China Employment Contracts: Don’t Wait

Our China employment lawyers often get questions from employers on what they should do to onboard new hires. The number one rule with a new employees is to have a written employment contract with them, assuming you have already done the following:

  • You checked your new hire’s credentials, made sure his/her previous employment relationship ended properly (you usually can do this by checking your new hire’s proof of termination of employment relationship document), confirmed your new hire completed the hand-over and exit procedures required by his/her former employer, and made sure there are no encumbrances or restrictions on your new hire coming to work for you, such as a signed non-compete agreement;
  • You extended an offer letter to the new hire, which was accepted.

Do not wait until your new employee requests a written employment contract to present one. You essentially have only one month after hiring to ensure that your employee has entered into an appropriate written employment contract. It is therefore a best practice to get your employees to sign a written employment contract — along with a signed acknowledgement of having received your Employer Rules and Regulations — before they start working for you. Sometimes it may be impractical to do all this in the timeframe you have and it is better to wait than to get pressured into signing something you have not fully reviewed or fully understand. We have had to clean up too many sticky employment situations where foreign companies signed employment contracts drafted by their employee based on something downloaded from the Internet. You need to say no to such a contract, because any contract you sign will become a legally binding document and it is much more difficult for an employer to back out of such an agreement than for your employee.

If your employee is failing to sign your employment contract within the first month of employment, you should notify that employee in writing that you will terminate their employment before the first month is out unless they sign a written employment contract. This is usually necessary because in most places in China, once you go past a month without an employment contract with one of your employees, you will be at a perpetual disadvantage as against that employee.

Bottom line: The first month of your employee’s employment is critical. Having a high quality dual-language employment contract tailored for your industry and your locale in place before your employee’s first day at work will avert HR headaches down the road.