Implementing Regulations for the PRC Employment Contract Law

(Promulgated by the State Council on, and effective as of, September 18 2008.)

Order of the State Council No.535

PART ONE: GENERAL PROVISIONS

Article 1: These Regulations have been formulated in order to thoroughly implement the PRC Employment Contract Law (the Employment Contract Law).

Article 2: People's governments at every level, labour administration departments of people's governments at the county level and above and other such relevant departments as well as labour unions and other such organisations shall take measures to promote the thorough implementation of the Employment Contract Law and facilitate harmonious employment relationships.

Article 3: Lawfully established accounting firms, law firms and other such partnerships as well as foundations are deemed to be Employers as specified in the Employment Contract Law.

PART TWO: CONCLUSION OF EMPLOYMENT CONTRACTS

Article 4: If an Employer as specified in the Employment Contract Law establishes a (sub-)branch and such (sub-)branch has obtained a business licence or registration certificate in accordance with the law, it may, as an Employer, conclude employment contracts with workers. A (sub-)branch that has not obtained a business licence or registration certificate in accordance with the law may conclude employment contracts with workers if so appointed by the Employer.

Article 5: If a worker does not conclude a written employment contract with his/her Employer within one month from the day on which the Employer began using his/her services, following a written notice given to him/her by the Employer, the Employer shall terminate the employment relationship by giving a written notice to the worker and shall not be required to pay him/her severance pay. However, the Employer shall, in accordance with the law, pay him/her labour compensation for the actual time he/she worked.

Article 6: If an Employer fails to conclude a written employment contract with a worker during the period exceeding one month but less than one year from the day on which it began using his/her services, it shall pay him/her twice his/her wage each month in accordance with Article 82 of the Employment Contract Law and conclude a written employment contract with him/her. If the worker does not conclude a written employment contract with the Employer, the Employer shall terminate the employment relationship by giving the worker a written notice and pay him/her severance pay in accordance with Article 47 of the Employment Contract Law.

The period during which the Employer is required to pay a worker twice his/her wage as specified in the preceding paragraph shall commence on the day immediately following the lapse of one month from the day on which it began using his/her services and shall persist until the day immediately preceding the conclusion of the written employment contract.

Article 7: If an Employer fails to conclude a written employment contract with a worker within one year from the day on which it began using his/her services, it shall pay him/her twice his/her wage per month in accordance with Article 82 of the Employment Contract Law commencing from the day immediately following the lapse of one month from the day on which it began using his/her services until the day immediately preceding the lapse of one year from the day on which it began using his/her services. The Employer shall be deemed to have concluded an open-ended employment contract with him/her on the day that one year has lapsed from the day on which it began using his/her services, and it shall promptly conclude a written employment contract with him/her.

Article 8: The register of employees specified in Article 7 of the Employment Contract Law shall include the name, sex, ID number, permanent registered address and current address, contact information, method of work, date of commencement of work, employment contract term, etc. of each worker.

Article 9: The period of “10 years in succession” specified in the second paragraph of Article 14 of the Employment Contract Law shall count from the day on which an Employer begins to use a worker's services and include his/her years of service prior to the implementation of the Employment Contract Law.

Article 10: If a worker is sent from his/her original Employer to work for a new Employer for a reason other than one attributable to himself/herself, his/her years of service with the original employer shall be counted as part of his/her years of service with the new Employer. If the original Employer paid severance pay to the worker, the new Employer, when it terminates or ends the worker's employment contract in accordance with the law, shall not be required to count the worker's years of service with the original Employer when calculating his/her years of service for the purpose of paying severance pay.

Article 11: Unless a worker and his/her Employer have agreed otherwise through consultations, if the worker requests the conclusion of an open-ended employment contract in accordance with the second paragraph of Article 14 of the Employment Contract Law, the Employer shall conclude such contract with him/her. The parties shall determine the provisions of such contract through consultations on the basis of the principles of lawfulness, fairness, equality, free will, consensus and good faith. If they fail to reach a consensus on certain provisions, matters shall be handled in accordance with Article 18 of the Employment Contract Law.

Article 12: The provisions of the Employment Contract Law on open-ended employment contracts and the payment of severance pay shall not apply to employment contracts of jobs of a public service nature created by local people's governments at every level and relevant departments of local people's governments at the county level and above for the purpose of employing persons who have difficulty finding employment and for which job subsidies and social insurance subsidies are provided.

Article 13: An Employer and a worker may not agree upon conditions for the ending of the employment contract other than those specified in Article 44 of the Employment Contract Law.

Article 14: If the place where an employment contract is to be performed and the place where the Employer is registered are different, matters such as the worker's minimum wage rate, work protection, working conditions, prevention of occupational hazards and average monthly wage of employees in the region during the preceding year shall be handled in accordance with the relevant provisions in the place where the employment contract is to be performed. If the relevant rates/standards in the place where the Employer is registered are higher than those in the place where the employment contract is to be performed and the Employer and worker have provided for the handling of matters in accordance with the relevant provisions in the place where the Employer is registered, such agreement shall apply.

