China’s Three-Child Policy – What are the Implications for Employers [ENG]
By Helen Liao, Partner, Deacons
  • In a major policy shift, mainland China has announced that couples will be permitted to have up to three children.

  • Businesses operating in the country should pay attention to how these measures could affect their HR and payroll policies.

With the amendment of Law of the People’s Republic of China on Population and Family Planning, which came into effect on 20 August this year, the following changes have occurred:

  1. Couples in mainland China are now allowed to have a third child (also known as the “three-child policy”);

  2. Social maintenance fee, which used to be charged against citizens bearing more than two children, has been cancelled; and

  3. Further policy support has been promised covering finance, tax, insurance, education and employment, and improved fertility treatment services.

Passed into law by the Standing Committee of the National People’s Congress (NPC), amendments to the law symbolise an end to the past restrictive family planning measures and fines. The amendments support the leadership’s decision to respond to new circumstances in social and economic development and promote long-term population growth.

For employers, changes in related policies and supporting measures such as more maternity leave and maternity subsidies could increase if the number of employees giving birth increases. While specific implementation measures have yet to be announced, the three-child policy could lead to an increase in employment-related costs; more challenges in recruiting certain positions; higher employee turnover rate; and escalated pressure in the management of female employees during their pregnancy, childbirth, and the post-childbirth period. Employers need to plan ahead with a corresponding compliance management system, adjust employment strategies as appropriate, and actively respond to the impact of relevant policies.

Compliance management tips

The protection of female employees (especially during pregnancy and the post-childbirth period) could be further strengthened as a result of the three-child policy law amendment and enforcement. Employers who fail to conform could face legal responsibilities that could result in fines and/or employment policy corrections. Simultaneously, female employees who can prove they have been discriminated against have the right to unilaterally terminate their employment contracts and claim economic compensation from wrongdoing employers.

On-boarding management

Employers are not allowed to refuse to hire women or unreasonably construct the terms of recruitment criteria purely on the grounds of gender. Enquiring about a women’s marriage and childbirth history during interviews is also prohibited, along with the use of pregnancy tests as a job entry medical examination requirement. Under no circumstances are employers allowed to draft pregnancy restrictions as a condition for recruitment or restrictions that differentiate between the standard employment contract for male and female employees.

Maternity leave

Female employees in mainland China are entitled to at least 98 days of maternity leave. Each province and city may also stipulate additional days of maternity leave (e.g. 30 days in Beijing and Shanghai, and 80 days in Guangdong). Female employees are also entitled to extra leave days under special circumstances such as dystocia, multiple births, and miscarriage, which are determined in accordance with relevant laws and regulations.

Maternity subsidy and wages

The nature of maternity subsidy and wages are different; the former is paid by the Social Insurance Bureau, and the latter is paid by the employer. If a female employee, for any reason, is not entitled to maternity insurance, the employer is required to pay wages during the maternity leave period. If the maternity subsidy is lower than the employee’s wage, the employer is required to make up the difference in accordance with local regulation practices.

Wages and working hours

No employer shall reduce the wages of, dismiss or rescind the labour or employment contract with a female employee due to pregnancy, childbirth, or the breastfeeding period following childbirth. Employers are not permitted to prolong working hours or arrange nightshift work for female employees in or after the seventh month of pregnancy. Adequate rest time should also be provided during working hours.

Paternity Leave

Eligible male employees are entitled to paternity leave in accordance with the relevant regulations of their provinces and cities (current regulations: 15 days in Beijing and Guangdong, 10 days in Shanghai).

Termination – exercise the right of dismissal with caution

Except for special circumstances, employers are not allowed to unilaterally terminate labour contracts with female employees within their pregnancy, childbirth, and postchildbirth breastfeeding period. If the labour contract was due to expire within the pregnancy, childbirth, and post-childbirth breastfeeding period, it should be automatically extended until the end of the period.

Suggested measures in response

  1. Formulate guidelines for managing female employees during their pregnancy, childbirth, and postchildbirth period. Focus on implementation in order to improve the level of compliance and reduce the risk of labour disputes.

  2. Develop a sound management system for prenatal inspection, maternity leave, and paternity leave, to ensure the compliance and effectiveness of the company’s management processes.

  3. Fulfil the obligation of maternity insurance properly to prevent paying wages in full during maternity leave.

  4. Talent sort wisely and predict business needs, reduce the impact of mass maternity leaves through reasonable assignment of responsibilities, and protect the company’s interests by signing relevant legal documents when necessary.

  5. Adopt a flexible arrangement to the labour force to solve short-term employment needs, reduce human resource costs and the employer’s compliance burdens.

  6. If it is necessary to adjust the positions of the female employee, seek legal advice from professional lawyers in advance. Draft and sign thorough legal documents to protect the company’s interests.

Future developments

Various measures from the national and local levels can be expected to be formulated to further enhance the three-child policy’s effectiveness. In the future, for instance, the mainland Chinese government may expand the regulations relating to maternity leave and insurance; introduce new tax reduction and exemption policies; and implement special protection for female employees at both the national and local levels. For employers, promoting the culture of a family-friendly workplace may become a new focus of social responsibility.  

China’s Three-Child Policy – What are the Implications for Employers [ENG]
PR 11 January, 2022