Document No (2) 2003 Issued by Planning & Wages Division Shanghai Municipal Labour & Social Security Bureau, January 17, 2003 The Municipal Committees, Offices and Bureaus concerned, The Holding (Group) Corporations, the Enterprises (Group) Corporations, The District & County Labour & Social Security Bordeaux: The Provisions on Payment of Wages by Enterprises in Shanghai Municipality is transmitted as the follows and shall be implemented. Shanghai Municipal Labour & Social Security Bureau, January 17, 2003 The Provisions on Payment of Wages by Enterprises in Shanghai Municipality In accordance with the Labour Law of the People’s Republic of China and other relevant laws and regulations, in light of the actual circumstances of Shanghai Municipality, these Provisions are enacted to safeguard the right of the employees to obtain remuneration for their work and to regulate payment of wages by the enterprises. Article 1 The Provisions shall apply to all types of enterprises and individual economic organizations (hereinafter referred to as “the employers”) within the administrative region of Shanghai Municipality, and to the workers that have established employment relationships with them as well. Article 2 Wages in the Provisions refer to remuneration paid to the employees in monetary form by the employers in accordance with the state and municipal regulations (i.e., monetary income included in the calculation of employees’ total wage amounts). Article 3 Wages shall be paid in legal tender. Article 4 Where an employer pays wages through banks, such wages should be transferred to the employees’ individual accounts on time. Employers that pay wages directly shall make payment to the individual employees, and the employees shall sign upon receipt of their wages. Where an employee is unable to collect his or her wages in person for some reason, his/her relative or other person authorized may collect the wages on the employee’s behalf. Article 5 Employers shall keep written records on the amount of the wages, items, time and names of the individual employees on making wage payment to employees, and the employers shall keep such records in accordance with relevant regulations for inspection. Employers shall provide employees with individual wage statements regardless of the form in which they pay wages. Article 6 Employers shall pay wages to employees on a mutually agreed date at least once per month. In case the payday falls on a statutory holiday or rest day, the payment of wages shall not be delayed if payment is made through banks; in case the employer pays wages directly, payment shall be made in advance. In case that the employees are paid annually or wages payment are made in the end of the assessment periods, employers shall pay monthly wages in advance on the standard no less than the minimum wage rate, and the wages payments shall be settled at the end of the year or the assessment periods. Article 7 Where a labour contract expires or the employer and the employee terminate the contract in accordance with the laws and regulations, the employer shall pay all due wages to the employee in a lump sum upon completion of the related procedures. Article 8 Where an employee participates in civic activities during statutory working hours in accordance with the laws and regulations, the employer shall deem such participation as equivalent to normal provision of labour and pay wages accordingly. Article 9 Where an employee takes marriage leave, bereavement leave, family leave or other leaves in light of the laws, the employer shall pay the employee’s wages during the period of such leaves in accordance with the state regulations. The base for the calculation of such wages shall be determined according to the following principles: (1) Where an agreement on wages has been made in the labour contract, the calculation base shall be set at the level no lower than the corresponding wage rate for the employee’s working position as agreed in the labour contract. Where the wage standard defined in the collective agreement (collective wage agreement) is higher than that agreed in the labour contract, the former shall be applied. (2) Where the labour contract or collective agreement contains no stipulation on the wages calculation base, the base may be determined through collective wages bargaining between the employer and employee’s representatives, and as the result, a collective wage agreement shall be signed between the two parties. (3) Where no agreement exists between the employers and the employees, the calculation base for wages during the leave period shall be equivalent to 70% of the monthly wages payable under normal attendance for the work in the individual employee’s position. Calculation bases for wages during periods of leave defined in accordance with the above principles shall not be less than the minimum wage rate of Shanghai Municipality, with exception of other stipulations of laws and regulations. Article 10 Where an employer encounters cash flow problems owing to production or operational difficulties and thus is temporarily unable to pay wages on time, it may, having consulted and obtained the agreement from its trade union, delay the payment of wages to employees for up to one month. In such cases, the period of the delay in payment shall be announced to all the employees and be reported to the competent authority for record, or where there is no such competent authority, be reported to the municipal, district or country labour and social security administrative department. Article 11 Employees who, after entering into employment relationship with their employers, has provided normal service during the probation periods or internship, shall be entitled to wages that are not less than the minimum wage rate of Shanghai Municipality. Article 12 Where a work stoppage or suspension of production occurs within a wage-payment period, the employer shall pay its employees wages in accordance with the agreed rate. In case that such stoppage or suspension exceeds one wage-payment period, the employer may pay wages according to the service provided by each worker and in compliance with a new rate agreed by the concerned parties, while such wages shall not be less than the minimum wage rate of Shanghai Municipality. Article 13 Where an employer, according to its actual needs, arranges an employee to work beyond the statutory standard working hours, the employee’s wages shall be paid according to the following stipulations: (1) Where the employer arranges the employee to work beyond statutory daily working hours, wages shall be paid at the rate of not less than 150% of the individual employee’s hourly