New work permit application system for foreigners
- The Chinese government adopted a new application system for foreigners’ work permit since 1 April 2017. Previously, two types of permits were granted to foreign employees and experts i.e. Foreign Experts Certificate and Alien Employment Permit. Under the new system all foreigners working in China will uniformly receive a foreigner’s work permit.
- Under the new system, foreigners working in China are classified into three (3) categories, i.e. Category A - high-end talents, Category B - professional talents and Category C - other foreigners allowed to work in China in line with the state policies and regulations and based on different evaluation criteria. The basic principle of the Chinese government is “encouraging high-end talents, controlling average labors and restricting the labors at low-level”.
- The application documentations and processes vary depending on the Category under which a work permit application is made. Applicants under Category A can enjoy more convenience and preferential treatment, such as less documentation requirements, more-simplified process, and getting a work permit with a longer validity period (up to 5 years).
- It is noteworthy that due to the policy change, some foreigners who were eligible to obtain a work permit in the past, however, might not meet the new criteria and requirements and therefore be unable to obtain a work permit under the new system. Therefore, companies hiring foreign employees or dispatching foreigners to work in China are advised to carefully review the new criteria and requirements for the work permit application and make sure that its employees are eligible to obtain a work permit or have their work permits renewed under the new system.
New bilateral treaties on expatriates’ social insurances contributions
- In the year 2017, the bilateral agreements on social security concluded between China and Canada, Finland, Switzerland, and Netherlands came into force.
- Nowadays, taking into account of the bilateral agreements with Germany, South Korea and Denmark concluded in earlier days, China has been implementing effective bilateral agreements on social security with seven countries in total. Under such agreements, some foreigners coming from the aforesaid countries working in China can be exempted from paying a part of social insurance premiums in China if they already joined the social insurance scheme in their own countries.
- Not all foreign employees coming from the seven countries can enjoy the exemption. Only those expressly defined in the bilateral agreements may be exempted. In general, foreign employees who are dispatched by overseas headquarter/mother company to domestic subsidiaries can be exempted.
- In addition, China just signed bilateral agreements with Spain, France and Luxembourg in 2017. However, these three agreements have not come into force yet.
New supervisory system on labor law compliance
- As of 1 January 2017, a new supervisory system for compliance with PRC labor law has been launched along with the effectiveness of the following three regulations:
(i) The Methods on Ranking of Credits of Enterprises in Compliance of PRC Labor Law (“Ranking Methods”);
(ii) The Methods on Public Announcement of Severe Violations of PRC Labor Law (“Announcement Methods”);
(iii) The Notice on Promotion of Making Random Inspection Relating to Human Resources and Social Security Matters for Supervision Purposes (“Random Inspection Methods”).
- Under the new supervisory system, all enterprises will be ranked into three different levels of A, B or C by the competent labor administrative authority every year subject to the compliance situation of the enterprises with PRC labor law. Depending on the ranking result, an enterprise will be subject to supervision by the authority at different levels. Enterprises being ranked into level B or level C will become major supervisory targets and be more regularly inspected by the labor administrative authority.
- Random inspection is one of the tools of the competent authorities in order to supervise and ensure enterprises’ compliance with law. In addition, the ranking of an enterprise will be decided also based on written documents submitted by the enterprise, the report generated from the aforesaid random inspections and complaints lodged by employees, etc.
- A so-called “Name and Sham” measure is adopted. Severe offences against PRC labor law may be publicly announced by the competent labor administrative authorities on their official websites, or on other major public media such as newspapers or TVs in the area.
- The establishment of the aforesaid new supervisory system is a clear signal of the Chinese government for strengthening its supervision over enterprises’ compliance with PRC labor law. In order to avoid potential risks, enterprises in China may wish to conduct an internal check on their compliance with the labor law and make adjustments on their internal employment policies if necessary.
Policy updates on China’s disabled persons’ employment security fund
- On 15 March 2017, the PRC Ministry of Finance issued the Notice on Relevant Policies about Cancellation and Adjustment of Some Governmental Funds (“Notice”), which provides two updates on the policies about contribution to the employment security fund for persons with disabilities.
- According to the Notice, an enterprise with no more than 30 employees can be exempted from making contributions to the employment security fund for persons with disabilities for the first three years after its establishment.
- Further, the calculation basis for the contribution to the fund, which is the average annual salary of employees of an enterprise, will be capped with three times of the average annual salary of employees as announced by the location government for the previous year at the location where the enterprise is registered.
- The Notice became effective on 1 April 2017 and the two updates have been implemented by local governments accordingly.
Mandatory retrenchment notifications
- From 1 January 2017, employers who employ at least 10 employees are required to notify the Ministry of Manpower (“MOM”) if 5 or more employees are retrenched within any 6-month period.
