Pay particular attention to the Chinese Work Contract Law and the Compensation & Benefits system. Chinese laborers frequently demand higher pay, such as a transportation allowance, than the legal minimum. Hence, when questioning a Chinese prospect about their current wage, be sure to ask about their supplementary benefits.
Foreign companies must be aware of and compliant with China’s social benefits and Housing Provident Fund systems.
Following these guidelines enables the company to calculate the price of recruiting local Chinese workers with accuracy.
Employer of Record China under the Law on Chinese Labor Contracts
In order to establish and sustain happy and stable working relationships, the Labor Contract Law, which was introduced in 2008 with the aim of improving the labor contract system, outlines the rights and obligations of employees and employers. The laws governing labor in China are very different from those in the US and Europe. Here are a few of the variations:
format of contracts
There are three types of employment contracts in China:
Fixed-term Contract: An employer must offer an employee an open-ended contract if they want to keep them after two consecutive fixed-term contracts.
No-expiration-date employment contract for the duration of a specific job or project.
the initial stages
Many of our international customers want to know if they can continue working if the probationary period lasts the entire job term.
The table below shows the maximum probationary time duration required by Chinese labor contract legislation.
An employee’s baseline annual leave in China varies from 5 to 15 days, depending on the total number of years worked. More yearly leave is frequently offered by international companies. Bright people therefore find international firms more appealing.
Different types of leave depend on the circumstance and may vary by city:
maternity leave, In Shanghai, a parent might be given 10 days of paternity leave, whereas in Beijing, they might receive 15 days.
- Leave for divorce
- Go to the funeral
- Sick leave, etc.
As a result, it is strongly suggested that foreign employers familiarize themselves with the rules or seek guidance from a competent Employer of Record in China (official employer).
Using a Global Employer of Record to Hire Workers in China
Being an employer of record in China, we always examine references and ask applicants for documents such CVs, degrees, relevant paperwork, and references to ensure that the best candidate is hired at a fair price.
An interview with a candidate provided to a customer by INS Global once went well. At the interview, the applicant stated that his current pay, including bonuses and benefits, was 15,000 RMB per month. Our client made the decision to increase the candidate’s compensation by 20% in light of this information. The candidate’s actual monthly salary was 12,000 RMB, as revealed by INs Global’s recruitment verification process.
In general, the termination process is challenging. Yet, the Labor Contract Law does include clauses that offer protection to employees when their employment is ended.
There are three ways for employers to fire employees:
After a contract’s term has ended, do not extend it.
Incorporate termination terms and conditions from the start of the employment contract. Include both the notice period and the remuneration (if the company initiates the termination). A mutual agreement is the best option for the company to avoid going to court or arbitration.
It is possible for companies to end an employee’s employment even if the employee does not agree, but the employer must provide compelling written evidence justifying the termination, such as policy violations or inadequate skills after training. In cases of wrongful termination, arbitration, legal action, and compensation payments may be necessary.
Chinese workers who work as freelancers for foreign companies
They are not protected by the Labor Contract Law, so they may face difficulties with issues such as payment of wages and termination benefits. Employers have limited control over these workers, especially if they require non-disclosure agreements. As a result, we recommend that multinational corporations follow the China Labor Contract Law when hiring Chinese workers.