Labor Contract Memo for WOFE
After the establishment of the WOFE, WOFE can hire Chinese and foreign employees. What are the preparatory work before the recruitment? What should be paid attention to when signing a contract with employee? Does Chinese law have the same protection for Chinese and foreign employees? This article will offer a preliminary introduction about general concerns for WOFE. Please contact us if you need further consultation.
Preparation before the Recruitment:
The employee handbook includes work discipline, rewards and punishments, confidentiality principles, etc. Usually, we recommend that WOFE should prepare the handbook before recruitment. If the handbook is prepared after recruitment, the handbook needs to be approved by all employees to become effective.
2.Social Security and Provident Fund Account：
Employer should open Social Security and Provident Fund Account before recruitment.
The Job Posting must be accurate, legal and without discriminatory content.
The Focus of Labor Contracts:
1.Signing Labor Contract：
The employee is entitled to request double salary if there is no written labor contract.
The labor standards relating to minimum wages, working hours, rest and leave, labor safety and health, social insurance, etc. must comply with Chinese laws and regulations.
2.Personal Income Tax：
The employer must withhold and pay the Personal Income Tax for employee.
3.Legal Rights of Female Employees:
China's law attaches importance to the labor protection for female employees, especially during pregnancy, childbirth, lactation period. The same standard applies to the labor protection of Chinese and foreign female employees.
In order to protect the commercial secrets of employer, a Non- competition Restriction can be signed between employer and specific employee concerned in accordance with the specific business content according to law.
Special Protection for Chinese Employee:
After signing two fixed-term labor contracts, employee may ask for an open-ended labor contract for the third time, and employer shall not refuse.
If the labor contract expires and the employer does not offer to renew it, the employer shall pay the economic compensation. If the employer or the employee decide to end labor contract under the circumstances stipulated by the law, employer shall pay economic compensation to the employee. If employer violates the provisions hereof by dissolving or terminating labor contracts illegally, employer shall pay double economic compensation.
Rules for Foreign Employee:
Unlike Chinese employees, foreign employees who want to achieve economic compensation, double compensation, and Working Permit, etc., must be expressly ruled in labor contract, instead of writing "apply to Chinese labor law or labor contract law". In particular, the reasons for dismissal or retirement must also be specified in the labor contract.
Even if the foreign employee fits the legal requirements to sign an open-ended labor contract, foreign employee still has to comply with the "labor contract’s maximum period is not more than five years" and related renewal and approval of the provisions and procedures. However, foreign employee can renew the contract by the approval procedure.
If the contract didn’t stipulate that employer must apply Working Permit for foreign employee, the employer can refuse to renew the Working Permit without reasonable excuse or any compensation.