We are well into 2018 and are seeing distinct trends in labor law in Asia Pacific (APAC) countries. For an overview and insight into key changes that will impact companies who employ APAC citizens, we spent some time with industry expert Adam Sheffield, President of Global PEO Services. Along with helping companies hire employees fast without having to set up legal entities in foreign jurisdictions, Global PEO Services also deals with related HR, Payroll, Compliance, Accounting and Talent Acquisition issues.
CHINA
“China is no longer only a place where companies go to manufacture cheaply, they are doing so much more now and it’s important to understand the labor laws in each region, not just the country overall.”
-Adam Sheffield, President, Global PEO Services
Employer credit system for female employment right
To encourage employers in Guandong Province to implement fair employment practices, the authorities will use an enterprise credit system. Employers who fail to protect the rights of female employees will incur sanctions recorded in that system. Learn more
Release of personal information definition
‘Personal Information’ and ‘Personally Sensitive Information’ have been defined so that employers will have a greater understanding of how to protect the personal data of their employees. Also, ‘network operators’ are now required to oversee the protection of personal information.
‘Personal Information’ is defined as information recorded via electronic or another form and used in combination with other information to identify an individual. Some obvious examples of ‘Personal Information’ include an individual’s name, telephone number, address, date of birth, ID number, records of individual transactions, bank account and bio-metric information.
The law now also specifies that the processing of “personal information” must be for necessary, specific and legitimate purposes and must only be collected with explicit consent and authorization of the individual involved. Learn More
Change in paid leave rule: Guangzhou & Chongqing
The Chongqing and Guangzhou provinces have both introduced increases in the total number of days of paid leave that children of hospitalized parents can take annually, with the total number of days being increased to 10 and 15 in Chongqing and Guangzhou respectively. Learn More
Talent visa to be issued to eligible foreign nationals
There have been developments in the work permit system pertaining to the introduction of a ‘Talent Visa’ or ‘R Visa.’
Within the scope of these developments, senior executives, entrepreneurs, and graduates of top universities are defined as ‘Category A’ employees and these are the individuals who will be eligible for the R Talent Visa.
Some of the more enticing features of the ‘R Talent Visa’ include:
- Validity between 5 and 10 years
- Multiple entries, allowing up to 180 days for each stay
- The family members of an R visa holder may obtain visas with the same conditions and term of validity
“China is becoming a more diverse workplace, with people from all around the world working there. This has its own unique set of challenges when managing diverse workforces that the Chinese are becoming familiar with.”
-Adam Sheffield, President, Global PEO Services
Other important immigration developments:
China is implementing a national and unified exit-entry system which allows visa and residence information of foreign nationals to be shared nationwide. This system is only intended for internal government purposes.
Shanghai has introduced a series of rules with the goal of attracting qualified foreign talent:
- ‘Category A,’ or highly qualified foreign nationals such as entrepreneurs, senior executives who work in the Chinese (Shanghai) Pilot Free Trade Zone or the Zhangjiang National Innovation Demonstration Zones will now have an easier time applying for Chinese permanent residence cards given a set of simplified requirements.
- For those foreign nationals working in either of these two zones, they will be able to start part-time businesses while still under the employment of their original sponsors.
Qualified foreign graduates who begin doing businesses in Shanghai will now be eligible for 2-year residence permits, which after 2 years can be converted into permanent residence cards.
Union funds can now be used for employee gifts
Union funds can now be used for gifting employees during events such as birthdays, festivals, retirement, and marriages.
Additional uses of the union funds that are permitted include:
- Providing training to employees
- Providing legal support
- The purchase of safety equipment
- Recreational activities such as outdoor activities, sporting events, movies, and cultural events
- Internal union activities and expenses
HONG KONG
New code of practice for employment agencies
Employment (Amendment) Ordinance 2018 has been introduced in Hong Kong. The Commissioner for Labor has executed the “Code of Practice for Employment Agencies” which contains new legislative requirements for Employment Agencies.
