employment contracts - help!

[yonitabonita]

Hi folks

A question for those working in China and have experience with their employment contracts.

I just got my contract today. It had 4 clauses relating to:

- probation period

- pay

- annual leave

- foreign medical insurance

And that's it!

It's WAY too brief for my comfort levels.

Employment contracts and their standard clauses vary country to country. I'd like to know what are some standard ones for Chinese contracts.

For example, I understand that in some cases, your annual salary equates to your monthly salary multiplied by 13 - not 12 - to provide for a 'New Year's bonus'. How standard is this?

I've also been told that Chinese workers don't just get salaries - rather they get accommodation add ons, superannuation add ons, etc. Is it reasonable that a foreigner ask for the same? Or perhaps more to the point, is it standard practice for foreigners not to get superannuation loadings?

What's a standard arrangement for dealing with overtime?

Is there anything else I should be raising?

Context, is that it's a part time job with an international firm. If they've already agreed to hire me, then I guess there's nothing to lose by being a bit pedantic over details.

Thanks a million for any advice you can provide.

Y

[gato]

If I understand your question, you are asking what benefit packages are standard in China, and not about legal issues within the contract itself. Since you are going to be a part-time employees, the benefits available are probably going to be quite different from those for full-time employees. Aside from medical insurance and salary, which I guess would be hourly-based, I can't really think of any other benefits that would be standard. Regular employees might get 1.5 or 2x pay for overtime work, but I don't know whether that would apply to part-timers.

China taxes annual bonuses at a preferential rate, which is one reason why many employers offer it. Perhaps you can talk to the firm what their policy is with respect to annual bonuses. Perhaps they can restructure your compensation so that you can at least enjoy the tax savings on part of your salary.

Is this an at-will contract? Chinese employment contract are usually for fixed terms, but I don't know if you'd really want that.

What about sick leave?

[roddy]

Part time job, foreign company, foreign employee - I wouldn't expect Chinese norms to apply too much, beyond the legal essentials.

I would want to see a clear description of what I was meant to be doing, if not in the contract then in a separate job description, to avoid situations of the 'Well, there's not much work today - but we were thinking about starting an English class, and . . .' nature.

Bonuses, housing subsidies, etc, I'm always inclined to just get built into the salary for simplicities sake. If you've got an end of year bonus, and then you decide in December you want to quit, it's going to complicate things. However, if there are tax considerations that might change things.

[Rincewind]

The contracts, in English, that I have seen have always been a mess. My own contract was a photocopy of someone else's contract and had a page missing when they first sent it to me. For some jobs (e.g. teaching) there may be standard contracts provided by the government department (though this varies for city to city).

I'd make sure your contract states how many hours per week you are expected to work and also when you should come to work and when you should leave. Check they match up. Then for hours outside this time you can ask for overtime. I get double time for overtime.

If you are new to china, then getting the accommodation provided by the employer will make your initial stay more pleasurable as you won't have to waist time house hunting. But don't expect them to provide a palace. I got a fully furnished apartment on my arrival. It was far form western standards, but it kept the rain out. I have now got a nicer place myself but my employer still subsidises it.

[yonitabonita]

Gato - yes, I'm asking about the sorts of standard provisions that get built into employment contracts. I'd want to know that I'm not getting less than everyone else.

Sick leave, good one. I'd totally forgotten. The contract runs for a year, with the option to renew at the end of the year.

We've agreed that there will be 4 hours a day but a set monthly salary has been agreed, so I guess that I don't really get paid strictly by the hour. There's the option to go full time at double the rate of pay at double the hours.

On the point of bonuses being taxed at a preferential rate, do you mean that I should negotiate to take a lower monthly rate but ask for an annual bonus so I can enjoy a lower tax rate?

Roddy - yep, I double triple checked that there wouldn't be anything extra 'opportunities for experience'.

Rincewind - I've got the hours clearly covered. I've been living in Beijing for a while now so I'm ok on that front.

