In order to hire employees in China employers must follow certain HR compliance matters. One important question that we frequently get asked is about what documentation an employer needs to file with respect to their employee’s data. In the following article we will provide you a best-practice guide of documentation a company should have when it comes to onboarding or offboarding employees.
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Labor Contract:
The labor contract is the most important document when a new employment relationship is created. Chinese labor contracts shall always be conducted in Chinese language as the prevailing language and needs to be signed by the employee within the first 30 days after the starting date. Otherwise, the company might need to compensate the employee for not officially conducting an employment relationship.
Furthermore, an employment contract should contain clauses that are still valid after the contract period to protect the company’s interests. Find out more about this specific regulation as well as other important clauses to be included in a labor contract in our full article on Labor Laws and Labor Contracts in China.
Offer letters do not count as an official document which neither the employer nor the employee can base themselves on for future negotiations. It is solely for the purpose of negotiation and therefore does not necessarily need to be kept by the company. However, we still recommend keeping these documents since they still provide documentation of the negotiation process.
Besides the labor contract, it is recommended that an employer is aware and/or keeps record on more details.
Employee Handbook:
The employee handbook is a very important employment document in China. It specifies all company policies that are not part of the labor contract, the employee handbook functions as an instrument for clarification in addition to the labor contract.
Therefore, the labor contract should include a clause on importance of the employee handbook which shall be considered of equal importance to the labor contract. Especially when it comes to legal disputes at the labor arbitration court, the employee handbook can become an essential document to prove whether an employee has acted in contravention of company policies.
Policies to Protect Special Rights:
If a company provides specialized services or owns intellectual property that needs to be protected, a company might consider implementing special policies in addition to the employee handbook. Similar to the employee handbook, the labor contract should refer to these special policies stating that they are considered of equal importance to labor contract.
Diplomas and Certificates:
Depending on the company’s internal requirements, as well as on industry and labor protection laws, an employer should ask for their employees’ diplomas and certificates. These documents provide the new employer with certain proof of education or trainings, that are required as a qualification for employment. By signing the labor contract, the employee ensures all documents and information provided are authentic and correct.
Social Security De-Registration Confirmation:
Confirmation of de-registration of social security is essential for an employer to hire new staff. It ensures that a company’s new employee is no longer registered for Social Securities, Housing Fund or Individual Income Tax with another company.
An official notice of confirmation can be obtained when de-registering an employee from Social Securities and Housing Fund, however, it is not very common that employees will receive the confirmation from their previous employer.
Once a new labor relationship is established, the new employer needs to register the employee for Social Security and Housing Fund contributions with the new company in the tax system. The registration in the system should be smooth if all de-registration procedures have been correctly completed by the old employer. Otherwise, it might be necessary to coordinate about this part with the former employer respectively.
Resignation Confirmation from Previous Employer:
An officially chopped resignation confirmation letter, that confirms the employee is no longer employed with his/her previous employer, provides further proof to the future employer that there are no risks that may arise from the previous employment. A company should ask whether there was a confirmation letter issued to the employee before the latter signs the new employment contract.
At the same time, it is important for the new employer to check whether the employee might be in violation of any non-competition clauses with his previous employer, in order to avoid any negative impacts on the company.
A letter of confirmation ensures that these items are officially confirmed by the previous employer and there is no risk that the employee might not be able to start the position as a result of a violation of a previous labor contract.
Labor Brochure:
An important document that exists for Chinese individuals in some cities, like Shanghai, is the individual labor brochure (劳动手册). The labor brochure contains different personal information, incl. employment history or the employee’s education. Requirements on which information must be included vary across regions.
In Beijing and Shanghai, employers are required to keep their staff’s labor brochures during their entire employment period. Foreign companies with Representative Offices in China are not allowed to hire Chinese nationals as employees directly, however, they can engage an HR dispatching service provider to employ and respectively keep the labor brochure of the employee hired on behalf of the Rep Office.
General Health Check:
In some industries, especially those with regards to food and beverages, catering or service industry, employees need to provide their history of infection and cure of infectious diseases. Apart from that, a general health check can be requested by the new employer as of which the employee needs to provide the examination report respectively.
Data Collection & Data protection:
With the implementation of the Personal Information Protection Law (PIPL) by the Chinese government in 2021, companies need to pay more attention on collecting personal data of their employees. Collection shall be justified, legal and necessary by being limited in fulfilling the purpose of the collection.
Employees must also be informed about the method of data collection and an employer must obtain the employee’s consent to the actual data collection. When collecting more sensitive data, employers need to prove a special purpose and additionally need to obtain separate confirmation from the employee.
Minimum required data
Below you will find our recommended best practice of minimum data an employer should save, in order to compliantly register the employee with the company and make salary payments respectively.
Onboarding information:
Doceuments for the employment:
About MSA
For over a decade, MSA has supported foreign businesses in China with accounting and corporate set-up services. Our experts are able to help you navigate the complex landscape in China, ensuring your business remains compliant and is on track for success. For more information on our services, get in touch with us now.
