chinese labor and employment law
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CHINESE LABOR AND EMPLOYMENT LAW
BY NATHAN JACKSON
April 2011
This FAQ is an attempt to answer questions that a foreign layperson may ask about
China’s labor and employment laws. China’s labor policy is often a politically charged issue in
foreign countries and much misinformation is frequently deployed in political debates. In
addition to providing an overview China’s labor and employment laws, this FAQ also attempts
to highlight relevant topics that may be unfamiliar to informed laypersons. The focus of this
document is on law, but as the FAQ will show, there is often a large gap between law and actual
practice. Where possible, comments are included that provide a practical perspective of China’s
labor and employment laws.
Why do China’s labor and employment laws matter to me?
China’s labor environment matters to you because changes in labor and employment laws
influence the prices of goods and services around the globe, the locations in which companies
and individuals choose to invest or move production, and the social stability of China. In
November 2001, China became a fully admitted member of the World Trade Organization and in
recent years the press has heavily covered China’s growing participation in international trade.
China has not only become a major export power, but also an attractive investment target for
international investors seeking to sell goods and services within China. As China’s share of
world trade and investment continues to increase, its labor environment will likely attract more
attention from outsiders interested in assessing the country’s economic competitiveness.
How large is China’s labor force?
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China’s labor force consists of more than 800 million workers, up from 500 million in
1980. At least 130 million of these are migrant workers who move from relatively poor rural
areas to urban and industrial centers to work. Many of these migrant workers remit portions of
their earnings back to family members in their hometown. Until recently, China has typically had
an oversupply of unskilled labor and a shortage of skilled and professional workers. However, in
the past several years, some companies in the major industrial hubs have begun to complain
about labor shortages. As a result, many companies now raise wages 10 percent or more annually
to retain workers, while others have closed their doors and moved to poorer inland areas or
countries with cheaper labor. Interestingly, salaries for new university graduates have stagnated
because of the sharp increase in the number of graduates from China’s quickly expanding
university system. While university graduates start their careers with wages comparable to a
factory worker, their salaries typically rise much more quickly than those factory workers.
How have China’s labor laws changed in recent years?
There has been a tremendous change in China’s labor and employment laws in the past
35 years. Prior to the early 1980s, nearly all jobs were allocated to citizens through an
administrative bureau. Employees could not choose their employer or terminate their
employment. Further, regulations set an expectation that the employee would work for the same
employer for her or his whole working life. Companies in this era could only terminate
employees for gross misconduct. This type of labor market and social safety net was called the
Iron Rice Bowl because the employer guaranteed job security and benefits to employees
regardless of their productivity or the employer’s profitability. In other words, the benefits could
not be taken away and were ―iron‖ clad.
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In 1983, the government introduced a contract system that attempted to address the low
productivity of the labor market by replacing the Iron Rice Bowl with short-term labor contracts.
At first, state-owned companies resisted this trend and the government succeeded only in
minimal reforms. In 1992, the National People’s Congress promulgated a Trade Union Law that
required all trade unions to be affiliated with the All-China Federation of Trade Unions
(ACFTU). This effectively brought labor unions under greater control of the government.
The Labor Law of 1994 liberalized the labor market. The labor law, when combined with
economic reforms, resulted in more than 40 million lost jobs in government and state-owned
enterprises. As a result of the reforms, the government shuttered inefficient businesses and the
formerly economically dominant northeast turned into a rustbelt. Meanwhile, Chinese
entrepreneurs and Hong Kong investors transformed the formerly weak southeast province of
Guangdong into the largest center of manufacturing in the world.
In 2008, the government introduced a Labor Contract Law that rolled back some of the
laissez-faire approaches to the workforce that the government introduced in the 1990s. This new
law abolished the system of at-will employment for most full-time employees and required
employers to provide employees with written contracts. Since 2008, the government has also
revisited its policy of tight control over the All-China Federation of Trade Unions (ACFTU).
While all unions must still be approved by and affiliated with ACFTU, it appears that the
government is allowing the ACFTU greater authority to advocate for the rights of workers than it
did just a few years ago. That said, the government continues to imprison workers who advocate
for the formation of independent trade unions.
