China Laws and Regulations Update in December 2017

1. Circular Notice on Adjusting Import Taxes on Certain Commodities
Promulgated by the Ministry of Finance
Document number: No.25 [2017] TB
Promulgation date: 22nd November 2017
Effective date: 1st December 2017

As from 1st December 2017 import taxes on certain commodities are reduced based on current tax rates. The import tax reduction this time applies to 187 commodities with an 8-digit tax number such as food, healthcare products, medicine, cosmetics, clothes, shoes and hats. The average tax rate is reduced from 17.3% to 7.7%. The tax rate of diapers and nappies is reduced from 7.5% to 0%. The tax rate of certain baby milk powder products is reduced from 20% to 0%. (Source: Website of the Ministry of Finance)


How Can the Double Wages Payment Provision be Misused In China?

(By You Yunting) In order to protect the legitimate rights and interests of laborers and to avoid enterprises failing to conclude a labor contract with laborers, China’s Labor Contract Law stipulates that, where an employing unit fails to conclude a written labor contract with a laborer that has provided labor services for more than one month but less than one year, it shall pay double wages payment to the laborer each month.

In practice, however, many enterprises found this stipulation being misused. To achieve double wages payment, some laborers intentionally failed to conclude the written labor contract with their employing units and then brought the employing units to labor arbitrations claiming for double wages payment. In our post, we would like to introduce a typical case where a laborer in charge of human resources who deliberately did not conclude a labor contract with its enterprise is supported by the courts to receive double wages payment after their departure. Foreign investors who do business in China should be aware of this potential labor risk.


How an Employer Terminates a Labor Contract with an Unqualified Laborer in China?

(By Luo Yanjie) Abstract: “where a laborer is unqualified for his work and remains unqualified even after receiving a training or an adjustment to another work post”, the employer may terminate a labor contract. The employer shall, if terminates a labor contract with an unqualified laborer, prove the employer to be incompetent from many aspects not just based on a bad performance.

Pursuant to the Labor Contract Law, there are many conditions for termination of a labor contract with laborers. Among these conditions, the most used one is that a labor is unqualified for his work. This means, the employer may not consider rescinding a labor contract unless a laborer is unqualified for his work. During the process of termination, among many disputes between laborers and employers, we would like to introduce a typical cases regarding termination of an unqualified laborer from Case Guidance of the Supreme People’s Court.


Solutions to Labor Dispute on the Employment of Foreigners in China

By Albert Chen

A subscriber of our website raised a question to us: what to do when countered a labor dispute for foreigners in China, who shall also be protected by local laws? To this question, you may find your answer in today’s post.

I. Are Chinese laws and regulations applying to labor disputes of foreigners?

The main existing laws regulating the employment of foreigners in China is RULES FOR THE ADMINISTRATION OF EMPLOYMENT OF FOREIGNERS IN CHINA (Rules) issued by police, labor and other two departments. According to Article 26 of the Rules:


Why to Protect Legal Benefits of Units in Labor Disputes?

By You Yunting

Recently, following a disputed labor case I have noticed an inadequate protection of the unit by the existing laws and regulations, and such inadequacy has made an unfaithful employee gain immoral advances from such inadequacy in the case, and on the other hand, hundreds of innocent labors may suffer losses from this. So, we would like to put the case in discussion now:

A senior employee asked for sick leave of 1 year (it was found afterwards that the hospital has never prescribed medicine after the issuance of the medical certificate, yet the hospital also refuses to admit involvement in the false sick leave), contrary to this the employer later found that the employee was actually running her own company then entrusted lawyers to investigate it. After the check of the registered information of the suspected company, the employee was proven to be the general manager. Meanwhile, the lawyer also contacted the employee in the name of business contact through the contact telephone number on the home page of the company, which further confirmed the employee’s service with the company. The call was notarized.


The Untimely Chinese Labor Contract Law

     ——Layoff Difficulty of Nokia, Groupon and Ku6, the influence of untimely and inappropriate regulations in Labor Contract law

Highlights: The untimely and inappropriate regulations on layoffs in Labor Contract Law fails to meet the current development demands of the company, the legal obstacle deteriorates competitiveness of the company and limits company’s desires on employment.

Recently, four Chinese companies met difficulties due to cuts were brought to our attention., a Chinese deal-of-the-day website jointly invested by and Tencent (SEHK 700), started mass layoff, which raised a concerns and protestations from its employees; someone even chose the suit for the dissatisfaction on the compensation. Shortly after that, Nokia (NASDAQ: NOK) and Nokia Siemens Networks were also doubted due to  its illegal layoff procedure. And what’s more, the earlier layoff of KU6 (NASDAQ:KUTV) led to physical aggression and outbursts.