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PRC Labour Law - Bitesize

10 July 2013
Mayer Brown Newsletter

Wages, Overtime and Compensation (Cont'd)

How much do I need to pay my employees in the PRC?

There is no restriction on the amount which an employer can pay its employees, provided that the employee's monthly rate (or hourly rate if the employee works on a part-time basis) is not lower than the relevant statutory minimum wage (which may be updated by the local government on a yearly basis).

The minimum wage level varies from region to region; at the time of publication, the minimum wage levels range from RMB850 to RMB1,620 per month for full-time employees and from RMB9 to RMB15.2 per hour for part-time employees, depending on region.

Are employees on leave covered by the minimum wage legislation?

Basically, the answer is yes when an employee is taking statutory leave. Sick leave pay is an exception, where the minimum pay is generally 80 percent of the minimum wage depending on local practice. (Generally, Shanghai local rules impose a higher minimum pay requirement than 80 percent of the minimum wage.)

However, if the employee is taking leave other than that required by law, then the minimum wage rules will not apply.

Do I have to pay a 13-month salary or end-of-year bonus to my employees in the PRC?

While PRC employers often, in addition to monthly salary, provide employees with a 13-month payment or an end-of-year bonus (which is usually paid at the end of the calendar year or before the Chinese New Year), this is not a statutory requirement.

Can I pay a "discretionary" bonus to my employees in the PRC?

It is possible to describe a bonus as "discretionary". However, such description alone may not be sufficient for a labour dispute arbitration tribunal or court to determine that an employer can refuse to pay such bonus. A tribunal or court may consider past practice and the reasonableness and fairness of the employer's actions in determining an employee's entitlement to a bonus. In such case, any written provision (in respect of the relevant standard, conditions and timing of such payment) expressly provided in the internal policy or the labour contract may be helpful for the avoidance of any ambiguity.

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