WAGES
Does China have a minimum wage?
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Yes. There are two standards of minimum wage: monthly and hourly. Minimum wages
are set at the provincial and municipal level. The government prohibits employers from reaching
an agreement with employees for wages that fall below the local minimum wage standard
regardless of whether the employee is still in her or his probation period or internship. A
probationary period occurs at the beginning of an employment relationship and allows employers
to terminate employees without severance pay up to a maximum of six months, but usually just
two months. The probation period allows the employer to make sure the employee is a good fit
with the employer before being locked into the full term of the employment contract. Provincial
and municipal governments frequently adjust statutory minimum wages. For example, many
municipalities have raised their minimum wages twice in the past year alone.
How much is China’s minimum wage?
It depends on the locality. For example, Shanghai’s minimum wage for full-time
employees is RMB 1,120/month, or roughly $165. However, in the poorer inland city of
Chongqing, the minimum wage is RMB 870/month, or roughly $130. Of course, purchasing
power differences prevents these figures from being directly comparable with another country’s
wages. The relative cost of living in China is lower than in many developed countries, but even
when wages are adjusted for relative prices they remain much lower than in highly developed
countries.
How much do factory workers earn?
It depends on the locality, industry, skill level, and a host of other factors. However,
several sources keep broad indices of costs for general factory labor across many regions.
Although the indices are only rough estimates, they are helpful in gauging wage differentials
across the country. For example, a skilled manufacturing employee in Beijing can be hired for
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RMB 3,000/month, or roughly $445. A similar worker in the poorer inland municipality of
Chongqing can be hired for RMB 1,900/month, or roughly $280. To illustrate how important
geographic location is in determining wage rates, the average employee salary in Beijing is
nearly three times higher than in the poor inland province of Jiangxi.
Do Chinese workers get overtime?
They’re supposed to. Under China’s Labor Law, an employer must pay overtime
compensation to any employee who works more than 40 hours per week. As a general rule, an
employer cannot require overtime of more than one hour per day, or three hours per day under
special circumstances, and no more than 36 hours per month. As in many other countries, white
collar workers like managers and sales staff are often exempt from the overtime pay rules.
The following payment schedule illustrates the overtime pay requirements.
Extended Working Hours Minimum Overtime Pay (percent of regular wages)
Typical working day 150 percent
Rest day (min. one per week) (i.e.,
weekend)
200 percent
National holiday 300 percent
Many migrant workers desperate to earn quick money agree with the employer to work
beyond the maximum overtime requirements so they can send extra money home to their
families. This type of overtime work is frequently found in industrial hubs and is a contributing
cause of recent labor strikes because employees who agree to these arrangements place
downward price pressure on wages and upward pressure on hours. Employers are also able to
maneuver around overtime regulations by applying to the local labor authorities and asking for
approval to use an alternative system of working hours.
What are the wage levels for workers who are paid piece-rate?
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Piece-rate is a compensation system where the employer pays the employee for each unit
produced or action performed, not on the basis of time. Piece-rate wages are still a feature of
China’s manufacturers, but over the past decade, the government has developed rules to address
the exploitation of employees through piece rates. For example, workers were exploited when
employers paid workers at piece-rate, but then fined them for quality defects, tardiness, or no
reason at all. These penalties effectively left workers with wages far below what the employer
promised the workers during the hiring process.
The first principle of piece-rate wages is that employers cannot set a work quota so high
that it prevents an employee from completing the work within an eight-hour day or an average
40-hour week. Second, the employer must set piece-rates that reflect the amount of work
normally accomplished in a forty-hour week. For example, in the industrial hub of Guangdong
province, for an employer’s piece-rate to be valid, more than 70 percent of employees must be
able to achieve the work quota within the legal working hours.
SAFETY
How many workers are injured on the job each year?
Despite many safety regulations, China’s workplace safety record is still extremely poor.
According to the State Administration of Work Safety, more than 83,000 workers died in work
accidents in 2009, or roughly one out of every 10,000 workers. Of these, more than 2,000 of the
dead were coal miners. In 2006, government statistics placed the number of workplace injuries at
625,000. And in the manufacturing hub of Guangdong province, more than 40,000 fingers are
severed each year. The majority of injured workers are migrant workers and the most frequent
causes of injuries are carelessness and fatigue. Both of these causes persist because of
substandard job training and overly long work hours on repetitious tasks.
