On July 25, 2016, the Ministry of Human Resources and Social Security issued Measures of Grading Evaluation of Compliance and Integrity of Enterprises’ Labor Protection (hereinafter referred to as “Measures of Grading Evaluation”). This grading evaluation of the compliance and integrity of labor protection will begin on January 1, 2017. The Measures of Grading Evaluation set out new requirements and implement an evaluation system for compliance with the law, and an enterprise classification system. The Measures of Grading Evaluation grades the compliance and integrity of enterprises’ labor protection in three classes A, B and C, and the class evaluation results will be added to the compliance file of the enterprise for at least three years. The Measures of Grading Evaluation specifies the circumstances that will be attributed to level C, and explicitly guides the conduct of the grading evaluation The measures are beneficial for supervision of businesses, standardizing enterprise behavior and building harmonious labor relationships. An enterprise will become a primary target of labor protection supervision in the event it is rated as level C, and the human resources and social security administrative departments will arrange meetings with the responsible person of the enterprise and urge the enterprise to comply with labor protection laws and regulations.

Following the Measures of Grading Evaluation, the Ministry of Human Resources and Social Security issued Measures of Public Disclosure of Significant Violations of Labor Protection Laws (hereinafter referred to as “Measures of Public Disclosure”), and decided to implement a public disclosure system for those enterprises which significantly violate labor protection laws after January 1, 2017. The formulation and implementation of the Measures of Public Disclosure clearly define “significant violation” and set out the types of violations that will be made public. This further standardizes the public disclosure mechanism for local human resources and social security administrative departments. Under the Measures of Public Disclosure, local human resources and social security administrative departments have an obligation to disclose to the public significant violations of labor protection laws that have been investigated and dealt with. This means that significant violation of labor protection laws will not only expose an enterprise to legal risk, but also to commercial risk through public exposure.

The promulgation of the two latest regulatory documents places more responsibility on enterprises to meet compliance and integrity standards including specific guidelines for the protection of employees. The two new regulations implement public disclosure and a grading system for important aspects that involve the material rights and interests of employees. For instance, deduction or unreasonable default in employee remuneration, failure to contribute social insurance pursuant to the law, violation of limitation on working hours and leave policies, violation of the prohibitive regulation of engaging child labor and violation of special labor protection provisions for female employees. The implementation of the public disclosure and grading evaluation system is an important measure which imposes more severe punishments strengthens public supervision and promotes compliance with labor protection and the regulation of enterprises.

Both the Measures of Grading Evaluation and the Measures of Public Disclosure will come into effect on January 1, 2017. In order to implement the two regulatory documents in practice, local human resources and social security administrative departments will certainly pay full attention to the documents and take further steps to establish and improve local measures of public disclosure and the grading evaluation system. Enterprises should focus on and comply with the standards and guidance of specific local measures, and facilitate the implementation of the two regulatory documents.

Editor’s note: this article was simultaneously published on Chinalawinsight.com