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Quick Guide to Working in China

2017/7/31 14:29:35

Quick Guide to Working in China


The labour contract

 

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To begin your work in China you will of course need a work contract with the company you will work for.

 

The following mandatory clauses must appear in the contract:

 

  • Basic information about the employer (name, address, name of the legal representative or a senior manager)

  • Basic information about the employee (name, address, identification number)

  • Commencement date and the term of the contract

  • Description of the job and the location where it is to be implemented

  • Salary details

  • If applicable, statement that the employer will contribute for the social insurance of its employee

  • Labour protection, labour conditions and protection from occupational hazards.

 

 It can also be beneficial to have mentions of the following in the contract, although not mandatory

 

  • Probation period (length, salary, etc.)

  • Non-competition clause

  • Confidentiality clauses

  • Allowances and benefits.

 

It is good to keep in mind that it is common in China to send an offer letter to a candidate that has passed the selection process, but this offer letter cannot and should not be considered as a labour contract, and it will have no value in court.

 

It is also very important to remember that in China, the binding document/contract is always the Chinese one, if you for example sign contracts in both English and Chinese. Even if you sign a dual-language contract (specifying that the English version is the controlling one), it could be refused as such by Chinese courts and should first be translated into Chinese.

 

Probation Period

When you sign your labour contract, it is usually a fixed-term labour contract, in which the employer can choose to have set a probation period. During the probation period, the employer can pay the employee from 80% to 100% of the salary stated in the labor contract. 
The length of the probation period will be determined by the length of the labour contract;

 

  • For a contract that lasts less than three months, there won’t be any probation period

  • For a contract whose duration is comprised between three months and one year, the probation period cannot exceed thirty days

  • Contract more than one year but less than three years, the probation period cannot be longer than sixty days

  • If the contract duration goes beyond three years, the maximum length of the probation period is six months.

 

Employee Handbook


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The employee handbook is what you should always refer to for important matters such as the company’s code of conduct, internal policies, training information, performance standards and assessment information, employee benefits programs, information about the work environment, discipline procedures, etc.
The employee handbook document is usually signed by the employee.

 

Working hours

 

The working hours in China are usually not exceeding 8 hours per day, and the work week of 5 days not exceeding 40 hours of work, as determined under China’s “standard work hour system”.

 

A more flexible work hour system can also be implemented (usually the comprehensive work hour system or the non-fixed work hour system) depending on the role/industry.

 

Individual Income Taxes (IIT)

 

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Whether a foreigner is liable to pay IIT in China, and the extent to which he or she is liable, depends upon:

 

  • How long the individual has been living in China;

  • What is the source of the individual’s income; and

  • Who bears the salary cost of the individual.

 

The first factor, the duration of stay can be determined by tax treaties between China and the home country of the expatriate

Determination of the Labour Contract

  

A labour contract is deemed terminated when it came to its term, when the employee and employer mutually agree to end it or when the employee/employer unilaterally ends it.


The contract can also be terminated by the employer in the probation period by giving the employee a three-day notice period. Except for serious violations of company’s rules, the employer must bring sufficient evidence regarding why the employee does not fit the position he/she was hired for. Employee can also resign with a three-day notice.

 

After the probation period, either party can terminate the contract by giving a thirty-day notice. If the employer terminates the labour contract with thirty days’ notice without being able to prove that the employee seriously violated one or several of the employer’s rules, the employer will have to pay severance payment.
The payment will not have to be paid in the occasion in which the employee has decided to terminate the contract by giving a thirty-day notice, but over time and unused paid annual leave should be paid.