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Does China have a Workers’ Compensation system?
Yes. Each province in China has its own Work-Related Injury Insurance Regulations that
require employers to pay the medical expenses of injuries, disability, and occupational diseases.
The regulations cover all companies, including unregistered companies and those that illegally
avoid paying the premiums. The insurance fund is financed through employer-paid premiums
that the government determines by gauging the dangerousness of the workplace. For example, an
employer with low risk work like accounting pays 0.5 percent of total payroll expenses into the
insurance fund, while an employer with high risk work like shipbuilding pays 2 percent of total
payroll into the fund.
The law prohibits employers and employees from contractually opting out of the Work-
Related Injury Insurance systems. While coverage of employees has continued to increase, many
employees are unfamiliar with this worker’s compensation program and provincial level taxation
departments continue to under-enforce it. Similarly, employers continue to underfund the
insurance scheme by understating payroll, hiring employees without contracts, and paying wages
in cash.
What kind of safety regulations exist for Chinese workers?
China has a large patchwork of safety regulations, but workplace safety is still very bad
by the standards of highly developed countries. The Labor Law requires employers to inform
employees of occupational hazards during the hiring process. The law also requires that
employers provide workers with safe and hygienic working conditions. The Safe Production law
requires some large manufacturers to establish full-time safety supervisors and training for
employees. Other important safety regulations include the Occupational Diseases Law and the
Administrative Penalties for the Violation of Production Safety Laws.
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What are the penalties for safety violations?
It varies. First, the onus is largely on employees to report safety violations to the
authorities. Employees are allowed to refuse to perform risky work and they have the right to
resign summarily when the employer gives them an order to do unsafe work. In such cases
employers must pay the employee severance in accordance with the Labor Contract Law. For
many workers, especially migrant workers, this job protection is still insufficient to encourage
them to report safety violations. The civil courts impose punishments like warnings, fines, and
workplace closures on employers that violate health and safety regulations.
How much compensation do employees receive for workplace injuries?
The Work-Related Injury Insurance Regulations contain a disability scale that determines
the amount to be paid to the injured worker. For example, if a worker loses an eye in a workplace
accident, the employer must retain the labor contract with the injured worker, even if the worker
is unable to perform her or his job. As compensation for the injury, the worker will receive a
lump sum equal to a portion of the national average wage for the type of work and an ongoing
disability allowance equivalent to a portion of the average monthly wage.
In 2011, the government released a new Work-Related Injury Insurance Regulation that
eliminates some of the gaps in injury payments between poor and wealthy regions of China.
Under the previous regulation it could take an injured employee months or years to finalize a
settlement, but under the new regulation the authorities are to reach a decision on payment within
fifteen days of accepting the injured employee’s application for benefits.
In practice though, problems continue to persist in the payment of injured workers. The
law requires employers to pay employees while they are in the hospital recovering from work
injuries, but in one survey, only 33 percent of injured workers received their salary while in the
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hospital. To receive benefits, employees must confirm their employment relationship with the
company at which they were injured. Because employers in dangerous industries often ignore the
Labor Contract Law by not providing their employees with contracts, it is challenging for an
employee to prove that she or he is covered under the Work-Related Injury Insurance
Regulations. Further, the new regulation adds a provision that prevents employees from
collecting benefits if she or he is the primary cause of the accident. While this may seem logical,
the most common workplace injuries are caused by distraction and fatigue, both of which are
difficult to investigate because their causes can often be blamed on both the employer and
employee.
What kind of laws does China have against child labor?
China has several different laws to protect against the labor exploitation of minors. Under
the Child Labor Regulations, employers are not to recruit, employ, or facilitate the employment
of children under the age of sixteen. Exceptions exist for child entertainers, athletes, or
vocational training, but in these cases employers must ensure the health of children. These new
regulations also remove exceptions that allowed children to engage in labor for the family and
loopholes that previously allowed local authorities in poor areas to allow certain forms of child
labor.