wage rate; (2) Where the employer arranges the employee to work on rest days, and alternative day-off can not be arranged, wages shall be paid at the rate of not less than 200% of the individual employee’s hourly or daily wage rate; (3) Where the employer arranges the employee to work during statutory holidays, the wages shall be paid at the rate of not less than 300% of the individual employee’s hourly or daily wage rate. Where an employer pays wages on a piece-rate basis and has legitimately arranged the employee to work beyond the statutory standard working hours, the piece-rate wages shall be adjusted in accordance with the above stipulations. For the employers that have been approved by the labour and social security administration department to implement cumulative working hours system, the working hours in excess of the statutory standard working hours shall be deemed as overwork. And the employees shall be paid wages for extended working hours in accordance with Article 13 (1) hereof. Where the employer arranges the employees to work during statutory holidays, wages should be paid in accordance with Article 13 (3) hereof. The employers that have been approved by the labour and social security administration departments to implement non-fixed working hour systems and have arranged the employees to work during statutory holidays shall pay wages in accordance with Article 13(3) hereof. Article 14 Calculation of daily wages for overwork: The concerned employees’ daily wages shall be calculated by dividing the monthly calculation base defined in accordance with the principles of Article 9 hereof by 20.92(the average number of working days per month). Hourly wages shall be calculated by dividing the daily wages by eight (daily working hours). Calculation of daily wages for sick leave and personal leave taken during normal working days: The concerned employees’ daily wages shall be calculated by dividing the monthly calculation base defined in accordance with the principles of Article 9 hereof by the number of payable days for the month in question. Payable days refer to the state stipulated normal working days and statutory holidays. Article 15 Where an employee under surveillance or on probation ordered by the people’ s court continues to work for his/ her original employer, the employee’s wages shall be paid by the employer in accordance with the agreement in the labour contract, or the rules of the employer’s company. Article 16 Where an employee breaches labour discipline or the company’s rules and receives administrative penalties with reduction of his/her wages, the reduced wages shall not be less than the minimum wage rate of Shanghai Municipality. Article 17 Where a labour contract is suspended because the employee is under custody as a suspected criminal or for any other objective reasons, the employer shall stop paying wages to the concerned employee, with exception of other stipulations of laws and regulations or other agreement in the labour contract. Article 18 Where an enterprise is declared bankrupt and owes outstanding wages to its employees, it shall pay such wages in accordance with the payment settlement procedures as stipulated in the Enterprise Bankruptcy Law of the People’s Republic of China and the Company Law of the People’s Republic of China. Article 19 The employers shall not deduct the employees’ wages. An employer may deduct wages under any of the following circumstances: (1) for the payment of individual income tax on behalf of the employee; (2) for the payment of the social insurance contributions on behalf of the individual employee for which he/she is liable; (3) for payment of child support or alimony as mandated by a court judgment or order; (4) for other payment as stipulated by laws and regulations. Article 20 Where an employer deducts or delays the payment of the employees’ wages for no reasons, or refuses to pay wages for extended working hours, it shall pay within a stipulated period all wages owing to the concerned employees, as well as compensation in an amount equivalent to 25% of the wages deducted or delayed. Article 21 Where the wages paid to the employees are less than the minimum wage rate of Shanghai Municipality, the employer shall complement the difference between the actual wage and the minimum standard and meanwhile, pay compensation in an amount equivalent to 25% of the difference. Article 22 Where an employee’s individual action causes his/her employer economic losses, and the employer requests compensation for such losses according to laws and regulations and requires that compensation be deducted from the employee’s wages, the amount deducted each month may not exceed 20% of the employee’s wages for that month and, after deduction, the employee’s remaining wages may not be less than the minimum wage rate of Shanghai Municipality. Article 23 Where a labour dispute arises due to unilateral termination of the employment relationship by the employer, and the labour dispute arbitration committee or the people’s court overturns such termination decision, the employer shall pay wages to employee for the duration of the arbitration or litigation. Such wages shall be calculated by multiplying the average monthly wages for the employee’s working position during the 12 months preceding the month of the termination by the number of unpaid months. In case that both parties are at fault for the termination, they shall each bear due liability in proportion to their respective degree of faults. Article 24 Employees who work on a part-time basis shall be paid hourly wages in accordance with their agreement with the employers, but such wages may not be less than the minimum hourly wage rate of Shanghai Municipality. Article 25 The employers and the employee’s representatives may determine the wage payment measures for their enterprises through collective bargaining in accordance with the principles established by these Provisions, and all employees shall be informed of such arrangement. Article 26 Where a labour dispute regarding the payment of wages arises between an employer and the employee, either party may apply for arbitration to the labour dispute arbitration authority in accordance with the laws and regulations. In case that either party is dissatisfied with the arbitration award, it may lodge litigation in the People’s Court. Article 27 These provisions shall be implemented as of 1 April 2003. The Provisional Measures for the Payment of Wages by Enterprises in Shanghai Municipality shall be repealed correspondingly. In the event of any inconsistency between relevant previous regulations and these provisions, these provisions shall prevail.