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Employee handbook (Effective from Sept-02) We set up a challenging development target, and in order to reach it, try its best to create the opportunity for the employees, which can make them develop and use their competence. We try to realize our target as soon as possible via develop and motivate the knowledge, ability and enthum of the employees, create a fruitful team-spirit and combine the utmost of all the employees. Catalogue 1. General staffing policies Employment management 1.1.1. Employment 1.1.2. Probation 1.1.3. Job vacancy in the company 1.1.4. Additional tasks/transfer/delegation 1.1.5. Personnel development 1.1.6. Business travel 1.1.7. Resignation procedures 1.1.8. Termination of employment 1.1.9. Additional business restriction 1.1.10. Change in personal data Work schedule and pay practices 1.2.1. Hours of work / overtime 1.2.2. Annual compensation 1.2.3. Performance review Other personnel policies 1.3.1. Punctuality 1.3.2. Confidential obligation 1.3.3. Safety 1.3.4. Identification card and security control 1.3.5. Public statements 1.3.6. Team spirit 1.3.7. Absences 1.3.8. Business conduct 1.3.9. Disciplinary procedures 2. Employee benefits Leave benefits 2.1.1. Public and statutory holidays 2.1.2. Annual paid leave 2.1.3. Compassionate leave 2.1.4. Special leaves 2.1.5. Sick/medical leave 2.1.6. Application for leave/leave record Contribution and usage of social security funds 2.2.1. Principles 2.2.2. Pension fund 2.2.3. Public medical fund 2.2.4. Housing fund 2.2.5. Unemployment insurance fund 2.2.6. Staff welfare fund 2.2.7. Trade union fund Insurance benefits 2.3.1. Medical care 2.3.2. Life/accident insurance Error! Reference source not found. 1. General staffing policies 1.1. Employment management 1.1.1. Employment Any employment in the company is deemed valid only when: The Personal File has been transferred. The applicant has passed a medical examination. An employment contract has been signed between the company and the applicant. 1.1.2. Probation Employees on initial employment in the Company required to serve a probationary period of certain months defined by individual employment contract in terms of the Chinese Labor Law. Normally, the probationary period is defaulted as 6 months. At the end of the probation period, the direct superior has to assess the performance of the employee, decides about the continued employment and informs the employee about the result of the assessment. 1.1.3. Job vacancy in the company The company will advertise job vacancies via Intranet/Internet or other media when there are vacancies available within the company. Selection preference will be given to internal applicant when she/he exhibits the same qualification as that of external applicant. 1.1.4. Additional tasks/transfer/delegation In view of the requirements of business, the work position, place and/or the title of the employee are subject to the change or adjustment of the company. Due to the requirements of business of the company, the company is entitled to transfer the employee to other departments, other location. 1.1.5. Personnel development . CPD dialogue and staff dialogue HR established the Comprehensive Personnel Development system (CPD) to systematically develop its employees. CPD consists of a CPD Roundtable and CPD Dialog. During CPD Roundtable, MO, line managers and HR people discuss development potential, performance, compensation adjustment, all possible development measures as well localization possibility of each employee. For certain group of employees a well-structured Dialog may take place between staff and superior, by which an employee and her/his superior talk about all development issues of the individual employee. For those who have no CPD, Staff Dialogue are optional to apply. Staff Dialogue is a much easier talk between staff and supervisor and it also focuses on the employee career development. . Training plan & execution Training includes: self-study, distance learning, CBT(Computer based training), WBT (Web based training), Department Managers proposes the training plans of his/her people for the upcoming fiscal year. For those training plans, which are agreed on CPD or staff dialogue, just highlight them. HR checks whether it is in budget. If HR sees there is a common training plan, HR should take it as an in-house training. If the training course will be delivered by SMI, HR Consultant places orders. If delivered by public training company, the employee himself/herself can propose the vendor but HR and direct supervisor will make final decision. After returning, employee fills “Training Feedback Form”. . Prolonged service contract for going abroad The employee going abroad for either training or working must guarantee to work for for several years from the returning date. Details are as follows: For those going for training, the service years will be 3 years, if training period is within 4 weeks 4 years, if training period is between 48 weeks 5 years, if training period is more than 8 weeks For those going for working, the service years will be 1.5 years, if working period is within 4 weeks, 2 years, if working period is between 48 weeks 2.5 years, if working period is more than 8 weeks For both training and working, If training period working period, the abroad period will be: Training period + working period/2 = Training period If training period working period, the abroad period will be: Training period*2 + working period = working period Then apply one of the above 2. In case the employee fails to abide by these above (excluding the case that the termination done by ), he/she should pay back the total expense pro rata as defined in the amendment contract. Employee and HR confirm the total expense of going abroad after returning. 