In China, employment contracts for new employees often include a probation period (试用期) designed to give the employer (mostly) and the employee time to test each other out.
Generally speaking, the longer the initial employment term, the longer the probation period may be. However, the length of the probation period is not without limitation. Under China’s Labor Contract Law, for employment terms of more than three months but less than one year, you may set a probation period of no more than one month. For employment terms of more than one year but less than three years, the probation period cannot exceed two months and for employment terms of more than three years or for an open-term employment arrangement, the probation period cannot be longer than six months.
Chinese law, however, does not allow any probation period for the following three types of employment arrangement:
- employment of a part-time employee
- employment with a term of less than three months
- employment whose term is based solely on the employee completing a certain task.
Note that you may use only one probation period for the same employee. In other words, you may not set another probation period for the same employee upon renewal of his or her labor contract. Any failure to follow the rules above will subject the employer to administrative and/or civil liability.
If you are an employer in China, you should take advantage of the probation period to review your employees performance to make sure they are indeed a good fit for your organization. If, by the end of the probation period, you do not wish to extend employment to an employee, you can relatively easily terminate the employee before he or she begins the standard employment term. Under China’s labor laws, employers can unilaterally terminate employees that do not satisfy the conditions of employment during the probation period without having to make any severance payment to the terminated employee. For new employees, our China lawyers generally recommend an initial employment term of three years and a probation period of six months (i.e., the longest probation period possible). We advise our clients to take the probation period seriously so no employee is taken beyond the probation period unless it is certain he or she will work out. Once the employee has completed his or her term of probation period, termination requires good cause and a severance payment. For what is involved in terminating a China employee not on probation, check out How To Terminate China Employees Legally
During the probation period, the wages paid to your employees on probation cannot be lower than 80% of the lowest wage paid to other employees at the same position at the workplace, or 80% of the wage during the probationary employees’ standard employment term. The wages paid to an employee during the probation period also must meet the local minimum wage requirement and you as the employer must provide all applicable benefits to the employee, including safe working conditions, necessary labor protection, normal rest time and vacation, and social insurance.
Bottom Line: Terminating Chinese employees not on probation is usually difficult and expensive. It therefore nearly always makes sense to take advantage of a probation period when hiring a new employee.