Probationary Period In China’s New Labor Contract Law
By Vincent Cheung from www.pathtochina.com
A lately reminder from China’s labor and Social Security Department states that new college graduates’probationary periods must be stipulated in the labor contracts with employers as part of their employment term and they should not be put on trial for more than six months.
As an employer may end, virtually for no good reasons, the labor contract with an employee who is still serving the probationary period under the old labor contract law, some employers have used abusively extended probationary periods to give sack to their staff unfairly. To solve this problem, the new Labor Contract Law connect the duration of trial to the term of labor contracts more specifically, and prohibits any employers from  requiring a employee to serve more than one probationary period. A probationary period should not be required for a labor contract with a term of less than three months or under the condition that the term ends upon the completion of one single assignment;  and must not be more than one month if the term of the labor contract is between three months and one year, must not be more than two months if the term of the labor contract is between one year and three years; and must not be more than six months if the term of the labor contract is more than three years or the labor contract is open-ended. The Labor Contract Law also introduces three standards regarding salary payable to employees during the probationary period. According to Article 20 , before the completion of the probationary period, the salary payable to the employee must not be lower than the minimum salary for the similar positions in the employer, or 80% of the salary as agreed in the employee’s labor contract, and must also not be lower than the minimum salary of the city where the employer is located.After the new labor contract law takes into effect, an employer has to sign contract with employee within one month since the employee is hired; a double salary is required to be paid to the employee in case the contract is not signed more than one month but less than one year after the employment ; an open-ended contract is deemed to be signed in case the employer doesn’t sign labor contract with the employee one year after the employment.   Unless the employee receive the employer’s training or confidentiality or non-compete obligations are stipulated in the contract, the “liquidated damages†clause should not be included in the contract, so the employee can get away with the breach of the contract. Besides, employers must pay employees’ social insurance during probationary period.
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“Path To Chinaâ€Â is an International Business Consulting Firm that provides foreign investors with business registration service in China. For business advisory service , please contact Vincent by vincent@pathtochina.com.    Â
