China Employment Law Update June 2018

Executive Summary

  1. Social insurance treaty signed between China and Japan to reduce the burden of social security contributions in both countries
  2. Changes to employer housing fund contribution rates to ease economic costs
  3. Jiangsu Province issues regulations requesting employers to take measures to protect female employees from sexual harassment and strengthen labour protections for female employees in certain situations

1. Social insurance treaty signed between China and Japan to reduce the burden of social security contributions in both countries  

Following the conclusion of similar treaties with Germany, South Korea, Denmark, Finland, Canada, Switzerland, the Netherlands, France, Spain, and Luxembourg, China has recently executed a bilateral treaty with Japan. According to the agreement, Japan will waive the obligations of dispatched employees, crew, flight attendants, diplomatic consular agencies and civil servants of Chinese invested enterprises in Japan to pay pension insurance and national pensions. Conversely, China will waive the obligation of the above-mentioned personnel from Japan to pay employee's basic pension insurance in China.

The treaty was entered into to address the double social insurance charge for nationals of a home country whilst in a host country, protecting the social security rights of these nationals, and relieving certain burdens for both employers and employees. In addition, the signing of the agreement is intended to further facilitate economic, trade and personnel exchanges between China and Japan.

2. Changes to housing contribution rates for employers to ease economic costs 

Contributing to housing funds for employees is mandatory for employers in Mainland PRC. This non-tax payment, which can reach up to 20% of the employee's salary, is a significant economic burden on employers. In order to ease that burden, on 28 April 2018, the Ministry of Housing and Urban-Rural Development and the Ministry of Finance, together with the Central Bank, jointly issued the Notice on Further Improving the Housing Fund Contribution Scheme to Reduce Enterprises' Costs (the "Notice").

The Notice states that the contribution basis of housing funds should not exceed three times the monthly average salary in the previous year, as announced by the statistic department of the metropolitan city where the employer is located. The contribution rate of the housing fund must not be lower than 5% of the monthly salary and must not be higher than 12%.

In addition, employers experiencing difficulties in production and business operation, may, upon discussion with the employee representative assembly or the trade union, apply for a reduction in the contribution rate or postponement of housing funds. The reduced contribution rate shall not be less than 5% of the monthly salary.

The Notice will be gradually implemented between now and 30 April 2020. As far as we know, various regions and municipalities throughout the country will successively issue detailed rules to implement the requirements of the Notice. We will continue to pay attention and provide the latest news.

3. Jiangsu Province issued regulations requesting employers to take measures to protect female employees from sexual harassment and strengthen labour protections for female employees in certain situations

On 8 May 2018, the People's Government of Jiangsu Province issued Special Provisions on Labour Protection of Female Workers (the "Special Provisions"), which will take effect from 1 July 2018. The Special Provisions contain the following highlights and it is worth businesses in the region taking note:

  • Mainland PRC is increasingly concerned with sexual harassment in the workplace. However, there are no explicit provisions on sexual harassment in national laws such as the Labour Law and the Employment Contract Law. To remedy this, the Special Provisions require employers in Jiangsu Province to take the following measures to protect their female employees from sexual harassment: 1) formulating and implementing company rules prohibiting workplace sexual harassment; 2) providing training for employees on the prevention of workplace sexual harassment; 3) creating a working environment free from sexual harassment; 4) establishing complaints channels for sexual harassment, handling such complaints in a timely manner and protecting the privacy of the involved parties; and 5) taking other measures that can prevent workplace sexual harassment.
  • Employers should take measures to protect female employees who are menstruating: 1) Employers are not allowed to require women who are menstruating to perform work duties prohibited during that time by national law. If such a duty is part of her daily work duties, a temporary adjustment of duties or a rest of 1 or 2 days is required during that time. 2) A female employee who has dysmenorrhoea and is unable to work can ask for a rest of 1 - 2 days during her period. 3) Employers that can afford to do so may provide hygiene products or fees to cover the cost of such products on a monthly basis to its female employees.
  • Before hiring women of childbearing age for roles which involve duties which the state prohibits for pregnant workers, the employer should obtain the relevant employees' consent to perform those duties in advance.
  • Following an application from a pregnant employee, the employer can approve additional leave during her pregnancy (other than statutory maternity leave). The salary during the leave will be negotiated between the two parties.
  • After maternity leave, upon application, the company may approve female employees to breast-feeding leave for no more than 6 months. The employee's salary during this time shall not be less than 80% of the local minimum salary standard. If the leave exceeds 6 months, the salary shall be negotiated by both parties.

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