If you want to set a probation period to test out a new China employee hire, you need to clearly say so in the new hire’s employment contract. Both the employer and the employee can use the probation period to their advantage: for example, a probationary employee can resign with only 3 days’ notice—a much shorter notice requirement than that for an employee not on probation. However like pretty much everything else involving China’s employment laws, employers need to tread with care.
Our general recommendation is that if you want to use a probation period, you should go with the maximum probation period permitted under the law. For example, Chinese law provides that for fixed-term employment contracts of three years or more, the probation period cannot exceed six months, so if your new hire’s initial employment contract is for a 3-year term, you should consider using a 6-month probation period.
Because the general rule is that you only get one shot at the probation period, it makes sense to use the legal maximum period to determine if the employee is a good fit. For example, if your employment contract provides for an initial term of 3 years with a 1-month probation period, and near the end of that 1-month probation period, you are not convinced you and the employee are compatible, but are thinking about giving the employee a “second” chance. Can you extend the initial probation period by another 5 months? There is no simple answer here. You need to consider a number of things, including:
- Does your locale allow this practice?
- If it is considered legal in your locale, is your employee amenable to extending the initial probation period?
- If the employee agrees with this change, can you document this before the end of the initial probation period?
- What happens if the employee still does not meet or exceed your expectations at the end of the extended probation period?
The safest approach is to check and confirm the legality of your plan beforehand and then document your action in writing. In other words, it is not safe to just rely on the employee’s written consent without making sure your plan/document does not run afoul of Chinese law. Even if the employee signs an amendment, it does not mean he or she will not turn around and bring an employment claim against you if the employee believes your action violates the applicable law on employee probation.
This is kind of a long way of saying that setting the legal maximum probation period in the first place saves you all this trouble.
In our experience, foreign employers doing business in China do not usually get into trouble because they are trying to abuse the probation period (for example, paying the employee a reduced “probationary salary” to save money). Rather, they get into trouble because they incorrectly believe the probation period is an at-will period during which they can terminate the employee for pretty much any reason so long as the termination occurs before the probation period ends.
How the employer can go about terminating an employee on probation depends on the facts. The basic rule is that terminating a probationary employee requires a legally permissible ground under the law and terminating an employee on probation is nearly as difficult as terminating an employee not on probation. And do not assume a terminated probationary employee will simply walk away without a fight. Just realizing this (a probationary employee is not an at-will employee) can help you prevent many employment problems.
If you are considering a probation period for your new employees, make sure you set it and use it wisely.