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Labor Laws in Asia
One reason international payroll companies are so important is because it’s critical to know the requirements of localities where your business operates; According to our Global HR Practices research study, this is one of the primary areas of risk for employers. According to data found, 70% of companies are not fully confident in their current knowledge of foreign compliance and labor requirements.
In this series we have explored a variety of international labor laws, comparing and contrasting their requirements across a variety of categories. Asia is an area of the world that is evolving rapidly, and many employers are turning their sights to the skilled labor populations in a variety of countries. This particular analysis will examine three Asian countries: China, Singapore, and the Philippines. As always, for quick insights into these or other countries, the CountryPedia has what you need at a quick glance.
China is predicted to become the world’s largest largest economy by 2018, but talent is difficult to come by in many areas. One HR Magazine article points out that talent is unevenly distributed throughout the country, and some jobs are more challenging to fill with Chinese talent. At the same time, employers are still pushing into the area, a key reason for growth.
In a conversation with Papaya Global CEO and co-founder Eynat Guez, we covered some of the interesting labor requirements that employers need to know. In some countries it is common for workers to save vacation days and roll them over from year to year; However, in China, employers must pay workers 300% of the value on any unused vacation days at the end of the year, according to Guez. This presents a financial risk for employers unaware of this requirement whom allow workers to maintain high vacation balances through the end of a working year.
In terms of working hours, Chinese labor law stipulates no more than eight hours a day and 44 hours a week on average. However, overtime may be paid at:
- 150% of regular wages for extended working hours,
- 200% of regular wages for working on off days if no makeup dates can be arranged,
- And 300% of regular wages for working on statutory holidays.
Because China represents a complex market with a robust source of talent, Papaya Global has created 2 specific Country Guides dedicated to China available here: Beijing, Shanghai. These guides covers key details such as employment costs, work permits, and cultural challenges to help employers adequately prepare for hiring in this unique market.
Singapore ranks the highest in Asia for attracting and developing high-quality talent, according to the Global Talent Competitiveness Index. The country’s government is working to establish itself as a hub of digital talent expertise for the rest of the world to tap into, according to Bloomberg.
Employers hoping to expand into Singapore should know that the compliance requirements are relatively straightforward, says Inside Counsel. Working relationships for most positions are governed by employment contracts which must be provided to workers no more than fourteen days after starting work. Additionally, about one-fourth of the workforce is unionized.
Work hours for Singapore are similar to China, with a maximum of 44 hours per week or eight hours a day. In addition, Singapore employees must not work more than six hours a day without a rest break and must have at least one rest day per week.
Employees covered under the Employment Act are paid for eleven standard public holidays, and anyone that works during a scheduled holiday must receive 200% of their regular daily wage. With regard to paid leave, workers must receive seven days of paid leave after their first year of service. The number of days increases with each year of subsequent service and caps at fourteen days of maximum paid leave.
For more information please see Singapore’s employment and labour law details in the CountryPedia.
According to Harvard Business Review, the Philippines is the world’s second-fastest growing economy, producing more than its fair share of technology startups, a testament to the high-quality talent available in the relatively small country.
Filipino workers are eligible for what is referred to as service incentive leave; however, this is typically offered in the form of vacation leave. Employees who have worked at least one year are entitled to this benefit of five paid days. If the leave is not exhausted by the end of the year, the balance of the leave should be paid out by the employer.
Employees may work a maximum of eight hours a day or 48 hours a week at their regular rate of pay. Employees must receive one rest day per week. Overtime hours in excess of eight hours a day must be paid at a rate of at least 125% of the standard wage.
One interesting twist for employers is the Thirteenth Month Pay requirement. Non-managerial employees receive no less than 1/12 of the total basic salary earned by the employee within the calendar year. This payment is made to workers no later than December 24th each year.
While each of these countries has its own unique requirements, as well as a rich variety of talent ready and able to take on new employment opportunities. If your business is ready to start exploring these and other opportunities for growth and scaling your business, be sure to check out the Papaya Global technology platform and international payroll solutions that makes it possible to scale while minimizing the growing pains.
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