COUNTRY

Employment contracts in China must be in writing. Employers may use fixed-term or indefinite-term contracts. If an employee agrees to renew an employment contract and has at least 10 years of service, the contract will be indefinite unless the employee specifically agrees to a fixed term contract. A contract will be deemed an indefinite term contract if the employer fails to sign the contract within one year of the employee’s start date.

The standard work period in China is eight hours a day, and no more than 44 hours a week. Overtime is paid at 150% of the basic rate on a standard workday, 200% on a rest day and 300% on public holidays. Employers may adopt different work hours under special circumstances and with the approval of the Labor Department.

Employees in China receive between three and 24 months of sick leave, depending on the length of service. Employees receive 60% to 100% of their last monthly wage for up to six months, then 40% to 60%. Employees receive 100% of their wages for up to 12 months following a work injury, which can be extended for another 12 months.

Female employees in China receive 98 days paid maternity leave, which can begin 15 days prior to the birth. An additional 15 days is allowed if the employee has a difficult birth, or for multiple births. Female employees over the age of 24 years also receive additional time off, in some regions up to 30 days. Male employees in China are entitled to paternity leave. The amount of time depends on the region, but generally does not exceed two weeks.

China does not set a national minimum wage. Rather, each province, city or administrative unit sets a monthly and hourly minimum wage based on local economic conditions. The minimum wage in Shanghai generally is the highest. Bonuses are common in China, with employees frequently receiving a bonus at the end of the year equal to one month of salary.

Employees in China receive five days paid annual leave after one year of service, 10 days after 10 years of cumulative service and 15 days after 20 years of cumulative service. Employees with less than one year of service receive vacation on a prorated basis. Annual leave may be reduced if an employee takes sick leave. Unused annual leave that does not carry over is paid to the employee at a rate of 200% of the employee’s average daily wage.

In China, the public holidays are:

• New Year’s Day

• Chinese New Year (Spring Festival)

• Qingming Festival

• Labor Day (multiple days)

• Dragon Boat Festival (multiple days)

• Mid-Autumn Festival

• National Day (multiple days)

China provides basic health and pension insurance through the national social security system, but private health insurance may be offered.

Employment can be terminated in China at the end of a fixed-term contract, by mutual agreement, by the employer or by the employee. Employment in China is not “at will,” meaning employers are required to provide notice prior to termination and pay severance in most instances. An employer may terminate an employee without notice or not pay severance for a number of reasons. Absent cause, an employer must provide notice and pay severance. Employees are entitled to 30 days written notice or pay in lieu of notice. Severance is one month of the employee’s average salary for each year of service, up to 12 months. The average monthly salary is capped at three times the average for the region. Employees with less than six months of service receive half a month’s salary for severance. Employees with six months to less than 12 months receive one full month of salary for severance.