37 / 127
Human Resources and Payroll in China 2016-2017 (5th Edition) -
37
This lack of clarity makes job contracts relatively more prone to disputes and even litigation. Unlike
a contract signed with another company for its provision of services to complete a project, the job
contract forms an employer – employee relationship. As such, in the event of a dispute, the court
will tend to protect the interests of the employee to a greater extent than those of the employer.
In addition, the employer is not allowed to set a probation period for a job contract. For these reasons,
most employers avoid this type of arrangement.
Mandatory Clauses in Labor Contracts
• Name of the company, address, name of the legal representative or a senior manager.
• Name of the employee together with a valid address and identification number.
• Commencement date and the term of the contract.
• Description of the job and the location where it is to be implemented.
• Salary details.
• Statement that the employer will contribute social insurance for the employee.
• Labor protection, labor conditions and protection from occupational hazards.
Every local Labor Bureau will have standard labor contracts available in Chinese. However, we do
not recommend using these in every case. Each company may have specific requirements, and
may wish to draft labor contracts with its employees in such a way as to offer the company more
protection. We therefore suggest combining a local standard template with terms you use in labor
contracts for your operations abroad.
Recommended Clauses in Labor Contracts
Depending on the specific situation, a number of additional terms to the labor contract are
recommended, including:
• Probation period.
• Non-competition clauses.
• Confidentiality clauses.
• Allowances and benefits (particularly for foreign employees).
• Reference to the company rulebook or staff manual.
Probation Period
The employer can choose to set a probation period at the start of the contract. During the probation
period, it is comparatively easier for the employer to dismiss the employee. Also, the employer
is allowed to pay the employee 80 percent of the full salary stated in the employment contract,
although this amount may not fall below the local minimum wage. The employee may resign after
giving only three days’ notice. It is therefore inadvisable to stipulate a very long probation period.
The length of the contract will determine the maximum length of probation the employer can set.
“ It’s important to make sure newly hired staff receive and sign a written contract within a month, to avoid potential liabilities. Companies are well advised to streamline this process, as an oversight may prove costly. ” Helen Kong Manager Human Resources Dezan Shira & Associates Dalian Office