Hiring, Wages, Hours and Benefits in the USA and China
Hiring policies differ from country to country. However, most regulations aim to deliver the insurance of employee safeguards against employer’s exploitation and vice-versa. Let us now look at the hiring and common practices in the People’s Republic of China.
Hiring and Common Practices in the People’s Republic of China
The employee hiring process and guidelines for the People’s Republic of China are established within the PRC Labor Law and PRC Labor Contract Law. The difference that China has against the United States is that it is required by law for employees to have a binding contract with the employer before work starts. China is not an at-will employment scheme instead they rely on written contracts. There are three different contracts established between the employer and employee, these are the following: fixed term non-fixed term and contracts established for the completion of specific tasks (Jiang & Xu, 2017). All these different contracts have to be in writing as stated in the PRC law. This is similar to the exempt and non-exempt employee classifications in the USA (Steingold, 2017).
If an employee is contracted by a set duration, they are entering a fixed term agreement, non-fixed term are for employees that have worked 10 or more consecutive years in a company. However, when an employee continues to work for a company after the expiration date of his/her contract and is not renewed after one month, the employer is required to pay double of that employee’s base pay. Furthermore, if the contract is still not renewed after a period of one year, it is assumed that the employee has entered an open-term labor contract. This is about as close as an employee can get to a lifetime employment, no employer should allow this situation to happen (Yang, 2017).
However part-time employees in China depending on the municipality or Province, contracts need not be written but, as a best practice have all your employees whether they are full-time or part-time sign written contracts.
In China, background checks are only often requested for senior management positions and the law prohibits testing employees for Hepatitis B (Jiang & Xu, 2017). According to the WHO (2015), an estimated 90 million residents in China have Hepatitis B. It is a life-long infection in which the virus is constantly in the blood. Another common practice in China is the agreement on probationary periods within the employment contract. These are done so that the employer has freedom to terminate an employee if he/she is not up to standard without liability from the government. During this period, an employee’s wage should either be the minimum wage or at least 80% of the stipulated amount in the contract (Yang, 2017).
Legal Requirements for Pay and Hours Worked
The legal requirements for pay in both the U.S. and China are the same in which the minimum wage is established. However, there are some differences are them and how are they being implemented by for example, there is no nationwide minimum wage in China but in the United States there is a federal minimum wage mandated by the FLSA which is $7.25. In Guam it is $8.25 as deemed by the legislature (United States Department of Labor DOL). The minimum wage in China is set per region and province according to PRC law. The wage is pre-determined by the five guiding principles which are the following: (a) the lowest living expenses of workers and the average number of dependents, (b) local average wages, (c) labor productivity, (d) local employment, and (e) the regional difference of economic development (Fang & Lin, 2013; Wang & Gunderson, 2011). According to the data analysis conducted by Fang and Lin (2013), the minimum wage in a particular region in China can be computed by the following equation: , where is the employment variable expressed in log of county in year ; and are the minimum wage index variables expressed in log of county in year and year , respectively; X is a set of control variables to capture business cycle effects; is a set of fixed year effects; and is a set of fixed county variables. The disruption term is assumed to be uncorrelated and orthogonal to the free variables. The minimum wage in Beijing comes to around 21 RMB (3.23 USD) per hour and 1,890 RMB (293.44 USD) as the monthly average (“China Minimum Wage 2016-2017”, 2017). One thing to note is that the hourly rate in China only pertains to part-time workers while the monthly minimum wage is for full-time employees (Yang, 2017).
Both China and the US observe the 8 hour work day and 40 hour work week. Similarly, any time spent working in excess of the 8 hours per day or 40 hours in a week are subjected to overtime pay (Department of Labor DOL; Jiang & Xu, 2017). In China however, if the excess time spent working falls on a weekend or national holiday, the base pay rate is multiplied by 200% or 300% respectively. While in the U.S., overtime pay is paid by 150% (depending on the state or territory) of the employee’s base pay by the number of hours exceeding the 40 hours in a work week (Steingold, 2017, p. 92). Part-time employees in China and cannot work more than 4 hours a day and a total of 24 hours a week (Yang, 2017)
No matter how different countries might be in terms of government regulations regarding employer and employee relations, one thing is common: the law exists to regulate the relationships between the two. The legislation strives to promote equality between employers and staff members through strict guidelines set forth in various mandates of the law. These laws and regulations adapt to laborers working conditions, which varies from country to country.