The employee handbook must firstly be clearly understood by all employees. This means that it not only needs to be a reasonable length and not overly convoluted; it also means that it needs to be bilingual (i.e., in Chinese and mostly in English), and this is particularly the case for foreign companies with Chinese employees. Without a Chinese version of the handbook, it is highly likely that a labour arbitration commission or court will rule that the handbook is invalid and therefore unenforceable because the employees were unable to understand it. While an English version isn’t as important in a legal sense, it is important for foreign employers to refer to for the purpose of making key employee-related decisions, particularly when it concerns termination .
It is also important that the employee handbook used in the foreign company’s home country headquarters not be directly translated into Chinese for use in its China subsidiary. It needs to be tailored for the Chinese market and to ensure compliance with China’s constantly changing labour laws. If a provision in the handbook violates Chinese law and it was used as a basis to terminate an employee, a labour arbitration commission or court will most likely deem it as unlawful termination and rule in the employee’s favour. It is therefore critical that employers regularly review their handbook to ensure that it remains compliant with the law.
The employee handbook should avoid subjective and ambiguous rules. An example of such a rule is one which simply states that being late or absent from work without good reason is a terminable offense. Here, it is important to clarify the number of late arrivals which constitute a serious violation justifying termination. Terminating an employee for being late once would most likely be considered unreasonable by a labour arbitration commission or court, and thus be considered unlawful termination.
The employee handbook should also make references to employees’ labour contracts. This will greatly strengthen an employer’s position if an employee violates a rule or regulation contained in the handbook. For example, employers should include a clause in the labour contract stating that the employee must comply with the rules and regulations of the employer, otherwise the employee may be disciplined or terminated.
Perhaps the most critical thing about the employee handbook, though, is that when formulating the rules and regulations contained within it, employers have a legal obligation, specifically under Article 4 of China’s Labour Contract Law (In Chinese: 中华人民共和国劳动合同法) (“LCL”), to have “consultations” with all employees or the employee representative council about those rules before making a final decision. This is particularly crucial when such rules “have a direct bearing on the immediate interests of employees, such as labour remuneration, working hours, rest and vacation, occupational safety and hygiene, insurance and welfare, training, labour discipline and labour quota management”. The consultation procedure is usually achieved through a meeting or several meetings.
Article 4 of the LCL also requires that the employer make public or inform employees of the rules and regulations as well as decisions on important matters. Common practice here is for the company to publicly post on its bulletin board or share on its internal IT network an Implementation Notice and the final version of handbook. These documents should also be sent to all employees in both hard copy form and via email. During this process everything should be signed, witnessed and properly recorded. If this consultation procedure is not followed properly or at all, then a labour arbitration commission or court will most likely rule that the handbook rules are invalid and unenforceable.
While ideal, it is not mandatory for the employer to obtain every employee’s explicit consent for them to be bound by the handbook rules and regulations. The employer is also not required to agree to or accept employees’ comments, although it should document and record how it considered and responded to such comments. Additionally, the consultation procedure is not required for new employees joining the company after the procedure has occurred. However, all new employees must review and sign a copy of the handbook along with their labour contract before they start their employment. If an employer ever gets into a dispute with one of its employees, and there is no written proof that the employee received the handbook and agreed to be bound by its contents, there is every chance that the employee will claim that they never received it. In this situation, a labour arbitration commission or court would likely rule that the handbook rules and regulations are not binding on the employee. In most cases, the burden of proof lies with the employer in China-related labour disputes.