Answer: Employment law in China encourages employers to sign permanent contracts with new recruits and employees (Article 12 of the Employment Contract Law). In the practice of employment law, however, the most common form of contract is fixed-term contract between employers and their new employees.
But, the Employment Contract Law has different rules for employees to renew their contracts. If an employer has signed two consecutive fixed-term contracts with their employee after 2008, or the employee has consecutively worked for the employer for more than 10 years and both parties agree to continue the employment relationship, the employer must sign an permanent employment contract with the employee.
Courts around the country have different practices in treating the signing of the employment contract following two consecutive fixed-term contracts. For details, please see Should a permanent employment contract be signed after two fixed-term employment contracts? In addition, if a written employment contract has not concluded one year after the employment commences, it is deemed that both parties have a permanent employment contract in place.
If, according to the above situations, the employer is obligated to sign a permanent employment contract with the employee but does not do so, or both parties is deemed to have formed a permanent employment contract employment relationship, the employer may not terminate the employment relationship with the employee on the ground of fixed-term contract¡¯s expiry, otherwise it may constitute an illegal dismissal.
This article is a part of our new book“Employment Law in China: A Practical Guide. A book about “What should I do” with case laws.”Stay tuned, and the book will soon be published as an electronic books!
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