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“996” declared illegal – China’s labour law in flux

By Zoey Zhang (Dezan Shira Associates)

Chinas oberstes Gericht hat entschieden, dass die umstrittene “996”-Überstundenregelung (Arbeit von 9 bis 21 Uhr an sechs Tagen in der Woche) illegal ist und richtet sich damit gegen die übermäßigen Arbeitszeiten, die in chinesischen Internetunternehmen üblich sind.

Am 26. August 2021 haben der Oberste Volksgerichtshof (SPC) und das Arbeitsministerium (MOHRSS) gemeinsam einen Leitfaden veröffentlicht, der zehn typische Fälle von Überstunden illustriert, die alle von Arbeitnehmern erstritten wurden. Die Behörden erläuterten die Rechtsgrundlage für das Urteil in jedem Fall.

In one case, a worker at a parcel delivery service was dismissed after refusing to work overtime under the “996” policy. The worker requested arbitration and the arbitration court ordered the company to compensate the worker with 8,000 RMB (1,050 euros). The court found that the parcel delivery company’s “996” labour policy was a serious violation of Chinese labour law.

In anderen Fällen geht es um Überstunden und die entsprechende Bezahlung, einschließlich Entschädigungen für Verletzungen, die während Überstundenarbeit auftreten.

In einem anderen Fall wurde ein Arbeitnehmer namens Li von einer Zeitarbeitsfirma zu einem nicht näher bezeichneten Medienunternehmen entsandt. Li arbeitete regelmäßig mehr als 300 Stunden pro Monat und nahm sich in einem normalen Monat nicht mehr als drei Tage frei. Am 1. Dezember 2020 fiel Li in einer Toilette am Arbeitsplatz in Ohnmacht und starb nach einer fast 12-stündigen Nachtschicht an einem Herzinfarkt. Lis Arbeitgeber hatte keine Unfallversicherung für ihn abgeschlossen. In seinem Urteil bestätigte das Gericht, dass sowohl der Zeitarbeitsdienstleister als auch das Medienunternehmen für den Tod von Herrn Li verantwortlich seien, und wies die beiden Unternehmen an, seine Familie mit 766.911 RMB (100.700 Euro) zu entschädigen.

The landmark Supreme Court ruling and labor dispute cases are a sign that China is cracking down on the grueling overtime culture in the tech industry. This comes amid the widespread crackdown on the sprawling private tech sector, and the campaign to promote “shared prosperity” to reduce inequality(China.Table reported). All of this is intended to dampen public discontent with immense social and economic constraints.

Cracking down on brutal overtime culture

Since Alibaba’s Jack Ma first called the “996” culture a “blessing” in 2018, the public backlash against the extreme overtime culture in Chinese society seems never-ending. Earlier this year, two employees of Pingduoduo (PDD), a fast-growing e-commerce platform, died unexpectedly, reviving debates about “996.” The death of a young PDD employee once again caused public outrage. She had died after working a series of excessively long shifts.

No wonder, then, that the leadership is raising its voice on labour rights issues. Recent developments may well lead to greater control of the labour market. For example, on June 23, Siemens Numerical Control was fined by the local government in Nanjing for violating working time regulations. Some administrative regions, such as Beijing, have also reportedly begun to review the implementation of labor laws and regulations in local companies.

In the face of this increased external regulatory pressure, China’s leading tech companies have finally begun to relax harsh working conditions. Since June, popular short-video apps Douyin (the Chinese Tiktok) and Kuaishou have abolished the “big week/small week” policy – a practice that mixes five-day weeks and six-day weeks.

Tencent-backed game studio Lightspeed & Quantum Studios, which has developed popular games such as Game for Peace (the Chinese version of PUBG), has decided to allow its employees to leave the office at 6pm on Wednesdays and no later than 9pm on other days of the week.

Still, not all workers agree with the change in overtime rules, especially those who need to meet key performance indicators (KPIs) or want more overtime pay. According to a Caixin report, employees at Bytedance, which owns Tiktok and Douyin, found that their wages shrank by 10 to 20 percent compared to previous months as overtime pay withered under the less demanding labor policy.

