Laws and Regulations

Chinese Law

Source: Ministry of Commerce Website, PRC

Provisions of Shanghai Municipality on Minimum Wages of Enterprise Employees

Monday, December 05, 1994 Posted: 14:38 BJT(0638 GMT)

(Valid From:1995.01.01)

Article 1 (Purpose and Basis)

With a view to protecting the legal rights and interests of the employees, guaranteeing the basic necessities of life for the employees and their family members and offering chances for fair competition among enterprises, these Provisions are formulated in accordance with the Labour Law of the People’s Republic of China and other relevant provisions and in the light of the actual conditions in Shanghai.

Article 2 (Scope of Application)

These Provisions shall apply to enterprises and their employees who have labour relations with them within the jurisdiction of Shanghai Municipality.

Article 3 (Definition)

The minimum wage mentioned in these Provisions refers to the minimum remuneration for labour obligatorily paid by an enterprise to its employees after they offer normal labour within the legal working hours.

Enjoyment of legal holidays, leaves for marriage and funeral, and ipso jure participation in social activities shall be regarded as normal labour offered by the employees.

Article 4 (Constitution of Minimum Wages)

Minimum wages are made up of various kinks of incomes which should be entered in the total wages in accordance with the stipulations of the State Statistics Department, except the following items:

1. Wages paid for extra work done after the legal working hours;

2. Allowances given for the swing shift, the night shift, and for working under the special environmental conditions such as high temperature, low temperature, shaft, poison and detriment;

3. Other incomes which should be excluded from minimum wages in accordance with the stipulations of the Municipal Labour Administration.

Labour insurance for employees and their welfare treatment, which are stipulated by laws, rules and regulations, must not be entered in the minimum wages.

Article 5 (Calculation of Minimum Wages)

In general, minimum wages shall be calculated by the month. Where the systems of paying wages by the week, the day, the hour or by the piece, or by deducting a percentage are adopted, the minimum wages shall be derived from the monthly minimum wages by way of conversion.

Article 6 (Principles for Determination and Adjustment of Standards for Minimum Wages)

In determining or adjusting the standards for minimum wages, comprehensive reference shall be made to the following factors:

1. The lowest living expenses of the employee himself (or herself) and the lowest average living expenses of the family members supported by the employee;

2. The average salary level of the society;

3. Labour productivity;

4. Employment situations;

5. The differences in the level of economic development between the urban districts and the suburban counties of the city.

Article 7 (Examination and Approval Procedures of Determining and Adjusting Standards for Minimum Wages)

The Municipal Labour Administration shall, jointly with the Shanghai Federation of Trade Unions as well as the representatives from the business circles, put forward plans for determination and adjustment of the standards for minimum wages, which are to be put into effect after being ratified by the Municipal People’s Government, and sent to the State Council for the record.

The standards for minimum wages shall be promulgated annually.

Article 8 (Financial Entry)

Minimum wages paid by enterprises may be totally included in the cost.

Article 9 (Supervision by Trade Unions)

Trade unions are entitled to supervise the implementation of the standards for minimum wages. If the wages paid by enterprises to their employees are found to be below the standards form minimum wages, the cases may be referred to the Labour Administration for settlement.

Article 10 (Liability for Compensation)

When any enterprise pays its employees less than the standard minimum wages in violation of these Provisions, the Labour Administration shall order it to pay the arrears retroactively within the time limit in accordance with the standards for minimum wages. The enterprise can also be ordered to pay a compensation to its employees according to the following provisions:

1. If the amount in arrears is under 25 percent of the standards for minimum wages, the enterprise shall pay a compensation at the rate of 20 percent of the amount owed;

2. If the amount in arrears is above 25 percent, yet under 50 percent of the standards for minimum wages, the enterprise shall pay a compensation at the rate of 50 percent of the amount owed;

3. If the amount in arrears is above 50 percent of the standards for minimum wages, the enterprise shall pay a compensation at the rate of 100 percent of the amount owed.

Article 11 (Administrative Punishment)

If the enterprise still fails to pay retroactively the amount owed and the compensation within the time limit, the Labour Administration may, according to the seriousness of the case, impose a fine two to five times the amount owed for each payment in arrears.

Article 12 (Settlement of Disputes)

All employees have the right to report to the Labour Administration any act of their enterprises in violation of these Provisions. If any dispute arises in connection with the payment of minimum wages, employees may, according to law, apply to the Labour Dispute Arbitration Committee for arbitration. If not satisfied, the employees may, according to law, take legal proceedings in a people’s court.

Article 13 (Reconsideration and Lawsuit)

If refusing to accept the punishments imposed by the Labour Administration, enterprises may either apply for administrative reconsideration or bring a suit before the people’s court in accordance with the Regulations on Administrative Reconsideration and the Administrative Procedure Law of the People’s Republic of China.

Article 14 (Exceptions to the Application)

These Provisions shall not apply to the enterprises that have been ratified or ruled by the government or the departments concerned, in accordance with the relevant provisions, to close down, to make readjustment or to go through the procedure of bankruptcy because of difficulties in production or operation.

Employees’ wages during their sick leave, compassionate leave and during the time of awaiting employment shall be paid according to the relevant provisions for sick leave, compassionate leave and awaiting employment.

Article 15 (Cases Handled by Reference to These Provisions)

For individual industrialists and merchants employing helpers within the city, matters shall be handled by reference to these Provisions.

Article 16 (Department for Interpretation in Application)

The Municipal Labour Bureau is responsible for the interpretation of these Provisions in their specific application.

Article 17 (Date of Implementation)

These Provisions shall become effective on January 1,1995.