Why Going for China Employment Contracts is the Right Strategy

China has the second largest economy and one of the strongest consumer markets globally. No wonder, big companies and entrepreneurs all across the world consider China as a potential location for startups and business expansion. However, foreign companies find that this is not a simple task, particularly due to the existing China employment law.

Employment law in China offers comprehensive and rigid rules. From hiring employees to termination, Chinese employment law covers everything and the notable thing is there is no room to improvise anything to the employment relationship.

Employment Contracts in China

China’s labor laws use employment contracts as the basis for employment agreements. A written employment contract is required in China. If the parties do not execute a written contract, then after one year, the employer and the employee are deemed to have established a non-fixed term (ie, permanent) employment relationship. Not only knowing the things foreign companies must keep in the employment contract, but there are several provisions they must skip in the China employment contract.

List of items you must include in the China employment contract

  • Breaks and vacations
  • Salary
  • Basic information for the employer and the employee
  • Work site and hours
  • Labor protection and safety
  • Job description
  • Term of the contract including probationary periods
  • Social insurance
  • Other items as required by law

Even a few years ago, Chinese employees were reluctant to pursue a long and hard legal battle for any employment disputes. They were happy to receive any sort of settlement as quickly as possible and move on to other employment as there were abundant job opportunities in the Chinese market. But things have changed a lot over the years. The slowdown in the Chinse economy, rise in the labor wages that results in foreign companies shifting their base to the cheaper locations and the negative effect of the global geopolitical events have a massive impact on the Chinese job market.

As finding good jobs becoming hard these days, fired Chinese employers are paying more attention to pursuing long-term legal actions against their employers. Because of this trend, having the right strategy before approaching an employee about termination is more important than ever.

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