Working Hours

PRC law recognises three categories of working hour systems: (i) the Standard Working Hour System; (ii) the Flexible Working Hour System; and (iii) the Comprehensive Working Hour System.  Each system varies in its applicability to employment positions and industries within the PRC.

The Standard Working Hour System provides that an employee may work no more than 8 hours per day and, as such, working hours are capped at 40 hours per week. Any work that exceeds the maximum limit of 8 hours per day, or 40 hours per week, is considered overtime. In contrast, the Flexible Working Hour System provides no limit on an employee’s working hours. However, the Flexible Working Hour System is only applicable to certain positions as specified by PRC law (e.g. senior management, sales staff and drivers). Finally, the Comprehensive Working Hour System is only applicable to certain industries as specified by PRC law (e.g. staff in transportation, railway, shipping, aviation, fishery, construction and tourist industries). The Comprehensive Working Hour System provides that an employee’s working hours are calculated periodically (e.g. per week, month, quarter or year) although the average working hours shall be generally the same as the Standard Working Hour System.

In principle, an employer wishing to adopt the Flexible Working Hour System or the Comprehensive Working Hour System for particular employees must obtain pre-approval from the local labour authorities.

Overtime

The Standard Working Hour System and the Comprehensive Working Hour System provide compensation for overtime worked. An employee must be compensated for any overtime work as follows:

(i) 150% of the base salary for overtime work on a working day;

(ii) 200% of the base salary for overtime work during the weekend; or

(iii) 300% of the base salary for overtime work on a public holiday.

In any event, overtime work must not exceed 3 hours per day and 36 hours per month.

Under the Flexible Working Hour System, no compensation is required for overtime work, but the employer must ensure that the employee has sufficient off-work time in order to ensure the well-being of the employee.

Annual Leave

PRC law also provides statutory annual leave for each employee who has at least one year of cumulative working experience. The amount of statutory annual leave is generally based on the cumulative working experience of an employee as follows:

(i) if the employee has cumulative working experience of 1 year or more but less than 10 years, he/she is entitled to 5 days statutory annual leave;

(ii) if the employee has cumulative working experience of 10 years or more but less than 20 years, he/she is entitled to 10 days statutory annual leave; and

(iii) if the employee has cumulative working experience of 20 years or more, he/she is entitled to 15 days statutory annual leave.

The cumulative working experience is not limited to the employee’s length of service with the current employer but refers to working experience with all previous employers.

Under PRC law, an employer must compensate an employee with 300% of the daily salary for each day of unused statutory annual leave. Many international companies in China provide additional annual leave to supplement the statutory annual leave.  However, PRC law has no requirement on compensation for the unused additional annual leave provided by an employer and therefore any compensation may be addressed by the internal policies of the employer.

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