We all know that China is the most populous country in the world. But did you know that it is the second largest economy in the world and the third largest country in the world?
With a GDP value that is as high as 17.73 trillion dollars. China will continue to expand while providing ample opportunities for business growth.
Therefore, it is not surprising that companies are looking to expand their talent pool by recruiting in China, however, they must be wary of the complications that come with this. Especially without the help of an employer of record (EOR) provider.
Labor Contract Law - Employment Manual
China has a labor law system. Tax regulations and comprehensive social security provisions applicable to domestic and foreign employees working in China.
All labor laws in China are governed by the Labor Contract Law of 2008 and the Labor Contract Law Revision of 2012. The law has 13 chapters and more than 100 articles, which detail all labor regulations such as wages, working hours. and other legal requirements which is enforced by labor contract law Human resources and social security.
Chinese working clock
China's standard working hours are 8 hours per day. Overtime pay is limited to 1 hour per day. and medical staff are limited to 3 hours per day, however overtime hours cannot exceed 36 hours per month. The law requires employees to have at least one day off per week.
Overtime is compensated according to the following standards:
150% of working day wages
200% of holiday pay
Holiday overtime pay: 300% of salary
Exploring social security and governance in China
As the name shows The Ministry of Human Resources and Social Security is responsible for establishing and managing the country's social security system.
Under this system Employees must pay for 5 types of insurance:
Pension
8% of an employee's salary is used to guarantee retirement benefits.
Health insurance
Employees are required to pay a 2% health insurance premium, which is refundable in the event of a non-work related injury.
Unemployment insurance
Employees contribute 0.5% to unemployment insurance. This provides monetary benefits for up to 24 months in case of unemployment.
Home insurance
Both the employer and employee pay into the provident fund. Foreign employees are exempt from paying provident funds. All contributions must be at least 5%.
Maternity insurance
Female employees can receive medical benefits from employer-paid maternity insurance. Male employees may also extend this benefit to their unemployed spouses in accordance with local laws.
Injury insurance
In addition, employers are required to pay monthly workers' compensation insurance contributions. Employees who are off work due to a work-related injury will still receive pay.
Want to know everything about Labor Contract Law? Read the international guide:Moore MS Advisory
It is important to note that all of these donations are subject to change depending on local and federal laws. Because the law is not stable Compliance with regulations is therefore important for employers. This is because failure to comply can have serious consequences.
In these situations It would be beneficial to have a robust workforce management system that allows for automatic compliance updates. It allows employers to focus on their organization's goals.
Leaving a Global Business Footprint: Enter China
There are many laws to be aware of when recruiting in China. Still, it may not be a smooth process.
“Did you know? Not every foreign company with a legal entity in China can hire Chinese people.”
There are several regulations for foreign companies. Especially for companies looking to recruit employees from China, in some cases they are not allowed to hire employees directly and rely on Chinese institutions instead. This is because it is not considered a legal entity that emphasizes capital letters.
If companies with local operations are overcoming many obstacles to expanding their talent pool, And what about those companies that aren't?
