News & Events

CHINA LABOR & EMPLOYMENT LAW UPDATE

Submitted By Firm: Jun He

Contact(s): Jeffrey Wilson

Author(s):

Date Published: 1/29/2017

Article Type: Legal Update

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Proposals floated to protect employees from air pollution

Government advisors and commentators in January voiced support for measures that would

protect employees from air pollution. Members of the Shaanxi Provincial Committee of the

Chinese People's Political Consultative Conference reportedly reintroduced a proposal in January

at the opening session in Xi’an that outdoor workers receive “hazard pay” during periods of high

pollution and that "haze" be listed among occupational disease risk factors. According to the

proposal, local governments—not employers—would pay allowances to workers, including

construction workers. The provincial human resources and social security department and trade

union federation have reportedly been studying the feasibility of such a proposal since last year.

Members of the Henan Provincial Chinese People's Political Consultative Conference also

reportedly submitted a proposal for smog subsidies for outdoor workers. A January 24

commentary in the influential Party newspaper Guangming Daily advocated that companies who

produce air pollution be charged fees that the government could use to compensate outdoor

workers.

Many cities and provinces have issued rules defining pollution alert levels. For the highest level of

orange and red alerts, construction sites and certain employers may be required to suspend or

reduce production. In the past two years, Beijing has issued three red alerts and three orange alerts

covering a total of 30 days.

A political advisor in Ningbo, Zhejiang reportedly proposed in January that employees be allowed

to work flexible hours during days when there is heavy pollution. Such a proposal would add to

protections Ningbo already offers employees. Ningbo local rules require that employers pay full

salary if an employee is required to suspend or reduce work due to a red alert.

Ningbo also prohibits employers from disciplining or terminating employees who are late or absent

from work due to a red alert. Employers can be fined up to RMB 20,000 per violation. Other cities,

including Shanghai and Shaoxing, have issued similar rules in the past two years.

Also in January, provincial and city weather bureaus reportedly were instructed to stop issuing

smog alerts in order to avoid contradictory information issued by environmental authorities.

Personal information protection obligations likely to increase

Employers are expected to be increasingly obligated to protect employee personal information

pursuant to the Cybersecurity Law, which was issued on November 7, 2016. While the

Cybersecurity Law does not specially address whether employers with internal IT networks will be

considered “network operators”, and thus be subject to the law’s obligations regarding personal

information protection, additional regulations and national standards are expected to clarify

employer obligations before the law’s scheduled effective date of June 1, 2017. At that time,

employers could be obligated to implement classified cybersecurity protections according to

specified standards for the collection, storage, processing and transfer of personal information of

employees.

An example of upcoming guidance is the draft Personal Information Security Specification, which

addresses the collection, storage, transfer and disclosure of personal information. The

Specification defines “sensitive personal information” as information that once leaked, disclosed

or abused, may potentially harm personal property, security, personal reputation, physical and

mental health, or cause discriminatory treatment. ID numbers, bank account information, health

records, and biometric information are listed as examples of sensitive information. Although the

Specification is unlikely to have binding effect as a law, it will likely establish sound practice

principles for employers to follow, and may serve as a basis for regulatory authorities to enforce

the Cybersecurity Law and for courts to determine privacy-related cases when no applicable law is

on point.

Work permit requirements eased for recent graduates

Foreign nationals who have graduated with at least a master’s degree from a Chinese university or

an “overseas famous university” may be exempted from the requirement to have two years of

relevant overseas work experience when applying for PRC work authorization pursuant to a circular

issued on January 6, 2017. The circular is part of a series of recent measures aimed at revamping

the country’s work authorization system and encouraging highly-skilled and educated foreign

nationals to work in China. The number of recent foreign nationals eligible for the special work

authorization will be subject to annual quotas per province as determined by the Ministry of

Human Resources and Social Security.

The requirements for the special work authorization include:

  •  graduation within one year of the work authorization application;
  •  excellent academic record;
  •  an advanced degree and major that is relevant to the proposed job position;
  •  salary of at least the local average salary (e.g., currently RMB 5,939 in Shanghai); and
  •  no criminal record.

 While the circular does not define “overseas famous universities”, rules issued last year refer to a

list of 100 universities published by Shanghai’s Jiaotong University.

Under the special authorization, graduates of overseas universities will be required to enter China

with “Z” (i.e., work) visas. Graduates of Chinese universities may convert PRC residence permits

for study into residence permits for work without being required to leave China.

China and Canada social insurance agreement takes effect

A social insurance agreement between China and Canada entered into force on December 27, 2016

exempting Chinese and Canadian nationals seconded to work in the other country and “selfemployed

persons” working in the other country from participation in statutory pension programs

if contributions are made in their home countries. Employees remain obligated to participate in

other types of social insurance programs. A “self-employed person” (自雇人员) is understood to

be a person who owns companies and works in both countries.

A separate bilateral social insurance agreement between China and Finland takes effect on

February 1, 2017. Under this agreement, Finnish nationals seconded to China and self-employed

persons are exempt from contributing to PRC pension and unemployment insurance programs if

contributions are made in Finland.

The PRC Social Insurance Law requires that foreign nationals working in China participate in the

statutory social insurance programs unless there is an applicable treaty exempting participation.

Housing Fund Program may open to foreign employees in Shenzhen

Draft regulations issued on January 4, 2017 would allow foreign nationals and residents of Hong

Kong, Macau and Taiwan who are legally working in Shenzhen to voluntarily participate in the

Housing Provident Fund. Eligibility for foreign nationals is currently limited to those holding

permanent residence status.

Under the draft proposal, employers and employees would make contributions at the same rates

as PRC nationals with employees entitled to the same use of the funds, such as paying a mortgage,

rent, or for renovations of an apartment. The employer and employee contributions would not be

taxable income of the employees. Foreign nationals and residents of Hong Kong, Macau and

Taiwan would be entitled to cash out their fund accounts if they leave mainland China or move to

a different region where participation in a local housing provident fund program is not allowed.

If the draft rules are approved, Shenzhen would join Shanghai as one of the few cities that permit

foreign nationals, as well as residents of Hong Kong, Macau and Taiwan, to voluntarily contribute

to local housing funds.

Transgender employee wins termination case in district court

A transgender employee won an unlawful termination claim on December 18, 2016, in a district

court case that generated widespread domestic and international attention. This case is believed

to be the first unfair termination case in China filed by a transgender employee.

Referred to publically only as Mr. C, although born as a woman, the employee identifies as a man.

Mr. C was dismissed after seven days of working as a sales consultant for the Ciming Health

Examination Center in Guiyang, Guizhou province. In May 2016, an arbitration tribunal ruled that

Mr. C was legally terminated during the probation period on the basis of poor performance.

The district court reversed the arbitration decision and found that the employer had not provided

sufficient evidence to support poor performance, and consequently awarded Mr. C RMB 483 in

unpaid salary as well as statutory damages in the amount of RMB 1,500. The district court

rejected Mr. C’s argument that Mr. C was actually fired on the basis of unlawful discrimination.

The district court’s reasoning was that discriminatory statements and comments made by one of

Mr. C’s colleagues could not be attributed to conduct on behalf of the employer.

Wang Yongmei, one of Mr. C’s lawyers, stated that the district court decision was acceptable

because the labor arbitration award was overruled and the termination was ruled unlawful; the

court ordered damages, and the case attracted considerable attention to the issue of transgender

employees in the workplace. Ms. Wang noted that the court’s written decision quoting a nondiscrimination

provision of the Employment Promotion Law indicated an appreciation of Mr. C’s

arguments.

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Altra Industrial Motion Inc.

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