Must Read Labor Dispute FAQ with Jingsh

Lylian Zhao   |   August 24, 2020

Understanding exactly what your labor rights are can be difficult for foreigners working in Shenzhen. News can often be out of date or fake, word of mouth cannot be trusted, and important details can often be lost in translation.

For many years, Beijing Jingsh Law Firm Shenzhen has been advising foreigners working in Shenzhen to ensure they know their rights and make the best decisions possible. Lylian Zhao kindly agreed to share some of the most frequently asked questions she gets regarding labor disputes and offers her expert advice.

Q: My contract stipulates that I must give 60 days notice if I resign from my school. According to Chinese labor law, however, it appears I am only required to give 30 days. What should I do?

A: First, let’s clarify what the law actually is. Employees must notify their employers in writing 30 day in advance before terminating their contract. During probation, employees are only required to give 3 days notice.

So, you are not required to give 60 days notice and would not violate any labor law by only giving 30 days notice. That being said, it is often best to follow what was agreed between the employee and the employer in the contract. It’s always useful to maintain good relationships with former employers if possible.

Q: I came to China to work in a training center in January. Due to disagreements with the boss, I decided to resign in April. With the Coronavirus outbreak, the training center agreed not to cancel my work permit so that I could stay in China and search for another job. In June, I found a new job with a university.

My concern is that I may have broken labor laws by having a work permit from April to June without actually working for the training center. Will I have any issues with this when I start my new job at the university?

A: According to the law, after an employer cancels a work permit, the employee has 30 days to transfer the work permit to another company. Although you did not start your new job until 2 months later, this should not be an issue as your former employer did not cancel your work permit, so the 30 days deadline would not have applied.

Also, do not be concerned about your former employer. The only options they have with your work permit is do nothing, in which case your work permit continues to be valid until it expires at which point you can renew with your new employer, or they can cancel it now, in which case you just need to transfer the work permit to the new employer. Your former employer cannot cancel it retroactively, so you have nothing to be concerned about.

Q: My school has not paid my salary for the past three months. What should I do?

A: Although you may be worried that the school can get away without paying your salary, the law is on your side. You have the right to submit your case to a local arbitration court to ask for the salary and as well as compensation. If the school applies to have your work permit cancelled, they must first resolve any labor dispute between employer and employee.

You see, as part of the process to cancel the work permit, the employee must sign a form. The work permit cannot be cancelled if you do not sign the form. As long as you refuse to sign this form until your salary dispute is resolved, the school cannot unilaterally cancel your work permit.

Q: I work in a tech company and had signed a two-year contract when I joined. That contract has now expired and the company is now proposing to renew the contract but reduce my salary. If I do not agree to the reduction, they will not renew my contract. What should I do?

A: First of all, it’s completely normal for both parties to wish to negotiate a contract when it comes up for renewal, but the company cannot reduce your salary without your agreement.

If you do not agree to the salary reduction and they refuse to renew the contract, then of course you are free to leave. Normally for Chinese employees, the company is still required to pay a certain amount of financial compensation. For every year worked in the company, the company is required to pay a month’s salary. If you are a foreign employee, however, this compensation will depend on what is outlined in your contract.

Q: What compensation is my company required to pay if I am made to leave? My salary is RMB70,000 per month and I have been working for the company for 3 years. So, if it is one month of salary for every year worked, does that mean I would be due RMB210,000 in compensation?

A: No, your company would only be legally obligated to compensate you RMB95,814.

In fact, the law is very clear on this. While it is true that employees are compensated with one month’s salary for every year they have worked for the company, if you are paid more than three times the average salary in Shenzhen then your compensation is capped at three times that average salary.

Last year, the average monthly salary in Shenzhen was RMB10,646, so the cap would be RMB31,938 for each year worked in the company. In your case, you worked 3 years so that add up to RMB95,814.

If you ever find yourself in a similar situation or need some advice on trade or business disputes, please do not hesitate to contact Lylian Zhao at Beijing Jingsh Law Firm Shenzhen for expert legal advice.