1.1.6. Business travel In case an employee has to travel for business purposes, the company will reimburse travel expenses, including ticket, accommodation, and entertainment expenses, upon presentation of the actual official receipts according to current company regulations. Please refer to the relevant regulation. 1.1.7. Resignation procedures An employee is requested to submit his/her letter of resignation at least thirty days in advance (excluding in the probation period), which based on individual employment contract to HR via his/her immediate superior. MO will issue acceptance of resignation upon receipt of the letter of resignation. However, the effectiveness of resignation is not based on the issuance of acceptance of resignation. An employee whose employment contract is terminated / rescind or who resigns must hand over all company property and settle open account to obtain final clearance before leaving the company. 1.1.8. Termination of employment During probationary period, an employees employment may be rescinded without further notice in advance and without compensation in lieu thereof, if s/he fails to meet the companys recruiting requirements. As a counterpart, the employee also can rescind the employment with the company without further notice in advance during probationary period. During the terms of employment, either party giving the certain month notice, which based on the employment contract in written form, can affect rescission of employment contract. The employer may rescind the employment contract with immediate effect for specified reasons stated in the employment contract and the Labor Law of PRC. If the company based on article 24, 26, and 27 of the Labor Law of PRC rescinds the contract, the employee may be eligible for compensation according to the law. However, if the employee applies for resignation on his/her own account, he/she does not entitle to receive any compensation from the company. 1.1.9. Additional business restriction Except for the interest of the company, the employee shall not by himself or herself or together with third party engage in the business related to his or her position. Employee shall not engage in any activities in direct or indirect competition with the company during the term of the employment. 1.1.10. Change in personal data To ensure that all staff personal records are kept up-to-date, all employees are required to notify the company immediately of any changes in their personal particulars including: Martial status and spouses particulars Address and telephone number Birth of child Employees are also required to furnish relevant documentary evidence where applicable, in support of such changes. 1.2. Work schedule and pay practices 1.2.1. Hours of work / overtime The normal working time is forty hours per week, from Monday to Friday. If the authority approves of the companys implementing new working time system, the employee will obey the new working time system based on relevant laws and regulations. Only the over time job for the following cases are reimbursable: On-site service by employees of the Engineering, Service and COC departments Done by the drivers (refer to “Additional regulation on drivers overtime”). Done by Ayi For other cases, the OT will not be reimbursed because it is replaced by the integral performance compensation under the Annual Target Compensation system. But it could be compensated by paid leave, which have to be taken in the current calendar year. The per hour pay for overtime work shall be the 1.5 times during the working day (double during weekend, triple during legal holiday) of an employees basic salary per hour, which is calculated as daily salary divided by 8 hours. Overtime is subject to prior approval or later ratification of the superior. Claimed overtime has to be confirmed by the Management office or dept. manager on the Performance evidence sheet”. Travel time, entertainment for business purpose, accompanying guests is not considered as overtime. Overtime taxi will be reimbursed only when the overtime work from 7:00pm to 7:00am during the weekdays and on weekends. 1.2.2. Annual compensation The following graph shows the components of company compensation structure. Annual target compensation is composed of 12 months salary and annual target incentive. Monthly salary includes basic monthly salary/bonus and monthly allowance that are paid at the end of each month to employees individual bank account. Monthly allowance is a lump-sum amount covering all kinds of allowances or subsidies, which may be stipulated by labor authority. Employee will receive a monthly pay slip either in hard copy or e-copy. . Fixing the salary band of an employee According to the annually updated “Development Landscape”, the department manager has the right to recommend a position class which corresponds to a salary band for a newly employee referring to the similar positions and quality of the incumbent, which is subject to verification by HR. When an employee signs the Employment Contract, the company fixes the employees rank corresponding to the position provided. . Adjust the salary band of an employee The employees salary band shall be changed under the following circumstances: When an employees position has been changed When the companys structure expands remarkably, which demands salary band to be changed. . ATI=ATC X % MO at the beginning of a fiscal year determines this percentage, which differentiates on classified positions. Normally, the percentage of sales-driven team is higher than that of other team; the percentage of direct supervisors is higher than that of team members. . Actual annual incentive= ATI X Achieved % Achieved percentage could be flexible from 0 to maximum 250%, which is assessed on the basis