Article 15: The wage of a worker during his/her probation period may not be lower than 80% of the lowest wage rate for the same job with the Employer, lower than 80% of the wage specified in the employment contract or lower than the minimum wage rate in the place where the Employer is located.

Article 16: The training expenses specified in the second paragraph of Article 22 of the Employment Contract Law shall include the receipt-supported training expenses, travel expenses during the training period and other expenses directly expended on the worker in connection with the training that are incurred by an Employer so as to provide professional technical training to a worker.

Article 17: If, at the expiration of an employment contract, the service period agreed upon by the Employer and the worker in accordance with Article 22 of the Employment Contract Law has not expired, the employment contract shall be extended until the expiration of the service period, unless the parties have provided otherwise, in which case such provisions shall apply,

PART THREE: TERMINATION AND ENDING OF EMPLOYMENT CONTRACTS

Article 18: A worker may terminate his/her fixed-term employment contract, open-ended employment contract or employment contract for the duration of a certain task with his/her Employer on the conditions and by the procedure specified in the Employment Contract Law if:

(1) the worker and Employer reach agreement thereon through consultations;

(2) the worker gives the Employer a 30-day prior written notice thereof;

(3) during the probation period the worker gives the Employer a three-day prior written notice thereof;

(4) the Employer fails to provide work protection or working conditions in accordance with the employment contract;

(5) the Employer fails to pay labour compensation on time and in full;

(6) the Employer fails to pay social insurance premiums for the worker in accordance with the law;

(7) rules of the Employer violate laws or regulations, harming the rights and interests of the worker;

(8) the Employer used means such as deceit or coercion, or took advantage of the worker's plight, to cause him/her to conclude an employment contract or amend the same in a manner contrary to his/her true intent;

(9) the Employer exempted itself from statutory liability or denied the worker's rights in the employment contract;

(10) the Employer violates mandatory provisions of laws or administrative regulations;

(11) the Employer compels the worker to work through means such as violence, threats or illegal restriction of his/her personal liberty;

(12) the Employer instructed the worker, in violation of regulations, or arbitrarily ordered him/her to carry out a dangerous operation that threatened his/her personal safety; or

(13) another circumstance under which laws or administrative regulations specify that a worker may terminate his/her employment contract arises.

Article 19: An Employer may terminate a fixed-term employment contract, open-ended employment contract or employment contract for the duration of a certain task with a worker on the conditions and by the procedure specified in the Employment Contract Law if:

(1) the Employer and worker reach agreement thereon through consultations;

(2) during the probation period, the worker is shown not to satisfy the conditions of employment;

(3) the worker seriously violates the Employer's rules;

(4) the worker commits a serious dereliction of duty, practises graft or engages in embezzlement, causing material damage to the Employer;

(5) the worker simultaneously has an employment relationship with another Employer, seriously affecting the completion of his/her work tasks with the Employer, or, after having the same mentioned to him/her by the Employer, he/she refuses to rectify the matter;

(6) the worker used means such as deceit or coercion, or took advantage of the Employer's plight, to cause it to conclude an employment contract or amend the same in a manner contrary to its true intent;

(7) the worker has criminal liability pursued against him/her in accordance with the law;

(8) the worker contracted an illness or sustained a non-work related injury and after the expiration of the set medical period he/she is unable to return to his/her original job or engage in other work arranged for him/her by the Employer;

(9) the worker is incompetent and after undergoing training or an adjustment of his/her position remains incompetent;

(10) the objective circumstances relied on at the time of the conclusion of the employment contract have materially changed, making performance thereof impossible and the Employer and worker fail to reach agreement on amending the employment contract after consultations;

(11) the Employer is to undergo restructuring in accordance with the Enterprise Bankruptcy Law;

(12) the Employer is experiencing serious difficulties in its production and operations;

(13) the enterprise is to switch production, undergo a material technological makeover or adjust its mode of operations and still needs to cut back personnel after the amendment of employment contracts; or

(14) another material change in the objective economic circumstances relied upon at the time of the conclusion of the employment contract occurs, making the performance thereof impossible.

Article 20: If, pursuant to Article 40 of the Employment Contract Law, an Employer chooses to pay a worker one month's wage in lieu of notice, the wage so paid shall be determined based on the worker's wage rate for the preceding month.

Article 21: An employment contract shall end when a worker reaches the mandatory retirement age.

Article 22: If an employment contract for the duration of a certain task ends due to completion of the task, the Employer shall pay the worker severance pay in accordance with Article 47 of the Employment Contract Law.

