Whistleblowing in the People's Republic of China

A high level outline of employment protection for whistleblowers in the People's Republic of China.

Introduction

Employees (or any other individuals or entities) are allowed, and encouraged, to report or complain about breaches of labour and social security laws to a competent labour bureau. All submitted information will be kept confidential and whistleblowers have a general right not to be subject to retaliation.

Who is protected?

The protection applies to any individual or entity that files a report or a complaint.

Which disclosures are covered?

The report or complaint can generally relate to any breach of labour or social security law, including but not limited to issues regarding:

  • the formulation of internal labour protection rules and systems by an employer
  • the execution of employment contracts
  • the prohibition of the use of child labour
  • the provision of special labour protection to female workers and underage workers
  • the compliance in respect to working hours, rests and leaves
  • the payment of remuneration and the satisfaction of the minimum wage standards, and
  • the participation in social security schemes and the making of necessary contributions.

Procedure for making a disclosure

Where an employee files a complaint to a labour bureau on a potential breach which affects his/her own rights and interests, he/she should do so in writing. If the employee has any difficulty in submitting a written complaint, he/she can do so orally and sign a written statement prepared by the department. Depending on the nature of the complaint, the labour bureau may advise the complainant that it is more appropriate to deal with the matter through labour arbitration or a court.

Otherwise, there is no specific procedure which dictates how any other individual or entity should file a report. This can usually be done in person, by mail or by telephone.

A complaint and/or a report can only be made within two years of the relevant breach having occurred.

Reward

The government has the discretion to award informants who provide true reports and important clues or evidence for investigating significant breaches of law.

The monetary rewards are generally within a range of amounts, or a certain percentage of imposed fines (with or without a cap) stipulated by relevant laws.

For breaching of labour law, the reward is not significant. In some cities, local regulations may provide more guidance on the range of the available award. For example, in Beijing, the award for reporting breaches of the social security laws is generally between RMB 100 and 5,000. However, an employee who reports a breach of the social security laws that affects his/her own rights and interests is not entitled to an award under the Beijing local regulations.

For breaching of some particular laws such as food and drug safety law, the incentive will be 1-6% of products value or imposed fine, and the maximum incentive may reach RMB 500,000. For employees reporting any offences by government officers violating anti-corruption law such as accepting bribes, the reward will be RMB 500,000 or a higher amount approved by the PRC Supreme People's Procuratorate.

Protection available

The labour bureaus are required to keep details of the reports and complaints confidential. In the event that an employer retaliates against a whistleblower, the relevant labour bureau has the power to require the employer to rectify its acts. There is, however, no guidance under PRC law as to what constitutes an actionable act of retaliation.

Contracting out

It is not possible to agree with individuals (in advance) that they will not make a report or complaint to the labour bureau. Any contractual term to such effect will be void.

Remedies

The labour bureaus have the power to require an employer to rectify any act of retaliation.

An employer can unilaterally terminate employment on one of the prescribed statutory grounds. The fact that an employee has made a whistleblowing claim does not (obviously) fall within any of the permitted grounds. For more information on termination in the PRC and the consequences of an unlawful dismissal, please click here.

Whistleblowing policies/arrangements

There is generally no legal requirement for an foreign investment entity to have a whistleblowing policy although under the Basic Rules for Enterprise Internal Control (the Basic Rules) companies listed in China must have whistleblowing policies in place (which include measures to protect informants) and set up a whistleblowing hotline. Large and medium size enterprises that are not listed are also encouraged to follow the Basic Rules.

Practical implications

Even though the implementation of a whistleblowing policy and hotline are not legally required for most employers, they may still wish to consider implementing them so that employees are encouraged to bring their concerns to the company’s attention before raising them externally.

Other

Besides the ability to file a report or complaint on a suspected breach of any labour or social security law, there are also whistleblowing regulations which encourage individuals and entities to report the misconduct of any individual, entity, organisation or government officials.

 

This document (and any information accessed through links in this document) is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.