of target agreements. . Target agreement Targets setting It is done on individual basis. The targets should be measurable and could be influenced by the employee. The targets should include company & group & individual target. It is valid for one fiscal year. Target agreement process The individual proposes his/her own targets in the new fiscal year. The direct supervisor disseminates the group targets to his/her subordinates and sees the difference between the dissemination and the proposals of each individual and then discusses with the individual. MO approves and signs all the target agreements. Rules for special cases Probation period No target agreement with the employee in probation period, thus no incentive either Internal job change If internal job change happens in the first half of a fiscal year, the performance is assessed on the new target agreement at new position. If internal job change happens in the second half of a fiscal year, the performance is assessed on the old target agreement at the previous position. Leaving the company (resignation and dismissal) If an employee leaves the company between Oct 1 and Chinese Spring Festival before which the annual incentive is supposed to be paid, the annual incentive should be paid out, but still on the same day as done with other employees. If dismissal, the annual incentive will be paid out proportionally on basis of target annual incentive. Retirement If an employee retires, the incentive should be calculated on a pro-rata basis and is paid at the time of retirement. . Special bonus Special bonus is determined by MO to be paid to some employees due to special reasons. This payment is done with monthly salary pay distribution. All payments are subject to individual income tax. 1.2.3. Performance review Being one part of the CPD system, the annual performance review gives the employee the opportunity to see how she / he has performed during the past period and to enable every employee to be guided towards being an excellent performer. It allows the superior to highlight the strong and weak points and discuss areas, which require development. The rating and discussion will be private and personal between the employee and the superior. The assessment sheet evaluates Quantity, Quality of work, Initiative and Independence, Cost consciousness and Cooperation, Foreign language skills and Discipline. This assessment forms the basis for salary adjustments. 1.3. Other personnel policies 1.3.1. Punctuality Every employee has to work during office hours from 8:30am to 5:00pm, during which from 12:00pm to 12:30pm is luncheon time. 1/2 hour in the morning and afternoon are flexible working time. However, every department should make sure that there is at least 1 person available at 8:30am. And the receptionist is exceptional to the flexible time. For some positions, attendance control procedures are implemented. The employee shall not come late or leave early during working time. 1.3.2. Confidential obligation The employees have the duty to keep confidential any and all information and data such as trade secrets, lists of customers, secret process, know-how, technical secrets, etc, which are acquired by the employee in the course of employment or disclosed to the employee for the purpose of fulfilling the working tasks either in the employment period or the time after the employee leaves. Any breach of this obligation may subject the employee to rescission of employment contract and civil or criminal liability. For details, please refer to the /SLCWeb/corporateDepartments/cio/infosecurity/index.stm 1.3.3. Safety Safety is everyones responsibility. The company guarantees provision of safe and healthy working conditions according to the requirements of current laws and regulations of the P.R. of China. Employees are required to comply with all safety rules and regulations. Existing and available protective measures must always be used. The prime purpose is to prevent accidents and protect employees and their fellow colleagues from accidents. 1.3.4. Identification card and security control To limit the access to the premises to authorized employees, every employee has to bear the ID card. If the ID card lost, RMB200 is fined. 1.3.5. Public statements The employee shall defend the benefit and reputation of company on any occasions. Employees are not allowed to make public or press statements on company policies/business orally or in writing without the approval of the company. 1.3.6. Team spirit Team spirit, trust and respect between the employee and the company, among the employees are needed and encouraged. Learning continuously, improving knowledge and know-how as well as capabilities are expected. 1.3.7. Absences It is the employees duty to avoid unnecessary absenteeism and tardiness. Employees are expected to work on every workday, except for illness and approved absence. In case of foreseeable absence caused by personal reasons, the employee must apply for an exemption of work in advance. In case of unforeseeable absence, the respective superior must be informed immediately and must get a notification without any delay. In case of illness absence over one day, a doctors certification is necessary and the expected duration of absence must be notified as soon as possible. Payment will be deducted accordingly. If an employee fails to resume to job after expiration of agreed absence without reasonable excuse, it will be considered as an incident of non-excused absence. If an employee is absent from work for 15 consecutive calendar days or 30 calendar days accumulated over one fiscal year without approval or without legitimate reason and admonition is ineffective, the company will have a right to rescind his/her empl

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