Your China expat employees are covered by China’s Provisions on the Employment of Foreigners in China (《外国人在中国就业管理规定》) (hereinafter “the Provisions”). These provisions require you comply with applicable Chinese law regarding such things as working time, rest and vacation, labor safety and health, and social insurance. What is left open to question, however, is whether matters other than those stated above can be agreed to by an employer and an expat in a labor contract. For instance, can the termination of a labor contract be pre-determined by a contract between the employer and the expat employee?
Like virtually everything involving China’s labor laws, it depends.
For example, in Shanghai, the short answer is yes. Since 1998, the Several Opinions Regarding the Implementation of the Provisions on the Employment of Foreigners in China (《关于贯彻〈外国人在中国就业管理规定〉的若干意见》) have been the governing guidelines for Shanghi. According to these written guidelines, a Shanghai employer and its expat employee can contractually agree on the conditions for terminating the employment relationship. Shanghai’s position is that the parties’ own arrangement should generally be respected, so long as the employer and the expat employee have agreed on the contract terms and so long as those terms do not contradict matters covered in the Provisions on the Employment of Foreigners in China.
For those of you who have read some of my previous posts on China employment law, you know that Beijing oftentimes does not “see eye to eye” with Shanghai on employment law issues, such as expat social insurance. And that is the case here. Beijing courts generally believe that China’s Labor Law and Labor Contract Law are by their very nature “public laws,” drafted with the primary purpose of protecting employees. Giving an employer the right to unilaterally terminate a labor contract would impact the employee’s right to employment, Beijing generally ignores employment contract provisions that grant the employer the right to unilaterally terminate employment of anyone, including expats.
Bottom Line: The enforceability of an employer-expat employment contract is going to depend on the city. Shanghai is more likely to abide by contract terms and Beijing is more likely to look to China’s Labor Law and Labor Contract Law. Your mileage will vary when it comes to other cities in China, which is why you should also check first.