Understanding policy differences critical to HR management success in China

Foreign businesses that fail to understand different labour laws and practices in China risk hefty penalties for non-compliance and would struggle to retain talented staff, Lillie Ding, Director of Payroll and HR Advisory, said at our China Briefing on 12 July 2018.

Get it right from the start
The morning session, “Get It Right from the Start”, underscored the need for Singaporean businesses expanding into China to understand how HR policies are different. “Labour regulations in China are more protective of employees,” Lillie noted. “Terminating the contract of service is a complex issue in China, unlike Singapore where employers may give employees notice of termination at any time.”

Foreign firms should also be aware that China’s social security system comprises medical, maternity, pension, unemployment and work-related injury insurance as well as housing fund contributions, with the contribution bases, rates and deduction periods differing between Chinese cities.

Another key area is maternity leave. “Maternity leave duration varies from city to city and once a female employee is pregnant, the employer is not allowed to terminate the employee’s contract for at least one full year,” Lillie said.

She added that the HR function should attract more talent, optimise social security benefits, provide full expatriate benefits and optimise individual income tax for successful manpower management in China.

Group Compliance Manager Shawn Li of women’s activewear retailer, Lorna Jane, also shared about the differences in social insurance, individual income tax and sick leave policies between Singapore and China.

Driving performance in China
Participants at the afternoon session learnt how HR professionals can help to drive business performance in China through five key areas: planning & organisation, compensation & performance, labour relations, recruitment & retention and training & development.

“The traditional mode of managing employee relations that focuses on control is no longer as effective as it used to be,” Lillie said. “With strong competition for talent in the market today, organisations should have a properly planned programme for staff retention.”

She added that although salary benchmarking facilitates recruitment and helps to ensure fair remuneration for employees, it is not adequate alone for the retention of talented staff. HR professionals also need to consider other aspects, including flexible benefits to meet diverse staff needs, personal development, change management, career development and employee welfare.

The seminar was held in Singapore with the theme, “HR Management in China”.