Thanks for your input guys. Very much appreciated.

Y

[gato]

On the point of bonuses being taxed at a preferential rate, do you mean that I should negotiate to take a lower monthly rate but ask for an annual bonus so I can enjoy a lower tax rate?

Yes, that for many people would result in a lower overall tax rate. China taxes wages on a monthly basis using progressive marginal tax rates, that is someone making 10,000 per month pays a higher rate than someone making 2000. But an annual bonus is taxed by using the marginal rate corresponding to a monthly salary equal to 1/12 of the bonus amount (i.e. as if it were paid spread out over 12 months). Thus, the margin rate for the bonus is likely to be much lower than if it were paid as part of the regular monthly salary.

See this article for more details:

http://www.hg.org/articles/article_809.html

Of course, this may or may not be a good idea in your case. Roddy already pointed one concern, which is that you may want to leave early. If you just get paid a regular monthly salary, you might be able to break your 1-year contract without any real penalties. If there's a bonus, the employer could use that as leverage to keep you from leaving early.

We've agreed that there will be 4 hours a day but a set monthly salary has been agreed, so I guess that I don't really get paid strictly by the hour.

If you are getting paid by the month instead of month, you might want to negotiate some kind of over-time pay in case sometimes you are forced to work much more than 4 hours in a day (or 20 hours in a week). If this is to work as a lawyer, I am sure you know that hours are not always within one's control.

[Senzhi]

Employers in China are obliged to address the following issues in the employment contract:

- Job nature.

- Term of probationary period and employment period, if any.

- Dispute resolution.

- Disciplinary action.

- Dismissal adn employee resignation.

- Working hours, annual leave and holidays (optional).

- Employee benefits (optional).

- Special training (optional).

- Confidentiality requirement (optional).

- Tort liability (optional).

- Severance pay (optional)

Besides that you are entitled by law too:

- Maximum working hours of 40 per week. (rest is overtime)

- Overtime should not exceed three hours per day, or thirty-six hours in a month, paid at 150% of the normal salary. (Double or tripple for weekend work or on legal holidays).

- At least one day holiday per week.

- Five days of paid annual leave.

- The ten legal holidays: New Year's Day, Chinese New Year (3 days), International Labour Day (3 day), National Day (3 days).

In addition, both employer and employees are required to contribute to unemployment insurance, the provident fund and medical insurance.

As you can clearly see, this is not so different with the rest of the world.

And as is also the same with the rest of the world, it is up to the employer and the employee to negotiate any additional benefits in the contract.

Or simply said: like anywhere in the world, do your homework and check your market value. Stick to it.

A good source of reference is http://www.acftu.org.cn/

[trevelyan]

>> Gato - yes, I'm asking about the sorts of standard provisions that

>> get built into employment contracts. I'd want to know that I'm not

>> getting less than everyone else.

So what are you getting then?

[yonitabonita]

Wow! thanks for all the wisdom guys.

One more question:

Since the agreement didn't mention sick leave, I raised it today. They said two things in response.

First, that if I were Chinese I wouldn't be asking about sick leave.

Second, that I am not covered by Chinese labour laws since I'm a foreigner and am therefore just entering into an agreement with the company. Company policy with regard to sick leave, is just a matter of showing someone a medical certificate.

Also, overtime will not be paid, but there will be no overtime apparently. My question is : but what if there is? to which I was told that these things aren't dealt with by employment contracts! Holy crap!

HR have apparently never dealt with questions like whether there is a limit to the amount of sick leave you can take, whether sick time will be paid, whether overtime will be compensated for. To me this is crazy talk, but it's clear that my asking for clarification is, to them at least, also crazy talk!

This isn't the first time I've had a negative response to my further inquiries into a contract. Going through a potential lease with a not so fine tooth comb was also frowned upon.

