How to respond to China’s IT Industry ‘996 normal’ - and the impact on your HR and payroll admin
Article 3 minute read

How to respond to China’s IT Industry ‘996 normal’ - and the impact on your HR and payroll admin

22 July 2019

Companies in China should avoid following the lead of local IT industry leaders and their implicit 996 working practices. Companies should instead ensure they operate under the Labour Law.

The domestic IT industry in China is committed to 996 working (9:00am to 9:00pm, six days per week) as the norm. This is vastly different from the seven or eight hours, five days per week of Europe and the USA. Quite apart from the working culture shock for foreign companies, they need to be aware of the effect on their HR administration and payroll systems and how to comply with the Labour Law in China. A key decision is whether to implement the implicit local norm, their home country norm, or strict Labour Law rules on working hours.

The 996 debate in China

Leading Chinese IT companies strongly believe that staff should demonstrate commitment to the future of China by working the 996 system. Alibaba founder Jack Ma said “To be able to work 996 is a huge bliss”i, Robin Li of added that “Slackers are not my brothers”ii. This has been taken to indicate that only those showing this high level of commitment would progress within those companies. This led to significant debate on social media, with many objecting to the implicit imposition of 996 but others supporting the need for people in the well-paid IT industry to support China’s future, and become the leader in the global IT industry.

China’s Labour Law on working hours

China has strict employment laws, and forcing a 996 schedule on workers without their agreement and without overtime pay is illegal. To protect the rights of workers, the Labour Law stipulates that employers should not force their workers to work more than eight hours a day, or more than 40 hours a week. If employers do need their staff to work extra hours to meet production deadlines or fulfil other urgent tasks, they can ask them to work overtime, but no more than three hours per day or 36 hours extra per month. This should only be implemented after consulting, and reaching an agreement with, the workers and labour union, where a union has approved negotiating rights. Once agreed, companies must pay overtime for the additional hours worked at the rates stipulated within the Labour Law, or higher.

Operating under the Labour Law

Companies operating in China should ignore the 996 model implicit under the pronouncements of the leading Chinese IT companies and instead operate within the Labour Law. Payroll systems should be configured to apply the legal overtime payment limits defined under the Labour Law, or any higher levels that the company wishes to offer as an incentive.

Also, the employment contract should not detail overtime terms and conditions, as they should apply equally to all workers. Normal working hours and overtime terms and conditions should instead be stipulated in the employee handbook.

Employee handbooks

Whilst not a legal requirement, an employee handbook is the normal document in all Chinese companies that defines the relationship between the employer and its employees. It ensures that all policies and practices are documented, consistent and provides transparency to staff.

As well as defining the working hours related rules of the organisation, the employee handbook includes leave policy, travel policy, a code of conduct and so on. All items in the handbook must follow the Labour Law. When issued to staff upon joining, the new employee must sign a receipt to signify that they have received the handbook and that they will comply with its stated rules. Whenever there is an update made to the employee handbook, it should be redistributed to all employees, and an acknowledgement receipt from employees is again a must. The acknowledgement receipts should be filed.

Next steps   

Companies should review their policies and procedures to ensure that they are operating under the Labour Law, not only with regard to working hours, but in all aspects of the employment contract with their staff. This includes the employee handbook. Companies should review their onboarding policies to ensure that they clearly communicate their policies and practices to their employees in Chinese and, where appropriate, their main corporate language and retain evidence that staff have received and understood the employee handbook.

Talk to us

Our experts in China and in more than 80 jurisdictions across the world can help you to implement policies and procedures throughout the HR and payroll functions. From onboarding through the full employee lifecycle. We can also help you to understand your responsibilities under local labour law. 

Want to know more about our services? Get in touch with us today.

TMF Group assesses jurisdictions for business complexity each year. Although China has improved since our last review, it remains one of the most complex places in which international companies do business. Discover where China ranks among 76 jurisdictions for business complexity – download the free report

A version of this article originally appeared on HRM Asia.



Written by

Jessie Ye

Associate Director, South China Accounting & Tax

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