Overtime Payments and Regulations in China
This article offers an insight into employment contract law in China which is the most significant law in the country pertaining to the employer and employee association:
- Working hours, breaks and working days, annual leave
- Overtime payment
Having your own business in China does not automatically entitle you to hire employees in China. There are a set of rules and laws that every employer in China has to abide by while considering the recruitment of local or foreign employees.
This law is applicable to the employment of expatriates as well as local residents of China and applies to local Chinese companies as well as WFOE’s. This law has been constructed to protect the rights of the workforce hired in China and build harmonious employment relationships. For more practical information regarding hiring employees in China, please refer to ‘Employing Local Personnel in China‘ or ‘Planning to Hire Employees in China‘.
Working hours, breaks, working days, annual leave
The labor law safeguards the right of employees to have pre-specified working hours and working days per week, regular daily breaks, over-time work payment, paid annual leave in addition to China’s public holidays. In special conditions, the employer is also entitled to grant medical leave, maternity/paternity leave and marriage leave to its employees. The employer may also grant longer annual leave to its expatriate employees considering their travel to their home country. The minimum amount of annual leave in China is five days.
The employer and the employee are required to have a clear understanding as to how many hours should be worked in the labor contract, and it is only if this amount is exceeded that overtime would have to be paid.
A normal working day of an employee in China is of 8 hours and a normal working week is of 40 hours. An employer may extend working hours due to the business needs, after consulting with the employee union and the employee. The extended working time for one day shall generally not exceed one hour. If an extension is necessary due to special reasons, the extended hours shall not exceed three hours a day, under the condition that the health of the employee is not endangered. The total extension of working hours in a month shall not exceed thirty-six hours. It is extremely important for your China Payroll team to understand the policies and regulations to make sure your compliance in China regarding the overtime payment.
When an employer arranges employees to work at the time outside the legal maximum working hours, it shall pay overtime payments to the employees according to the following standards:
1. Overtime payments shall be paid at a rate of no less than 150% of the hourly wages for all hours outside the normal daily working hours.
2. Pay no less than 200% of the daily wages or the hourly wages if the employer arranges employees to work overtime during the weekend or a rest day in case it fails to arrange for the rest at a later time; and
3. Pay no less than 300% of the daily wages or the hourly wages if the employer arranges employees to work overtime during public holidays.
How HROne can be beneficial to your business
HROne’s service can handle the complete employee benefits for your company in compliance with the local policies and also can take care of the visa for your company’s expatriate employees. We can directly hire employees for a company not having a legal entity in China by our specialized Employee Leasing / Talent dispatching services.
The information contained in this article is valid on June 23rd, 2016. For updated information, please contact us via email at firstname.lastname@example.org.