A Guide to Doing Business in China 4 - How To Set Up Your Staff
If you've established a representative office in China, you're not legally allowed to engage staff directly; you will need to use the services of a government accredited HR agency. Such as the foreign services enterprise corporation (or FESCO for short) who will employ your staff and effectively second them to your organisation and you have to pay FESCO a fee for that service; you will also have to contribute social welfare payments for your staff.
If you're setting up a wholly foreign owned enterprise, or a joint venture, you can engage staff directly but you do need to have a written contract with all your staff. If you don't have a written contract with your staff then there are penalties. If you don't have a written contract within one month then you're liable to pay your staff double their compensation, if you don't have a written contract within twelve months then not only do you have to pay them double their compensation but they will automatically move onto an open ended contract with means it's much harder to get rid of them, you have to pay higher levels of severance pay and there are also fines which you will have to pay.
There is a lack in China of experienced, skilled senior level management, especially those with English skills or particular technical knowledge. A lot of companies, when going to China, plan on engaging local staff, but when they cant find the necessary skills they then have to employ British staff to fill that skills gap and the budget will go up accordingly. Obviously if you're wanting to recruit staff that are in short supply, you'll need to pay appropriate salary levels and they can be equivalent to western salaries in major cities like Shanghai and Beijing. Once you've employed the staff, you then need to make sure you retain them, obviously providing an attractive salary would be one incentive but there are other ways you can retain staff. Providing a clearly defined career progression, also by providing opportunities for training and opportunities to travel aboard.
Termination of staff in china can be very difficult, summarily dismissal of staff is allowed but you need to have a good reason, they could have committed an act of gross misconduct or committed a crime. You do need to keep accurate records of their acts of misconduct or crimes. There are some staff who are untouchable unless they've committed acts of gross misconduct or crimes, for example, anyone who's pregnant or on maternity leave or staff who are suffering from a work related injury. Redundancy in china is also very difficult; one point to bear in mind is probationary periods, the maximum probationary period is six months for employees who are on a contract of three years or more. If you have staff on a contract of two to three years, the maximum probationary period is two months, one to two years is one month and staff on a contact of under one year; the maximum probationary period is half a month.
About the Author:
The China Britain Business Council is the UK's leading organisation helping British companies do business in China. In these exclusive sets from GuruOnline, several of their senior staff offer free business advice to anyone thinking of doing business in China. Their sets cover everything from where to find the help you'll need through to the technical aspects of running your China office. www.guruonline.tv/cbbc-setting-up-and-hr