On May 8, 2012, the PRC Ministry of Human Resources and Social Security issued Regulations on Management of the Special Working Hours in draft form (Draft Regulations) to solicit public comment. The public comment period ended on June 8, 2012. Once effective, the Draft Regulations will replace the existing regulations that have been in place since 1995, and which only set out several general provisions and lack of operability. The special working hours system, which is intended to allow enterprises with such needs to have their employees work hours other than the standard eight-hour work day, is generally divided into two categories, the Flexible Working Hours System and the Comprehensive Calculation Working Hours System. Below is a summary of the highlights in the Draft Regulations which we would like to bring to your attention.
1. Scope of application
In addition to enterprises, other organizations such as institutions, social organizations, private non-enterprise entities, foundations, law firms, accounting firms and individual businesses are subject to the Draft Regulations.
Where employers arrange employees to work under a special working hours system, they must negotiate with the employees beforehand. This pre-negotiation requirement is essential for an enterprise to effectively implement the special working hours system to employees on a specific position.
3. Changes to Flexible Working Hours System
The Flexible Working Hours System applies to senior employees and individuals in technical, research and creative positions that allow for more flexible work schedules. Specifically, the Draft Regulations provides that the positions eligible for the Flexible Working Hours System include “positions “with decision-making and leadership responsibilities with respect to business management” (characterized as “senior management” in the current regulations)” as well as “positions involving technology, research and development, and creative work” where employees can arrange their own schedule and attendance is not required. Making these additional technical, research and creative positions eligible for the Flexible Working Hours System will be welcome news for enterprises engaging in technology, research and development, and creative work, as this will allow them to provide greater flexibility to their employee schedules without the risk of incurring unreasonable overtime or other labor liability.
Note however, that the annual remuneration of an employee under the flexible working hours system may not be less than the previous year’s average annual local wage of the area where the employer is located. This new provision is to prevent enterprises from abusing the flexible working hours system.
4. Changes to Comprehensive Calculation Working Hours System
The Comprehensive Calculation Working Hours System applies to employees in special industries with work schedules that are restricted by seasons, resources, environment and natural conditions, industries where a partial disruption in operations would affect social and public interests, and special industries that merit such treatment pursuant to State Council policies encouraging or supporting such industries. The Draft Regulations provides greater detail by expanding the list of specific positions eligible for implementation of a comprehensive calculation working hours system to include positions in the telecommunications, electric power, petroleum, petrochemical and finance sectors and other industries, adding to the current list of industries eligible for implementation of the Comprehensive Calculation Working Hours System, including transport, railways, postal and telecommunications services, shipping, aviation, fisheries, geological and resources exploration, construction, salt production, sugar production, travel, etc.
The Draft Regulations further prescribes restrictions on permitted overtime based on the applicable calculation cycle for the relevant job position. For example, an employee working in a position on a weekly cycle may not work overtime in excess of 15 hours per week, and 36 hours per month; an employee working in a position on a monthly cycle may not work overtime in excess of 36 hours per month, an employee working in a position on a seasonal cycle may not work overtime in excess of 108 hours per season and an employee working in a position on an annual cycle may not work overtime in excess of 360 hours per year. Regardless of the work cycle, each employee may not work more than 11 hours a day (which is already stipulated in PRC labor law, which limits overtime to not more than three hours a day and 36 hours per month) and is guaranteed at least one continuous 24 hour rest period every two weeks.
Employers must pay employees overtime pay for overtime work and work performed on holidays in accordance with the PRC Labor Law.
5. Examination and approval of applications for Special Working Hours System
The Draft Regulations prescribe the specific procedures for application for the special working hours system and for examination and approval of an application by the Ministry of Human Resources and Social Security and its local counterparties (the “Approval Authority”). Specifically an implementation plan ratified by the labor union (or the employees concerned if there is no labor union) must be submitted to the Approval Authority with a written application.
After the application for the special working hours system is approved by the Approval Authority, employers must publish the approval decision for a period of no less than 15 working days. For employees concerned, the relevant content with respect to the approved special working hours system should be added into their original labor contracts.
7. Labor dispatch
Entities intending to use individuals employed through a labor dispatch arrangement (i.e., secondment of individuals by an third party human resources enterprise) should clearly specify the related details in the labor dispatch agreement with the labor dispatching entity, which should in turn inform the employees to be dispatched of the details of such arrangement. A labor dispatching entity may not apply directly to the Approval Authority for the implementation of a special working hours system with respect to the dispatched employees.
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This item is part of the the Asia Employment Law Update for November 2012, read more articles related to this: