A China employment contract must specify the employee’s working hours and the working hours system under which the employee will work. The employee contract for an employee working under the standard hours system must state the employee will have “standard” working hours (this generally means 8 hours a day and 40 hours a week) and if an employee is working under the flexible hours system, the contract must specify that as well.
As the name of the flexible hours system indicates an employee can be designated to work flexible hours and not adhere to the standard 8 hours a day/40 hours a week. One of the most appealing features of China’s flexible hours system is that allows employers to avoid having to pay for most overtime. However, as with pretty much everything else having to do with China’s employment laws, this sounds way better and simpler than it actually is.
It should go without saying that this system is not designed to allow employers to abuse their employees’ working hours. For example, if your flexible hours employee works long hours every workday and/or during the weekends, even with proper government paperwork, an arbitral body/court will likely “pierce the veil” of the working hours arrangement and rule that the employee is really under the standard hours system and rule that the employer owes the employee unpaid overtime and additional penalties. Numerous cases confirm that “gaming” China’s flexible hours system can lead to massive problems for employers that do this.
As part of their efforts to prevent employer abuses, the Chinese authorities require prior government approval and periodic renewals for an employee to come within and remain within the flexible working hours system. Despite what you may have been told otherwise (and that includes being advised by your own employees), an employee’s signed consent to work under the flexible hours arrangement is NOT sufficient. This is so important I will say it again. For the flexible hours working system to work you need prior government approval and an employee’s agreement to work under this system is not enough. I repeated this because huge numbers of foreign employers believe otherwise.
Also, and despite what you may have been told otherwise, not all employees are eligible to work flexible hours. Whether an employee is eligible to work flexible hours differs by locale, but in most places, employee eligibility largely depends on the employee’s job title, and job duties, though some cities take the employee’s salary into account as well. What our China employment lawyers have been seeing these days is that the labor authorities across the country are getting much tougher with their flexible hours reviews. Therefore, when a foreign company employer comes to us for help in getting all of its China positions classified as flexible, we usually suggest that we first figure out whether the employer can achieve that and if not, we suggest prioritizing the need for flexible hours position by position. Then one of our China employment attorneys will gather up all relevant information regarding the employer and each employee and then we have initial conversations with the local employment authorities to get an idea of who may be eligible to work flexible hours. Our clients often will ask us to give them a list of who is and who is not qualified to work flexible hours. Our usual response is that we cannot provide such a list because (like so much else in China) such a listing can vary from district to district within the same city and even within a district, it can constantly change. We then offer to send them a list that can give them a basic idea of who can work flexible hours, while in the meantime we contact the authorities in their specific district regarding the exact requirements.
Up until about a year ago (yes, about the start of the US-China Trade War), we were often able to get verbal telephonic confirmations of eligibility from the authorities simply by providing some basic information. Without revealing the employer’s identity, we would tell the employment authorities about the employer’s situation and why it needed its employees to be able to work flexible hours and the authorities would then usually provide us guidance on the sorts of things their specific office wanted to see on the flexible hours application documents.
By way of a bit of background, Chinese government authorities have traditionally been great at helping foreign companies navigate Chinese laws and applications, not just in the employment arena. A large part of our job as China lawyers has always been to call up local Chinese government authorities, tell them generally about what our client will be seeking to do (without revealing any client names) and asking how that is being done these days in that particular district. Up to a year ago, Chinese government authorities were invariably exceedingly helpful. The reason for doing things this way is because the last thing you want to do is just go off and file something with the government and get it rejected because after that one rejection you become suspect and getting acceptance becomes ten times more difficult. It can be even worse to get Chinese government acceptance for something that does not 100% correspond with what you actually end up doing.
Recently, however, things have been different. The “new normal” is that Chinese government authorities are a lot less interested in helping foreign companies than they were and Chinese employment authorities are generally now refusing to verbally confirm an employee’s eligibility over the phone or in person. Their response these days is usually to say that flexible hours eligibility will depend on a number of things, with the nature of the employee’s work and job responsibilities being most important. They will also usually explicitly say they will not render any opinion (even verbally) until they have fully reviewed all of the application documents. They are also fairly consistently making things more difficult for foreign employers by imposing new requirements without notice. So now, in addition to our China employment lawyers having to draft the essential working hours-related employment documents for our clients, we also have to provide considerably more legal counsel on this issue, including working with the employer to make sure its application documents meet the government’s exact requirements.
Bottom line: With Chinese authorities cracking down hard on foreigner employers for not being in full compliance with China’s employment laws and with Chinese employee lawsuits against their foreign employers rapidly increasing, prudence and preparation are required when arranging your China employees’ working hours. See Want to Keep Your Business in China? Do These Things NOW.