodpolicies.

ALLANXU

Partner

BusinessAdvisoryServices

ShanghaiOffice

na’slaborlaw

“Chi

frameworkisintricate,not

onlyduetoitscomplex

wordingbutalsobecauseit

continuallyevolvestoalign

withthecountry’ssocio-

economicdevelopment.”

GuidetoHRComplianceandBestPracticesinChina14

China’smajorlaborlaws

Despitelocalvariations,mostlaborlawsalignwiththenationalprinciplesandguidelinesestablishedbymajorlaborlegislation.Theselocaldifferencesfallwithinthepermissiblescopeofdiscretiongrantedbynationallaw.

TheLaborLawofPeople’sRepublicofChina(theLaborLaw)andtheLaborContractLawofPeople’sRepublicofChina(theLaborContractLaw)aretwoprimarysourceofemploymentregulationswithinChina’slaborlawframework.Theyplayacrucialroleinsafeguardingworkers’rights,regulatinglaborrelations,andpromotingharmoniousstabilityinlaborrelations.

TheLaborLaw,firstimplementedin1995andlastrevisedin2018,establishesthefundamentalstructureoflaborrelationsandspecifiescoreelementssuchasthelaborcontractsystem,laborprotection,workingconditions,wages,andlabordiscipline.Itprovidesessentialguidanceandabasisfortheformulationandimplementationofotherlaborlawsandregulations.

Meanwhile,theLaborContractLaw,firstimplementedin2008andlastrevisedin2012,servesasasubsidiarylawtotheLaborLaw.Itprovidesdetailedregulationsonvariousaspectsoflaborrelationsbetweenemployeesandemployers,includingestablishment,modification,aswellasthesigning,execution,andterminationoflaborcontracts.TheLaborContractLawoffersmore

preciseandspecificlegalguidanceforthepracticaloperationoflaborrelations.

OtherlaborlawsinstitutedcentrallythatinvestorsshouldtakenoteofwhendoingbusinessinChinainclude:

•LawontheProtectionofRightsandInterestsofWomen:Thislawsafeguardswomen’srightsintheworkplace,addressingissuessuchasequalpay,maternityleave,andprotectionagainstdiscrimination.

Aidi

Sapea

WhatistheimportanceoforiginalemploymentcontractsinChina?

Q&AansweredbyAdamLivermore,Partner

•SocialInsuranceLaw:Thislawplaysacrucialroleinprovidingsocialsecuritycoveragetoemployees,includingpensions,medicalinsurance,unemploymentinsurance,maternityinsurance,andwork-relatedinjuryinsurance.

•RegulationsontheHousingFund:Theseregulationsprovideguidanceonhowemployersshouldregisterandcontributetohousingfundschemesfortheiremployees.

•LaborDisputeMediationandArbitrationLaw:Thislawprovidesguidanceonresolvingdisputesrelatedtolaborcontracts,workinghours,wages,safety,andotherlabor-relatedmatters.

•TradeUnionLaw:ThislawoutlineshowtradeunionsshouldbeorganizedinChina,theirroleinlaborprotection,andtheresponsibilitiesofemployers.

EXPLOREDETAILS

•LawofthePeople’sRepublicofChinaonWorkSafety:Thislawenhancessupervisionandcontroloverworksafety,aimingtopreventaccidentsandprotectlivesandproperty.

•AdministrativeProvisionsonEmploymentofForeignersinChina:ThislawlaysouttherequirementsandproceduresforhiringforeignemployeesinChina.

GuidetoHRComplianceandBestPracticesinChina15

ImportanceofcompliancewithChina’slaborlaws

CompliancewithChina’slaborlawsplaysavitalroleinmaintainingaharmoniousandproductiveworkplace.Itisessentialforpreventinglabordisputes,avoidingpenaltiesfromregulatoryauthorities,andattractingandretainingtoptalents.

Preventinglabordisputes

GivenChina’sstrongemphasisonemployeeprotectioninlaborrelations,employersoftenfind

themselvesatacomparativedisadvantagewhenlabordisputesarise.Therefore,implementingeffectivestrategiestopreventsuchdisputesiscrucialforminimizingtheriskoffinancialloss.Adheringtolaborlawsandregulationsplaysapivotalroleinpreventingmisunderstandingsandconflictsbetweenemployersandemployees.Byensuringthatworkers’rightsaresafeguardedandthatemploymenttermsaretransparentandequitable,companiescansignificantlyreduce

thelikelihoodofdisputes.

Avoidingpenaltiesfromauthorities

Aspreviouslymentioned,China’slaborlawsplacesubstantialresponsibilityonemployers.

Failingtocomplywithrelevantmandatorynormscanleadtopotentialaudits,investigations,andsignificantfinancialpenalties.Maintainingstrictcompliancewithlaborregulationsallowsbusinessestooperatesmoothlywithinthelegalframeworkandavoidtheserisks.

Attractingandretainingtalent

WhileChinahasanabundantlaborsupply,findingsuitablecandidatesisn’talwaysstraightforward.Attractingandretainingtoptalentisakeypriorityforbusinesses.Companiesknownfortheircommitmenttolaborcomplianceandfairtreatmentofemployeestendtobemoreappealingtojobseekers.Conversely,companieswithlabordisputerecordsorviolationsoflaborlawsmaydiscouragepotentialcandidates.

