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China Enterprise HR Manager: Employee Relations and Labor Law

China Enterprise HR Manager · Work through your exam, one topic at a time.

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Employee Relations and Labor Law

What the domain tests

Employee Relations and Labor Law (员工关系与劳动法) tests the employment lifecycle: contracts, rules, termination, severance, collective relations, and dispute resolution. Accuracy on procedure and money is what separates a pass from a near miss.

Core rules

  • Contracts: written within one month; types are fixed-term, open-ended, and task-based. An open-ended contract is required after 10 years’ continuous service, after two consecutive fixed-term contracts on renewal, or at 10 years’ service within 10 years of retirement.
  • Termination: employee resignation needs 30 days’ written notice, or 3 days during probation. Employer summary dismissal is limited to serious violation, gross negligence, criminal liability, dual employment affecting work, or fraud. Economic layoff of 20+ employees or 10%+ of staff requires 30 days’ notice to the union or all employees and a report to labor administration.
  • Severance (N): one month’s wage per full year; six months or more counts as one year; less than six months is half a month. The base is the prior 12 months’ average wage. High earners are capped at 3× the local average monthly wage and 12 years.
  • Unlawful dismissal: compensation of 2N.
  • Disputes: labor arbitration is mandatory before court; the limitation period is generally one year.
  • Non-compete: maximum two years, limited to senior management, technical staff, and confidentiality roles, with monthly compensation.

Worked example

An employee with 4 years 7 months’ service and an average monthly wage of CNY 10,000 is made redundant. N = 5 months, so severance = CNY 50,000. If the dismissal is unlawful, compensation = 2N = 10 months = CNY 100,000. If the local average wage is CNY 8,000, the 3× cap is CNY 24,000; this employee is below it, so no cap applies.

Traps

  • Treating “N+1” as the rule for every termination; the “+1” is pay in lieu only in specific cases.
  • Forgetting that probation employees still receive severance.
  • Confusing economic layoff procedure with individual incompetence dismissal.
  • Using a non-compete with no compensation.
  • Missing the one-year arbitration limitation.