The Useful Aspects of HR Audit for the Foreign Firms in China

Overseas organizations that operate in China are facing a greater number of potential labor disputes. A steady and sharp rise in the labor dispute case makes it absolutely important to perform an HR audit. A human resources audit usually involves a review of all HR policies, practices, and procedures, whether or not they are formal. It includes reviewing documents, interviewing human resources professionals from different areas of the organization, interviewing some managers at different levels of the organization, and possibly interviewing in-house employment counsel.

A strategic HR audit is the highest level of audit for the HR department. It includes all the current strategies and policies of the HR. A review is done to see if the HR is putting the strategies of the organization into practice. If you are wondering which kind of foreign companies operating in China should go for the HR audit, the general advice for most of the Chinese business lawyers, following are the companies must go for the HR audit in China-

  • WFOEs
  • Rep Offices
  • Joint Ventures

In China, labor disputes can be really expensive, time-taking and inconvenient. An HR audit can offer you a sense in advance about the hidden HR-related problems and complications, as well as possible compliance issues against a backdrop of China’s ever-evolving rules and regulations. Doing business can be really difficult in this country as China’s employment laws and rules just keep getting more complicated, more pro-employee, and more localized. An audit could work as a defense mechanism against any probable difficulties you may face in future regarding labor-related problems.

Because regulations are always subject to change as a result of new legislation or interpretations, HR audits should be conducted periodically to ensure that organizations are in compliance with the latest federal and state requirements. According to the Chinese business lawyers, the main benefit of the HR audit is that it offers specific, measurable and verifiable data of the current state of the function and ensures timely compliance with legal requirements, company and mandated regulations, and professional standards.

There is no surprise that China employment lawyers put extreme emphasis on the employer audit as an important part of the due diligence on any M&A deal. All the foreign companies working in China should keep in mind that a comprehensive HR audit not only helps to point out the complexities hidden in the human resource department that can have a negative impact on your business but also helps your organization to achieve remarkable growth and development. Not surprisingly, Chinese business lawyers suggest their clients to keep in mind that the human resource audit in China is not limited to WFOEs. There are other aspects that need to be included for a seamless business experience in China.

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How to Fire a Probationary Employee in China

The labor law of China is quite comprehensive and it is not hugely different from other European countries. But still China’s employment law is exclusive in its own way and it is really important to have a proper knowledge about labor law for conducting business with this country. As an employer you need to understand the fact that China is not an employment-at-will country, and when it comes to terminate an employee who is in probation it becomes even more difficult and complex.

During the probation period, there are expanded grounds for dismissal of employees, and termination during the probation period is easier and cheaper than after its expiration. Probation period is stipulated in a labor contract with a period to complete the prescribed work or a labor contract with a fixed period of less than three months and it has been performed.

For a better understanding, we are giving you a life-like scenario. A foreign employer appointed a Chinese employee on the first of January and keeps him/her on the two months probation period ( two months is the maximum probation period in China). Within this probation period, the employee finds that the hired person is not performing well and far below to their expectations and the employer has decided to sack the employee but the termination notice is given to that employee on the first of March that is one day after the employee’s probation period ended.

The employee can go to the court against his/her former employee, raising the issue that he/she has been given termination notice after the probation period. The Chinese courts will rule that the late termination signifies that the employer cannot use “failure to meet the conditions of employment during the probation period” as a basis for unilateral termination without severance pay. It shows that even a one day can make a huge difference in China.

The notable thing is that, when an employee in China completes a probation period, the employing authority cannot dismiss him/her on the grounds of probationary rules. This is the reason, China lawyers suggest don’t try to fire any employee by reason of incapability of doing one’s job unless this reason is stipulated in your recruitment advertising. Employers should carefully document any breach of the rules and regulations and serve written notice thereof. It is also essential for the employers to check their overall HR practice regarding probation period across their organization.

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