Written contract requirement
PRC law requires that an employer must enter into written employment contracts with each of its employees within one month after the commencement of the employment.
Where an employer fails to enter into a written employment contract within such period of time, the employer is liable to pay double salary to the employee concerned, starting from the second month of the employment until the end of the first year of the employment. Starting from the second year of the employment, an open-ended employment contract will be deemed to have been entered into between the employer and the employee.
Term of contract
An employment contract can have a fixed term or be an open-ended contract under PRC law.
A fixed term contract terminates automatically when the term expires. In that case, the employer is required to pay statutory severance pay to the employee, unless the parties renew the contract or the employee refuses to renew the contract on terms and conditions no less favourable than the existing terms and conditions. An open-ended contract is of indefinite duration.
Under any of the following situations, an employee is entitled to request the conversion of a fixed term contract into an open-ended contract:
- the employee has been continuously working with the employer for 10 years; or
- the parties have entered into two consecutive fixed term contracts.
As a mandatory requirement under PRC law, the following items must be included in an employment contract:
- name, address, legal representative / principal (for branches) of the employer;
- name, address, ID card number of the employee;
- term of the employment contract (fixed or open-ended);
- job duties and location;
- working hours and leave entitlement;
- social insurance; and
- labour protection, labour condition and prevention of work-related hazards.