Safeguarding the rights and interests of day labourers

Compared to permanent employees who can rely on arbitration tribunals and local regulators to protect their labor rights, millions of casual workers such as couriers, food delivery drivers, and app drivers have more difficulty protecting their rights.

In January, a food delivery driver for Alibaba-operated takeout platform Ele.me set himself on fire outside a store in the eastern Chinese city of Taizhou over a pay dispute. In September last year, an investigative report titled “Delivery Man Trapped in System” went viral on popular Chinese social media platforms, sparking a heated discussion. The tech company’s algorithm was said to have shortened delivery times for delivery drivers and driven them to race against time on the road. In April, Beijing Satellite TV aired a segment about a high-ranking city official who disguised himself as a food delivery driver. In that role, he had earned only five euros within a day. All this news has caused public unrest.

In response, Chinese regulators have forced tech companies to pay more attention to the rights of casual workers, known as gig workers, through a series of measures.

On 22 June , eight authorities published guidance on protecting the rights and interests of workers in “new forms of employment”, such as couriers, food delivery and ride-sharing drivers.

On 23 June, seven authorities, including the Ministry of Transport, issued a statement on the rights and interests of couriers. The statement calls on courier companies to hire workers directly and to pay accident insurance for courier employees in proportion to the average local salary or turnover.

On 27 July , seven authorities, including the State Agency for Market Regulation (SAMR), published guidance urging online food delivery providers to improve their remuneration. They should also introduce a proper mechanism for recording the working hours of their delivery staff.

The reaction of the capital market forces adjustments

Shares of delivery services fell dramatically in the two days following the release of the Ministry of Transport’s directive to strengthen protections for courier drivers. In contrast, shares of short-video app Kuaishou rose nearly five percent on June 25, the day after the announcement of the repeal of the “big/small weeks” policy, according to Caixin.

From the investors’ point of view, the tightened labour protection threatens to drive up the costs of listed companies. This could reduce the return on investment. In order to survive in the market, the companies concerned may have to rethink their competitive pricing strategies.

What Chinese labor law says about overtime

Under Chinese law, employees may not work more than eight hours per day or 40 hours per week. Companies must limit overtime to 36 hours per month. Despite the current law, workers are often discouraged from recording overtime correctly.

For beginners to the world of Chinese labor law, we divide the laws into the following categories:

  • The standard working time system: According to this system, an employee’s working day should not exceed eight hours, and the average working week does not exceed 40 hours, which corresponds to a five-day week. Employees are entitled to at least one rest day per week, and the fixed overtime rates apply to longer working hours. Most employees fall into this category.
  • The holistic hours worked system: under this system, hours worked are accumulated over a period of time (weekly, monthly, quarterly or annually). The average number of hours is then calculated based on this period. On the whole, this system is best suited to work assignments with irregular shifts, such as seasonal or project work. Overtime is charged for hours worked in excess of the standard per cycle. These rates are the same as those in the standard work schedule system for overtime and work on holidays. However, this system does not include a day off. Before a company can implement this system, it must first submit its plan to the local labor office and obtain its approval.
  • The system of non-fixed (flexible) working hours: This system is suitable for workers whose working hours are difficult to measure. Workers with such a work schedule system are usually paid like salaried employees. This salary is a fixed amount paid per period, often monthly. Under the non-fixed work schedule system, there are no overtime costs. While the employer is required to maintain reasonable hours of work and rest, this is at the employer’s discretion. This system also requires the approval of the local labour office before implementation.

How companies should prepare

China’s changing labor system may have a direct impact on the hiring practices, employment policies, organizational restructuring, and specific business development regulations of many companies in the technology and related sectors.

To learn more about employment law compliance in China and avoid employment litigation, please read our guide to human resources and payroll in China or contact our human resources experts and attorneys at china@dezshira.com.

This article first appeared in Asia Briefing, published by Dezan Shira Associates. The firm advises international investors in Asia and has offices in China, Hong Kong, Indonesia, Singapore, Russia and Vietnam.

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