- Retrenchment is defined as "dismissal on the ground of redundancy or by reason of any reorganisation of the employer's profession, business, trade or work”.
- Notifications apply to the retrenchment of permanent employees as well as to contract workers with full term contracts of at least 6 months.
- The notification must be submitted within 5 working days after the employee is notified of his or her retrenchment.
- Failure to notify MOM within the required timeline is an offence and, upon conviction, may result in penalties, including a fine of up to S$5,000.
Launch of the Employment Claims Tribunal
- On 1 April 2017, the State Courts of Singapore launched the Employment Claims Tribunal (“ECT”) to facilitate the expeditious resolution of low-value employment disputes.
- Previously, such claims were referred to the civil courts and the cost of court proceedings was often a deterrent to filing claims.
- The ECT hears:
(i) statutory salary-related disputes for employees covered under the Employment Act, Retirement and Re-employment Act, and Child Development Co-Savings Act; and
(ii) contractual salary-related claims involving professionals, managers and executives (“PMEs”) who earn a monthly salary of more than S$4,500.
- The ECT has simplified procedures, is judge-led and parties are not allowed representation by lawyers.
- The ECT’s jurisdiction is limited to hearing claims of up to (1) S$20,000; or (2) S$30,000 if the dispute has undergone mediation assisted by the unions.
- Cases will be referred to the ECT after mediation at the Tripartite Alliance for Dispute Management.
New Tripartite Standard for term contract employees
- Term contract employees are employees on fixed-term contracts of employment that will terminate upon the expiry of the specified term of the contract unless renewed.
- On 31 July 2017, the Ministry of Manpower launched a new Tripartite Standard on Employment of Term Contract Employees specifying better employment conditions for such employees. Previously, employees who did not meet a minimum service period of 3 months were not entitled to statutory benefits.
- Under the Tripartite Standard, all term contracts of 14 days or more which are renewed within 1 month from the end of the previous contract are treated as continuous service. Employers are encouraged to:
(i) offer term contract employees statutory benefits (including annual leave, maternity leave and childcare benefits) commensurate with the cumulative length of the contract;
(ii) provide appropriate notice (based on the cumulative length of service) to term contract employees in cases of early termination or non-renewal of the contract; and
- provide training, including on-the-job training, online courses and workshops, to enable employees to perform their jobs effectively.
Launch of Tripartite Standard on Flexible Working Arrangements
- On 6 October 2017, the Tripartite Alliance for Fair & Progressive Employment Practices (“TAFEP”) launched the Tripartite Standard on Flexible Work Arrangements ("FWAs") with the objective of empowering:
(i) employers to attract and retain employees; and
(ii) employees to integrate their work arrangements with other aspects of their lives.
- The most commonly implemented FWAs include flexi-time or staggered work hours, part-time work and telecommuting.
- The aim of the Tripartite Standard is to help employers take certain organisational steps when implementing FWAs in the workplace, in order that employees will be aware of the procedures and options available.
Amendments to the Retirement and Re-employment Act
- On 9 January 2017, the Singapore Parliament passed several amendments to the Retirement and Re-employment Act, which took effect on 1 July 2017.
- The age for re-employing older workers has been revised from 65 to 67.
- Employers are required to offer all employees who are Singapore citizens or Permanent Residents and turn 62 years old an opportunity for re-employment up to the age of 67, provided that these employees:
(i) have served the company for at least 3 continuous years before turning 62;
(ii) have satisfactory work performance, as assessed by their employer; and
(ii) are medically fit to continue working.
- If the employer is unable to re-employ the employee, the employer can transfer the re-employment obligations to another employer by paying an Employment Assistance Payment (“EAP”) to the employee.
- The employee should be willing to accept re-employment with the new employer and the new employer should be willing to take on pre-existing re-employment obligations, including offering:
(i) the employee re-employment up to age 67;
(ii) EAP should the new employer subsequently be unable to offer re-employment up to age 67.
- Further, employers are not permitted to reduce an employee's wages after the age of 60.
Mandatory mediation may be expanded to cover non-salary related disputes
- Based on press reports, the Singapore Government, unions and employers are in talks to expand the scope of the Employment Claims Act (“ECA”) to require mandatory mediation for non-salary related disputes.
- Presently, the ECA covers salary-related disputes with other disputes dealt with through voluntary mediation.
- The Tripartite Alliance for Dispute Management (“TADM”), which is currently limited to mediating salary-related disputes, is considered a great success. Since its launch in April 2017, TADM has handled over 4,600 disputes and successfully resolved 3,100 cases as of September 2017.
- In particular, mandatory mediation is expected to address concerns over the resolution of wrongful dismissal claims by professionals, managers and executives (“PMEs”) not covered under the Employment Act. If implemented, TADM would be able to refer disputes where resolution is not reached through mandatory mediation to the Employment Claims Tribunal.