Laws of the Guangdong Province

Regulations of the Shenzhen Special Economic Zone on the Security of Wages Owed by Enterprises

(Adopted at the Eleventh Meeting of the Standing Committee of the Second Shenzhen Municipal People' s Congress on October 29, 1996, promulgated by the Public Notice No. 35 of the Standing Committee of the Shenzhen Municipal People' s Congress on October 29, 1996)

Chapter I General Provisions

       Article 1 In order to safeguard the legitimate rights of the enterprise employees of the Shenzhen Special Economic Zone (hereinafter referred to as the Special Zone) and maintain social stability, these regulations are hereby formulated in accordance with the basic principles of the related laws, regulations of the state and in the light of the practical conditions of the Special zone.

       Article 2 These regulations shall apply to the enterprises within the Special Zone and the employees forming the labor relationship with these enterprises.

       Article 3 The owed wages referred to in these regulations shall mean the wages that enterprises should pay but have not paid after the pay day.

       Article 4 The Shenzhen Municipal People' s Government (hereinafter referred to as the municipal government) shall establish an owed-wages security fund.

       Article 5 The owed-wages security shall follow the principles of combining contribution with mutual assistance, payment on an enterprise' s behalf with recovery from this enterprise.

Chapter II Organizations of Owed-Wages Security

       Article 6 The municipal government shall establish a committee of the owed-wages security fund consisting of representatives of government, employees, and enterprises, etc.

       The committee of the owed-wages security fund shall have the following duties:

(1)   to formulate the related regulations on the administration of the owed-wages fund;

(2)   to manage, supervise the revenue and expenditure of the owed-wages fund;

(3)   to make a decision on major spending of the owed-wages fund;

(4)   to report regularly to the municipal government on the management of the owed-wages fund;

(5)   to coordinate the related tasks of owed-wages security.

Article 7 The administrative department of labor of the municipal government

(hereinafter referred to as the municipal department of labor) shall be the responsible department for the work concerning owed-wages security, and execute the following duties as a day-to-day administrative office of the owed-wages security fund:

(1)   to be responsible for the daily management of the owed-wages fund;

(2)   to accept applications for payment for owed wages;

(3)   to verify and pay for owed wages;

(4)    to recover what has been paid for owed wages;

(5)   to report regularly to the committee of the owed-wages security fund on the revenue and expenditure of the fund;

(6)   to complete other tasks assigned by the committee of the owed-wages security fund.

Chapter III Owed-Wages Security Fund

Article 8 The sources of the owed-wages security fund are as follows:

(1)   the owe-wages security fee and its interest income;

(2)   the investment income of the owed-wages security fund;

(3)   the public financial subsidy.

Article 9 Each enterprise shall pay once a year the owed-wages security fee

which is as much as 70% of the minimum monthly wages announced by the municipal government in the previous fiscal year.

       The owed-wages security fee shall be entered into the cost of an enterprise as an expense.

       Article 10 The department of industrial and commercial administration shall be responsible for collecting the owed-wages security fee from enterprises. The collection shall be done from newly established enterprises when they go through industrial and commercial registration; as for established enterprises, the collection shall be done when they accept annual inspection.

       Article 11 The municipal department of labor shall open a special account for the

owed-wages security fund at a bank.

       The department of industrial and commercial administration shall transfer the collected owe-wages security fee into the special account of the owed-wages security fund.

       Article 12 The owed-wages security fund shall be used to pay for the owed wages which comply with the stipulations of these regulations.

       If it is decided by the committee of the owed-wages security fund, the owed-wages security fund may be used to pay for the expenses directly related to the fund administration, but the total amount of the payment shall not be more than 5% of the total of the collected owed-wages security fee in the same year.

       The owed-wages security fund may be used for value-guaranteed, value-increasing investment such as state bonds, etc., but the total amount of investment shall not be more than 20% of the balance of the owed-wages security fund.

       Article 13 The collection, payment, recovery, balance, and operation of the owed-wages security fund shall accept auditing done by the audit department.

       The municipal department of labor shall make public the audit result every year.

Chapter IV Payment for Owed Wages on an Enterprise' s Behalf

       Article 14 The payment for owed wages on an enterprise' s behalf shall be made only if the following requirements are met simultaneously:

(1)   the enterprise owes wages for one of the following reasons: the people' s court has accepted the application for bankruptcy according to law; the enterprise is under rectification according to law or the audit has proved that the debts of the enterprise exceed its assets so that it has no capability to pay the wages of employees; investors or operators have hidden or fled;

(2)   the wages owed to individual employee is more than 150 RMB;

(3)   the owed wages are those owed within the previous 6 months before an application for payment for owed wages is filed.

Article 15 The amount of payment for owed wages on an enterprise' s behalf shall

be limited to the total amount of the wages actually owed to employees, but the maximum payment shall not be more than 20% of the annual average wage of the city-wide employees in the previous fiscal year.

