PRC Employment Contract Law (Revised)

Article 2: This Law shall govern the establishment of employment relationships between enterprises, family proprietors, private non-enterprise work units and other such organisations (Employers), on the one hand, and workers, on the other hand, and the conclusion, performance, amendment, termination and ending of employment contracts.

The conclusion, performance, amendment, termination and ending of employment contracts between state authorities, institutions and social organisations, on the one hand, and the workers with whom they have an employment relationship, on the other hand, shall be handled in accordance herewith.

Article 3: When entering into an employment contract, the principles of lawfulness, fairness, equality, free will, reaching a consensus through consultations and good faith shall be adhered to.

A legally concluded employment contract shall be binding and the Employer and worker shall perform the obligations specified therein.

Article 4: An Employer shall establish and enhance work rules and regulations in accordance with the law so as to ensure that its workers enjoy their work rights and perform their work obligations.

When an Employer formulates, amends or decides on rules and regulations or material matters that have a direct bearing on the immediate interests of workers, such as labour remuneration, working hours, rest, leave, work safety and hygiene, insurance and benefits, employee training, work discipline and labour quota management, etc., the same shall be subject to deliberation by the meeting of representatives of staff and workers or all of the staff and workers, which or whom shall propose solutions and comments, and which shall be determined through bargaining on an equal footing with the labour union or representatives of staff and workers.

If, in the course of the implementation of rules or regulations, or decisions on material matters, the labour union or the staff and workers deem the same to be inappropriate, it/they shall have the right to make the same known to the Employer, and amend and improve the same through bargaining.

An Employer shall publicly post or inform its workers of rules and regulations, and decisions on material matters, that have a direct bearing on their immediate interests.

Article 5: The labour administrative department of the people's government at the county level or above together with labour unions and enterprise representatives shall establish and enhance a tripartite employment relationship coordination mechanism to jointly consider and resolve major issues relating to employment relationships.

Article 6: A labour union shall assist and guide workers in concluding and performing employment contracts with the Employer in accordance with the law and establish a collective bargaining mechanism with the Employer so as to safeguard the lawful rights and interests of the workers.

Part Two: Conclusion of employment contracts

Article 7: The employment relationship between an Employer and a worker shall be established from the date on which the Employer begins to use the worker. The Employer shall keep a register of employees for reference purposes.

Article 8: When an Employer employs a worker, it shall truthfully give him/her a description of the work and inform him/her about the work conditions, place of work, occupational hazards, work safety situation, labour remuneration as well as other matters that the worker wishes to know. The Employer has the right to know about the basic particulars of the worker that are directly relevant to his/her employment contract, and the worker shall truthfully provide the same.

Article 9: When an Employer employs a worker, it may not retain his/her resident ID card or other document, require him/her to provide security or require him/her to provide property under another guise.

Article 10: When establishing an employment relationship, a written employment contract shall be concluded.

If an employment relationship has been established without a written employment contract being concluded, such contract shall be concluded within one month from the date on which use of the worker commenced.

If an Employer and a worker conclude an employment contract prior to the commencement of use of the worker, the employment relationship shall be established from the date on which use of the worker commences.

Article 11: If an Employer failed to conclude an employment contract at the time it commenced using a worker or if the labour remuneration agreed upon with the worker is unclear, the labour remuneration of a newly-employed worker shall be handled with reference to the rate specified in the collective contract. In the absence of a collective contract or if such collective contract is silent thereon, the principle of the same remuneration for the same work shall apply.

Article 12: Employment contracts are divided into fixed-term employment contracts, open-ended employment contracts and employment contracts for the duration of a certain task.

Article 13: The term “fixed-term employment contract” means an employment contract with respect to which the Employer and the worker have agreed upon the time of ending.

Once an Employer and a worker have reached a consensus through consultations, they may conclude a fixed-term employment contract.

Article 14: The term “open-ended employment contract” means an employment contract with respect to which the Employer and worker have agreed not to set an ending date.

Once an Employer and a worker have reached a consensus through consultations, they may conclude an open-ended employment contract. In any of the circumstances set forth below, if a worker requests or agrees to the renewal or conclusion of an employment contract, an open-ended employment contract shall be concluded, unless the worker requests the conclusion of a fixed-term employment contract:

(1) the worker has worked for the Employer for at least 10 years in succession;

(2) the Employer is implementing the employment contract system for the first time or is a state-owned enterprise that has undergone a change in corporate form and is concluding employment contracts anew, and the worker has worked for the Employer for at least 10 years in succession and is less than 10 years away from the statutory retirement age; or

(3) the worker has concluded two fixed-term employment contracts in succession, he/she is not characterised by any of the circumstances specified in Article 39 or Item (1) or (2) of Article 40 hereof and his/her employment contract is due for renewal.

