Service Term

Service Term means the term the Employee promises to work for the Employer in case the Employee receives special treatment from the Employer.

If the Employer provides training for the Employee at its own cost, the Employer can enter into agreement with the Employee and have a service term in such agreement.

In the event the Employee violates the service term, he shall pay penalty to the Employer, which shall not be more than the training expense. Furthermore, the penalty the Employer requires the Employee to pay shall not exceed the part of training expense which is the rest of the training expense according to the term left.

Probation Period

In the new Employment Law, the probation period has direct link with the employment term. In case the employment term is more than 3 months but less than one year, then the probation period shall be no more than 1 month; If the employment term is more than one year (including one year) but less than three years, the employment term shall be no more than 2 months; if the employment term is more than three years (including three years) or the employment contract is an open term contract, then the probation period shall be no more than 6 months.

The same Employer can only be allowed to have probation period with the same Employee for one time.

No probation period is allowed if the contract is a task completion-based contract or the employment term is less than three months.

The probation period shall be included into the employment term. That is to say, if the employment term is 6 months and the probation period is 1 month, then the 1 month shall be part of the 6 months.

With regards the salary for probation period, according to the new Employment Law, the Employee’s salary for probation period shall be no less than the minimum salary for the same position in the company or no less than 80% of the salary as agreed in the employment contract.

During the probation period, the Employer is not allowed to terminate the contract except:

a) The Employee is proven not up to the requirements for recruitment during the probation period;
b) The Employee seriously violates the Employer’s disciplines or the rules;
c) The Employee causes great losses to the Employer due to serious dereliction of duty or engagement in malpractice for selfish ends;
d) The Employee meanwhile enters into employment relationship with other employer(s), which brings serious impact to the task which the Employee needs to complete for the Employer, or for such situation, the Employer has pointed it out but the Employee refuses to rectify;
e) The employment contract is concluded or modified by one party against the other party’s true intentions through the use of fraud or coercion or exploitation of the other party’s unfavorable position, which makes the contract null and void;
f) The Employee is investigated for criminal responsibility;
g) The Employee is unable to take up his original work or other work assigned by the Employer after expiry of his medical treatment term for illness or non work-related injury;
h) The Employee is unqualified for his work and remains unqualified even after receiving training or an adjustment of job position.

In case the Employer terminates the contract during the probation period, it shall explain the reason to the Employee.

The Employment Term

According to the new Employment Law, there are fixed-term employment contract, open term employment contract and task completion-based employment contract.

Fixed-term employment contract means the contract has an expiry date. The fixed-term employment contract can be concluded by the Employer and the Employee on the basis of consultation.

Open-term employment contract means the contract has no definite expiry date.

Open-term employment contract can be reached by the Employer and Employee on the basis of consultation. However, in the following situations, if the Employee puts forward or agree to renew or conclude the employment contract, an open-term employment contract shall be concluded except the Employee proposes to conclude a fixed-term contract:-

1. The Employee has been working for no less than 10 years for the Employer;
2. When the Employer adopts the employment contract system for the first time or state-owned enterprise is reorganized and reenters into employment contract with the Employee, the Employee has been working for no less than 10 years for the Employer and there is less than 10 years before he/she retires;
3. The fixed-term employment contract has been concluded for consecutive two times, and no following situations exist when reentering into the contract:-

a) The Employee is proven not up to the requirements for recruitment during the probation period;
b) The Employee seriously violates the Employer’s disciplines or the rules;
c) The Employee causes great losses to the Employer due to serious dereliction of duty or engagement in malpractice for selfish ends;
d) The Employee meanwhile enters into employment relationship with other employer(s), which brings serious impact to the task which the Employee needs to complete for the Employer, or for such situation, the Employer has pointed it out but the Employee refuses to rectify;
e) The employment contract is concluded or modified by one party against the other party’s true intentions through the use of fraud or coercion or exploitation of the other party’s unfavorable position, which makes the contract null and void;
f) The Employee is investigated for criminal responsibility;
g) The Employee is unable to take up his original work or other work assigned by the Employer after expiry of his medical treatment term for illness or non work-related injury;
h) The Employee is unqualified for his work and remains unqualified even after receiving training or an adjustment of job position.

