Answer: If the employee¡¯s position is changed within the same employer, according to the provisions of the Employment Contract Law, when the employer changes your position (such as promotion), the employer must impose a new probation period.¹Article 19 of the Employment Contract Law stipulates that the same employer and the same worker can only agree on one probation period. If the employer did not provide for a probation period when the employee took the role, but agrees on the probation period when the employee’s role changes, is this situation legal? I think it is illegal, because this is tantamount to empower employers to arbitrarily dismiss an employee who has already established employment, confronting with the principle that employment law protects employee rights and interests.

If the position change is an internal transfer between subordinate enterprises within a group company, there are different treatments in the judicial practice at present. Some cases confirm that this internal transfer does not constitute a change of employer, so the transfer-in employer shall not set a probation period for the employee.²In the case of labor dispute between Ma Dayong and Changchun Shengji Real Estate Development Co., Ltd., Changchun Kuancheng District People’s Court Civil Judgment (2013) KMCZ No.1613. ¡°The Court holds that during the implementation of the employment contract between the plaintiff and Hengda Changji (Shenyang) Real Estate Co., Ltd, transferring the plaintiff to the defendant, the employer, is an internal position transfer. The defendant signing an employment contract with the plaintiff again with another probation period violates the relevant provisions of the Employment Contract Law.¡±However, some court decisions hold that different employers under a group company are independent legal persons, and it is not against the law to provide for a probation period again.³Wang Hong and Jiangxi Haorun Investment Co., Ltd. Civil Judgment of the First Instance of Labor Dispute Jiangxi Nanchang Economic and Technological Development Zone People’s Court Civil Judgment (2020) Gan 0192 Min Chu No.1275. ¡°The same employer and worker can only agree on one probation period, the plaintiff has worked in Hongkelong Group, Huaying Company, and the defendant Haorun Company successively. Although the three companies are related, they are different independent and legitimate business entities.¡­¡­¡±

As legislations and judicial decisions are unclear, a more reasonable approach should be based on the purpose of the probation law (that is, the employer has a reasonable probation period for new employees). We can assess the role played by employees in the transfer process: if the transfer is entirely led by the parent company (such as the group company) or the transfer-in employer, the employee do not participate in or influence the process, the transfer-in company should not impose a probation period for the employee. If the employee actively participates in the transfer process or even applies for the job, the transfer-in company should have a reason to set a probation period to examine the employee. The length of service of the employee should also be a factor taken into account in reestablishment of a probation period.

In addition, when an employer is acquired (or a major equity change occurs), the new controlling party may not set a new probation period for the existing employees, because the Employment Contract Law clearly stipulates that a same employer and a same employee can only set one probation period, and the change of the controlling party of the employer will not lead to the employer becoming a different employer in law. This is quite different from the rule in common law country for example New Zealand, where a new controlling shareholder may set new probation for current employees.

The above rules are applicable not only to employees on permanent and fixed-term contract, but also to those on labor dispatch and irregular and general work hours.

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Mr. Wangdong

Mr. Dong Wang has been in practice for over 20 years, specializing in business law, including employment law, commercial law, company law, and intellectual property law. Mr. Wang has earned respect and trust from his clients due to his professionalism, fidielty, and kindness.

Email: wangdong@royalaw.com

• 1
  Article 19 of the Employment Contract Law stipulates that the same employer and the same worker can only agree on one probation period. If the employer did not provide for a probation period when the employee took the role, but agrees on the probation period when the employee’s role changes, is this situation legal? I think it is illegal, because this is tantamount to empower employers to arbitrarily dismiss an employee who has already established employment, confronting with the principle that employment law protects employee rights and interests.
• 2
  In the case of labor dispute between Ma Dayong and Changchun Shengji Real Estate Development Co., Ltd., Changchun Kuancheng District People’s Court Civil Judgment (2013) KMCZ No.1613. ¡°The Court holds that during the implementation of the employment contract between the plaintiff and Hengda Changji (Shenyang) Real Estate Co., Ltd, transferring the plaintiff to the defendant, the employer, is an internal position transfer. The defendant signing an employment contract with the plaintiff again with another probation period violates the relevant provisions of the Employment Contract Law.¡±
• 3
  Wang Hong and Jiangxi Haorun Investment Co., Ltd. Civil Judgment of the First Instance of Labor Dispute Jiangxi Nanchang Economic and Technological Development Zone People’s Court Civil Judgment (2020) Gan 0192 Min Chu No.1275. ¡°The same employer and worker can only agree on one probation period, the plaintiff has worked in Hongkelong Group, Huaying Company, and the defendant Haorun Company successively. Although the three companies are related, they are different independent and legitimate business entities.¡­¡­¡±