Update Your China Employee Handbook NOW

Since the beginning of the COVID-19 outbreak, China has released and updated countless national and local employment laws to deal with rapidly changing circumstances. In the United States and the EU, best practices usually dictate that you update your company’s employee handbook at least once a year and even more often if there have been substantial employment law changes. The same holds true for China and with all of the recent employment law changes, it is time again for an update to your Employer Rules and Regulations (the common name for an employee handbook in China).

Though the coronavirus and these new laws have complicated things for foreign employers in China, they do not mean you must relinquish everything to your employees. Even China’s most pro-employee locales still allow employers to unilaterally terminate an employee for a serious breach of the employer’s rules and regulations. However to quote the Chinese old saying, “to do a good job, an artisan needs the best tools.” What this means in the China employment law context is that if you are going to terminate or even just discipline one of your employees, you must first be certain of the following:

• Your China company’s Employer rules and regulations clearly and concisely and in both Chinese and in English spell out your company’s disciplinary measures.
• Your company’s rules and regulations and your methods for implementing those rules and regulations comply with all applicable China employer requirements.
• You checked all applicable laws and practices and your company’s disciplinary measures are legally enforceable.
• You have good written proof (like a receipt) that your employees received your employer rules and regulations.
• You clearly documented your employee’s violation of your rules and regulations.

Of course you also need to dot the i’s and cross the t’s with respect to the actual termination but that’s a topic for another day.

We have discussed many times that pretty much all employee terminations in China are difficult, and even more so now with China’s heightened concerns about the economy and unemployment. So why bother with even attempting a unilateral termination now? Because if you have an employee who is stealing from you or crushing company morale or damaging your company’s reputation, for example, you don’t have much choice. And of course there are also those companies that have been hit so hard financially by the coronavirus crisis that they effectively have no choice but to terminate employees.

A common example our China employment lawyers have been seeing these last few months is the situation where a foreign company has legally reopened its China operations post-COVID and one or more of its employees refuses to return to work without any legal basis for doing so. Provided you have fulfilled your employer obligations under the applicable law — such as sending the employee a reminder about returning to work (this usually requires you looking to your local laws and regulations regarding what you must do before you can make the termination decision), you can discipline or terminate the employee for serious wrongdoing without having to pay any severance. However, you still need to follow your own employer rules and regulations regarding absenteeism.

We have found that foreign companies with the fewest employee problems in China tend to have the following in common:

• They have a robust China HR team, either in China or outside China, typically in both places.
• Their HR people in China and at their worldwide headquarters collaborate often; they talk often and they share in the decision-making process.
• They maintain an enforceable, practical and up-to-date employee handbook in English (or the native language of the company’s key decision-makers) and in Chinese they can read and understand and rely on.
• Their other employment-related documents, including their employment contracts, are in both Chinese and English and they coordinate with their employer rules and regulations.

Bottom line: If you have not recently checked and updated your China employee handbook, now is the time to do so.