Working Conditions

IMPLEMENTING REGULATIONS FORTHE LAW OF THE PEOPLE’S REPUBLIC OF CHINA ON EMPLOYMENT CONTRACTS

Unofficial Translation Prepared by Baker & Mc.Kenzie

(Adopted at the 25thOrdinary Meeting of the State Council on September 3, 2008. Promulgated by the State Council with Order No. 535 on, and effective from, September 18, 2008.)

CHAPTER 1. GENERAL PROVISIONS

Article 1.These Regulations have been formulated in order to thoroughly implement the Law of the People’s Republic of China on Employment Contracts (the “Law”).

Article 2.People’s Governments at every level, relevant authorities such as labor administration authorities, etc. of People’s Governments at the county level and above and organizations such as labor unions, etc. shall take steps to promote the thorough implementation of the Law and procure harmonious employment relationships.

Article 3.Partnerships such as accounting firms and law firms, and foundations, that are established in accordance with the law are deemed to be Employers for purposes of the Law.

CHAPTER 2. CONCLUSION OF EMPLOYMENT CONTRACTS

Article 4.Offices and branches that have been established by Employers as defined in the Law and that have lawfully obtained a business license or registration certificate may conclude employment contracts with workers as Employers. Those that have not lawfully obtained a business license or registration certificate may conclude employment contracts with workers upon authorization by the Employer.

Article 5.If, despite having been notified in writing by his Employer, a worker fails to conclude a written employment contract with the Employer within one month from the date on which the Employer started using him, the Employer shall terminate the employment relationship by written notice to the worker. In the event of such termination, the Employer shall not be required to pay severance pay to the worker, but it shall pay him labor compensation, according to law, for his actual period of work.

Article 6.If an Employer has not concluded a written employment contract with a worker more than one month but less than one year from the date on which it started using him, it shall pay him twice his wage each month, as required by Article 82 of the Law, and shall belatedly conclude a written employment contract with him. If the worker does not conclude a written employment contract with the Employer, the Employer shall terminate the employment relationship by written notice to the worker and pay severance pay as specified in Article 47 of the Law. The period over which the Employer shall each month pay the worker twice his wage, as mentioned in the preceding paragraph, shall commence on the first day after the end of a one-month period counted from the date on which the Employer started using him and end on the date immediately preceding the belated conclusion of the written employment contract.

Article 7.If an Employer fails to conclude a written employment contract with a worker within one year from the date on which it started using him, it shall pay him twice his wage each month, as required by Article 82 of the Law, over a period commencing on the first day after the end of a one-month period counted from the date on which the Employer started using him and ending on the day immediately preceding the last day of a one-year period counted from the date on which the Employer started using him. In addition, the Employer shall be deemed to have concluded an open-ended employment contract with the worker with effect from the last day of a one-year period counted from the date on which it started using him, and it shall promptly conclude a written employment contract with him.

Article 8.The register of employees mentioned in Article 7 of the Law shall include such particulars as each worker’s name, sex, ID number, registered permanent residence and currentresidential address, contact details, method of employment, time of commencement of employment, employment contract term, etc.

Article 9.The period referred to in the phrase “has been working for the Employer for a consecutive period of not less than 10 years” in the second paragraph of Article 14 of the Law shall becounted from the date on which the Employer started using the worker, and include the time worked by the worker prior to the implementation of the Law.

Article 10.If a worker is transferred from his original Employer to a new Employer for a reason not attributable to himself, his years of service with his original Employer shall count toward his years of service with his new Employer. If the original Employer has already paid the worker severance pay, the worker’s years of service with the original Employer shall be ignored when the new Employer lawfully terminates or ends the employment contract and calculates the years of service over which severance pay is payable.

Article 11.If a worker requests the conclusion of an open-ended employment contract pursuant to the second paragraph of Article 14 of the Law, the Employer shall do so unless it and the worker agree otherwise. The provisions of the employment contract shall be negotiated by the parties in accordance with the principles of lawfulness, fairness, equality, free will, negotiated consensus and good faith. Matters on which the Employer and the worker fail to negotiate a consensus shall be dealt with in accordance with Article 18 of the Law.

Article 12 .The provisions of the Law concerning open-ended employment contracts and the payment of severance pay shall not apply to employment contracts for community service jobs that local People’s Governments at any level and relevant authorities of People’s Governments at the county level and above provide for the purpose of creating employment for the difficult-to-employ and for which job subsidies and social insurance subsidies are offered.

Article 13.An Employer and a worker may not stipulate circumstances in which the employment contract shall end other than those specified in Article 44 of the Law.

