We have done a ton of China employer audits this year and from those our China employment lawyers have compiled the following list of the top six “warning signs” of impending employment problems.
1. All or some of your employment documents are in English only. If your employment documents are in English, you are handing your employees with a valid defense for not abiding by them. Nearly all Chinese courts and arbitrators will either refuse to enforce such contracts and documents or just rule in the employee’s favor. Equally bad is that anyone who believed that having their China employment documents in just English has no clue about Chinese employment law and the documents (in English) reflect this. You are almost certainly not going to be able to enforce your English language employment documents and yet your employees will be able to sue you for what you put in them, including any provisions that violate Chinese law. Your only real remedy is compliant documents with the English and the Chinese in one document.
2. All or some of your employment documents are in Chinese only. This one is very common and almost always a big mistake. I hate to sound like a broken record (actually I don’t) but you need your employment contracts and agreements to be in both English and Chinese and these two languages should be drafted together in each document, not as separate documents. You need these contracts in both Chinese and in English unless ALL of your relevant higher level employees (typically your HR personnel and management or anyone else who will be overseeing your employees in China) can read and understand written Chinese perfectly. Separate documents can lead to all sorts of problems. For example, when one version gets updated or amended and the other version does not (trust me when I say this happens all the time) you have a problem. Having separate documents also creates headaches for your HR people in terms of document retention. Much of the time when we see the employment documents in just Chinese they were drafted by a “trusted” Chinese employee not an HR expert and this usually means they fail to comply with either the national or the local employment laws AND they favor the employees. This situation also commonly leads management (especially out of the home office) to make employee decisions that run counter to what their own documents say simply because they do not know what their documents say. Again, your only real remedy is compliant documents with the Chinese and English versions in one document.
3. You get a lot of employee questions regarding your employment document or your employment policies. For example, your company recently implemented a new leave of absence policy and many employees are asking whether they are eligible and what they need to provide if they want to apply for the leave. This does not necessarily mean the relevant document is unworkable or even that the provision needs a re-writing. But it usually means you should at least consider making the document that is generating so many questions more clear. Similarly, if your employees are frequently contacting you with questions not addressed in your documents, you likely should put the answers in your employer rules and regulations or your employment contracts.
4. Your employer documents were implemented years ago. China’s national and especially its local employment laws and rules are constantly changing. On top of this, local interpretations and enforcement policies are constantly changing as well. See China Employment Law: Local and Not So Simple. Just last week, one of our China attorneys got an email from a reader thanking us for our employment law blog posts and for our China employment law book and saying that his new China WFOE had used those to draft all of its employment documents. Our lawyer wrote back with the following:
Using our blog posts and our book to draft your employment documents is a huge mistake. These are meant to give you general information and general guidelines but much of what we write becomes outdated soon after we write it and much of it will not apply to your specific locale or your specific industry or your specific situation. You need real employment law help and fast.
You should have someone who truly understands Chinese national and local employment laws review your employer rules and regulations at least once a year and, ideally, audit your entire HR program at the same time.
5. Your China office(s) has undergone or will be going through a significant change (such as a merger or an exit of key personnel). Your employment documents need to fit your existing situation, not what it was a week ago when you were half or twice your size. Your solution is to be sure to stay current.
6. Some or all your employment agreements are not signed or chopped. Check now to make sure all of your employees have signed your latest version employment contracts and written acknowledgments confirming receipt of your latest version employer rules and regulations. If this is not the case, your remedy should be clear and immediate. Do what it takes to update what you need to update and get signed what you need to have signed.
Bottom Line: If you see your company in the above, get moving. Now.