Signing Labor Contract in China: The Essential Rules you Should Know

When should a new labor contract be signed in China?

Either: 

1. Before the start date

2. The actual start day is most common 

3. Within 30 days of the start date 

Note that according to the Labour Contract Law, if a contract has not been signed within the first 30 days of the start date, then the employer is liable to compensate the employee for double their stated salary for the period they are employed. 

If a contract is not provided within 12 months of the employee's start date, not only will the employer be liable to pay double the agree salary for the preceding 12-month period but the employee will automatically be considered as a permanent employee and be entitled to remain employed at the company indefinitely.

What are the rules on probation?

According to Article 19 of the Labour Contract Law

• If a labor contract is valid for over three months, but less than one year, the probation period shall not exceed one month;

• If a labor contract is valid for over one year, but less than three years, the probation period shall not exceed two months; 

• In case of a three-year-or-above-fixed-term and non-fixed-term labor contract, the probation period shall not exceed six months. 

• An employee may notify the company of rescinding the labor contract three days in advance during the probation period. 

• If an employee is proved to be incompetent during the probation period, the employer may rescind the labor contract with the employee.

 Only one probation period can be specified by an employee and an employer.

What should be included in a labor contract?

• Employer's name, address, legal representative or principal responsible person 

• Employee's name, address, ID card number or other valid identity document number 

• Terms of the labor contract 

• Job contents and working location 

• Working hour scheme and number of annual leaves 

• Full scope of salary 

• Social contribution 

• Labour protection, labor conditions and occupational hazard prevention

• Labour contracts must be in Chinese to have legal effect

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