Article 14.If the place for the performance of an employment contract and the place of registration of the Employer are different, such matters as the minimum wage rate for workers, labor protection, working conditions, protection against occupational hazards and the preceding year’s average monthly wage of employees in the area, etc. shall be handled in accordance with the relevant regulations in the place where the employment contract is performed; if the relevant rates or standards in the place where the Employer is registered are higher than those in the place where the employment contract is performed and the Employer and the worker agree to handle the said matters in accordance with the relevant rates and standards in the place where the Employer is registered, then such agreement shall prevail.

Article 15.The wages of a worker on probation may not be less than 80 percent of the lowest wage level for the same job with the same Employer or less than 80 percent of the wage stipulated in the employment contract, and may not be less than the minimum wage rate in the place where the Employer is located.

Article 16.The training expenses mentioned in the second paragraph of Article 22 of the Law include the training expenses, the travel expenses during the training period, and the other direct expenses in respect of the worker incurred as a result of the training, that are paid by the Employer for purposes of giving the worker professional technical training and that are evidenced by receipts.

Article 17.If the term of an employment contract expires prior to the expiration of the term of service agreed upon by the Employer and the worker pursuant to Article 22 of the Law, the employment contract shall be extended until the expiration of the term of service. If the Parties havestipulated otherwise, matters shall be handled in accordance with such stipulations.

CHAPTER 3. TERMINATION AND ENDING OF EMPLOYMENT CONTRACTS

Article 18.A worker may terminate his fixed-term employment contract, open-ended employment contract or employment contract to expire upon completion of a certain job with an Employer, in accordance with the conditions and procedures specified in the Law, if:(1)the worker and the Employer so agree after consultations;(2)the worker has given 30 days’ prior written notice to the Employer;(3)the worker has given three days’ prior written notice to the Employer during the probation period;(4)the Employer fails to provide the labor protection or working conditions specified in the employment contract;(5)the Employer fails to pay labor compensation in full and on time;(6)the Employer fails to pay the social insurance premiums for the worker in accordance with the law;(7)the Employer has rules and regulations that violate laws or regulations, thereby harming the worker’s rights and interests;(8)the Employer used such means as deception or coercion, or took advantage of the worker’s difficulties, to cause the worker to conclude an employment contract, or to make an amendment thereto, that was contrary to his true intent;(9)in the employment contract, the Employer disclaims its legal liability or denies the worker his rights;(10)the Employer violates mandatory provisions of laws or administrative statutes;(11)the Employer uses violence, threats or unlawful restriction of personal freedom to compel theworker to work;(12)the worker is instructed in violation of rules and regulations or peremptorily ordered by the Employer to perform dangerous operations which threaten his personal safety; or(13)another circumstance in which laws or administrative statutes permit a worker to terminate his employment contract has arisen.

Article 19.An Employer may terminate a worker’s fixed-term employment contract, open-ended employment contract or employment contract to expire upon completion of a certain job, in accordance with the conditions and procedures specified in the Law, if: (1)the Employer and the worker so agree after consultations;(2)the worker is proved during his probation period not to satisfy the conditions for employment;(3)the worker materially breaches the Employer’s rules and regulations;(4)the worker commits serious dereliction of duty or practices graft, causing substantial damage to the Employer;(5)the worker has additionally established an employment relationship with another Employer which materially affects the completion of his tasks with the first-mentioned Employer, or he refuses to rectify the matter after the same is brought to his attention by the Employer;(6)the worker used such means as deception or coercion, or took advantage of the Employer’s difficulties, to cause the Employer to conclude an employment contract, or to make an amendment thereto, that was contrary to its true intent;(7)the worker has his criminal liability pursued in accordance with the law;(8)after the set period of medical care for an illness or non-work-related injury, the worker can engage neither in his original work nor in other work arranged for him by the Employer;(9)the worker is incompetent and remains incompetent after training or adjustment of his position;(10)a major change in the objective circumstances relied upon at the time of conclusion of the employment contract renders it un performable and, after consultations, the Employer and the worker are unable to reach agreement on amending the employment contract;(11)the Employer is undergoing a restructuring pursuant to the Enterprise Bankruptcy Law;(12)the Employer experiences serious difficulties in its production and/or business operations;(13)the enterprise switches production, introduces a major technological innovation or revises its business method, and, after amendment of employment contracts, still needs to reduce its workforce; or(14)another major change in the objective economic circumstances relied upon at the time of conclusion of the employment contract occurs, rendering it un performable.

Article 20.If, pursuant to Article 40 of the Law, an Employer elects to pay a worker one month’s wage in lieu of notice, the one month’s wage shall be determined based on the rate of the worker’s wage for the preceding month.

Article 21.An employment contract ends when the worker reaches the legal retirement age.

