If you’re planning to hire in the Mainland of China, the employee handbook is worth considering early. Handbooks used mainly as general guidance in other markets may need to be adapted before they can support employee management in China.
In the Mainland of China, a properly drafted and implemented handbook can help explain how workplace matters will be handled and give your human resources team a clearer framework for managing employees. It can also provide an important basis for addressing misconduct and, in serious cases, terminating employment.
This makes both the wording of the handbook and the way it is implemented especially important when you begin operations. In practice, employers should also retain evidence demonstrating that the handbook was consulted upon, communicated to employees and properly implemented.
In this article, we discuss:
- Why foreign companies need a China-specific employee handbook
- What a well-drafted China employee handbook should cover
- Practical steps to create or update an employee handbook
- Common mistakes foreign companies should avoid
- Case study: why a global employee handbook cannot be applied directly in China
- How we can help
- Frequently asked questions
Why foreign companies need a China-specific employee handbook
Many foreign companies typically have global human resources policies or an employee handbook used across the group. While these documents can provide a useful starting point, they usually cannot be introduced unchanged in the Mainland of China.
The Mainland of China has its own labour laws and procedural requirements for adopting workplace rules. Local employment practices may also differ from those in other markets. Importantly, under Article 4 of the Labour Contract Law of the People’s Republic of China, workplace rules that directly affect employees’ interests must be discussed with all employees or the employee representative congress.
Employees must be given an opportunity to put forward their comments and proposals. The employer must then consult with its trade union, where one has been established, or with employee representatives before finalising the rules.
A global handbook that works elsewhere may therefore require more extensive localisation before it can be relied on in the Mainland of China.
What a well-drafted China employee handbook should cover
If you’re starting a business in the Mainland of China and intend to hire locally, preparing an employee handbook should form part of the setup process. The exact content of your employee handbook will depend on your workforce and location in the Mainland of China.
Even so, the following areas are usually addressed in the employee handbook:
Managing onboarding and employment documentation
The handbook should explain your onboarding process, including the documents employees must provide, how probation will be managed and how company policies will be introduced. It should also remain consistent with each employee’s written employment contract, which must contain statutory information such as the employee’s role, workplace, working hours and remuneration.
Managing working hours, attendance and overtime risk
Clearly set out the working-hours system that applies, how attendance will be recorded and how overtime should be approved. Alternative arrangements, such as the flexible or comprehensive working-hours systems, generally require approval from the relevant local authority.
However, the handbook should not suggest that employees automatically lose their entitlement to overtime pay because prior approval was not secured. Whether the employer required, arranged or accepted the overtime may also be considered.
Managing leave and employee welfare obligations
The handbook should explain how employees can request and document leave. It should also set out how you administer statutory entitlements and any additional company benefits. Bear in mind certain requirements may vary between provinces and cities. These may include local leave entitlements, sick pay, social insurance and the administration of alternative working-hours arrangements.
Supporting consistent performance management
A clear performance-management process can help you set expectations and deal with underperformance consistently. The handbook should therefore explain how objectives are communicated, how performance is assessed and what support may be offered before further action is considered.
Poor performance should be distinguished from misconduct. Under Chinese employment law, these involve different legal grounds and procedures. For example, where termination is based on an employee’s inability to perform the role, you will generally need to show that training or reassignment was provided and that the employee remained unable to perform the work.
Protecting confidential information and intellectual property
The handbook should explain how employees are expected to handle confidential information, company systems and intellectual property created during employment. It should also address the return of company information and equipment when employment ends.
You may need separate confidentiality or intellectual-property agreements where further protection is required. Non-competition restrictions are subject to specific legal requirements and are generally limited to certain categories of employees.
Managing resignation, termination and redundancy procedures
In cases involving resignation, termination or redundancy, the handbook should set out the steps to follow when an employee leaves the business. This may cover notice periods, handover arrangements and the return of company property. It may also describe the internal procedures to follow where disciplinary action or termination is under consideration.
The handbook, however, does not override the legal grounds and procedures for ending employment.
