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Regulations Governing Labor Management of Foreign-Invested Enterprises - 1994

(Promulgated on August 11, 1994, jointly by the Ministry of Foreign Trade and Economic Cooperation and the Ministry of Labor)



Article 1
In order to safeguard the legitimate rights and interests of foreign-invested enterprises (hereinafter referred to as enterprises) and their employees, and to define, maintain and develop stable and harmonious labor relations between the enterprises and their employees, these Regulations are formulated in accordance with the state law and administrative regulations.

Article 2
These Regulations are applicable to the Sino-foreign joint venture enterprises, Sino-foreign cooperative business enterprises, enterprises solely funded by foreign investors, and Sino-foreign share-holding companies as well as their employees.

Article 3
The labor administrative departments of the People's governments at the county or higher levels, shall, in accordance with these Regulations, implement supervision over enterprises' employment, training, salary, insurance and welfare, labor safety and hygiene.

Article 4
The labor rules and systems worked out by enterprises themselves, shall not contravene relevant provisions in the state law and government administrative regulations.

Article 5
Enterprises can, in accordance with relevant state law and administrative regulations, make their own decisions on the time, condition, method and number of employees when recruiting employees.

Enterprises can recruit employees at their local employment centers (or stations) which have been certified by the local labor administrative departments. They can also recruit employees in other districts, upon the approval of the local labor administrative departments.

Enterprises shall not recruit employees who have not yet terminated their existing labor contracts with their former employers. Enterprises are prohibited from recruiting child labor.

Article 6
Enterprises shall recruit Chinese employees within the boundary of the People's Republic of China; Where the enterprises need to recruit foreign employees or personnel from Taiwan, Hong Kong and Macao, they shall abide by relevant state regulations, seek approval from local labor administrative department, and fulfill employment certification and other relevant procedures.

Article 7
Enterprises shall establish an on-job training system to train employees on a regular basis. Those employees, who are assigned to do technical work or are required to have special technical skills, shall be given special training and relevant certificates before they are put on such posts. The training expenditure shall be drawn and utilized in accordance with relevant state regulations.

Article 8
Labor contracts shall be set in writing between enterprises and employees themselves. Trade union (or the workers' elected representatives in the absence of a trade union) can, on behalf of employees, discuss, negotiate and sign the collective contract with enterprises on employees' wages, working time and holidays, labor safety and hygiene, etc.

The contents of a labor contract and collective contract shall comply with relevant provisions of state law and administrative regulations.

Article 9
The labor contract shall be submitted to the local labor administrative department for certification within one month from the date of signing. The collective contract, once signed, shall be submitted to the local labor administrative department for record. If the labor administrative department does not indicate any objection to the documents within 15 days from the date of receipt of such documents, the collective contract will come into effect immediately.

Article 10
When the term of the labor contract expires, or when the necessary conditions agreed to by both parties on terminating the contract have surfaced, the labor contract will immediately cease to take effect. However, if both parties agree, they may still renew their labor contract.

The two parties involved can fulfill procedure of revising their labor contract through consensus after negotiation. The revised content of a labor contract shall be decided by the two parties involved through negotiation.

Article 11
Enterprises and employees can dissolve their labor contract under either of the following circumstances:

(1) That the parties involved in the labor contract negotiate and reach consensus on terminating their labor contract;

(2) That the enterprises can dissolve labor contracts, if the employees, in their trial-work period, have failed to meet the recruiting requirements, or have failed to fulfill the labor contract, or seriously violated labor discipline or regulations and systems that the enterprises have formulated according to law, or have committed such offenses to get punished by law in the form of re-education through hard labor or a jail sentence;

(3) The employees can dissolve labor contracts, if the enterprises are found to have compelled workers to labor by brutal force, intimidation, confinement or other measures that impair human freedom; or to have failed to fulfill the labor contract; or to have violated the state law and administrative regulations; or to have infringed upon employees' legitimate rights and interests.

