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Onboarding in China with Employment Contracts – A Guide for Overseas Employers

When your company is onboarding employees in China, you may not be aware of how labor laws can affect the terms of the employment contract.  Whether your employees are local residents or expats, you will have to modify your contracts to meet Chinese standards.  This is true even if the terms are different from the employment contracts that you use in your home country.

The first thing to know is that employment contracts are mandatory in China, and should be drafted in Chinese as well as the home country language for expats.  Otherwise, they may not be enforceable if there is a dispute.

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If you are new to China how will you learn the requirements for employment contracts prior to onboarding your employees?  How will you handle contract terms that an employee wants to negotiate, but are set by labor laws?

Here is an example of how one of our clients was trying to navigate the Chinese rules for employment contracts:

Client Case Example: Contract Duration Terms in China

Context:

Our client was onboarding new employees in China, and had a question about how to structure the duration of the employment contract.  They wanted to offer an open-ended contract with no fixed duration, with the option to terminate the employee if there was cause.

Solution:

Our local partner in China came up with the solution of offering a two year fixed term contract, due to the fact that termination of open ended contracts is difficult in China.  With the fixed term contract, they could terminate with 30 days written notice and justifiable cause (or three days notice during the probation period).

If the employee will stay on longer than the initial two year term, the contract can be renewed using the same terms.  This was a better and more flexible approach than the open-ended contract which is not as common in China.

Need More Information About China?

If you are onboarding employees in China, you might need more information on the following issues when setting up the employment contracts:

How to decide what fixed term to offer, rather than using an open-ended contract?

What is the statutory probation period?

What are the justifiable causes for termination with 30 days notice?

These are the types of questions that we handle for our clients every day, in the areas of immigration, payroll and employment law to ensure smooth onboarding of employees.  We make international employment simple.

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