How Does an FIE in China Become Criminally Liable for not Paying Wages?

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2014 10 CB mag illustration

By Steven Elsinga

Most foreign investors may not be aware of it, but as of 2011, employers in China may face prison sentences for not paying their staff. While some conditions need to be met before an employer is held criminally liable, understanding this law is important to keep in mind in case a company runs into financial troubles, or leaves China without paying its employees.

Definition of the Crime

When a company evades paying a “relatively large amount” of labor remunerations, either by transferring property or concealment, or by refusing to pay while being able to, the government will order it to rectify the situation. If the company fails to pay after being so ordered, the entity will be fined and the person(s) in charge of the company and those directly responsible for the crime will be fined and imprisoned for three years. This can be extended to seven years for serious cases.

Below, we discuss how the different elements of the penal clause are interpreted. Continue reading…

Shenzhen Issues 2012 Salary Guide

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Jul. 13 – The Shenzhen Municipal Bureau of Labor and Social Insurance recently issued the “Shenzhen Municipal Human Resources Market Salary Guide (2012) (hereinafter referred to as ‘Salary Guide’).” The data in the Salary Guide is based on random surveys of employees across different industries in the city.

Shenzhen’s overall high, median and low monthly wages are RMB25,830, RMB3,087 and RMB1,600, respectively, with an average of RMB3,892. According to the Salary Guide, the high and median wage figures have increased a respective 1.7 percent and 3.9 percent compared to last year, while the average and low wage figures increased by a respective 17 percent and 12.4 percent. The relatively large increase in the latter two can be attributed to the increase in minimum wages over the past few years. Continue reading…

China Releases 2011 Statistics for HR and Social Security Development

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By Xiaolei Gu

Jun. 11 – China’s Ministry of Human Resources and Social Security recently released a statistical bulletin on “The 2011 Human Resource and Social Security Development in China (hereinafter referred as the Bulletin),” outlining the country’s employment, social security, human resource, and public service conditions in the year 2011. Continue reading…

China Minimum Wage Update

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Update (January 28, 2013): See our most recent – and more comprehensive – article on China’s minimum wage levels by clicking here.

By Julia Gu

May 25 – Recently, soaring costs in China’s traditional manufacturing clusters, including land prices, tightening environmental regulations, and wage overheads, have been posing challenges for manufacturers.

The Chinese government is apparently shifting from creating preferential policies for foreign investors towards instead favoring its local labor pool due to the country’s widening income gap. In addition, wage hikes will boost domestic consumption to keep the country’s economy expanding while overseas markets remain weak.

To that end, China’s Ministry of Human Resources and Social Security revealed the latest minimum wage levels across China in a press conference last month. The table below shows that most provinces and cities have set up minimum wage levels of more than RMB1,000. Continue reading…

Average Wages and Social Security Caps for Cities across China

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Mar. 27 – Social security in China is a complex topic because although it is based upon guidelines issued by the central government, the specifics and administration of the system is managed at the local level. This is the only practical method in a country as diverse as China, as any rigid system defining specific contributions to be made and benefits receivable could not be expected to meet the needs of citizens in cities as diverse as Shanghai, Harbin, Chengdu and Hohhot, for example.

Monthly contributions to the social security system include pension, health insurance, maternity insurance, work-related injury insurance, unemployment insurance, however the exact employer and employee contribution rates can vary greatly depending on location. We explain each of these categories in detail here. Continue reading…

Minimum Wage Levels Across China

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Feb. 22 – As wage levels in China have recently come under scrutiny (Foxconn, a key supplier for Apple, raised salaries at their China factories by 25 percent earlier this week following international criticism), the country’s actual minimum wage levels have been in place for decades and have been rapidly rising across the board.

The Chinese government, as a matter of national policy, has been increasing minimum wage levels by 15 percent to 25 percent annually for the past three years. Rates vary by region and are set by each respective local government – calculated in tandem with a number of other indicators, including relations to the local housing market. They are also set to rise over the coming years as China looks to shift its economy towards a more balanced consumer society. To achieve that goal, Chinese citizens need to have increasing levels of disposable income. Continue reading…

Calculating Overtime Payments in China

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Feb. 15 – Doling out overtime payments can be expensive for employers. With regards to paying overtime in China, employees are grouped into three categories working under different systems – the standard work hour system, the comprehensive work hour system, and the non-fixed work hour system.

The standard work hour system requires that an employee’s normal working day should not exceed eight hours, that the normal working week not exceed 40 hours, and that each employee should be guaranteed at least one rest day. Most white-collar workers in China now operate under a five-day working week, although some domestic companies still utilize a six-day working week model. Continue reading…

China 2012: Strong Growth Forecast, No Inherent Problems

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China next year – changes and trends (part one of a two-part article)

Op-Ed Commentary: Chris Devonshire-Ellis

Dec. 12 – Our firm, Dezan Shira & Associates has just finished our initial draft budgeting for 2012, and although some tweaking still needs to be carried out, the initial prognosis for the coming year seems positive. Our budgets are designed based upon the levels of performance achieved during 2011, a track record of 20 years’ operations in China providing us with plenty of precedence as concerns analysis, and the fact that we are a national business with some 12 offices throughout the country.

We consolidate our national budgets for the forthcoming year by adding together all the regional budgets planned by our various offices (which are each examined individually), discuss the details of each, make adjustments as necessary, then put them all together to see what it looks like, and overview onto that other issues that we feel we need to invest in over the course of the coming year. That becomes an operational budget as how we see the year behaving – and our track record in getting this right is pretty good – mostly as much of it is based upon definable and expected costs. Continue reading…

Dezan Shira & Associates

Meet the firm behind our content. Dezan Shira & Associates have been servicing foreign investors in China, India and the ASEAN region since 1992. Click here to visit their professional services website and discover how they can help your business succeed in Asia.

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