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Labour law for expats in the Hainan Free Trade Port, what you need to know

The Labour Contract Law of the People’s Republic of China (2007) states that “all employees, regardless of their nationality, shall enjoy equal rights in employment.” This means that, regardless of nationality all employees are entitled to the same legal protections and benefits, including the right to paid leave, sick leave, work-related injury leave, maternity leave, and marriage leave, as well as the right to equal employment opportunities.

It is important for all employers in China to adhere to these laws and ensure that their employees, both local and foreign, are treated fairly and equitably.

As an expat living and working in Hainan Island, it’s important to understand your rights as an employee. China’s Labour Law provides a set of regulations that employers must abide by, ensuring fair and just treatment of their workers. In this article, we’ll cover some of the key rights that you should be aware of.

The Chinese labour code defines three main work hour systems:

  1. Standard work hour system: This system is based on a standard working time of eight hours per day and 40 hours per week, with two days off per week. Any work beyond the standard working hours is considered overtime and should be paid accordingly. The maximum overtime hours are set at three hours per day and 36 hours per month.
  2. Comprehensive work hour system: This system combines the standard work hour system with a flexible working hours system. The employer and the employee can agree on the total working hours within a certain period of time, such as a month or a year. This system is often used in jobs that require flexible working hours, such as seasonal or project-based work, sales or management positions. Overtime pay is required for any work hours that exceed the agreed-upon hours.
  3. Non-fixed (flexible) work hour system: This system accommodates employees whose working hours are impractical to measure. Employees on such a work hour system will generally be paid as a salaried employee. However, one of the most appealing features of China’s flexible hours system is that it allows employers to avoid having to pay for most overtime. 

It’s worth noting that according to China’s labour laws, a standard work day is eight hours-long, with a maximum of 44 hours a week, (the 1994 Labour Code which is still in force provides for a 44-hour maximum work week (Article 36), Regulation 97896 subsequently lowered this to 40 hours per week.)

How many days off a week are employees entitled to?

Article 38 of the Labour Contract Law of the People’s Republic of China stipulates that employers should ensure their employees have at least one day off per week. However, for production and business needs, employers may extend working hours after consultation with the trade union and workers.

Generally, the daily extension should not exceed one hour, and for special reasons, the daily extension of working hours shall not exceed three hours. Nevertheless, the monthly total shall not exceed 36 hours, and the worker’s health must be guaranteed.

What are the overtime rates in China, and after how many hours are they paid?

According to PRC Labour Law and regulations, any work that exceeds 8 hours per normal workday must be paid at 1.5 times of the employee’s contractually agreed to hourly wage. For work done on rest days for which compensatory time off cannot be arranged, the employee should be paid at 2 times the normal rate. For work done on statutory holidays, the employee should be paid at 3 times the normal rate.

How long can an employer set the probation period for?

According to China’s Employment Contract Law (ECL), an employer may add a probationary period in employment contracts. The maximum length of the probationary period depends on the term of the employment contract.

  • If the employment contract is for between three months and one year, the probationary period can be for up to one month.
  • If the employment contract is for between one and three years, the probationary period can be for up to two months. 
  • If the employment contract is for more than three years or has no fixed term, the probationary period can be for up to six months.

It’s worth noting that, the employer and employee can agree to only one probation period. An exception applies to contracts that stipulate a change of position or type of work, in this case, the probation period may be renewed.

What kind of insurance or funds can expats pay into?

Employees have the right to receive “Five Insurances and One Fund” 五险一金 (wǔ xiǎn yī jīn).  Employers must pay for endowment insurance, medical insurance, unemployment insurance, work injury insurance, maternity insurance, and housing provident fund, according to the “Social Insurance Law” and the “Housing Provident Fund Management Regulations.”

The “Five Insurances and One Fund” are also applicable to expat workers in China, however, there are some exceptions. For example, expats who are only in China for a short period of time (less than one year) may not be required to participate in all of the insurance programs. Additionally, expats who are self-employed may not be eligible for some of the benefits, such as unemployment insurance.

The specific requirements for expat workers vary depending on their nationality, the type of visa they have, and the length of their stay in China. It is important to check with the local authorities to determine what insurance and fund programs are applicable to you.

(Generally, the Housing Provident Fund is only applicable to Chinese employees, expat employees are not required to contribute to the housing fund scheme. But if expats are thinking of buying a home in China, many cities may allow them to make housing fund contributions on a voluntary basis for attracting Talents.)

If you are an expat employee who is considering buying a home in Hainan, I recommend that you talk to your employer about whether or not you can make voluntary contributions to the HPF. You can also contact the local housing authority in Haikou to learn more about the HPF and how to make contributions.

  • Name: 海口市住房和城乡建设局 (Haikou Housing and Urban-Rural Development Bureau)
  • Address:  No. 15 Building, 2nd Government Office District, Changbin Road, Binhai Avenue, Haikou City.
  • Phone: 0898-68724538
  • Email: zhujianju@haikou.gov.cn.
  • Website: http://hkjsj.haikou.gov.cn/

Here is a brief overview of the “Five Insurances and One Fund”:

  • Endowment insurance: This provides retirement benefits.
  • Medical insurance: This covers medical expenses, such as hospitalization and doctor’s visits.
  • Unemployment insurance: This provides benefits to workers who are unemployed through no fault of their own.
  • Work injury insurance: This provides benefits to workers who are injured on the job.
  • Maternity insurance: This provides benefits to pregnant women and new mothers.
  • Housing provident fund: This is a savings account that can be used to purchase a home.