Employees between the ages of sixteen and eighteen are classified as underage
employees and may not engage in mining, unhealthy or hazardous work, or highly labor-
intensive work. Employers of underage workers must arrange to have these workers receive
regular physical examinations.
Despite the regulations that prohibit employment of children under the age of sixteen,
exploitation of child workers persists in China, though the situation has dramatically improved
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from even a decade ago. Both employers and child workers desperate to earn a meager living
sometimes ignore the regulations. In 2007, the authorities ended one of the worst documented
cases of child labor abuse after 500 or more children and mentally disabled adults were
discovered working in the brick kilns in Shanxi province. Major lapses like these suggest that
China’s child labor problems stem from poor enforcement, not a lack of regulation.
UNIONS
Can Chinese workers unionize?
Yes. Establishing a union is easy— there is no need for employee balloting or employer
counter-campaigns. To establish a union, 25 workers simply join the union, and the employer
will usually be required to accept the request. However, unions in China differ greatly from their
counterparts in many other countries. First, the primary function of unions is to avoid labor
unrest, not to advocate for the interests of workers. Second, while many unions exist in China, all
unions must maintain an affiliation with the All-China Federation of Trade Unions (ACFTU).
The union discourages rank-and-file employees from airing grievances or striking. Some
labor experts have described Chinese unions as bearing a closer relationship to a European work
council than what is commonly called a union. This comparison is apt because in a work council
country, a national labor organization reaches agreements with employers at a national level
while the work council is just a local component of a national labor organization. In short, the
national labor organization largely shapes the local work council’s efforts. Unions in China may
best be described as intermediaries between workers and management who do most of their work
by negotiating behind closed doors.
Who runs the unions?
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It depends. Under China’s Labor Union Law, labor unions may only be established by
workers voluntarily. However, unions in China are mainly set up by employers, often to preempt
organization by workers. This type of organization is called a company union and they are often
prohibited in developed countries because they prevent the workers from organizing
independently and choosing their own advocates. In China, union officials are often members of
management and they are directly paid by the company, not by workers. In some instances,
employees are able to administer their own union, though they may only negotiate with the
employer under the watch of the local or national union.
Do Chinese workers collectively bargain?
Yes. In 2006, the ACFTU negotiated collective agreements covering more than 110
million workers. However, the unions that conduct collective bargaining are often not in an
adversarial relationship with management. Rather, the union acts as an intermediary who seeks
to maintain both the profitability of the company and prevent worker unrest. Union officials have
broader considerations than just the interests of workers. Unions must spread their efforts
between advocating for workers, maintaining a positive economic environment for employers,
and preventing industrial instability that could threaten broader economic policy.
As a matter of social policy, the government is now encouraging workers to engage in
collective bargaining. The Shenzhen Human Resources and Social Security Bureau and
Shenzhen All-China Federation of Trade Unions recently announced that they will target 120
large enterprises for collective bargaining with the hope that once industry-leading companies
collectively bargain, the practice will spread throughout the industries. The government is
adopting this approach in the hope that it will address the growing income inequality gap by
pressuring companies to use their profits to pay workers higher wages. However, even though
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collective bargaining has surged in recent years, collective contracts frequently ensure only legal
minimum labor standards and do little to improve employee wages or benefits.
How are union leaders chosen?
While companies frequently set up a union, the local branch of the labor union typically
appoints the workers’ representatives. Usually this means that the chair of the local trade union
will be the workers’ chief representative. In instances where the negotiating representative is not
assigned by the trade union, the representatives are chosen by democratic vote from the
employees.
How do Chinese workers and management settle disputes?
The law requires disputing employers and employees to work with each other through
mediation and arbitration committees. At the outbreak of a dispute, workers and management are
first required to consult with each other. Only after consultation fails can the parties seek
mediation. After mediation, the parties enter an arbitration committee. If this still fails to resolve
the dispute, the workers or the employer can bring the dispute before a judge.
In 1996, China’s arbitration committees handled almost 48,000 cases. By 2008, and after
passage of the Labor Contract Law and the Labor Dispute and Mediation Law, the number of
cases reached 693,000. Resolving disputes peacefully to ensure industrial stability is a top
priority of the government and labor law commentators largely give positive reviews to the
arbitration committees.
