China Employer Audits: Watching the Cost Estimate Sausage Get Made

Complying with Chinese laws is the sine qua non for avoiding trouble in China. See China’s New Company Tracking System: Comply, Comply, Comply. Foreign companies that realize this have, among other things, been striving too clean up their employment practices to prevent employee conflagrations that can in turn lead to problems with the Chinese government.

The other day, one of our China employment lawyers cc’ed me on an email sent to a potential client, setting out what we need to be able to give a cost estimate for a China employer audit. I give you that email as I believe it could prove very helpful to any foreign company in China concerned about complying with China’s complicated and localized employment laws. In particular, just the number of documents that foreign companies with employees should have illustrates how complicated it is just being an employer in China and how many avenues there are for things to go wrong.

Thanks for reaching out to us.

For us to get a better understanding of your China employment situation and to better estimate costings for a China Employer Audit, it would be great if we could first ask you a few questions as well as take a quick look at your existing China employment documents.

In a comprehensive document-based China Employer Audit, we will want to review the executed copy of every document signed by an employee, including each individual employment contract, along with any employment-related templates or forms used in the employer’s China office. We usually request all written employment documents used in the employer’s China office, which usually includes any of the following:

  • Employment contracts
  • Employee handbook
  • Documents containing job descriptions, including any postings on internal or external websites
  • Offer letters
  • Company policies, such as travel expense policy, employee vacation/leave policy, overtime policy, rewards policy, discipline policy, and dismissal policy
  • Non-compete agreements
  • Intellectual property protection and/or confidentiality agreements
  • Education or training reimbursement agreements
  • Bonus plans or policies
  • Termination forms/agreements
  • Other employment-related agreements (including company policies) presented or signed by any company representative, or signed by any employee
  • Any documents filed with the local labor authorities

It would also be good if you could send us a copy of your Chinese company’s business license and also an organizational chart of your China office, including a list of all Chinese and non-Chinese employees. Once I get a better sense of your existing China employment documents, I can provide you with a fee estimate for the China Employer Audit.

I look forward to hearing from you.

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