I. Introduction

In China, it is a statutory requirement that an employer must pay an employee who has lawfully provided the normal labor during the normal legal or agreed working hours a wage or salary in an amount not less than the applicable statutory minimum wage (i.e., monthly minimum for full-time workers or hourly minimum for part-time workers); and failing to do so, the employer will be subject to adverse legal consequences and liabilities. 

According to China labor laws and regulations, the term "minimum wage" (hereinafter referred to as the “Minimum Wage”) is legally defined as a minimum amount of a wage or salary that an employer must pay to an employee in exchange for the normal labor provided by the employee to the employer during the statutory working hours. 

The Minimum Wage standards are varied by location in consideration of various factors such as the minimum local living expenses and the township resident consumption price index, etc.  Governments at provincial level or equivalent across China are empowered to determine and adjust their Minimum Wage standards at least once two years after seeking opinions from relevant trade union(s) and business enterprise/entrepreneur association(s), provided that they have sought requisite legal endorsement from and filed with the State Council or its authorized delegate (i.e., the Ministry of Human Resources and Social Security) their respective proposed Minimum Wage standards.

II. Current Minimum Wage Standards in Tier 1 Cities

According to Chinese government’s recently published statistics and reports, current Minimum Wage standards in tier 1 cities in China as of 30 March 2017 are as follows:

               Currency:  Renminbi

III. Legislative Background of Minimum Wage Requirement

The implementation of the Minimum Wage requirement in the context of a labor or employment legal relationship is one of the legal safeguards adopted by Chinese government for protecting legitimate rights and interests of the workers and employees in the People’s Republic of China (hereinafter referred to as “China” which for the purpose of this newsletter shall exclude Hong Kong, Taiwan and Macao) and was first introduced in China following the promulgation of the Enterprise Minimum Wage Measures by the Ministry of Labor (now renamed as the Ministry of Human Resources and Social Security) on 24 November 1993 and effective as of the same date which has been repealed by the 2004 Minimum Wage Regulation (as defined below). 

Over the past decades, the Minimum Wage requirement has been further implemented and reinforced through a number of legislative and administrative efforts by governments at various levels including without limitation: 

• the promulgation of the Interim Measures Concerning Wage Payment by the Ministry of Labor (now renamed as the Ministry of Human Resources and Social Security) on 6 December 1994 and effective as of 1 January 1995;

• the promulgation of the China Labor Law by the Standing Committee of the National People’s Congress on 5 July 1994 and effective as of 1 January 1995 (especially Articles 48 and 49 thereof);

• the issuance of a Circular on Opinions on Several Issues Concerning Implementation of the China Labor Law by the Ministry of Labor on 4 August 1995 and effective as of the same date;

• the issuance of the Minimum Wage Regulation by the Ministry of Labor and Social Security on 20 January 2004 and effective as of 1 March 2004（hereinafter referred to as the “2004 Minimum Wage Regulation”) that is applicable to all employers (including without limitation, foreign invested enterprises) in China;

• the issuance of the Regulation on the Surveillance of Labor Protection by the State Council on 1 November 2004 and effective as of 1 December 2004;

• the issuance of the Guiding Opinion on Improvement and Implementation of the Statutory Minimum Wage Standards by the China National Trade Union Office on 19 May 2006; and

• the promulgation of the Labor Contract Law by the Standing Committee of the National People’s Congress on 29 June 2007, effective as of 1 January 2008 and amended as of 28 December 2012.

IV. Why Minimum Wage Matters?

An employer who fails to observe the Minimum Wage requirement will be cautioned by relevant labor authorities to rectify its misconduct. If the employer fails to rectify within the required period of time, it may be liable to pay the employee a "punitive" compensation equaling to 50 to 100% of the exact difference between the Minimum Wage and the actual wage paid in addition to the payment of such deficiency.  The violation of the Minimum Wage requirement will also trigger the immediate termination right of the employee under law and if such right is so exercised by the employee, the employee may also claim for the statutory severance pay. 

V. What Minimum Wage Does Not Include?

When calculating the amount of the Minimum Wage, the following items generally are legally excluded:

• Labor incomes that are statutorily excluded from the scope of the normal wage, such as social insurance and benefits (e.g., funeral and condolences expenses, living hardship subsidies, etc.) and labor protection expenses (e.g., work uniform costs, summer beverage costs, etc.) provided by an employer to its employees as well as other remunerations or labor incomes which are not counted as a wage (e.g., monetary awards, writing or translation or speaker fees, etc.);

• Overtime pay;

• Mandatory social insurance and housing funds;

• Meal allowances;

• Subsidies or allowances paid to workers who work in special working environment or under special labor conditions such as night shift, high temperature, low temperature, underground, toxic or hazardous work environment; and

• Other incomes that are explicitly excluded from the scope of the Minimum Wage as prescribed by governments at provincial level or equivalent across China.

VI. Who Is Responsible for Enforcing the Minimum Wage Requirement?

Labor authority at county level or above is legally empowered to surveil/monitor, inspect and handle any violation of the Minimum Wage requirement by any employer(s) located in its area; and trade union at various level is legally authorized to surveil/monitor the implementation of the Minimum Wage requirement by the employers and has the right to report any violation of such mandatory requirement to the relevant local labor authority.