China - Minimum Wages - 2011

1 April 2011

This database is updated on the basis of national law and State Council administrative regulations, i.e. law as promulgated by the National People’s Congress, or its Standing Committee, and the State Council, or the Central People’s Government, of the People’s Republic of China. Further legal rules issued by the Ministry of Human Resources and Social Security (MOHRSS) and regulations issued at a provincial level may also be relevant, but fall outside the ambit of this review.

Labour Law 1994 Adopted at the Eighth Meeting of the Standing Committee of the Eighth National People’s Congress on July 5, 1994 and promulgated by Order No. 28 of the President of the People’s Republic of China, commenced 1 January 1995

Regulations on Minimum Wages, Order of the Minister of Labour and Social Security No. 21, dated 20 January 2004 with effect from 1 March 2004

Regulations on the composition of gross wages Ratified by the State Council on September 1989, and promulgated as the No 1 Instruction of the National Bureau of Statistics on 1 January 1990

Labor Contract Law of the People’s Republic of China, adopted at the 28th Meeting of the Standing Committee of the Tenth National People’s Congress of the People’s Republic of the China on June 29, 2007, effective as of January 1, 2008

The Law of the People’s Republic of China on Labor-dispute Mediation and Arbitration, adopted at the 31st Meeting of the Standing Committee of the Tenth National People’s Congress of the People’s Republic of China on December 29, 2007, effective 1 May 2008

Minimum wage standards for 2010, by province, autonomous regions and municipalities (monthly and hourly minimum wage rate).

Collective Wage Bargaining in Foreign Invested Enterprises, China Law and Practice, 1997-11-00. Vol. 11. No. 9, pp, 25-27

Cooney, Sean (2009) ’Working Conditions in an Integrating World: Regulating Time, Money and Family Life - China’

Brown, Ronald C ’Understanding Labor and Employment Law in China’ Cambridge University Press, New York, 2010

Huawei, Downey and Sonnenberg ’China’s New Wage and Hour Laws’ Paul Hastings Attorneys - Stay Current, May 2004

Key terms are defined differently in the various labour laws and regulations. Some of the main definitions are set out below.

The Labour Law applies to labourers who form labour relationships with employing units (as defined).

The Labour Contract Law applies to labourers who have established labour relations with state organs, public institutions and social groups, when entering into, implementing, modifying and dissolving or terminating labour contracts.

The Labour Law applies to all enterprises and individual economic organisations, which are collectively referred to as ’employing units’. These expressly include State organs, institutional organisations and societies.

The Labour Contract Law also applies to employing units, but defines these as all enterprises, private economic organisation and non-enterprises units run by civilian within the People’s Republic of China and which establish labour relations, enter into, implement, modify, dissolve or terminate labour contracts. The Law also applies to state organs, public institutions and social groups when entering into, implementing, modifying and dissolving or terminating labour contracts.

The Regulations on Minimum Wages apply to all enterprise, private non-enterprise units, sole proprietors, including state agencies, public institutions and community organisations (§2).

Gross wages are composed of 6 components:
(1) hourly wages;
(2) piece wages;
(3) bonuses;
(4) allowances and subsidies;
(5) overtime wages;
(6) wages paid in particular cases.

The minimum wage standard is defined as ’the least labour remuneration paid by the employers required by law on conditions that the labourers have provided normal labour during the legal working hours or working hours agreed by the labour contract’.

Minimum wage will not include payment owed on account of:
(a) overtime;
(b) special allowances paid by reason of a particular work environment or condition (e.g. shift duties, working in mines, working at high altitudes etc);
(c) statutory employee welfare benefits;
(d) travel-related expenses; or
(e) protective clothing or equipment.

The Labour Law provides that employing units shall not pay wages that are lower than the minimum wages set by the provincial, regional or municipal government in accordance with the State’s system of guaranteed minimum wages. The Regulations on Minimum Wages provides that all enterprise, private non-enterprise units, sole proprietors, including state agencies, public institutions and community organisation, are required to pay minimum wages.

Provincial, regional and municipal governments shall develop specific standards, relevant to their jurisdiction, for the system of guaranteed minimum wages. The standards set shall be reported to the State Council for the record.

Regional trade unions and federations of enterprises are consulted at the local level and the China Labour Union and China Federation of Employers are consulted at the national level.

The staff and workers of an enterprise as one party may conclude a collective contract with the enterprise on matters relating to labour remuneration. The draft collective contract shall be submitted to the congress of the staff and workers or to all the staff and workers for discussion and adoption. A collective contract shall be concluded by the trade union on behalf of the staff and workers with the enterprise; in enterprises where a trade union has not be established, such contracts shall be concluded by the representatives elected by the staff and workers with the enterprise.

A collective contract shall be submitted to the labour administrative department after its conclusion. The collective contract shall go into effect automatically if no objections are raised by the department within 15 days of the date on which it was received.