BENEFITS
How much holiday and annual leave do Chinese workers receive?
Employees with between one and ten years of work experience are to receive a minimum
of five days annual leave per year. Employees with between ten and twenty years of work
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experience receive a minimum of ten days per year. For more than twenty years of work
experience, the employee receives a minimum of fifteen days per year. These laws apply to all
employees, including managers.
Chinese workers receive many more days of holiday than in the U.S. Each year
employees receive eleven days of national holiday, and women receive an extra half-day for
Women’s Day. In addition, employers traditionally rearrange work schedules so that employees
can receive seven-day holidays during Spring Festival and National Day. In return, the
employees work during the following weekend to make up for the additional days of holiday.
Each year the week-long break during Spring Festival leads to the largest human migration, as
more than 150 million workers leave their jobs to visit family and friends in their hometowns.
During this time nearly all businesses close.
Do Chinese workers have a national retirement system?
Yes. Employers and employees must contribute to a basic pension insurance fund that is
administered at the provincial or municipal level. Some cities have also set up supplementary
pension insurance funds that employees have the option to join. Typically, employers contribute
roughly 20 percent of total wages and employees typically contribute roughly 8 percent of wages.
It should be noted that most pension amounts are insufficient to support retirees. For this reason,
the government offers and encourages workers to enroll in supplemental retirement plans.
The general retirement age for men is 60 and for women it is 55. Employees are not
allowed to make early withdrawals from their pension accounts, but the accounts are
transferrable when the employee changes employers or moves to a new city. Employer
contributions are subject to strong enforcement and employer defaults can be subject to very
large fines. When an employer defaults on pension payments, the local government is permitted
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to garnish the payments from the employer’s property. This is typically done through the largely
state-run banking system.
Do Chinese workers receive basic medical insurance?
Yes. A law passed in late 1998 requires most employers to participate in the national
basic medical insurance system. Under the system, employers contribute roughly 6 percent of
total staff payroll, and employees contribute 2 percent of their individual wages to a pooled
insurance fund and employee personal expense accounts. The employee’s contribution is placed
in his or her own personal medical expense account. The employer’s contribution is split into
two portions: 30 percent of the employer’s contribution is placed in the employee’s personal
medical expense account and the remaining 70 percent of the employer’s contribution goes to the
pooled fund. Supplemental medical insurance is also common among white collar workers.
Do Chinese workers receive maternity leave?
Yes. Female employees are entitled to a minimum of 90 days of maternity leave.
Employers are prohibited from discharging or discriminating against women because of
pregnancy or status as mothers. Employers may not subject pregnant women to overtime or
hazardous work. China also has a maternity insurance fund that compensates a woman for any
lost wages during maternity leave. The insurance fund is financed by employers that contribute
roughly one percent of payroll expenses. Men are not covered under the maternity leave
provisions, although most employers allow men several days off following the birth of a child.
Do Chinese workers receive unemployment insurance?
Some do. The current unemployment regulations only cover urban residents with a
proper hukou, or household registration. This means that for a worker to receive unemployment
insurance payments, she or he must be working in her or his place of official registration. To
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receive unemployment insurance, workers must fall within a working age range, be able to work,
and register with the government. These criteria filter the number of workers eligible for
unemployment insurance down to 120 million out of a total workforce of 800 million people.
Like other national insurance schemes, the unemployment insurance system is financed
by employers who must pay two percent of payroll. Additionally, employees must contribute one
percent of their wages to the fund. To receive unemployment benefits, the worker must be
registered for benefits, have paid premiums for at least one year, have involuntarily lost
employment, and be actively seeking work.
Do Chinese workers have other benefits?
Yes. Local governments in urban areas typically operate housing funds. Under these
programs, the employer and employee contribute an amount each month to a fund dedicated to
assisting employees in buying, refurbishing, or renting a home. The accounts are popular with
workers who are attempting to save for housing, as house prices have continued to skyrocket. If
the employees do not use the funds in their account for housing, they can only remove the funds
for retirement, a permanent move overseas, or several other scenarios.
