Working Hours in China
Working hours in China are systematically different from other business cultures. To effectively set up and maintain business operations in China, employers must familiarize themselves with different types of working hours systems and determine a structure that is most appropriate for their business needs.
Here, we will examine the different systems of working hours, China’s “9-9-6” principle, regional wage regulations and other special circumstances pertaining to working hours in China.
Chinese Standard Working Hours
Standard working hours in China follow a 44-hour weekly schedule, with a maximum limit of 8 working hours per day. Normally, this weekly arrangement consists of 5 full workdays, 1 half-day, and 1 day off. It is important to point out however, that the implementation of a particular working schedule can vary significantly based on the industry specifics and the individual demands of each business. Industries involving intensive labor, high competitiveness and more direct customer interaction may require extended working hours.
As an example, the hospitality and retail sectors are notable industries that necessitate extended working hours, while healthcare and education may have a shorter, 40-hour workweek.
Beyond the standard guidelines for weekly hour standards, employers are also obligated to provide their employees with designated periods of paid time off and consider Chinese labor holidays.
China Flexible Working Hours
A flexible working schedule is a system not based on fixed hours worked, but rather performance outcomes. Employees under this system often have irregular working hours, and are compensated with a fixed salary periodically.
When working hours are not easily quantifiable, there are no fixed expenses for overtime work, and employers have full discretion for how employees are compensated. There are currently no ways to precisely categorize employees for the qualification of a flexible working schedule, and each position must be approved by the local Labor Bureau on a case-by-case basis. Common roles considered for a flexible working hour system include salespeople and management personnel.
China Comprehensive Working Hours
The comprehensive working hours system takes into consideration the working hours of an employee across a specific timeframe or cycle and is most suitable for employees with seasonal or highly flexible work. Working hours are aggregated for a designated cycle (weekly, monthly, quarterly or yearly) which determines the average number of hours worked for a set period. Overtime pay is only required by employees if the average hours worked exceeds the standard of 8 hours in a day. A comprehensive working hour system can only be used following approval from the local Labor Bureau.
The 9-9-6 Working Schedule
Although the standard workweek in China shares many similarities to work patterns in the West, industry demands, individual corporate policies, and the demands of a burgeoning society has given rise to what has come to be known as the “9-9-6” principle in numerous Chinese enterprises.
The “9-9-6” principle denotes a working arrangement wherein employees work from 9AM to 9PM, 6 days per week. Such a regimen translates into approximately a 72-hour workweek, which is incredibly demanding. Organizations that follow a 9-9-6 schedule for their employees generally provide supplementary incentives to encourage extended working times. Such incentives include meal allowances, taxi expenses for late rides home, and on-site gym facilities.
The 9-9-6 principle is especially prevalent in the highly competitive technology sector, where efficiency and output are key success factors. Some Chinese CEO’s like the well known Jack Ma as well as some Western investors have praised the “9-9-6” principle for fostering strong work ethic, and cite it is as a driving force behind China’s economic success. Conversely, other voices including the Supreme People’s Court, have criticized the “9-9-6” principle, deeming it is exploitative to the working class.
Wage Regulations in China
Minimum wage levels vary considerably across different cities across China. As opposed to the national level, thresholds for minimum wage is set at the provincial level, and is contingent upon the local cost of living. In certain provinces, a different minimum wage is designated for more urban areas, where the cost of living is higher, in contrast to more affordable rural areas.
The minimum wage encompasses the inclusion of the social insurance premiums and the employee’s share of the national housing allowance. This approach entails that the deduction of these contributions are subtracted from of the employee’s renumeration before disbursal, resulting in a net take-home pay that is lower than the stipulated minimum wage.
Beijing municipality, however, is an exception to this rule, as its regulatory framework specifies that minimum wage is calculated after factoring social insurance and housing allowance.
An hourly and a monthly wage govern minimum wage considerations for each province. The hourly minimum wage considered is for part-time, hourly, or non–salary workers, and the monthly minimum wage is considered for salaried workers.
Hourly minimum wage benchmarks span a range between 13RMB/hour in more rural areas to 26.4RMB/hour in cities like Beijing. Similarly, the monthly minimum wage follows a range between 1,450 and 2,420RMB per month.
Overtime and holiday pay
The practice of overtime is extremely pervasive in China’s working landscape. Some industries may even enforce mandatory overtime, depending on the industry demands, competitive dynamics, and specific regulations. However, should a particular industry necessitate overtime hours, employees are required to mutually agree upon the extend of overtime involvement and be compensated accordingly.
When employees exceed the weekly limit of 44 working hours, employers are required to compensate for mandatory overtime. Generally, the overtime rate is 150% of the standard pay rate. However, in instances where employees need to work on national holidays or other days designated for rest, the overtime rate is 200%.
Additionally, certain industries where the work is marked by especially demanding or hazardous tasks may command an even higher substantial overtime rate, reaching up to 300% of the standard pay rate.
To exemplify this, if a worker earns a standard rate of 25 RMB per hour and completes 60 hours of work in a week, their overtime pay could be as follows:
Standard rate (44 hours): 1100 RMB
150% rate (16 hours): 600 RMB
Total (60 hours): 1700 RMB
For each employee, regulations cap overtime work hours at 3 hours per day, and up to 36 hours per month. Employees must be compensated at the prescribed overtime rate for all overtime hours worked. Some employers, through consent of their employees, are able to opt for alternative forms of compensation, such as providing additional time off, to renumerate overtime efforts.
To ensure all employees are fairly compensated, all overtime activity must be meticulously tracked, and this is where the use of an effective payroll software in China can help both employers and employees. Failure to appropriately compensate employees for overtime may place employers at risk of penalties or fines from the government.
Employers are required to provide their employees a standard allotment of paid days off per year. The exact number may vary based on the duration of the employee’s tenure at the respective company. Beginning with 5 paid days off in the employee’s first year, the allowance increases based on the length of service, and can add up to 15 paid days off for employees who have worked for over 10 years at the company. For a complete understanding, check out our full article on leave days in China.
Employers are obliged to provide their employees leave on standard Chinese labor holidays off, which include:
- Chinese New Year
- International Labor Day
- National Day
Chinese employees who are affiliated with labor unions may benefit from enhanced overtime compensation due to the influence of collective bargaining agreements and labor contracts. Moreover, they may be able to negotiate not only overtime pay, but also additional forms of compensation such as extra time off or meal allowances during overtime work.
As the world’s largest emerging economic powerhouse, China possesses transformative power for your business. Central to the transition into the Chinese market is the strategic employment of employees and effective management practices. Through understanding the local regulatory frameworks and practices for maintaining employee satisfaction, you will be able to foster the relationships that are essential in enabling your business to thrive.
Our experts at Moore – MS Advisory have had extensive experiences supporting foreign enterprises with their HR and payroll needs in China. For more on our services, contact us now.
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