Every employer in China should have its own set of Rules and Regulations because without one you will have an extremely tough time terminating a China employee.
Many companies doing business in China have learned the hard way that terminating China employees is difficult. Recognizing this, many foreign employers in China now have a Rules and Regulations document and most have even translated this document into Chinese for their China employees. This is a good start but there is more you should be doing. Below are a few additional basics you should bear in mind if you are going to employ people in China.
Your Chinese-language Rules and Regulations need to be more than just a mere translation of the employee manual you use in the United States, Australia or Europe. It must be tailored for your China employees in your business. And just as is true for any legally important document, literal translations do not work. You need a document that all your employees understand. This is not just about being culturally conscientious: the Chinese language version of your Rules and Regulations needs to be clear enough to form the basis for you being able to terminate your employees.
You need to make sure your employees receive a copy of your Rules and Regulations and you have prove that they did. If you ever get into a dispute with one of your Chinese employees, there is a good chance they will claim never to have received a copy of your employer Rules and Regulations. Your best counter to this argument will be to provide the arbiter with a Chinese language signed acknowledgement of receipt form, proving your employee received a copy of your Rules and Regulations.
If we could name only one section that you must have in your Rules and Regulations, it would be the section on disciplinary actions. Make sure your Rules and Regulations make clear the grounds for terminating an employee. Think hard about the misconduct that could be committed by your employees and put those actions in your Rules and Regulations as subject to discipline or termination. Without this section, your employees can do terrible things that harm your business and yet you will likely find yourself without a basis to discipline or terminate them.
Foreign employers often fill their Rules and Regulations with mission statements and incentives and things they encourage their employees to do. This misses the point of having Rules and Regulations, which should have different goals than an employee handbook. Your Rules and Regulations are the governing law for your organization and they should set forth the rules on how you manage and oversee your employees. This is why Rules and Regulations are generally negative in tone; they set out what you do not want your employees to do so that you can discipline them if they do these things.
You not only need a China-focused set of Rules and Regulations, you also need to give your employees opportunities to comment on or question your Rules and Regulations and you need to stay on top of addressing those comments and questions. If you fail to address an employee’s concerns about your Rules and Regulations, or even if you fail to clarify those Rules and Regulations in response to a question, you can be at risk for your actions being deemed unreasonable and disproportionate. This will mean your actions can more easily be called into question, which could lead a Chinese arbitrator or court to order you to pay statutory severance to your terminated employee or, even worse, to reinstate the employee.
If the time comes when you need to discipline an employee pursuant to your Rules and Regulations, you now need to make sure your discipline is pursuant to your Rules and Regulations and that your employee knows they have been disciplined. It is not uncommon for China employees to claim to have never received a discipline decision. This is of particular importance when your employee commits a minor wrongdoing and then starts escalating with additional offenses. If you cannot show that you previously disciplined your employee for past offense(s), you may not be justified in terminating the employee for being a repeat offender. Put it on paper every time you issue a warning and hand deliver those discipline notices to your employee with a witness there to record it. In addition, use email and require confirmation and/or an outside courier service that requires a signature for the delivery. If you have an internal procedure for appealing disciplinary actions, follow that procedure.