CONTRACTS
Do Chinese workers have employment contracts?
The 2008 Labor Contract Law requires employers to provide full-time employees with
written contracts that contain the term of employment, job description, place of work, working
hours, rest and leave periods, wages, social insurance, labor protections, and description of
working conditions. Part-time employees must have at least an oral contract. Before the Labor
Contract Law of 2008 went into effect, it was estimated that 40 percent of full-time workers did
not have written contracts. The Labor Contract Law has been extremely successful in increasing
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the number of workers covered by written contracts. The government hopes that written
contracts will reduce the number of disputes between employers and employees and provide
employees with employer assurances that can be backed by contract law. That said, it is still
common for many workers, particularly migrant workers, to work without labor contracts.
Can Chinese employers use at-will employment contracts?
Not anymore. The at-will employment doctrine allows both the employer and employee
to terminate their employment contract for any reason or no reason at all. Under the Labor
Contract Law, employers may no longer terminate full-time employees’ contracts at will.
Employers may only terminate at-will during the probation period between one to six months at
the beginning of the contract. Likewise, a full-time employee must provide her or his employer
with 30 days notice before resigning from the company. The employer can unilaterally terminate
an employment contract, but only in cases where the employee "seriously breaches the
Employer's rules and regulations." In other words, a serious breach would require a violation
equal to dereliction of duty or graft.
Under the Labor Contract Law, an employer cannot terminate an employee for
incompetence alone. In an employee is incompetent, the employer must re-assign the employee
or provide further training before terminating the contract. To terminate an employment
relationship without cause, both parties must reach a severance agreement by negotiation. A
minimum severance in cases of termination for cause is calculated as roughly one month of
salary for each year of service. An employer may also have to pay severance to an employee at
the end of an employment contract. If an employer does not offer the employee a new contract
with equal or better terms, the employee is entitled to her or his standard severance payment.
How does an employer fire an employee in China?
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The process can be quite complex depending on unionization or the status of the worker.
If the company has a union, the union must be notified before the employer can terminate the
employee’s employment contract. The labor union is entitled to respond, and if the labor union
disagrees with the termination, the employer must consider the response and provide the union
with a written notification of how it will respond to the disagreement. Disagreements between
the employer and union are settled by negotiation.
Employers are also prohibited from firing workers who have been exposed to
occupational disease hazards before being checked by medical staff. Employers may not fire
injured workers during their period of medical care, those who are pregnant, ill, or nursing, and
those who are within five years of retirement.
How do employees quit their jobs?
Employees can quit by resigning unilaterally, by reaching a mutual agreement with the
employer, or by reaching the end of their labor contract. Under the Labor Contract Law,
employees must give 30 days’ notice to the employer before resigning unilaterally. However, the
employee may immediately resign if the employer has abused the employee, failed to pay wages
or social insurance on time, or compelled the employee to perform dangerous tasks.
Can employers have employees sign non-compete or confidentiality agreements?
A non-compete clause limits the ability of employees to compete with their former
employers. Chinese courts allow non-compete agreements, but the courts treat non-compete
agreements with suspicion and require employers to compensate former employees if they wish
to exercise the non-compete contract provisions. The 1994 Labor Law allowed businesses to
include provisions in contracts that prevent key employees from taking business secrets with
them after they leave the company. By 2006, these provisions could only be applied to directors
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and senior management. In 2008, the Labor Contract Law expanded the ability of employers to
use contract law to protect trade secrets and intellectual property. A non-compete agreement
binds only senior management, senior technicians, and key personnel with confidentiality
obligations.
Employers may only enforce non-compete agreements for a maximum of two years and
during that time they must continue to compensate a former employee to maintain the agreement.
The amount of money to be paid to maintain the non-compete or confidentiality provisions is
fixed in a contract. Courts have fined employees for failing to abide by non-compete agreements,
but only in small amounts. However, courts have given jail time and fines of nearly $1 million to
employees who breach confidentiality clauses and cause serious damage to their employers.
Regardless of the regulations, employers, particularly among technology companies, complain
that employees steal their intellectual property and trade secrets and then take that knowledge to
competitors or establish their own companies.
