A competitive market with diversified work structures may require a more flexible schedule. In China, companies can adopt variable work arrangements or comprehensive work hour systems and remain compliant with local labor laws. When implemented correctly, this option can be beneficial both for the employer and the employee.
In China, there are three work hour systems: the standard work hour system, the comprehensive work hour system, and the flexible (non-fixed) work hour system. The latter two are considered ‘special work hour systems’, which have special approval and compliance requirements.
Each system has a specific schedule of work hours, rest periods and overtime payments rates for employees. It is important for foreign companies to understand the differences between each system to avoid violations of local labor regulations.
Most companies in China employ people under the standard work system, which is eight hours a day, five days a week. However, in the past few years it has become more common for employees to work irregular hours. In this situation, implementing a flexible work schedule or a comprehensive work hours system can help employers stay compliant, manage high overtime costs, and retain talent.
Companies must meet certain conditions and ensure compliance with labor laws to adopt a flexible work arrangement or comprehensive work hour system. Identifying the best option for the firm’s business needs in China, is the first step.
A flexible work hour system offers a fixed number of hours per day and per week, but these hours can be completed at irregular times. For example, if an employee works late on one day, then the company can arrange for the employee to come to work later or get off earlier the following day to make up for the additional hours worked.
In general, no overtime cost is owed with the non-fixed work hour system except for hours worked on public holidays.
Depending on the region in China, there are differences in overtime regulations. In Beijing, non-fixed work hour employees are not entitled to overtime pay for hours worked on public holidays, but in Shanghai, these hours are considered overtime and employers are required to pay up to 300 percent of the normal wage.
Under China’s comprehensive work hours system, an employer calculates an employee’s work hours comprehensively on a weekly, monthly, quarterly, or yearly basis. Under this system, the average daily work hours and average weekly work hours are basically the same as the standard work hours, but an employee may work more hours on one day and fewer on another.
The comprehensive work hour system pays overtime for hours worked above the standard set per cycle. Such rates match those of the standard work hour system for extra hours worked and work performed on public holidays. No rest day is outlined under this system.
Workers who work night shifts or during weekends can adopt the flexible hour system. They will generally be paid per period (often monthly) as a salaried employee.
These types of employees can be senior managerial personnel, field staff, salespersons, some on-duty personnel, employees engaged in long-distance transport, taxi drivers, some stevedores in railways, ports, or warehouses, and employees engaged in mobile work due to the special nature of their jobs in the company.
Salespersons often must travel to visit clients and meet vendors outside of normal office hours, such as evenings or weekends. In this case, the employer could allow the employee to rest and go to work later than regular work time to balance the total work schedule.
The comprehensive work hours system can be adopted for employees required for continuous operations due to the special nature of their jobs, such transportation, aviation, railway, shipping, fishing, postal and telecommunications service industries, electric power, petroleum, and finance industries.
It also includes seasonal workers and those subject to natural constraints, such as workers in the mining, construction, salt production, sugar production, and tourism industries.
Enterprises in these sectors can calculate the work hours comprehensively on a weekly, monthly, quarterly, or yearly basis. The length of the employees’ average daily and average weekly work hours should come to almost the same as the standard working hours.
To implement a flexible or comprehensive work hour system in China, companies must first submit their plan to the local labor bureau and be granted approval. The application presented to the authorities must contain relevant information and employees’ signatures indicating their agreement to the work hour arrangements.
The validity period for a flexible or comprehensive work hour system is one calendar year, after which the employer must reapply for approval one month prior to the expiration date.
Flexible or comprehensive work hours systems in China correspond to specific positions, not to specific employees. If a new worker joins the company and works in a position that has already been approved for flexible or comprehensive work hours, they are automatically allowed to work under the same arrangement.
If an employee joins the company in a new position that has not yet been approved for flexible or comprehensive work hours, the employer must wait until the next calendar year to apply for approval. In this case, it may be better for the employer and the employee to negotiate specific salary and overtime pay arrangements internally.
The employer can add the new position to the list of positions in the next round of applications for flexible or comprehensive work hours.
Flexible work hour arrangements do not necessarily specify exact work hours, and it is the responsibility of employers to ensure that employees have adequate rest and holiday time. This could be centralized work and rest (continuous work for a specified period followed by a period of rest), staggered leave, time off in lieu, or other arrangements.
Under the comprehensive work hours system, employers must pay overtime if employees work beyond the established hours. Additionally, employees must be compensated for working on public holidays but are generally not entitled to overtime pay for hours worked on public holidays.
To learn more about our services in China, contact our Head of Business Advisory - Ms. Kristina Koehler-Coluccia at firstname.lastname@example.org. DISCLAIMER: All information in this article is verified to the best of our ability and is assumed to be correct at time of release; however, Woodburn Accountants & Advisors does not accept responsibility for any losses arising from reliance on the information provided within. The information provided is for general guidance and does not replace specialized advice.