A written employment contract is necessary to establish a full-time employment relationship. However, a part-time employee, who works no more than 24 cumulative hours per week and four hours, on average, per day, is subject to different requirements and may be employed under an oral contract.
The employer must execute a written employment contract with the employee within the one-month grace period (commences upon the employee’s first day of work), otherwise the employer will owe double wages to the employee for each month of employment after this grace period without a written contract, and such period shall not be longer than 11 or 12 months, if the fixed-term employment contract is not renewed once it expires, but the employee continues to work for the employer. If an employer fails to execute a written employment contract with a full-time employee for over a year, the employer and the employee shall be deemed to have executed an open-ended employment contract.
Usually, the contents of an employment contract can only be modified in writing after both parties have reached a consensus through mutual negotiation. However, a verbal modification of an employment contract may also be valid if the modification has actually been performed for longer than one month and does not violate any law, administrative regulation, state policy, public order or good morals, and the employee does not raise an objection within one month after the modification.
Employment contracts in China can have three different types of terms: fixed, open-ended or terms that expire upon completion of an assignment. Under the Labour Contract Law, if an employer opts to enter into a fixed-term contract with an employee, after the completion of two fixed terms, that employer will be obligated to execute an open-ended contract upon the employee’s request. Since open-ended contracts are inherently difficult to terminate, employers may want to use fixed-term contracts for new hires. This would give the employer a chance to evaluate its new employees. If the employee’s performance is deemed unsatisfactory, a fixed-term contract provides the employer with the option of discontinuing the employment relationship at the end of the term.
In China, the employee trial period is also known as the probationary period. A probationary period is commonly included in employment contracts. However, Chinese labour law contains restrictions on the length of the probationary period. The employer may agree on a probationary period with the same employee only once. Probationary periods are not permitted for employment contracts that expire upon completion of an assignment or those with terms shorter than three months.
In China, an employee may unilaterally terminate his or her employment contract by giving a written notice 30 days in advance or 3 days in advance during the probationary period. On the other hand, an employer may unilaterally terminate an employment contract by giving a written notice 30 days in advance or providing one month’s salary in lieu of notice in certain circumstances.
In addition, if the employer intends to reduce its workforce by 20 persons or more or by a number that is less than 20 but accounts for 10% or more of the total number of its employees, the employer must explain the situation to the trade union or all employees 30 days in advance, provide relevant information regarding the employer’s production and operational status, and make a formal report to the local labour authorities.