My general impression is that despite being pretty incompetent, they're not plotting to screw me over, and in the event that I was ill, they'd ask for a medical certificate and I'd get paid and there'd be no issue. If I had to work an extra hour here, they'd take off an extra hour there. The salary they're offering is generous and they'll give me 7.5 days of paid annual leave in addition to all Chinese national holidays. That said, the unforseeable is forseeable so it's better to get things clear from the beginning. Also, what I'm asking is perfectly reasonable.

Or am I being way too much of a rigid foreigner here?

My take on their perspective is that I'm being petty, maybe even insulting asking all these questions. It feels all a bit culturally tricky.

Any advice on how to handle this? I'm a total novice in the Chinese employment market.

A thousand thanks in advance,

Y

[muyongshi]

My general impression is that despite being pretty incompetent, they're not plotting to screw me over, and in the event that I was ill, they'd ask for a medical certificate and I'd get paid and there'd be no issue. If I had to work an extra hour here, they'd take off an extra hour there.

Or am I being way too much of a rigid foreigner here?

There not but don't back down. They think you are being petty but these things are very important otherwise you can get taken advantage of. I said keep pushing and explain your reasonings 再三 and hopefully it will all work out!

[Senzhi]

Many companies in the world don't pay overtime, but give time in lieu.

That said, if you'd work for a western company in a managing position, you would be most of the time doing some overtime ... for free.

Now ... medical leave ... according to Chinese employment law:

First of all, it's dependent on how long you have served the company as well as your total working experience (in China). As you'd be a starter I won't go into all the details: suffice to say that the length of medical leave may be up to 3 months continuous or within any 6-month period. You should receive 60% of your normal salary. In case of work related injury, your employer is also responsible for all medical expenses.

Of course, medical certificates will be needed. Again, it's no different as in any other country.

Be very cautious of companies and HR-departments playing 'stupid', especially when they believe their 'target' is not so well informed about employment legislation. Being Chinese or not doesn't matter.

They will also try to convince you local laws are different. Maybe they are ... but they're definitely not above national laws.

I personally had many job offers from respectable companies. Each time I start showing off I know something about contracts ..... they never contacted me again.

And I also know of former students of mine that companies have tried to recruit in Shanghai for a salary of 500RMB (monthly) without any solid contract. Happily I could intervene there.

In addition, just open the newspapers ...

So don't expect magic to happen. It does, but not too often,

it has to remain magic.

[Senzhi]

Oh, and I forgot to mention one more thing:

If you're employed under a Chinese contract (with a valid residence permit), then you're covered under Chinese employment law

... like anywhere else in the world.

Don't be fooled just because it's China. They're pretty smart in legislation, just not so in enforcing it.

[gato]

Second, that I am not covered by Chinese labour laws since I'm a foreigner and am therefore just entering into an agreement with the company. Company policy with regard to sick leave, is just a matter of showing someone a medical certificate.

Also, overtime will not be paid, but there will be no overtime apparently. My question is : but what if there is? to which I was told that these things aren't dealt with by employment contracts! Holy crap!

Overtime sounds like the main issue to me. What they've said so far sounds reassuring, but would it be possible to give it to you in writing, even if it's not included as part of the contract. Even just a statement of the above in an email confirmation would be better than only an oral statement.

The same goes for the sick leave policy. If they don't want to deal with it in the contract, do they have something written they can give you?

[cdn_in_bj]

Or am I being way too much of a rigid foreigner here?

I would think that if you're applying to an international company, and that company hires foreigners on a regular basis, then your questions shouldn't come as a shock to them. So I'm a bit surprised myself at their reactions to your (seemingly reasonable) questions. What kind of company are you applying to?

[yonitabonita]

Again , many thanks to you all for your input.

What kind of company are you applying to?

A foreign law firm.

I put all my questions to them in an email and have received a written response so I guess I'm ok. phew!

I might just have to suck up the overtime. If it sucks, I'll just leave.

Y