If an Employer has not concluded a written employment contract with a worker within one year from the date on which it commenced using him/her, it shall be deemed to have concluded an open-ended employment contract with him/her.

Article 15: The term “employment contract for the duration of a certain task” means an employment contract with respect to which the Employer and worker have agreed that the time required to complete a certain task shall serve as the term of such contract.

Once an Employer and a worker have reached a consensus through consultations, they may conclude an employment contract for the duration of a certain task.

Article 16: An employment contract shall require the Employer and the worker reaching a consensus thereon through consultations and the signing or stamping thereof by them before it enters into effect.

The Employer and worker shall each hold one copy of the employment contract.

Article 17: An employment contract shall specify the following:

(1) the name, domicile and legal representative or main person in charge of the Employer;

(2) the name, home address and the number of the resident ID card or other valid identity document of the worker;

(3) the term of the employment contract;

(4) the description of the work and the place of work;

(5) working hours, rest and leave;

(6) labour remuneration;

(7) social insurance;

(8) work protection, working conditions and prevention of occupational hazards; and

(9) other matters that laws and regulations require be included in employment contracts.

In addition to the mandatory provisions specified in the preceding paragraph, the Employer and worker may specify other matters in the employment contract, such as a probation period, training, maintenance of confidentiality, supplementary insurance and benefits.

Article 18: If an employment contract fails to clearly specify the rate or standards for labour remuneration or working conditions, etc., resulting in a dispute, the Employer and worker may hold new consultations. If the consultations prove unsuccessful, the provisions of the collective contract shall apply. In the absence of a collective contract or if the collective contract is silent on the rate for labour remuneration, the principle of the same remuneration for the same work shall apply. In the absence of a collective contract or if the collective contract is silent on the standards for working conditions, etc., relevant state provisions shall apply.

Article 19: If an employment contract has a term of not less than three months but less than one year, the probation period may not exceed one month. If an employment contract has a term of not less than one year but less than three years, the probation period may not exceed two months. For a fixed-term employment contract of not less than three years or an open-ended employment contract, the probation period may not exceed six months.

An Employer may specify only one probation period for any worker.

No probation period may be specified for an employment contract for the duration of a certain task or an employment contract with a term of less than three months.

A probation period is included in the term of an employment contract. If an employment contract only specifies a probation period, such probation period shall be invalid and such period shall be the term of the employment contract.

Article 20: The wage of a worker during his/her probation period may not be lower than the lowest rung on the wage scale for the same position with the Employer or 80% of the wage specified in the employment contract, and may not be lower than the minimum wage rate in the place where the Employer is located.

Article 21: An Employer may not terminate a worker's employment contract during his/her probation period, unless the worker is characterised by any of the circumstances specified in Article 39 or Item (1) or (2) of Article 40 hereof. If an Employer terminates a worker's employment contract during the probation period, it shall explain to the worker the reason therefor.

Article 22: If an Employer provides special training expenses to a worker and gives him/her professional technical training, it may conclude an agreement with such worker specifying a service period.

If the worker breaches the provisions on the service period, he/she shall pay the Employer liquidated compensation as agreed. The amount of the liquidated compensation may not exceed the amount of the training expenses provided by the Employer. The liquidated compensation that the Employer requires the worker to pay may not exceed the amount of the training expenses yet to be amortised over the portion of the service period that was not performed.

The agreement by an Employer and a worker on a service period shall not affect the increases in the worker's labour remuneration to be made in accordance with the normal wage adjustment mechanism during his/her service period.

Article 23: In an employment contract an Employer and a worker may provide for the maintenance of the confidentiality of the Employer's trade secrets and intellectual property.

An Employer may specify in the employment contract of, or a confidentiality agreement with, a worker who bears an obligation of confidentiality an anti-competition clause and monthly compensation for the anti-competition period after the termination or ending of the employment contract. If the worker breaches the anti-competition restriction, he/she shall pay the Employer liquidated compensation as agreed.

Article 24: Persons subject to an anti-competition restriction shall be limited to the Employer's senior management personnel, senior technical personnel and other persons with an obligation of confidentiality. The scope, territory and term of an anti-competition restriction shall be agreed upon by the Employer and the worker, and the provisions on such a restriction may not violate laws or regulations.

