Expanding Your Business to The Asia-Pacific: Common Employment Law Concerns

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The Asia-Pacific region consists of countries located along the Western Pacific Ocean. It is an umbrella term that includes East Asia, Southeast Asia, South Asia, and Oceania. Countries in the region feature well-developed corporate infrastructures, densely populated markets, and world-class technology.

With rapid GDP growth, Asia-Pacific economies are quickly outstripping the growth of western markets. For instance, China is now a top source of international direct investment in the world, while New Zealand, Singapore, and Hong Kong have secured the top three spots in World Bank’s Doing Business 2020 index.

This article covers the top 10 Asia-Pacific countries that are worth it for expanding your business. It is intended to provide an overview of each country’s most common employment law concerns and significant aspects that need to be kept in mind from a business perspective.

As soon as your company is set up in a new country and hires the very first employee, it becomes crucial to maintain certain records, including:

  • Personal details such as name, passport number, identity card, marital status, and address
  • Nature of employment
  • Designation in your company
  • Remuneration details
  • Period of employment
  • Non-cash and fringe benefits employees are entitled to

1.   Hong Kong

Hong Kong’s economy is well-known for its low tax rates and minimum government intervention. As it is heavily dependent on international trade, the country has become an attractive option for entrepreneurs, businesspeople, and fresh graduates.

The Employment Ordinance of Hong Kong covers full-time, part-time, and temporary employees. Here are some key aspects:

  • The employment contract is required to satisfy the minimum clauses of the Ordinance such as statutory holidays, sick and maternity leaves, mandatory provident fund payments, and severance and long-service payments.
  • The Ordinance does not specify a legal probationary period limit. However, Hong Kong’s Labor Department suggests a maximum duration of three months.
  • When hiring a new worker, your firm must inform the Inland Revenue Department within six months.
  • Businesses need to report remuneration given to employees on an annual basis.

2.   New Zealand

Other than its breathtaking landscapes, New Zealand is also known for its high-income and progressive economy. The country has become rapidly industrialized in the past few years, within the information technology, banking, and other service sectors.

New Zealand has emerged as the very top of World Bank’s Doing Business 2020 rankings, which implies that the government regulations substantially facilitate operations for companies seeking to expand to New Zealand. Here are some key employment concerns you need to keep in mind:

  • It is mandatory to have employment contracts for each employee that clearly states the responsibilities of employers and employees.
  • A regular working week in New Zealand comprises 40 hours and is divided into five working days.
  • Income taxes are typically withheld by the company and paid to the Inland Revenue on a Pay-As-You-Earn (PAYE) basis.
  • Workers in New Zealand can avail themselves of a four-week paid leave every year. The leave period can be provided gradually throughout the year, or allocated annually on the anniversary of an employee joining your organization.

3.   Singapore

Singapore has emerged as a rapidly progressing technological and financial hub in the Asia-Pacific region. Due to its free market economy and policies conducive for trade, the country has become one of the easiest places to operate a business, for both local and foreign companies.

Some of the largest industries in Singapore include finance, business, manufacturing, and tech exports. Here is what companies in Singapore need to know when hiring staff for the first time:

  • The Employment Act contains the basic rules about employment terms and the roles and responsibilities of the employers and employees.
  • Employees can work for a maximum of 44 hours a week (or 8 hours a day).
  • Salaries must be paid to employees at least once a month within seven days following the end of the salary period.
  • Employees are entitled to paid annual leave if they have worked with a company for a minimum of three months.
  • The legal age for employment in Singapore is 17 years and above. Children between 13 and 16 years can be employed, but there are limits on the type of work they are allowed to do.

4.   Australia

The presence of natural resources along with a favorable climate make Australia a great place to invest. It has the advantage of an open-market economy with bare minimum restrictions on the flow of goods and services.

Australia has a well-educated workforce benefiting any business. The education system in the country is internationally recognized and specialized training services are available for further skills development. Here are some employment law concerns that you need to know about when expanding to Australia:

  • The primary sources of employment law in the country are legislation, industrial instruments, and common law.
  • Full-time employees in Australia are allowed to work for a maximum of 38 hours per week.
  • The number of public holidays granted depends on the state where your company operates.
  • Both full-time and part-time employees are entitled to 4 weeks of paid annual leave, but it is common to avail six weeks.
  • Employees in Australia are eligible for up to 12 months of unpaid maternity leave for childbirth or adoption of a child under 16.

5.   Taiwan

Taiwan has witnessed rapid economic growth ever since the second half of the past century. Its main income is derived from the industrial manufacturing sector, especially by exports of machinery, electronics, and petrochemicals.

