Name and Shame: Employers’ Labor Law Violations to be Made Public in China

By Dezan Shira & Associates
Editor: Jake Liddle

The Ministry of Human Resources and Social Security (MOHRSS) has issued provisions for labor and social security offences committed by employers to be made public. The law, which will come into effect January 1, 2017, will apply to all companies operating in China that commit significant violations, and will serve as a powerful deterrent to companies who are not compliant with China’s labor regulations.

The following violations will be published:

• Reduction or failure to pay employees’ remuneration without reason
• Failure of payment or enrollment in social insurance premiums
• Violation of working hours or holiday/leave requirements
• Violation of special provisions for female and underage employees
• Violation of child labor laws
• Other labor violations which have serious negative consequences on society

The full name of the employer, address, social credit code or registration number, name of legal representative, details of the violation and verdict outcome will be made public by newspapers, magazines, television and other such media each quarter at county level, and twice yearly at provincial and national level. The information will also be published on the MOHRSS Administration Department’s online portal, and will be included on an employer’s integrity and legal compliance file, entered into the MOHRSS credit system, and shared with other social organizations and governmental departments. Information pertaining to state security, trade secrecy and personal information will not be published.

If an employer disagrees with the grounds of accusation, they may submit an application for review. The MORHSS will process the objection within 15 days. If the objection is found to be valid, correction to announcements will be made within 10 working days.

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Evaluation method

In addition to the measures for publicizing violations, an evaluation method of employers was detailed and released by the MOHRSS, which is based on a three tier system. Companies that have a sound legal record are classed as tier A, and will not be routinely audited. Companies that have been taken to task for labor law violations are classed as tier B, and will be routinely audited. Those who have committed violations more serious than tier B will be classed as tier C, and will be subject to tight regulation and inspection of enforcing agencies. Employers will be assessed by whether they:

• Have formulated internal labor security rules and regulations;
• Have signed a lawful labor contract with employees;
• Are compliant with the provisions on dispatching labor services;
• Are compliant with child labor law;
• Abide by the special labor protection provisions for female and underage employees;
• Are compliant with working hours and holiday/leave provisions;
• Pay salary according to minimum wage standards;
• Participate and pay social insurance premiums;
• Are compliant with other labor security laws, regulations and rules.

Once an employer receives grading appellation, it is recorded in the MOHRSS integrity record for three years. Inspections will be held with varying frequency according to grading within this period until a new assessment is made. For companies classed as tier C, personnel directly in charge will be required to arrange meetings with the MOHRSS in which they will be reminded of the labor laws and regulations.

Takeaways

The new law underlines the importance of keeping track of China’s ever-changing labor regulations. While the measures for publicizing labor violations and the evaluation method are together an effective means of moderating companies’ conduct, and should have a self-regulating impact, publication for misconduct would undoubtedly be damaging for a foreign company’s reputation and commercial success. As such, foreign employers should be especially vigilant regarding labor law compliance, with multinational entities’ non-compliance likely to be the first to be picked up on.

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