Article 12
Under either of the following circumstances, enterprises can dissolve labor contracts with employees after soliciting opinion from the trade unions. However, the enterprises shall notify the employees involved, in writing, 30 days in advance:

(1) That the employees can not return to work on their former posts or can not take jobs on other posts assigned by enterprises, after they have passed the "period of medical treatment" given for illness or non-occupational injuries.

(2) That the employees can not perform well in their duties even after training and readjustment of work-posts;

(3) That the labor contract is not practicable because of changes in objective circumstances, on which the labor contract is based, and the two parties involved can not reach consensus on revising the labor contract after negotiation;

(4) In cases of other circumstances as stipulated in relevant laws and administrative regulations.

Article 13
Enterprises shall not dissolve labor contracts with the employees who are confirmed as have lost or partially lost their working ability because of occupational diseases or job-related injuries; or who are still in their "period of medical treatment"; or women employees in their periods of pregnancy, maternity and breast-feeding.

If the employees, who are disabled because of occupational diseases or job-related injuries, demand that their labor contracts be dissolved, the enterprises shall, according to the local government regulations, turn over the disabled employment fee to the local social insurance organizations.

The "period of medical treatment" for employees suffering from diseases or non-job injuries, shall be implemented according to relevant current administrative regulations.

Article 14
The wage scale of enterprises shall be based on the principle of equal labor, equal pay. The salary standard of employees shall be improved year by year, in pace with the business progress of the enterprises. The employees' salary level shall comply with the pay guideline promulgated by the local People's government or the labor administrative department, and decided through collective negotiation.

The employees' minimum wage for their legal working hours shall not be lower than the local minimum pay standard.

Article 15
Enterprises should pay employees their full wage, in the form of legal tender, punctually and at least once a month. The enterprises shall, on behalf of their employees, deduct personal income tax from employees' wages and turn it over to the tax administration.

Article 16
Enterprises shall keep statistics of the salaries paid to their employees according to relevant regulations, and report and send the salary statistics chart to the local labor administrative department, financial department, statistics department and competent industrial administrative department for their reference.

Article 17
Enterprises shall, in accordance with relevant state regulations, participate in social insurance programs that include fees for pension, unemployment, medical care, job-related injuries and child-birth. They shall pay, in full, the insurance premiums on time to the social insurance organizations, in keeping with the standard of the local people's government. Insurance fee shall be listed under an independent account according to state regulations.

Employees themselves shall also pay their pension charge according to relevant regulations.

Article 18
Enterprises shall set up the employees' "labor handbook" and "pension handbook" system, for the purpose of keeping records of employees' working years, salary payment, and fees paid for workers' pension, unemployment welfare, job-related injuries, medical care and other social insurance programs.

Article 19
To those employees whose labor contracts have been terminated under conditions as mentioned in sections (1) and (3) of Article 11, and Article 12 of these Regulations, the enterprises shall pay them living allowance in one lump sum. And, to those employees whose labor contracts were terminated under conditions as mentioned in section (1) of Article 12 of these Regulations, the enterprises shall pay them medical-care subsidy in addition to their living allowance.

Article 20
The standard of living allowance and medical-care subsidy is calculated according to the total length of service of the discharged employee in the enterprise.

For each year the discharged employee has worked in the enterprise, he or she should be paid a living allowance equivalent to his or her one-month wage. The amount of medical-care subsidy is equivalent to his or her three-month wages for an employee who has worked in the enterprise for less than five year; and it is equivalent to six-month wages if the employee has worked there for more than five years.

If the employee has worked for more than six months but less than a year, he or she shall be assumed as having worked for one full year.

The standard one-month wage, as used in the calculation of living allowance and/or medical-care subsidy, shall be the average one month wage of the fist six months of the employee in question before he or she was discharged.

