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Paid Vacation Rules of China that Global Companies Need to Know

China’s labor laws have stipulated that employees are entitled to paid holidays after working for a year. Earlier, the law was not enforced rigidly it was considered by many as toothless and feeble. But as China has eventually became the epicenter of global manufacturing. With the new millennium, cities such as Beijing, Shanghai and Guangzhou has become the industrial centers of not only China but also the world. Global companies and the entrepreneurs from different parts of the world are setting up manufacturing units over here and employing a huge a number of local employees, the Chinese government has realized the importance of making changes in the existing employment laws.

In spite of China having the least number of guaranteed paid holidays (21 days), the incident of companies getting sued by their employees over the vacation leave is increasing on a regular basis. So it is really important for the international companies having business interest over here to understand the employee law and vacation rules in order to function smoothly without facing any legal problem to prevent employee burnout and boost employee morale.

Basic Eligibility-

According to the Chinese law, an employee is being entitled to vacation time and vacation pay after being employed for one year. The arrangement is like that when an employee is recruited, she/he is entitled to get paid vacation but is only eligible to get it until it vests. The vesting period is of one year. After the vesting period the employee can take a vacation up to two weeks and still be paid as if she/he is working.

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What China Lawyers are Suggesting to their Clients Regarding Vacation Leave

  • Many foreign employees have the notion of persuading their employees not to taking vacation leaves in order to get promotion or increment. Do keep in mind that in a legal battle if your employee succeeds in proving to the court that not taking vacation leave was a factor behind getting the promotion, you will face huge penalty. So never make vacation leave as a criterion for promotion to employees.
  • China lawyers suggest all the foreign employers to maintain accurate payroll records, including information on vacations taken and vacation pay paid. If a Labour Standards Officer audits and finds no record of vacation pay, the Director of Labour Standards might find the employer still owes the employee vacation pay.
  • If an employee has voluntarily given up such vacation days and given a written note, then the company can afford not to pay the dues for the vacation leave. In China, every company must pay their employees for unused vacation days.

Employees are entitled to between 5 and 15 days of paid annual leave at a sliding scale based on their length of service to the employer. Employees can also apply for sick leave, marriage leave, and funeral leave, when applicable.

About Michael Wong

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