China Law and Practice Key items when drafting employment contracts | Page 2

The China Question: Labour Law & Employment

I have had to switch a lot of my employees to direct hires because
of the amendments to the Employment Contract Law.

English only. However, in case a dispute arises, a Chinese translation of the contract will be necessary

The Domestic Perspective

Contract duration

There are a number of things that foreign employers should bear in mind when drafting and signing

Due to the difficulties in finding and satisfying a proper statutory termination ground, in many cases it

employment contracts in China

is very difficult for an employer to unilaterally terminate an employment contract early. In these cases,

due to the requirements of the arbitral tribunal or court.

waiting for the contact to expire becomes the only feasible option for the employer. Apparently,

Format and content

longer contract duration would significantly increase the employer’s economic burden, therefore,
the employer should determine the proper contract duration before signing.

PRC law specifically requires that an employment contract must contain certain terms, like the
identity information of both parties and social insurance, therefore an offer letter cannot serve as an

In terms of probation period, PRC law permits an employer to terminate an employment contract

employment contract, unless both the content and format of the offer letter is substantially the same

during this period if it proves that the employee is not qualified for the employment conditions. As

as or similar to that of an employment contract.

long as the employer sets out specific employment conditions like professional skill or qualification,
previous working experience and performance standards, then it can easily terminate the employment

The necessity to prepare a province-specific employment contract template is not high. A well drafted

contract if the employee is not satisfied any of such conditions during the probation period. However,

template can be used in any province without being challenged. Further, the contract is also not

the length of probation period is restricted by law and related to the contract duration (basically, the

required to be verified or approved by any local authority. Employment at will is not allowed under

longer the contract duration, the longer the probation period), so balance needs to be achieved when

PRC law. Also, the law does not permit an employment contract to either create any contractual

the employer determines the length of contract duration and probation period for an employee.

termination grounds that are different from the statutory termination grounds (for example, it is illegal
to provide in an employment contract that the employer can terminate the contract with a certain

Timing

number of months’ prior notice without any cause), or amend or preclude any statutory termination
grounds. Therefore, PRC legal counsel is highly advisable to ensure the compliance and enforceability

PRC law requires that a written employment contract must be signed within one month of

of an employment contract.

commencement of employment, otherwise, the employee may claim double monthly salary from
the second month until a written contract is signed. Moreover, if the unwritten contract period exceeds

As long as an employee is proficient in English, it is fine that their employment contract is written in

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one year, then an open-ended employment relationship would be deemed to have been established

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