       Article 16 If the requirements for payment for owed wages on an enterprise' s behalf are met, an employee shall file an application for payment for owed wages to the municipal department of labor within 30 days from the date of knowing that what is referred to in Item (1) of Article 14 took place.

       When applying, an employee shall produce the labor contract or other certificate of labor relationship, identification certificate, etc., and provide the photo copies of these documents.

       Article 17 Within 3 days from the date of receiving an application for payment for owed wages, the municipal department of labor shall examine it and decide whether to accept it.

       Article 18 After accepting an application, the municipal department of labor shall call for necessary data from the enterprise such as attendance records, wage rates, and wage payment, etc., and verify the period of time when wages have been owed, the amount of owed wages, and the truthfulness of the related data.

       The municipal department of labor shall decide whether pay for owed wages within 20 days after the date of accepting an application, and notify the employee and enterprise of the decision.

       Article 19 Within 30days after the date of receiving the notice of decision on payment for owed wages, an employee shall bring the identification certificate to a designated place to draw the payment for owed wages.

Chapter V Recovery of the Payment for Owed Wages on an Enterprise' s Behalf

       Article 20 After an employee has drawn the payment for owed wages, the right to recover and to receive the recovery of the owed wages which have been paid shall be transferred to the department of labor; as for the owed wages which have not been paid, the employee shall continue to have the right to recover them.

       Article 21 If an enterprise fails to pay wages because the people' s court has accepted its application for bankruptcy according to law and the owed wages of its employees are partly paid by the owed-wages security fund, the bankrupted assets, after being used to pay for the bankruptcy fee as a priority, shall be used first to pay the employees for the part of owed wages which have not been paid by the fund and also to pay the fund for its payment for owed wages on this enterprise' s behalf.

       Article 22 If an enterprise owes wages because the people' s court has accepted its application for bankruptcy according to law, the enterprise is under rectification according to law, the audit has proved that the debts of the enterprise exceed its assets so that it has no capability to pay the wages of employees, and its employees are paid for owed wages by the owed-wages security fund, the enterprise shall pay back the fund for the owed wages when it has such capability.

       If an enterprise violates the previous section, the department of labor may take the following measures according to different circumstances:

(1)   to request the people' s court to notify the bank where the enterprise has opened an account that the deposit of this account should be transferred to compensate for the payment made for its owed wages;

(2)   to take a civil action at the people' s court according to law.

Article 23 If an enterprise owes wages because its investors or operators hide or

flee, and its employees are paid for owed wages by the owed-wages security fund, the department of labor may request the people' s court to freeze their accounts, seal up their assets or distrain and auction their assets for paying back the owed wages which have been paid, and investigate into other legal liabilities.

       Article 24 If an enterprise is contracted out and the party running the enterprise by contract owes wages to employees, the party contracting out the enterprise shall have joint liability.

Chapter VI Penalty Provisions

       Article 25 The department of labor shall impose a fine of more than 3,000 but less than 10,000 RMB on the enterprise which provides false data.

       If an employee provides false data to swindle the payment for owed wages, the department of labor shall order the return of the amount of the swindled payment and impose a fine of the same amount.

       If the employee who swindles the payment for owed wages and the directly responsible person of the enterprise commit to a crime, the judicial office shall investigate into the criminal responsibility according to law.

       Article 26 If an enterprise has the capability to pay back what has been paid for owed wages on its behalf but fails to do so, the department of labor shall order it to pay back the money within 15 days; if the money has not been paid back after the deadline, the enterprise and its operator shall be warned, criticized by a circulating notice; as for the state-owned enterprise (including the state stock-holding enterprise) , it may be also suggested at the same time that the related department impose an appropriate administrative sanction on the directly responsible person.

       If an enterprise refuses to pay back what has been paid for owed wages on its behalf, the department of labor may impose a fine of one to two times of what has been paid for owed wages.

       Article 27 If an employee or an enterprise has an objection to the penalty decision made by the department of labor, an application for review may be filed to the administrative review office of the municipal government within 15 days from the date of receiving the penalty decision; if there is still an objection to the review decision, a legal action may be taken at the people' s court within 15 days from the date of receiving the review decision. The employee and the enterprise may also take a legal action directly at the people' s court within 15 days from the date of receiving the penalty decision.

       Article 28 If the personnel of the department of labor and the related responsible departments abuse power, practice favoritism and irregularities, neglect duties, exact and accept bribes, the related departments shall impose administrative sanctions according to the authority of personnel administration; if a crime is constituted, the judicial office shall investigate into the criminal responsibility according to law.

Chapter VII Supplementary Provisions

       Article 29 The wages referred to in these regulations shall include:

(1)   hour wage;

(2)   piecework wage;

(3)   bonus;

(4)   wage-like allowance, stipend;

(5)   extra shift wage, extra hour wage;

(6)   wages paid under special circumstances.

Article 30 The municipal government may formulate detailed rules for

implementation according to these regulations.