GuidetoHRComplianceandBestPracticesinChina16

3

EssentialStepsforEffective

EmploymentManagementand

HRComplianceinChina

»EmploymentmanagementandHR

complianceinChinaataglance

»Theemployeehandbook:Yourpolicycornerstone»Hiringandcontractmanagement

»Payrollmanagement»Termination

»Managingforeignemployees

»DataprivacyissuesinHRmanagement»Leveragingtechnologytoimprove

HRandpayrollmanagement

EssentialStepsforEffective

EmploymentManagementandHRComplianceinChina

EffectiveemploymentmanagementandHRcompliancearemultifacetedchallengesthatdemandexpertiseacrossvariousdomains.VariouskeyissuesdeservespecificattentionbyemployersinChina.Wesummarizesomeofthesebelow,anddelveintothemingreaterdetailwithinsubsequentsections:

•Hiringoptions:Anenterprisecanhirestaffthroughthreebasicoptions-directhiring,labordispatch,andoutsourcing.Professionalemployerorganization(PEO)serviceisgrowinginpopularityasanalternativehiringoption

•Representativeoffices:Representativeoffices,beingoneofthesimplestforeigninvestmentstructuresinChina,facelimitationswhenitcomestodirectstaffhiring.Instead,theymustengagedispatchagencies.Theseagenciesmustholdagovernment-issuedspeciallicensethatallowsthemtohireemployeesonbehalfoftheirclients(forinstance,DezanShira&Associatesholdssuchdispatchlicenses)

•Dispatchlimits:Labordispatchcanonlyapplytothreetypesofpositions-temporaryposition,auxiliaryposition,andreplaceableposition.Thenumberoftotaldispatchedemployeesusedbyanemployershouldnotexceed10percentofitstotalnumberofemployees.

•Mandatorywrittencontracts:Alldirectlyhiredemployeesmustbegivenawrittencontractwithinonemonthoftheirstartdate.Failuretodosoentitlestheemployeetodoublesalary.Electroniclaborcontractsareregardedaswrittencontractaswellbysatisfyingcertainconditions.

•Probationperiod:Therangeoflegitimategroundsfordismissinganemployeeisconsiderablywiderduringtheirprobationperiod.Theemployermayalsopayonly80percentoftheemployee’scontractualsalaryduringthistime.

•Workinghoursystem:InChina,therearethreemainworkhoursystems-thestandardworkhoursystem,thecomprehensiveworkhoursystem,andthenon-fixed(flexible)workhoursystem.Thelattertwosystemsareconsidered‘specialworkhoursystems’,whichrequirespecialapprovalandcompliancerequirements.

SERVICES

DezanShira&Associatesholdsalabordispatchlicenseandprovides

professionalHRandpayrollservicestoourclientsacrossAsia.

EXPLOREDETAILS

•Paymentandtax:Anemployee’ssalarypackagecouldincludebasesalary,allowances,bonuses,non-monetarypensionplans,andemployer’sportionofsocialsecuritycontribution.Thebasesalaryshouldbestipulatedinthelaborcontract.Employersarerequiredtofileindividualincometax(IIT)fortheiremployeesonamonthlybasis.

•Mandatorysocialsecurity:China’ssocialsecuritysystemismadeupoffivedifferentkindsofinsurance–pension,medical,maternity,work-relatedinjury,andunemployment,plusonehousingfund.Bothemployerandemployeeareobligatedtomakecontributions,butitisgenerallytheemployer’sresponsibilitytocorrectlycalculateandwithholdthepaymentsforbothparties.Employer’sobligationtomakeadequateandtimelycontributionscannotbealleviatedorexemptedbyreachingmutualagreementwithemployees.

•Leaveduringthefirstyearofemployment:Employeesarenotentitledtoanymandatoryminimumnumberofleavedaysduringthefirstyearoftheircareer,exceptpublicholidayssuchasChineseNewYeararoundJanuary-February,andtheNationalDaycelebrationsinearlyOctober.

GuidetoHRComplianceandBestPracticesinChina18

•Noat-willtermination:TerminatingemployeesinChinaisbothdifficultandexpensive.Whileemployeescanresignwith30days’notice,employersfacelimitedgroundsforterminatinganemployeebeforetheircontractreachesitsnaturalend.

•Non-fixedtermcontractaftertwofixedtermcontracts:Afteranemployeefinishestheirsecondcontractwithyourcompany,heorshegenerallyshallbeofferedanon-fixedterm(permanent)contractasthethirdunlesstheywantanotherfixedtermcontractinstead.Suchnon-fixedtermcontractcanonlybeterminatediftherearevalidgroundsfordismissal.Notably,someregions,suchasShanghai,offermoreflexibilityregardingthisrule.

•Severancepaymentsmandatedbylaw:Inpractice,severancepaymentscanbehigherthanthelawprescribes,andcancompriseasignificantpartofoverallHRcosts.

•Hiringforeignworkers:Chinaimplementsatieredtalentsclassificationsystemforhiringforeignworkers.Differentclassesoftalentsaresubjecttodifferentadministration.ForeignerswhowanttoworkatcompaniesinChinashouldarriveonavalidworkvisa(Z-visaorR-visa).EmployersneedtoobtainandrenewForeigner’sWorkPermitandResidencePermitfortheirforeignstaffsinatimelymanner.

•Tech-poweredHRandpayrollsolutions:Companiesarenowtransitioningfromfragmented,localizedpayrollsoftwareorExcelspreadsheetstocomprehensive,technology-drivenHRmanagementplatforms.Theseplatformsstreamlinevariousprocesses,includingonboarding,attendancetracking,leavemanagement,claimsprocessing,an