Collective contracts concluded in accordance with the law shall have binding force and payments agreed in individual agreements shall not be lower than those stipulated in the collective contract.

Employing units shall not pay wages that are lower than the minimum wages set by the local provincial, regional or municipal government in accordance with the State’s system of guaranteed minimum wages.

Specific legislation regulates collective bargaining regarding wages in Foreign Investment Enterprises, which are not included within the ambit of the Labour Act. This legislation sets forth the criteria to be considered when setting wage rates. These include manpower costs, average wage levels in the industry, government wage guidelines, CPI and productivity.

The Labour Law and Regulations on Minimum Wages set out a number of principles which are to underly minimum wage rates and readjustments.

The authorities are to have reference to minimum living costs of labourers and their dependants.

The authorities are to have reference to the average wage of workers in the locality. When setting the minimum hourly rate for part-time workers, reference must also be made to the published monthly minimum wages.

The authorities are to have reference to social security and housing fund contributions paid by individual employees. When setting the hourly rate of pay for part-time workers, reference must also be had to the basic pension and medical insurance contributions payable by employers.

The authorities are to have reference to the relevant province’s level of economic development.

The determination and readjustment of the standards of minimum wages shall be made with reference to labour productivity.

The authorities are to have reference to the employment situation.

The authorities are to have reference to the consumer price index for urban residents.

When setting the hourly rate for part-time employees, reference is to be made to the differences between full-time and part-time workers in terms of job stability, working conditions and intensity of labour and welfare. The Regulations also provide a detailed mathematical formula for setting minimum wage rates.

The provisions concerning minimum wages apply to enterprises, private non-enterprise entities, individual industrial and commercial households with employees (the employing entities), and the labourers who have formed a labour relationship with them.

The provisions concerning minimum wages apply to enterprises, private non-enterprise entities, individual industrial and commercial households with employees (collectively, the employing units), and the labourers who have formed a labour relationship with them.

Minimum wages are to be set locally by the relevant provincial, regional and municipal government.

Minimum wages are to be set locally by the relevant provincial, regional and municipal government. The minimum wages for 2010 in each province are attached.

The monthly minimum wage rates range between 500 Yuan (Anhui Province, Jiangxi Provice) to 1,120 Yuan (Shanghai Province).

There are 31 province-level minimum wage rates. The scope of these is illustrated by the following 4 examples:
Shanghai - 1,120 Yuan
Beijing - 960 Yuan
Anhui - 500-720 Yuan
Jiangxi - 500-720 Yuan

The dates vary between the provinces. Although most provinces are reported as hacing increased their minimum wage in 2010, some provinces have reportedly not updated their minimum wage since 2007 and 2008 (Chongqing, Guizhou and Qinghai provinces).
Shanghai - April 2010
Beijing - July 2010
Anhui - June 2010
Jiangxi - June 2010

Wages must be paid in cash. No statutory provision for in-kind allowances identified.

Wages shall be paid monthly for standard workers and fortnightly for part-time workers. Payment shall not be delayed without justification.

Part-time employees are to be paid by the hour within 15 days after the work is completed.

An employing unit should timely pay the full amount of salary to a labourer according to the specification of the labour contract or relevant State regulations.

At least once every two years.

Enforcement powers are vested in the labour department of local governments.

If the labourer’s legitimate rights and interests are infringed on, they have the right to ask competent authorities to deal with it according to law, or to go to arbitration or litigation.

If the employing unit delays or fails to pay a full amount of salary, a labourer can appeal to the local people’s court for a payment according to law, and the people’s court should issue an order of such a payment.

The administrative departments of labour at or above the provincial level are responsible for the inspection and supervision of the application of minimum wage. Specifically, the competent departments of the local governments are empowered, according to law, to make supervisions and inspections on a number of situations in fulfilling a labour contract, incluidng the situation in which an employing unit pays labour remunerations agreed in the labour contract, as well as implements the minimum wage standards. While conducting supervision and inspection, the competent labour departments are entitled to check related materials concerning labour and collective contracts and to conduct on-site inspections at workplaces. Employing units and labourers should provide material and information, based on the facts, to the competent labour department.

In addition, trade unions may supervise the implementation, and report violations, of the minimum wage legislation.

The Labour Contract Law provides that where either:
(a) an employing unit fails to comply with the provisions of a labour contract or provisions by the State and fails to timely pay a full amount of labour remuneration to a labourer; or
(b) the labourer’s wage paid is lower than the local minimum wage standard,
the competent labour department should order the employing unit to pay the outstanding amount. If these payments are delayed, a compensation equivalent to 50%-100% of these payments must be paid in addition to the due payments.

The Regulations on Minimum Wages provide that where a violation is established, the employer may be ordered to pay the difference owed within a specified period, plus damages of up to 5 times the outstanding amount.

No criminal liability is imposed. Failure to pay remuneration as agreed in the labour contract gives the labourer the right to rescind the labour contract summarily, i.e. without giving the 30 days’ notice otherwise required under the Labour Law.