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Frequently Asked Questions

FAQ13- What are the regulations concerning labor management of foreign-invested enterprises?

In order to guarantee the legitimate rights and interests of foreign-invested enterprises and their employees, the Chinese government has formulated the Regulations of the Labor Management in Foreign-Invested Enterprises, making stipulations concerning employee recruitment and training, vacation and leave, and salaries, etc.

1). Protecting the Legitimate Rights and Interests of Foreign-invested Enterprises

According to relevant state laws and administrative regulations, these enterprises can make autonomous decisions regarding the timing, conditions, methods and size of employment. These enterprises can recruit their employees from employment service centers recognized by local labor authorities where the enterprises are located, or, with the approval of local labor authorities, may recruit employees directly or from other regions.

These enterprises shall recruit Chinese employees within the territory of China. In case where employment of foreign nationals or residents from Taiwan, Hong Kong and Macao is necessary, approval from the local labor administration shall be obtained, and formalities, including an employment certificate, shall be completed in accordance with the relevant state regulations. The enterprises should establish the labor contract in a written form with individual employees. The enterprises may terminate the labor contract if an employee does not meet the job qualifications during the probation period, or fails to execute the labor contract, or severely violates labor disciplines or other bylaws of the enterprises, or receives sentences for imprisonment or labor education.

2). Protecting the Legitimate Rights and Interests of the Employees of Foreign-invested Enterprises

These enterprises must participate in social insurance scenarios for pension, unemployment, health care, work-related injuries, and maternal leave in accordance with relevant state regulations. They must pay the full amount of social insurance premiums to social insurance agencies in time. The accounting of expenses on social insurance shall follow relevant state regulations. Individual employees are required to pay pension premium accordingly.

These enterprises should establish the Employment and Pension Manuals to record their employees' length of employment, salary, and premium and insurance payment on pension, unemployment, work-related injuries, and health care.

These enterprises should set up a professional training scenario for their employees. Employees cannot start on a technical job, or a job requiring special skills unless properly trained and holding a certificate.

The trade union (or employees' representatives in the absence of the former) may establish a collective contract with the enterprise through consultation and negotiation on such matters as work remuneration, work hours, vacations, workplace safety and hygiene, and insurance and welfare on behalf of the employees. The contents of labor contracts and collective contracts shall not contradict the state's laws and regulations. The enterprise shall pay a one-time subsistence allowance to an employee whose labor contract is terminated, and provide medical subsidies in addition to the one-time allowance in certain special circumstances.

In the following conditions, an enterprise cannot terminate the labor contract of an employee: (a) the employee is confirmed of loss or partial loss of working ability due to an occupational disease or work-related injury; (b) the employee's specified treatment period has not expired; or (c) a female employee is in pregnancy, maternal leave or breast-feeding period. In case the employee intends to terminate the contract due to an occupational disease or work-related injury, the enterprise shall pay the social insurance agency an employment rearrangement fee for work-related disabilities according to local regulations.

When an enterprise terminates a labor contract according to relevant regulations or when the two parties agree to cancel the labor contract through negotiation, the enterprise should, in accordance with relevant regulations of the local people's government, pay in a lump sum to the social security agencies living and social security expenses for the following cases:

An employee is entitled to vacations, public and general holidays, home leave and wedding, bereavement and maternity leave as stipulated by the state.

Welfare treatment of an employee during his/her active term of employment shall follow relevant regulations of the state. The enterprise shall utilize housing funds for Chinese employees in accordance with the regulations of the local people's government.

For working compensation of its employees, an enterprise shall follow the principle of equal pay for equal work. Salary level of the enterprise shall increase gradually on the basis of its profit growth. The minimum salary for legal work hour shall not be lower than the local minimum salary level.

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