Article 21
Enterprises, at the time of terminating a labor contract according to relevant regulations or dissolving a labor contract after negotiation with the employee involved, shall pay, in one lump sum, the living allowances and social insurance fees for the following employees, in accordance with the regulations of the local People's government:

- Employees who are receiving medical treatment or on their sabbatical leave, because they have suffered job-related injuries, or occupational diseases as verified by the hospital;

- Employees who, after medical treatment is over, are confirmed by labor certification committee as having lost or partially lost their working ability;

- Employees, who died on work-posts, are survived by relatives who, according to relevant regulations, are entitled to receiving the "pension for the deceased family";

Women employees in their periods of pregnancy, maternity or breast-feeding; and Employees who have not joined any social insurance programs.

Article 22
The welfare standard of the incumbent employees shall conform with relevant state regulations.

Article 23
Enterprises shall set up an account of housing fund for their Chinese employees according to regulations of the local People's government.

Article 24
Employees enjoy holidays as stipulated by State regulations, which include festival holidays, Saturdays and Sundays, home leave, days off for marriage or relatives' funeral, and maternity leave of women employees.

Article 25
When an enterprises has disputes with the trade unions or workers' representatives on signing collective contracts, the local labor administrative department can arrange for the two parties involved to settle their disputes through negotiation; When they have disputes on implementing the collective contracts, and they can not resolve them through negotiation, they can apply for arbitration or take legal proceedings in court according to law.

Article 26
All problems concerning labor disputes, labor safety and hygiene, report and settlement of job-related injuries and accidents, schedule of working hours, and special protection to women and minor employees shall be dealt with in accordance with relevant state regulations.

Article 27
Whoever, either the enterprise or the employees, which has violated labor contract, infringed upon the other party's interests and caused economic loss on the other party, shall be held responsible for making due indemnity therefor.

Article 28
If the enterprise recruit employees in such a way as to violate provisions of these Regulations, the local labor administrative departments shall impose a fine on the enterprises to a sum equivalent to five to ten times the recruit's average monthly salary and order it to cancel the recruitment.

Article 29
If the enterprise pay its employees less than the local minimum wage standard, the local labor administrative department can order it to make the correction within a time limit, replenish the employees' under-paid wages according to the minimum wage standard, in addition to paying them a compensation fee equivalent to 20 per cent to 100 per cent the difference between the employees' underpaid wage and the standard minimum wage.

If the enterprise refuses to replenish under-paid employees and pay the compensation fee, the enterprises will be fined to a sum equivalent to one to three times the difference between the employees' under-paid wage and the standard minimum wage, in addition to the compensation fee.

The enterprises which arbitrarily require employees to work overtime shall be ordered to make immediate correction. Those which refuse to correct will be fined to a sum equivalent to five times that of the employees' due wage for the total length of overtime work.

Article 30
Enterprises which do not buy their employees social insurance policies, shall do it within the time limit prescribed by the labor administrative department. If the enterprise fails to hand in the social insurance fee within the time limit, it shall be ordered to pay the fee plus an overdue fine, which is equivalent to 0.2 per cent of the insurance fee payable, starting from the expiry date of prescribed time limit.

The overdue fine shall be turned over to the respective social insurance categories.

Article 31
The enterprises which violates government labor safety and hygiene regulations shall be ordered to make correction within a prescribed time limit, or to stop production and re-organize. Moreover, they shall be fined according to relevant regulations.

Article 32
The enterprises which harasses or refuses labor supervision by the labor administrative department shall be fined to a sum equivalent to less than 0.1 per cent of their monthly business and sales income.

Article 33
Any of the aforesaid fines should be imposed by the local labor administrative department, only when the enterprise in question has failed to make the required correction even after it has been served a warning by the local labor administrative department.

Article 34
The local labor administrative department is responsible for enforcing the aforesaid administrative penalties according to law, and turning all the paid-up fines to the state treasury.

Article 35
These Regulations are applicable to the joint venture enterprises, co-operative business enterprises, solely foreign-owned enterprises and those share-holding companies located on the mainland, which are invested by overseas Chinese and investors from Taiwan, Hong Kong or Macao.

Article 36
The Ministry of Labor will be responsible for the interpretation of these Regulations.

These Regulations come into effect on the date of promulgation. They shall supersede all other similar labor management regulations on foreign-invested enterprises, which run counter to these Regulations.

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