In the recent past, several government-owned banks and industrial businesses in Taiwan were privatized, which encouraged many businesses to relocate there. Here are general employment considerations to keep in mind when considering expansion to Taiwan:

  • Employment laws are generally contained in Taiwan’s Labor Standards Act (TSA) by the Ministry of Labor.
  • Working hours for employees in Taiwan are limited to 40 hours per week (8 hours per day).
  • Workers are entitled to two off days out of every seven. One rest day is mandatory, while the employees can choose to work overtime during the other.
  • Salaries to workers are usually paid monthly. Like in most Asian countries, workers are entitled to a 13th month bonus of a month’s wages, which is usually given out at the time of the Lunar New Year.
  • Notice periods for termination depend on the period of service. It begins from 10 days for those with a minimum of three months of service, increases to 20 days after a year, and rises up to 30 days after three years.

6.   South Korea

South Korea is known to have rapidly developed since the 20th century. It has emerged into a globally connected and technologically advanced country due to effective state-led urbanization projects.

A notable reason for South Korea’s success is heavy government investment towards education, which propelled the country as a technological hub with a skilled workforce. If South Korea is your dream destination for investment, consider the following aspects while planning your venture:

  • According to law, employees in businesses with 50 or more permanent workers are not permitted to work more than 52 hours a week.
  • A termination notice to a worker in South Korea must be served at least 30 days in advance.
  • It is mandatory for companies in South Korea to register their employees for payroll by the 15th day of the initial month of operations.
  • Employers are supposed to withhold income tax when giving out salaries to workers.
  • Paid leave is provided to employees based on the period of service. Employees get one day per month worked in their first year, which increases to 15 days per year from the second year. After that, one day of annual entitlement is added every two years of service.

7.   Japan

Japan is home to the third-largest economy in the world, after the US and China. It features an advanced marketplace and a robust work ethic across all sectors.

Some of the largest brands around the world, such as Honda, Toyota, Nissan, and Sony were founded in Japan, strengthening its place as a hub for those interested in a career in tech, business, or media. If you wish to expand to Japan, here are some of the important employment law concerns to consider:

  • Japan’s Labor Standards Laws contain the crux of the employment rules and regulations in the country.
  • Employment contracts are renewed yearly. However, fixed-term contracts of more than three years are not allowed.
  • Employees are legally permitted to work 40 hours a week.
  • Salaries are generally given out to employees near the 25th of each month. They can either be paid directly or transferred to the employee’s bank account.
  • Workers are entitled to paid leave after six months of service, with the leaves increasing every 12 months thereafter.

8.   Malaysia

Malaysia’s multi-cultural and multi-ethnic culture can be a big advantage if you are planning to expand your business to the country. The country initially had a state-oriented economic structure, which helped it become one of the most competitive markets in the world today.

Business, tourism, tech, manufacturing, and healthcare services are some of the most prosperous sectors in Malaysia. Starting out as an employer in Malaysia, here are some of the important aspects to take into account:

  • Employment and labor laws of Malaysia are enshrined in the Employment Act 1955.
  • Maximum working week in the country is 48-hours long and divided into six eight-hour days.
  • For employees with less than two years of service, the termination notice period must be four weeks, increasing to six weeks at two years and eight weeks at five years.
  • Businesses in Malaysia are required to withhold income tax payments from workers as per a Pay-As-You-Earn (PAYE) system.
  • Employees in Malaysia are entitled to 11 public holidays every year.

9.   Thailand

Thailand is known for its pristine beaches, scenic islands, and majestic temples. In recent years, the country’s economy has progressed rapidly, making it more than just a fancy tourist spot.

Thailand has a free-market system and pro-investment policies, which makes it easy for foreign companies to move there. Here are some of the common employment law concerns you must know about:

  • There is a legal requirement for drawing up written employment contracts in Thailand, but they are still highly recommended.
  • Employees are required to work 8 hours a day from Monday to Friday. However, some businesses also work half-days on Saturdays.
  • Thai workers are usually paid monthly, either directly in cash or by bank transfer.
  • While it is not mandatory, employees generally expect a 30-day notice period in case of termination.
  • Minimum leave entitlement in Thailand is six working days in a year after the initial year of service, but it is common for companies to offer 10-15 days.

10.                 Indonesia

Not only is Indonesia the world’s largest island country, it also has the largest economy in Southeast Asia. It is a mixed economy, with both, a government-led public sector and private businesses playing an important role in economic progress.

Indonesia has a large population, providing you with a big market for your products or services. If you want to relocate to Indonesia, here are some employment law concerns to keep in mind:

  • Workers are supposed to work no more than 40 hours each week.
  • There is no national minimum wage in Indonesia. Minimum wage requirements are different in every province.
  • Collective bargaining is becoming popular, so having discussions with trade unions is becoming important when it comes to wage discussions.
  • Employees who have worked with a company for a full year are usually entitled to a bonus (religious allowance). This is equal to a month’s salary and must be paid at least a week prior to the Eid-ul-Fitr public holiday.
  • Notice period in case of termination of an employee is usually 30 days.

Final Thoughts

The Asia-Pacific region presents a wide range of opportunities for startups, entrepreneurs, and established companies. It is popular for its fast-growing economies and technological advancements. Moreover, these countries are generally heavily populated, providing massive markets for your products and services. For further insight on expanding to different markets around the globe, click here to explore our website.

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