Once an employment contract is terminated or ends, the term of the anti-competition restriction mentioned in the preceding paragraph that prohibits a person from serving with a competitor that produces or deals in the same type of product or engages in the same type of business as the Employer, or prohibits him/her from opening his/her own business to produce or deal in the same type of product or engage in the same type of business may not exceed two years.

Article 25: With the exception of the circumstances set forth in Articles 22 and 23 hereof, an Employer may not specify circumstances under which a worker would be required to bear liquidated compensation.

Article 26: The following employment contracts shall be wholly or partially invalid:

(1) an employment contract that is concluded or amended through means such as fraud, coercion or by taking advantage of a party's plight, thereby causing the other party to conclude or amend the employment contract in a manner contrary to his/her/its true intent;

(2) an employment contract in which the Employer exempts itself from statutory liability or denies the worker's rights; or

(3) an employment contract that violates mandatory provisions of laws or administrative regulations.

In the event of a dispute on the invalidity or partial invalidity of an employment contract, the same shall be subject to the confirmation of a labour dispute arbitration institution or a people's court.

Article 27: The partial invalidity of an employment contract shall not affect the validity of the other provisions thereof, which shall remain valid.

Article 28: If an employment contract is confirmed to be invalid and the worker has provided labour service to the Employer, the Employer shall pay the worker labour remuneration. The amount of such Labour remuneration shall be determined based on the labour remuneration paid to workers in identical or similar positions with the Employer.

Part Three: Performance and amendment of employment contracts

Article 29: An Employer and worker shall fully perform their respective obligations in accordance with the employment contract.

Article 30: The Employer shall pay the worker labour remuneration in full and on time in accordance with his/her employment contract and state provisions.

If an Employer owes labour remuneration or fails to pay it in full, the worker may petition the local people's court for a payment order in accordance with the law, and the people's court shall issue such order in accordance with the law.

Article 31: An Employer shall strictly implement labour quota standards and may not compel or in a disguised manner compel workers to work overtime. If an Employer arranges for overtime work to be done, it shall pay the workers overtime pay in accordance with relevant state provisions.

Article 32: If a worker refuses to carry out a dangerous operation as instructed in violation of regulations or arbitrarily ordered by a manager of the Employer, he/she shall not be deemed to be in breach of his/her employment contract.

A worker has the right to criticise, report to the authorities or file a complaint against his/her Employer in respect of working conditions that jeopardise his/her personal safety or health.

Article 33: A change by an Employer of its name, legal representative, main person in charge, investor, etc., shall not affect its performance of employment contracts.

Article 34: If an Employer undergoes a merger or division, etc., the existing employment contracts shall survive and continue to be performed by the Employer that succeeded to the rights and obligations thereunder.

Article 35: If they reach a consensus through consultations, an Employer and a worker may amend the provisions of an employment contract. The amendment of an employment contract shall be in written form.

The Employer and worker shall each hold one copy of the amended employment contract.

Part Four: Termination and ending of employment contracts

Article 36: If an Employer and a worker reach a consensus through consultations, they may terminate the employment contract.

Article 37: A worker may terminate his/her employment contract by giving his/her Employer 30 days' prior written notice. A worker in his/her probation period may terminate his/her employment contract by giving his/her Employer three days' prior notice.

Article 38: A worker may terminate his/her employment contract if:

(1) his/her Employer failed to provide work protection or working conditions in accordance with his/her employment contract;

(2) his/her Employer failed to pay labour remuneration on time and in full;

(3) his/her Employer failed to pay social insurance premiums for him/her in accordance with the law;

(4) his/her Employer's rules and regulations violate laws or regulations and harm his/her rights and interests;

(5) his/her employment contract is invalid due to a circumstance specified in the first paragraph of Article 26 hereof; or

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

If an Employer compels a worker to work through means such as violence, threats or illegal restriction of personal liberty, or instructs him/her, in violation of regulations, or arbitrarily orders him/her to carry out a dangerous operation that jeopardises his/her personal safety, the worker may summarily terminate his/her employment contract without prior notice to his/her Employer.

Article 39: An Employer may terminate an employment contract if:

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

(2) the worker seriously violates its rules and regulations;

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

(4) 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;

(5) the employment contract is invalid due to a circumstance specified in Item (1) of the first paragraph of Article 26 hereof; or

(6) the worker has his/her criminal liability pursued in accordance with the law.

Article 40: An Employer may terminate an employment contract by giving the worker 30 days' prior written notice or giving him/her one month's wage in lieu of notice if:

(1) 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;

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

(3) 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.

