The new Employment Contract law was passed by the 28th Secession of Standing Committee of NPC on June 29, 2007. The new Law increases penality to the employer who violates the Law and refuses to sign written employment contract with the employee. Also when disputes arise, the old procedure i.e. arbitration first and then litigation, is expected to be modified. This new Law will become effective on January 1, 2008.
Double salary shall be paid in case no written employment contract is signed
According to the Law, the employer shall sign a written employment contract with the employee. If no such contract is signed during the term starting from the next month of employment to expiry of one year of employment, the employer shall pay double monthly salary to the employer during such term; In case no written contract is signed after expiry of one year, besides the double monthly salary to be paid, it is deemed the employer has entered into non-fixed term contract with the employee.
The Probation term shall be no more than six months
With regards the probation term, if the employment term is over three months but no more than one year, the probation term shall be no more than one month; if the employment term is over one year but no more than three years, the probation term shall be no more than two months; if the employment term is over three years or the contract is a non-fixed term contract, the probation term shall be no more than six months.
In addition, the employee's salary during the probation term shall be no less than 80 % of the salary as agreed in the contract or no less than the minimum salary for the same position in the company.
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