Under the principle of equal pay for equal work, employers in China are required to provide the same compensation and benefits to employees who perform work with the same level of responsibility, effort, and results. § 46 of the China Employment Contracts Act requires employers to follow this principle and set wages based on the value of the work performed.
In Chinese labor law, equal pay for equal work is a relative standard rather than an absolute requirement that all employees doing the same job receive identical pay. Employees in the same role may have different qualifications, skills, and experience. Therefore, reasonable differences in compensation do not violate equal pay for equal work as long as the overall compensation and benefits remain substantially equivalent for employees performing equal work.
Components
Equal pay for equal work under Chinese law has three main components:
- Equal pay for equal work regardless of gender, although long-standing gender discrimination in wage decisions can be difficult to eliminate;
- Equal pay for equal work across different areas, industries, and departments, taking into account differences in economic conditions, living costs, and industry and department characteristics; and
- Equal pay for equal work within the same employer for employees performing comparable work and producing similar results.
Equal pay for equal work does not imply identical compensation and benefits for every employee in the same position. Instead, the principle focuses on equal treatment in how pay is set and requires that the employer apply the same wage policy to all employees. Where no employee within the same employer is performing equal work, comparisons may be made to other local employees in the same or similar positions.
While wage policy is at the discretion of the employer, it does not guarantee absolute uniformity in compensation and benefits. To uphold equal pay for equal work, four prerequisites and two conditions must be met. The prerequisites are that employees hold the same or similar positions, work the same hours, perform work of equal quantity and produce work of equal quality. The conditions are that the employer uses a standardized performance evaluation system and wage administration policy, such as the civil service pay scale, performance-based pay scale for public institutions, or the company’s own pay scale.
For an equal pay for equal work comparison between two China based employees to be valid, both must be covered by the same wage administration policy, such as both being civil servants or both being public institution employees, and under the same wage policy and performance evaluation standards. The employees should also hold comparable positions, work similar hours, and produce work with substantially equivalent results. Only when these requirements are met can their compensation be meaningfully compared for equal pay purposes. Certain allowances, such as transportation and meal allowances, are not treated as part of standard compensation and benefits and do not need to be equal.
Major international brands have attracted negative media for apparently misunderstanding China’s equal pay for equal work policy. In “Inside China’s mega iPhone factory: long hours, discrimination and delayed pay,“ the Financial Times and other local media as far back as 2019 reported that Apple’s operations were in violation of basic Chinese labor law, using temporary agencies as a vehicle to pay contingent workers below regular full-time employees in violation of the equal pay for equal work guaranteed to contingent workers. Apple was also alleged to have staffed more contingent workers than permitted by law. (Reuters)
While Chinese ideals over equal pay for equal work for contingent workers have been around for decades, social expectations towards labor rights compliance has shifted enough to create significant controversy, and regulators are signaling increased willingness to enforce age and sex discrimination protections as well.
Applicable Laws
The China Employment Contracts Act provides for equal pay for equal work. Under § 11, if an employer does not promptly enter into a written employment contract that specifies wages, employee compensation must be paid in compliance with any applicable collective bargaining agreement or, if none exists, on the basis of equal pay for equal work. An employer has one month from the start of the employment relationship to specify contractual terms, including wage provisions.
§ 18 of the China Employment Contracts Act requires employers and employees to negotiate disputes concerning compensation, benefits, and working conditions. If they cannot reach an agreement, any applicable collective bargaining agreement controls. If no collective bargaining agreement exists, or it does not cover the disputed matters, compensation and benefits are to be paid based on equal pay for equal work, and working conditions must comply with Chinese law. Collective bargaining agreements are currently not widely used in China; many companies have no agreement in place, and industry-wide or regional agreements are rare. Some companies may have a collective bargaining agreement, but if it does not specify compensation and benefits, the employer must still determine them under equal pay for equal work.
Further Reading
Learn more about Chinese Age Discrimination and Sex Discrimination laws, along with Temporary Staffing Compliance requirements.