ENFORCEMENT
Who enforces labor and employment laws?
Health and safety regulations are enforced by the State Council’s Work Safety
Commission. However, the Commission has many other functions that dilute its ability to be an
effective enforcement authority. As a result, enforcement is often left to local safety boards that
lack training or independence from government officials whose job it is to attract investment.
Because the central government rates and promotes provincial and local leaders on their ability
to grow the local economy, there is a conflict of interest in that these same authorities are left to
oversee the enforcement of safety laws. Wage and hour violations are also in most cases
enforced by local government administrations.
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Are they frequently enforced?
It is difficult to quantify, but commentators agree that the laws are increasingly enforced.
First, employees have been bypassing their unions and taking their disputes to court in increasing
frequency. After the Labor Contract Law of 2008 was passed, the number of labor disputes in
court jumped by more than 90 percent over the previous year. In some developed cities, the
number of labor-related court hearings tripled. Further, the government has gradually allowed the
ACFTU greater leeway to intervene on behalf of worker interests.
That said, the authorities tasked with enforcing labor and employment laws are frequently
understaffed and undertrained to adequately enforce China’s labor laws. Further, China’s courts
are not independent and equal branches of government. Instead they are responsible to the
National People’s Congress, the same body that decides economic policy. Again, this is
significant because there is a conflict of interest in that the National People’s Congress can
attempt to maintain economic growth by preventing courts from taking an aggressive stance in
enforcing labor laws. China’s legal system does not treat court decisions as precedents that are
binding on lower-level courts. This adds to the struggle of the Supreme People’s Court to
improve enforcement of labor laws at the local level.
EQUALITY
Does China have laws against workplace sexual harassment and gender discrimination?
Yes to both. The laws against sexual harassment were passed in 2005 and have seen
increased prosecution in courts. Gender is a protected status under the Labor Law. The law
provides that women cannot be denied employment by reason of gender. Nor can women have
their employment standards raised above those for men except in the most physically demanding
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work conditions. The gender provisions do not say anything on the status of transgender
individuals.
Does China have equal pay for equal work laws?
Yes. Under the Labor Law, there are three tests used to determine if an employer is
providing employees with equal pay for equal work:
1. Equal pay for employees holding the same position with the same work assignment;
2. Equal pay for employees holding the same position with similar expectations of work
volume; or,
3. Equal pay where the same working volume achieves the same performance.
Employees may bring a civil claim against their employer if none of these three tests are met. If
the employer meets even one test, it has satisfied the requirements of the law.
MIGRANT WORKERS
Why do so many workers migrate to cities to find work?
Several reasons. Urban companies pay better wages and provide workers with better
working conditions because there is more competition among employers. Migrant workers
became a prominent feature of China’s labor market in the 1980s after economic liberalization
led to tremendous growth in some regions while others remained dominated by agriculture and
resource extraction. Since that time, the Chinese government has allowed workers greater
freedom to move throughout the country to find work. As a result of the changes, China has
experienced history’s quickest rural to urban internal migration. In 1978, only 18 percent of the
population lived in urban areas. Currently, 46 percent of China’s population lives in urban areas.
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Who are the migrant workers?
Of China’s more than 130 million migrant workers, seventy percent are between the ages
of fifteen and thirty-five. China’s last census showed that in the manufacturing province of
Guangdong, more than 60 percent of factory migrant workers were female. In Shenzhen, this
number is 70 percent. The construction trades are dominated by men. Most migrant workers
come from relatively poor rural areas. Sixty-five percent of migrant workers stay within their
province to find work, while the rest typically move to industrial hubs near the coast.
Why do workers often live in factory dorms?
Efficiency. Factories often include dormitories for workers to live in as part of their
compensation package. These factories also typically provide a canteen at which the workers eat
their meals for a small fee, often between 30 to 50 cents per meal. Workers usually share a small
dormitory room with one or more other workers. Because factories are often located far from city
center, there are few acceptably-priced living quarters nearby. Living in the dorms saves workers
money and reduces commute time while giving the company extra production flexibility in
having labor on-site at all times. A secondary benefit for employers is that because workers rely
on their employer for housing, the workers may be less inclined to argue with management or
seek other jobs.