Practical steps to create or update an employee handbook
The below steps show how companies usually prepare and introduce an employee handbook for activities in the Mainland of China:
| Step | What foreign employers should do | China-specific considerations |
|---|---|---|
| 1. Identify high-risk employment scenarios |
Start by considering the employment matters your business may need to address, such as attendance, performance or compliance with company rules. |
Distinguish between misconduct and underperformance, as they may require different evidence, procedures and grounds for disciplinary action. |
| 2. Review global policies and local requirements |
Assess your existing group handbook and identify which provisions can be retained or need to be adapted. |
Certain employment requirements may vary between provinces and cities. This may apply to local leave entitlements, sick pay, social insurance and the administration of alternative working-hours arrangements. |
| 3. Draft clear workplace rules |
Set out what employees are expected to do and how breaches may be handled. Avoid broad or subjective wording. |
Conduct that could lead to disciplinary action or termination should be defined carefully. Any consequence should be proportionate and supported by evidence. |
| 4. Complete a legal and human resources review |
Confirm that the handbook is legally compliant and practical for managers to apply. |
The handbook should not reduce statutory entitlements or introduce measures that are not permitted under applicable law in the Mainland of China. |
| 5. Follow the consultation and employee notification process |
Give employees an opportunity to comment on relevant rules and communicate the final handbook clearly. |
Rules directly affecting employees generally require discussion with all employees or the employee representative congress, followed by consultation with the trade union or employee representatives. Evidence of consultation and notification should be retained. |
| 6. Train managers on implementation |
Make sure managers understand how to apply the handbook consistently and when to involve human resources. |
Managers should know how to investigate alleged breaches and preserve evidence. Where a trade union is established, additional notification requirements may apply before unilateral termination. |
| 7. Monitor, update and maintain records |
Review the handbook as your workforce and operating model change. Keep records of amendments and implementation. |
Material changes may need to go through the consultation and employee notification process again. Version histories, acknowledgements and training records may become important in a labour dispute. |
Common mistakes foreign companies should avoid
The following are some of the common mistakes to be aware of when preparing your employee handbook for the Mainland of China:
| Common employee handbook mistake | Why it matters |
|---|---|
|
Translating without localising |
Translating a global handbook into Chinese is not the same as localising it. The content should also be reviewed against Chinese labour laws, local employment practices and the way your business operates. |
|
Having unclear disciplinary rules |
Employees should be able to understand what conduct is prohibited and what consequences may follow. Rules that are too broad or unclear may be difficult to rely on when taking disciplinary action or handling a labour dispute. |
|
Applying handbook rules inconsistently |
Similar cases should be handled in a similar manner. If rules are enforced unevenly, this may weaken your position and make disciplinary decisions easier to challenge. |
|
Failing to keep implementation records |
After completing the required consultation process and communicating the final handbook to employees, it is important to keep a clear record of the steps taken. This may include meeting records, employee feedback and signed or electronic acknowledgements. |
|
Failing to review the handbook regularly |
Your handbook should be reviewed as your business, workforce and employment requirements change. Material updates may also need to go through the applicable consultation and employee notification procedures. |
Case study: why a global employee handbook cannot be applied directly in China
The following example illustrates the risks a foreign company may face when it uses a global employee handbook in the Mainland of China without properly adapting and implementing it for the local workforce:
A multinational company entered the Mainland of China and used its headquarters handbook to manage local employees. The handbook treated certain behaviour as serious misconduct, so when an employee breached the relevant rule, the company believed it had sufficient grounds to end the employment relationship.
The employee later challenged the decision. In a real dispute, shortcomings in localisation and implementation may result in a termination being found unlawful, even where employee misconduct has occurred. The main issue was not simply whether the misconduct had taken place, but whether the Chinese subsidiary could lawfully rely on the headquarters handbook as the basis for termination.
In this example, the company was unable to show that the relevant policies had been properly adapted to Chinese labour law requirements. It also lacked sufficient evidence that the rules had been introduced through the appropriate procedures and communicated to local employees.
This highlights a critical point for foreign companies operating in China. A handbook does not automatically become enforceable simply because it is used across the wider group. Labour dispute authorities may also consider whether the rules are lawful, clear and properly implemented within the Chinese entity.
While the employee’s conduct may have raised genuine concerns, weaknesses in the localisation and implementation process made it harder for the company to rely on the handbook. Consequently, this can lead to higher dispute-resolution costs and place an additional burden on management.
How we can help
For multinational companies, localising an employee handbook in the Mainland of China involves much more than translating an existing group policy. Our team understands the areas a China-specific handbook should cover and how the content may need to be adapted to your operations, workforce and location. We can help you review or prepare a localised handbook that gives your local team a practical framework for managing employees.
We can also guide you on how the policies should be introduced, communicated and applied. With the appropriate localisation and implementation, the handbook can support day-to-day employee management and help control employment risks.
If you have plans to expand your business into the Mainland of China, we can also assist with the wider process of setting up and operating here. Our scope of services can include entity formation, provision of directors and company secretary, bank account opening and other ongoing corporate and compliance support. For more information, please get in touch.
Frequently asked questions
What is the employee handbook?
An employee handbook sets out the workplace rules employees are expected to follow in the Mainland of China. It may cover areas such as working hours, leave, conduct, performance, confidentiality and disciplinary procedures. When properly prepared and implemented, it can also give the employer a clearer basis for managing employment matters.
What are the legal requirements for handbooks in the Mainland of China?
The main legislation applicable to employee handbooks in the Mainland of China is the Labour Contract Law of the People’s Republic of China. Workplace rules contained in the handbook that directly affect employees’ interests must comply with applicable law. They must also undergo the required consultation process and be properly shared with employees.
Which companies should have an employee handbook?
Any company hiring staff in the Mainland of China can benefit from having a localised handbook. This is particularly useful if you’re using an Employer of Record (EOR), managing employees through a local human resources team or hiring remote staff in the Mainland of China.
Where an EOR arrangement is used, the provider will generally be the legal employer. You will therefore need to coordinate your workplace expectations with the EOR’s policies and procedures.
What employment risks does a handbook help a foreign company manage in the Mainland of China?
An employee handbook may help manage risks relating to attendance, leave, misconduct, performance, confidentiality, remote working and disciplinary action in the Mainland of China. It can be particularly relevant where you are considering terminating an employee for a serious breach of company rules. In these cases, you will generally need to show that the relevant rule was lawful, clearly written, properly introduced and made known to the employee.
Reach out to our team for guidance on preparing or reviewing an employee handbook for your operations in the Mainland of China.
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