Article 41: If an Employer needs to carry out a personnel cutback involving at least 20 persons or a personnel cutback involving less than 20 persons but accounting for at least 10% of the enterprise's workforce due to any of the circumstances set forth below, it may do so after explaining the circumstances to the labour union or all of the staff and workers 30 days in advance, listening to the opinions of the labour union or staff and workers and reporting its personnel cutback plan to the labour administrative department:

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

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

(3) 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 amendment of employment contracts; or

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

When carrying out a personnel cutback, the following persons shall be retained on a priority basis:

(1) those who have concluded relatively long-term fixed-term employment contracts with the Employer;

(2) those who have concluded open-ended employment contracts with the Employer; and

(3) those who do not have other employed persons in the household and are supporting elderly persons or minors.

If an Employer that has carried out a personnel cutback in accordance with the first paragraph hereof employs again within six months, it shall notify the personnel that were cut back and, all things being equal, employ them on a preferential basis.

Article 42: An Employer may not terminate a worker's employment contract pursuant to Article 40 or 41 hereof if the worker:

(1) was engaged in operations that exposed him/her to an occupational disease hazard and has not undergone a pre-departure occupational health examination or is suspected of having contracted an occupational illness and is being diagnosed or undergoing medical observation;

(2) contracted an occupational illness or sustained a work-related injury with the Employer and has been confirmed as having lost all or part of his/her capacity to work;

(3) contracted an illness or sustained a non-work-related injury and the set period of medical treatment therefor has not expired;

(4) is a female employee in her pregnancy, confinement or nursing period;

(5) has been working for the Employer for at least 15 years in succession and is less than five years away from the statutory retirement age; or

(6) is characterised by another circumstance specified in laws or administrative regulations.

Article 43: If an Employer unilaterally terminates an employment contract, it shall notify the labour union of the reason therefor in advance. If the Employer has violated laws, administrative regulations or the provisions of the employment contract, the labour union shall have the right to demand that the Employer rectify the matter. The Employer shall consider the opinions of the labour union and notify the labour union in writing on how it handled the matter.

Article 44: An employment contract shall end if:

(1) its term expires;

(2) the worker begins receiving basic old-age insurance benefits in accordance with the law;

(3) the worker dies, or is declared dead or missing by a people's court;

(4) the Employer is declared bankrupt in accordance with the law;

(5) the Employer has its business licence revoked, is ordered to close down or is closed down, or decides to dissolve early; or

(6) another circumstance specified in laws or administrative regulations arises.

Article 45: If any of the circumstances specified in Article 42 hereof exists at the time of the expiration of an employment contract, its term shall be extended until such time as the circumstance no longer exists, at which point the employment contract shall then end. However, the ending of the employment contract of a worker who has lost all or part of his/her capacity to work as specified in Item (2) of Article 42 hereof shall be handled in accordance with state provisions on work-related injury insurance.

Article 46: An Employer shall pay a worker severance pay if:

(1) the worker terminates his/her employment contract pursuant to Article 38 hereof;

(2) the Employer proposes the termination of the employee's employment contract in accordance with Article 36 hereof and reaches a consensus on the termination thereof with the worker through consultations;

(3) the Employer terminates the worker's employment contract pursuant to Article 40 hereof;

(4) the Employer terminates the worker's employment contract pursuant to the first paragraph of Article 41 hereof;

(5) the worker's fixed-term employment contract ends pursuant to Item (1) of Article 44 hereof, unless the Employer proposes its renewal on the same or better terms and the worker does not agree thereto;

(6) the worker's employment contract ends pursuant to Item (4) or (5) of Article 44 hereof; or

(7) another circumstance specified in laws or administrative regulations exists.

Article 47: Severance pay shall be paid to a worker based on his/her years of service with the Employer at the rate of one month's wage for each full year of service. A period of service of not less than six months but less than one year shall be counted as one year. For a period of service of less than six months, a worker shall be paid half a month's wage as severance pay.

If the monthly wage of a worker is three times greater than the average monthly wage of staff and workers in the region during the preceding year published by the people's government of the municipality directly under the central government or the city (divided into districts) where the Employer is located, severance pay shall be paid to him/her at the rate of three times the average monthly wage of staff and workers and for a maximum period of service not exceeding 12 years.

For the purposes of this Article, the term “monthly wage” means the worker's average wage during the 12 months prior to the termination or ending of his/her employment contract.

Article 48: If an Employer terminates or ends a worker's employment contract in violation of this Law and the worker demands that it continue performing such contract, the Employer shall continue performing the same. If the worker does not demand that the Employer continue performing the employment contract or if performance thereof has become impossible, the Employer shall pay him/her compensation in accordance with Article 87 hereof.

Article 49: The state will take measures to establish a sound system that makes workers' social insurance portable between regions.