Employers who fail to pay social insurance premiums without reason can be ordered by the labour administrative department to pay within a time limit, and a late payment fee may be added for overdue payment.

If you decide to leave China, can you reclaim your contributions?

Yes, expats can reclaim their contributions to the Five Insurances and One Fund when they leave China. The process and details depend on the specific circumstances and the type of insurance or fund. Here are some general guidelines:

  1. Endowment insurance: Expats who have paid endowment insurance for more than 15 years in China can claim their pension payments after they leave the country. If they have paid less than 15 years, they can apply for a lump sum refund of their contributions.
  2. Medical insurance: Expats can usually apply for a refund of their medical insurance contributions if they have not made any claims during their stay in China. The refund amount may vary depending on the specific insurance plan and the duration of the coverage.
  3. Unemployment insurance: Expats can apply for a refund of their unemployment insurance contributions if they have not been unemployed in China or have not received any unemployment benefits.
  4. Housing provident fund: Expats can withdraw their housing provident fund contributions when they leave China, provided they meet the eligibility criteria and follow the necessary procedures. The withdrawal amount may include both the employer and employee contributions, as well as the accrued interest, (eligibility criteria may include things like completion of contract, retirement, disability or illness etc.).

It is important to note that the regulations and procedures for claiming refunds or benefits may change over time, and expats should consult with their employers or relevant authorities for the most up-to-date information.

Time off and holidays, what are expats entitled to under Chinese law?

Expats have the legal right to take holidays, including statutory holidays, annual leave, sick leave, and work-related injury leave, marriage leave, and maternity leave, according to Article 39 of the “Labour Law.”

Employers should arrange for workers to take leave during the following festival periods: New Year’s Day, Spring Festival, International Labour Day, National Day, and other statutory holidays as stipulated by laws and regulations.

Article 45 of the “Labour Law of the People’s Republic of China” states that “employees who have worked continuously for one year or more shall enjoy paid annual leave.” The “Regulations on Paid Annual Leave for Employees,” which took effect in 2008, further clarifies the provisions of Article 45, and stipulates that the number of days of annual leave is determined by the employee’s cumulative working years.

  • Employees who have worked for more than one year, but less than ten years are entitled to five days of annual leave,
  • those who have worked for more than ten years but less than 20 years are entitled to ten days of annual leave,
  • and those who have worked for more than 20 years are entitled to 15 days of annual leave.

Statutory holidays and rest days are not counted as annual leave.

There may be a few exceptions. For example, an expat worker who has worked for less than one year may be entitled to a pro-rated amount of annual leave. Additionally, if an expat worker is employed on a short-term contract, their annual leave entitlements may be different from those of a full-time employee. It is important to review the terms of the employment contract to determine the specific entitlements for annual leave.

Working outdoors in high temperatures

Anyone who works outdoors in temperatures above 35℃ and are unable to take effective measures to lower the workplace temperature below 33℃ are entitled to a high-temperature allowance, according to the “Measures for the Management of Heatstroke Prevention and Cooling” issued in 2012.

Women’s labour rights

It’s important to note that women have the right to equal employment as men. Article 13 of the “Labour Law” stipulates that employers shall not refuse to hire women or raise the employment standards for women based on gender, except for occupations or positions that are unsuitable for women as stipulated by the state.

Further Reading: Hainan Provincial High People’s Court launches English website, online legal help and mobile micro court.

Can an employer require that you do not work in the same industry for a certain period of time after you quit your job? (Non-compete agreement).

In China, employers can sign non-compete agreements with key employees, such as senior management, senior technicians, and other personnel with confidentiality obligations. These agreements prohibit high-level employees from working for another company that competes with the employer for a certain period of time after their employment has ended.

Western companies often include non-compete clauses as moral clauses without any real intention to enforce them, but put it in regardless. In China, this approach exposes the employer to payment.

China limits these non-compete provisions to two years or less after termination of the labour contract and it also requires the employer compensate the employee to maintain the non-compete requirement.

In general, the employer must pay the employee compensation at 30% of the employee’s average monthly salary in the 12 months before termination, or the local minimum wage, whichever is higher, for the duration of the agreement

As an expat working in Hainan Island, understanding your rights as an employee is crucial to ensuring fair and just treatment in the workplace. By familiarizing yourself with these regulations, you can advocate for your rights and protect yourself against any potential violations.

If you have any questions or comments on living or working in the Hainan Free Trade Port, head on over to the Hainan FTP business forum where we answer questions on the FTP and you can join the growing online business community in Hainan.

Related article: Keep up to date with the latest business news

Comment or complaint

If you would like to make a comment, compliment or complaint about any aspect of living or working in Hainan Island, we’d love to hear from you. We pass all communications on to the relevant services. Please keep it polite and to the point.

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