If the Employer does not sign written employment contract with the Employee and such condition has last for over one month starting from the date when the Employee carries out the work but less than one year, the Employer shall pay double salaries each month to the Employee.

In the event the Employer does not sign written employment contract with the Employee and such condition has last for one year, the Employer is deemed to have entered into open term employment contract with the Employee.

If the Employer violates the law and refuses to sign open term employment contract with the Employee, the Employer shall pay double salaries to the Employee from the date when the open term employment contract shall be signed.

Task completion-based employment contract means the contract comes to an end when the task is completed.

Task completion-based employment contract can be concluded between the Employer and the Employee on the basis of consultation.

The rights that Employees enjoy when concluding an employment contract

During the course of concluding employment contract, the Employees have the right of knowing . The Employer shall faithfully inform the Employees of the job content, job condition, working address, work-related danger, safety production condition, remuneration and other issues that the Employees want to learn about.

The employer is not allowed to detain the Employees ID or other certificates, or ask for guarantee from the Employee as a means to keep the employment.

Written employment contract shall be concluded. In case the employment relationship has been set up but no written employment contract was ever signed, the contract shall be signed within one month upon establishment of employment relationship. If the contract is signed before the Employee carries out the work as assigned by the Employer, the employment relationship shall be deemed to be established when the work is carried out.

China Promulgated the new Employment Contract

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.

The company's right to terminate the employment contract

1. In the following cases, the company is entitled to terminate the employment contract unilaterally without prior notice to the employee:

a) the employee is proved not up to the requirements for recruitment during the probationary period(usually the probationary period is 3 months);

b) the employee seriously violates the discipline or regulations of the company;

c) the employee causes great losses to the company due to his/her dereliction of duty or engagement in malpractice for selfish ends;

d) the employee is facing investigation by the police for criminal action.

2. In the following cases, the company can terminate the employment contract but a written notice shall be given to the employee 30 days in advance:-

a) after the completion of medical treatment for illness or non work-related injury, the employee is unable to take up his/her original work or any new job assigned by the company,

b) the employee is unqualified for the work assigned and continue this status even after he/she receives training or adjustment to other position;

c) no agreement on modification of the employment contract can be reached between the company and the employee when the conditions taken as the basis for the conclusion of the employment contract have greatly changed so that the original employment contract can no longer be carried out.

d) during the period of statutory consolidation when the company comes to the brink of bankruptcy or runs into difficulties in production and management, and if reduction of its personnel becomes really necessary, the company may make such reduction after it has explained the situation to the trade union or all of its staff and workers 30 days in advance, solicited opinions from them and reported to the labour administrative department.

3. Both the company and the employee can terminate the employment contract if they reach an agreement.

In above-mentioned 2 and 3, the company is liable to pay compensation to the employee when the employment contract is terminated.

Salary for sick leave

When an employee needs to have a sick leave, he/she shall apply with the company with the doctor's note and get approval from the company. Sick leave term shall not include holiday. In case the sick leave term is within 6 months, the company shall pay the salary for sick leave as follows:-

1. If the employee's working term in the company is less than 2 years, the employee is entitled to 60% of the Salary;

2. If the working term in the company is above 2 years (including 2 years) but less than 4 years, the employee is entitled to 70% of the Salary;

3. If the working term in the company is above 4 years (including 4 years) but less than 6 years, the employee is entitled to 80% of the Salary;

4If the working term in the company is above 6 years (including 6 years) but less than 8 years, the employee is entitled to 90% of the Salary;

5.If the working term in the company is above 8 years (including 8 years), the employee is entitled to 100% of the Salary.

In case the sick leave term is above 6 months, the company shall also pay illness relief fee.

The illness relief fee shall be calculated as follows:-

1.If the working term in the company is less than 1 years, the illness relief fee shall be 40% of the Salary;

2.If the working term in the company is above 1 years (including 1 year) but less than 3 years, the illness relief fee shall be 50% of the Salary;

3.If the working term in the company is above 3 years(including 3 years), the illness relief fee shall be 60% of the Salary.

The Salary herein refers to 70% of the payment the employee receives from the company in normal condition.