China Employment Contract Tips

In this article, we share several China employment contract tips:

  • China employment contract establishmentChina-Employment-Contract-Tips-HROne

  • Details included in the employment contract

  • Term of contract

  • Non-competition information

  • Probation period

  • China employee leasing/talent dispatch/PEO

This article offers an insight of employment contract law in China which is the most significant law in the country pertaining to the employer and employee association. This law is applicable to the employment of expatriates as well as local Chinese employees, and applies to local Chinese companies as well as WFOE’s. This law has been constructed to protect the rights of the workforce hired in China and build harmonious employment relationships.

China employment contract establishment

  • When an employment relationship is established, a written employment contract is required.
  • When an employment relationship is established, the employer and the employee shall sign a written employment contract within one month from the date the employee starts working if the written employment contract was not signed at that time
  • An employment contract shall be agreed with the employer and the employee and shall come into effect after the employer and the employee affix their signatures or seals to the employment contract.
  • When an employer employs a woman, it shall sign an employment contract or service agreement with her. The employment contract or the service agreement shall not contain restrictions on her matrimony and child-bearing.
  • Both the employer and the employee need to keep an original copy of the employment contract.

Details included in the employment contract

The employment contract must have the below mentioned information. In case of an expatriate employee, the contract is made bilingual (English and Chinese).

  • The date of contract signing/time of contract;
  • The registered name of the employer, registered address, details of its legal representative or supervisor and Signature;
  • The name of the employee, permanent and temporary address, valid identity card details and Signature;
  • The term/duration of the Employment contract
  • The job description, probation period and work location;
  • The mention of working hours, daily breaks, working days, annual holidays;
  • The compensation and benefits of the employee;
  • The social insurance information;
  • Employer expectations with regards to the ‘quality’ of services;
  • The non-disclosure of information or non-competition clause;
  • The mention of clauses which may lead to termination of employment or discontinuation of services.
  • Information about relevant labor protections, favorable working environment and protection against occupational hazards.

Term of contract

The terms of the employment contract can be of 3 types:

  • Fixed Term

The employer and the employee specify an end date for the contract.

  • Unpredicted term

The employer and the employee do not specify an end date for the contract. This type is applicable for long-duration employment relationships. This can be terminated by mutual consent or by the employee with a 30-day advance notice or by the employer with redundancy payment.

  • Task-based term

The term of the employment contract is based on the completion of specific tasks.

Non-competition information

For an employee who has the obligation to protect the employer’s confidentiality and trade secrets, the employer and the employee may agree on the inclusion of non-competition clauses in the employment contract or a separate non-disclosure agreement. In the event that the employment contract has been terminated or has expired, during the agreed non-competition period, the employer shall pay compensation to the employee on a monthly basis. If the employee breaches the non-competition agreement, he/she shall pay damages to the employer as agreed.

Probation period

  • If an employment contract has a term of no less than three months but less than one year, the probation period may not exceed one month; if an employment contract has a term of no less than one year but less than three years, the probation period may not exceed two months; and if an employment contract has a term of no less than three years or is non-fixed-term, the probation period may not exceed six months.
  • An employer may stipulate only one probation period with one employee.
  • A probation period shall not be stipulated in a project-based employment contract or an employment contract with a term of less than three months.
  • The probation period shall be included in the term of an employment contract. If an employment contract only provides the term of probation, the probation shall be null and void and the term of the probation shall be treated as the term of the employment contract.

China employee leasing/talent dispatch/PEO

China Employee Leasing/Talent Dispatch service also known as labor dispatch, China staff/employee outsourcing, workforce dispatch, contractor, PEO. With HROne Employee Leasing/Talent Dispatch service, the employee signs the labor contract with HROne and HROne ‘dispatch’ or “Lease” him/her to the client’s company.

HROne Employee Leasing/Talent Dispatch services allow the Representative Office(Rep Office) or foreign companies who has no legal entity in China safely and legally hire Chinese employees in China, or for other specific circumstances where a direct employment contract is not desired or feasible.

The information contained in this article is valid on January 18th, 2016. For updated information, please contact us via email at info@hrone.com.