Article 23: If an Employer ends in accordance with the law the employment contract of an employee who has sustained a work-related injury, it shall, in addition to paying him/her severance pay in accordance with Article 47 of the Employment Contract Law, pay him/her a lump sum medical treatment subsidy for work-related injury and disabled employment subsidy in accordance with relevant state provisions on work-related injury insurance.

Article 24: The proof of termination or ending of an employment contract issued by an Employer shall specify the term of the employment contract, the date on which the employment contract was terminated or ended, the worker's job and his/her years of service with the Employer.

Article 25: If an Employer terminated or ended an employment contract in violation of the Employment Contract Law and paid compensation in accordance with Article 87 of the Employment Contract Law, it shall not be required to pay severance pay. The years of service for the purpose of calculating such compensation shall count from the day on which the Employer began using the worker's services.

Article 26: If an Employer and a worker have agreed upon a service period and the worker terminates his/her employment contract pursuant to Article 38 of the Employment Contract Law, such termination shall not be deemed a breach of the provisions on the service period and the Employer may not require the worker to pay liquidated damages.

If an Employer terminates a worker's employment contract that contains provisions on a service period, the worker shall be required to pay liquidated damages to the Employer in accordance with the employment contract if:

(1) he/she seriously violated the Employer's rules;

(2) he/she committed a serious dereliction of duty, practised graft or engaged in embezzlement, causing material damage to the Employer;

(3) he/she simultaneously had an employment relationship with another Employer, seriously affecting the completion of his/her work tasks with the Employer, or, after having the same mentioned to him/her by the Employer, he/she refused to rectify the matter;

(4) he/she used means such as deceit or coercion, or took advantage of the Employer's plight, to cause it to conclude an employment contract or amend the same in a manner contrary to its true intent; or

(5) he/she has criminal liability pursued against him/her in accordance with the law.

Article 27: The monthly wage for the purpose of the severance pay specified in Article 47 of the Employment Contract Law shall be paid based on the wages payable to the worker, including monetary income such as his/her hourly wage or piece wage, and bonuses, allowances and subsidies. If the average monthly wage of a worker during the 12 months preceding the termination or ending of his/her employment contract was lower than the local minimum wage rate, his/her monthly wage for the purpose of severance pay shall be calculated based on the local minimum wage rate. If the worker has worked less than 12 months, his/her average monthly wage shall be calculated based on the actual number of months that he/she worked.

PART FOUR: SPECIAL PROVISIONS ON PLACEMENT

Article 28: If a temp agency invested in, or established in partnership with another, by an Employer or work unit subordinate thereto places workers with the Employer or the subordinate work unit, the same shall constitute the establishment of a temp agency as prohibited in Article 67 of the Employment Contract Law.

Article 29: An Employer of Temporary Workers shall perform the obligations specified in Article 62 of the Employment Contract Law and safeguard the lawful rights and interests of temporary workers.

Article 30: A temp agency may not recruit temporary workers on other than a full-time basis.

Article 31: The payment of severance pay when a temp agency or a temporary worker terminates or ends the employment contract between them shall be handled in accordance with Articles 46 and 47 of the Employment Contract Law.

Article 32: If a temp agency terminates or ends the employment contract with a temporary worker in violation of the law, matters shall be handled in accordance with Article 48 of the Employment Contract Law.

PART FIVE: LEGAL LIABILITY

Article 33: If an Employer violates the provisions of the Employment Contract Law concerning the establishment of a register of employees, the labour administration department shall order it to rectify the matter within a specified period of time. If it fails to rectify the matter within the specified period time, the labour administration department shall fine it not less than Rmb2,000 and not more than Rmb20,000.

Article 34: If, in accordance with the Employment Contract Law, an Employer is required to pay a worker twice his/her wage each month or pay him/her compensation but fails to do so, the labour administration department shall order it to pay such amount.

Article 35: If an Employer of Temporary Workers violates the provisions on placement of the Employment Contract Law and these Regulations, the labour administration department and other relevant competent departments shall order it to rectify the matter. If the circumstances are serious, a fine at the rate of not less than Rmb1,000 and not more than Rmb5,000 per temporary work shall be imposed. If the temporary worker(s) incur(s) harm as a result thereof, the temp agency and the Employer of Temporary Workers shall bear joint and several liability therefor.

PART SIX: SUPPLEMENTARY PROVISIONS

Article 36: Complaints of, and reports on, violations of the Employment Contract Law and these Regulations shall be handled by the labour administration departments of people's governments at the county level and above in accordance with the Regulations for Monitoring Labour Security.

Article 37: In the event of a dispute between a worker and his/her Employer in connection with the conclusion, performance, amendment, termination or ending of the employment contract, matters shall be handled in accordance with the PRC Law on the Mediation and Arbitration of Employment Disputes.

Article 38: These Regulations shall be effective as of the date of promulgation.