Why don’t migrant workers move their families to where they work?
Some do, but most realistically cannot for combination of reasons. First, the travel and
living expenses would be too high for most migrant workers to bring their families with them.
Second, China’s hukou or household registration system, prevents migrant workers from
obtaining residential status in the city where they work. In other words, a worker’s residential
status is set at the place she or he came from and the worker cannot change the status easily.
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Without residential status in the cities where they work, migrant workers cannot receive social
benefits like unemployment insurance payments or schooling for children. Workers who cannot
change their residential status and benefits are more likely to be victims of labor exploitation,
discrimination, and abuse.
Why doesn’t China allow migrant workers to permanently move themselves and their families to
cities?
This is a bit complex. First, many migrant workers and their families are able to move to
urban areas without changing their registration location. There are no borders to stop the
migration and many migrants can find low wage work legally and relatively easily. The Chinese
government uses the registration system to slow the already massive migration from rural to
urban areas in an effort to preserve social stability. The government’s fear is that sudden influxes
of rural families to the cities will lead to greater unemployment, lower wages, and ultimately
violent frustration among poor workers. Further, by not allowing workers to change their
registration easily, the authorities ensure that most migrant workers will send a portion of their
earnings home, hopefully spurring economic development in poor regions.
Do migrant workers receive the same treatment as local workers?
China’s Employment Protection Law prohibits employers from discriminating against
migrant workers and states that migrants are entitled to the same labor rights as local workers.
However, migrant workers are more likely to experience unpaid wages and poor working
conditions. According to one survey, more than 70 percent of China’s migrant workers were
owed some form of back pay by their employers. Migrant workers often work without contracts
despite the new Labor Contract Law and migrant workers are often unaware of their legal rights
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despite the efforts of some labor lawyers. As a result, employers disproportionately assign
migrant workers to dangerous jobs with low pay.
RECENT LABOR NEWS
What caused the outburst of labor strikes in China in the summer of 2010? Did the workers
receive any benefit from their strikes?
Workers in China do not have the right to organize independently and strike. However, in
the summer of 2010, workers at several factories in Guangdong province organized
independently and went on strike for better wages and working conditions. This is significant
because although the workers did not have the right to take such actions, the government sided
with the employees and allowed their organization and strike to continue. The strikes of the
summer of 2010 were a break with previous labor unrest because until that point, most labor
disputes were settled without strikes and were not covered in the media. Ultimately, the strike
continued without an intervention by the ACFTU and the workers won wage increases of 24-34
percent.
What was the result of the 2010 labor strikes? Why are they still mentioned in newspapers?
Several other events occurred during the summer of 2010 that pressed the government to
alter labor policy. First, after the successful independent strike early in the summer, strikes
spread to other nearby factories. Second, a string of worker suicides at the contract electronics
manufacturer Foxconn led to intense international media coverage. As a result of the
embarrassment from the international coverage of worker strikes, Foxconn raised wages by 30
percent for tens of thousands of its workers. After these events, the government then intervened
by significantly raising minimum wages in many of the major industrial centers of the country.
As an example of the scramble to meet worker expectations, the Beijing city government raised
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its minimum wage twice in a six- month period. In March of 2011, the southern manufacturing
hub of Shenzhen announced it will raise its minimum wage by 20 percent. This will be
Shenzhen’s eighteenth minimum wage rise since 1992.
CONCLUSION
China’s economy has achieved tremendous growth over the past 30 years and overall
working conditions have improved at a similar rate. Fewer workers are dying on the job each
year, wages continue to rise, and more and more of the country is able to take part in economic
activity. China has also promulgated a tremendous amount of legislation that is modeled on labor
and employment law of many developed countries. In fact, in comparison to the U.S.’s labor and
employment laws, China’s law appear much more progressive. However, promulgating laws is
much simpler than creating governance structures to enforce them. China’s labor law
enforcement record is spotty and depends greatly on the region, industry, or individual case at
hand. This gap between law and enforcement is a theme that has dogged China for centuries.
There are signs that this situation has improved in recent years, but it remains to be seen how
long it will take to standardize enforcement across the country.
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