Article 22.If an employment contract to expire upon completion of a certain job ends by reason of the completion of the job, the Employer shall pay the worker severance pay in accordance with Article 47 of the Law.

Article 23.If an Employer lawfully ends the employment contract of an employee who has sustained a work-related injury, it shall, in addition to paying the worker severance pay in accordance with Article 47 of the Law, pay him a work-related injury medical subsidy and disabled’s employment subsidy in one lump sum in accordance with state regulations on work-related injury insurance. Article 24.The proof of termination or ending of an employment contract issued by an Employer shall specify the term of the employment contract, the date on which it was terminated or ended, the job held and the worker’s years of service with the Employer.

Article 25.If an Employer terminates or ends an employment contract in violation of the Law and pays damages to the worker in accordance with Article 87 of the Law, it will no longer be required to pay severance pay. The number of years over which the damages are to be calculated shall be counted from the date on which the Employer started using the worker.

Article 26.If an Employer and a worker have agreed upon a term of service and the employment contract is terminated by the worker pursuant to Article 38 of the Law, such termination shall not be deemed a breach of the agreement concerning the term of service and the Employer may not claim liquidated damages from the worker. If an Employer terminates the employment contract of a worker that stipulates a term of service, the worker shall pay to the Employer the liquidated damages stipulated in the employment contract if:(1)the worker has materially breached the Employer’s rules and regulations;(2)the worker has committed serious dereliction of duty or practiced graft, causing substantial damage to the Employer;(3)the worker has additionally established an employment relationship with another Employer which materially affected the completion of his tasks with the first-mentioned Employer, or he refused to rectify the matter after the same was brought to his attention by the Employer;(4)the worker used such means as deception or coercion, or took advantage of the Employer’s difficulties, to cause the Employer to conclude an employment contract, or to make an amendment thereto, that was contrary to its true intent; or(5)the worker has his criminal liability pursued in accordance with the law.

Article 27.The monthly wage that is the basis of the severance pay provided for in Article 47 of the Law shall be calculated according to the wage due to the worker, including monetary income such as an hourly or piece wage and bonuses, allowances and subsidies. If the worker’s average wage during the 12 months immediately preceding the termination or ending of his employment contract was less than the local minimum wage rate, the calculation shall be based on the local minimum wage rate. If the worker worked for less than 12 months, the average wage shall be calculated according to the number of months actually worked.

CHAPTER 4. SPECIAL PROVISIONS ON PLACEMENT

Article 28.If a staffing firm established with capital contributed by, or established in partnership with, an Employer or a subordinate unit of an Employer places workers with such Employer or subordinate unit, then it is a staffing firm that Article 67 of the Law does not permit to be established.

Article 29.An Accepting Unit shall fulfill the obligations specified in Article 62 of the Law and protect the lawful rights and interests of the workers placed with it.
Article 30.When a staffing firm hires a worker for placement purposes, it may hire him on a full-time basis only.

Article 31.If an employment contract is terminated or ended according to law by the staffing firm or the worker to be placed, matters relating to severance pay shall be handled in accordance with Articles 46 and 47 of the Law.

Article 32.If a staffing firm illegally terminates or ends the employment contract of a worker to be placed, matters shall be handled in accordance with Article 48 of the Law.
CHAPTER 5. LEGAL LIABILITY

Article 33.If an Employer violates the provisions of the Law concerning the keeping of a register of employees, the labor administration authority shall order it to rectify the situation within a specified period of time. If the Employer fails to rectify the violation within the period specified, the labor administration authority shall impose a fine of not less RMB¥2,000 and not more than RMB¥20,000.

Article 34.If an Employer is required by virtue of the Law to pay a worker twice his wage each month or to pay a worker damages but fails to do so, the labor administration authority shall order it to make such payment(s).

Article 35.If an Accepting Unit violates the provisions of the Law or of these Regulations concerning placement, the labor administration authority and other relevant competent authorities shall order it to rectify the situation. If the circumstances are serious, the Accepting Unit shall be fined not less than RMB¥1,000 and not more than RMB¥5,000 for each placed worker. If the placed worker(s) suffer(s) harm, the staffing firm and the Accepting Unit shall be jointly and severally liable for damages.

CHAPTER 6. SUPPLEMENTARY PROVISIONS

Article 36.A complaint or report of a violation of the Law and these Regulations from any organization or individual shall be handled by the labor administration authority of the local People’s Government at the county level or above in accordance with the Regulations for Monitoring Labor Security.

Article 37.Disputes between a worker and his Employer in connection with the conclusion, performance, amendment, termination or ending of the employment contract shall be dealt with in accordance with the Law of the People’s Republic of China on the Mediation and Arbitration of Employment Disputes.
Article 38.These Regulations shall be implemented from the date of issuance.

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