You can read about the Code Of Practice For Employment Agencies in this information published by the Hong Kong Labor Department. Learn More
Employee injury: maximum daily rates of reimbursable medical expenses increased
The maximum daily rates of reimbursable medical expenses under the Employees’ Compensation Ordinance and the Pneumoconiosis and Mesothelioma (Compensation) Ordinance have been increased. Learn More
Proposed reforms for severance payment
The Hong Kong government has proposed several reforms related to the Mandatory Provident Fund (MPF)
The proposals include:
- In return for scrapping the current offset mechanism, that severance and long service payments will be reduced by 50%
- Capping the maximum pay-out at HKD 200,000, which is nearly 50% of the current HKD 390,000
Industrial accidents: proposed law change to impose higher penalties on employers
To help protect employees, the government has proposed imposing heavier penalties against employers who violate legislation relating to occupational healthy and safety. Learn More
JAPAN
“Without the assistance of experts, the great economies of Japan and South Korea can
be difficult to navigate due to a tough regulatory environment paired with language and
cultural barriers.”-Adam Sheffield, President, Global PEO Services
Change in law for fixed-term employees
Employees who have worked under fixed-term agreements for 5 or more years can now request to be treated as indefinite term employees and employers need to fulfill this request. Learn More
Reforms on overtime, employee classifications, and equal pay
A bill that introduces significant reforms to things like ‘equal pay for equal work’, employee classifications, and overtime caps is expected to be introduced in 2018. This bill will have a major impact with respect to important labor law issues that will affect almost all employers in Japan.
For example, in the case of overtime caps, under the new bill, the maximum hours of overtime worked in regards to the ‘exceptional circumstances exemption’ must remain below 100 hours per month. Therefore, organizations that are currently engaging employees with long hours of overtime work should review and amend their approach in alignment with this new legislation. Learn More
Proposal: new tax deductions available to corporations
A proposal has been made by the Japanese government to introduce new tax incentives for Japanese companies who pay higher wages, provide more development and training opportunities for their employees, and invest in new facilities. Learn More
SOUTH KOREA
Reform to create a wage-driven economy
The objectives of creating a wage-driven economy include increasing the minimum wage, creating new jobs, and converting “non-regular workers” into permanent employees who have better salaries and benefits. The goal is that domestic consumption will increase, which will lead to more investment into and growth of the Korean economy.
- The National Assembly is expected to pass legislation that will reduce the maximum working hours from 68 to 52 hours per week. Of those 52 hours, 40 would be regular work hours and the remaining 12 would be for overtime/holiday work.
- After the 16.4% minimum wage increase from 2017 to 2018, the government is expected to continue to make annual increases in aims of achieving its goal of a rate of KRW 10,000 (US$8.94) per hour by 2020.
Stringent audit regulations
The government has made plans to audit companies more rigorously to ensure that they are not only employing regular workers but also “non-regular workers” such as workers from temp agencies and subcontractors (which is required by law). In cases where violations are found, the violating companies will be ordered to hire those non-regular workers as permanent employees. Learn More
Revision of Gender Equality Employment and Work-Family Balance Support Act
The revised Gender Equality Employment and Work-Family Balance Support Act (GEEA), has come into effect. Under the revised GEEA, anybody can report an incident of sexual harassment in the workplace to an employer
The employer concerned then has the obligation to conduct an investigation and take necessary measures to protect the victim, such as placing the victim on paid leave, or changing their place of work. An employer that does not fulfill their role in this way may be subject to administrative fines totaling up to KRW 5 Million.
Revision of minimum wage
On Jan 1st 2018, the minimum wage was increased from KRW 6,470 to 7,350 per hour (16.4%). Learn More
Revised annual leave in 2018
The amount of paid leave days employees are entitled to has increased to 11 days in the first year and 15 days in their second year of employment. Learn More
Change in law for occupational accident compensation
Workers will now be eligible for workplace compensation if involved in an accident during commuting to or from work, regardless of the mode of travel. There will be no significant impact for employers, save for a small increase in premiums (0.1%, subject to change each year). Learn More
Staff training to prevent disability discrimination
To eliminate disability discrimination in the workplace, employers must now conduct relevant staff training. Non-compliance can result in a penalty up to KRW 3 million. Learn More
About our experts
Adam Sheffield, is the president of Global PEO Services. Global PEO Services (GPS) helps companies hire employees fast without having to set up legal entities in foreign jurisdictions. They also deal with related HR, Benefits, Payroll, Tax, and Accounting issues.
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