Article 50: When an employment contract is terminated or ends, the Employer shall issue a proof of the termination or ending of such employment contract and, within 15 days, carry out the procedures for the transfer of the worker's file and social insurance.

The worker shall carry out the procedures for the handover of his/her work as agreed between the parties. If the Employer is required to pay the worker severance pay in accordance with the relevant provisions hereof, it shall do so upon completion of the handover of the work.

An employment contract that has been terminated or has ended shall be preserved by the Employer for at least two years for reference purposes.

Part Five: Special provisions

Section One: Collective contracts

Article 51: The staff and workers of an enterprise and their Employer may conclude a collective contract on matters such as labour remuneration, working hours, rest, leave, work safety and hygiene, insurance, benefits, etc., through bargaining conducted on an equal basis. The draft of the collective contract shall be submitted to the meeting of representatives of staff and workers or all of the staff and workers for deliberation and approval.

A collective contract shall be concluded between the labour union, as the representative of the enterprise's staff and workers, and the Employer. If a labour union has yet to be established, the collective contract shall be concluded between the representatives selected by the workers on the advice of the labour union at the next higher level and the Employer.

Article 52: The staff and workers of an enterprise and their Employer may conclude collective contracts for specific issues such as work safety and hygiene, the protection of the rights and interests of female employees and the wage adjustment mechanism.

Article 53: Within areas below the county level, an industry-wide collective contract or area-wide collective contract may be concluded between labour unions and enterprise representatives in industries such as the construction industry, mining industry and catering service industry.

Article 54: Once a collective contract is concluded, it shall be submitted to the labour administrative department. If the labour administrative department does not express any reservations concerning the collective contract within 15 days after the date of receipt thereof, such contract shall enter into effect.

A collective contract concluded in accordance with the law shall be binding on the Employer and the workers. Sector-wide and area-wide collective contracts shall be binding on the Employers and workers in the industry or area in the region concerned.

Article 55: The rates for labour remuneration, and standards for working conditions, etc., in a collective contract may not be lower than the minimum rates or standards specified by the local people's government. The rate for labour remuneration, and the standards for working conditions, etc., in the employment contract concluded between an Employer and a worker may not be lower than the minimum rates or standards specified in the collective contract.

Article 56: If the Employer breaches the collective contract, infringing the working rights and interests of workers, the labour union may, in accordance with the law, require the Employer to bear liability. If a dispute arises in connection with the performance of the collective contract, and bargaining fails to resolve such dispute, the labour union may apply for arbitration or institute a legal action in accordance with the law.

Section Two: Placement

Article 57: To engage in placement business, the following conditions shall be satisfied:

(1) having registered capital of not less than Rmb2 million;

(2) having a fixed place of business and facilities suitable for the business engaged in;

(3) having a placement management system complying with laws and administrative regulations; and

(4) other conditions as specified in laws and administrative regulations.

To engage in placement business, an application for administrative permission shall be made to the labour administrative department in accordance with the law; once permission is granted, the relevant company registration procedures shall be carried out in accordance with the law. Without permission, no entity or individual may engage in placement business.

Article 58: A temp agency is an Employer as defined herein and shall perform the obligations of an Employer toward workers. The employment contract between a temp agency and a temporary worker shall, in addition to stipulating the matters specified in Article 17 hereof, stipulate the employer of temporary workers with which the worker is to be placed, the term of the placement, his/her position, etc.

A temp agency shall conclude a fixed-term employment contract of at least two years with a temporary worker and pay him/her labour remuneration on a monthly basis. While a temporary worker is not on assignment, the temp agency shall pay him/her labour remuneration on a monthly basis at the minimum wage rate specified by the people's government of the place where the temp agency is located.

Article 59: When placing workers, the temp agency shall enter into a placement agreement with the work unit that accepts workers on a placement basis (the Employer of Temporary Workers). The placement agreement shall specify the positions of the workers, the number of persons, the term of the placement, the amount and method of payment of labour remuneration and social insurance premiums, and liability for breach of the agreement.

The Employer of Temporary Workers shall determine the term of the placement with the temp agency based on the actual requirements of the positions and may not divide a continuous employment period into shorter periods and enter into several short-term placement agreements in respect thereof.

Article 60: The temp agency shall inform the temporary workers concerning the provisions of the placement agreement.

The temp agency may not make unwarranted deductions from the labour remuneration paid to the temporary workers by the Employer of Temporary Workers in accordance with the placement agreement.

The temp agency and Employer of Temporary Workers may not charge the temporary workers fees.

Article 61: If a temp agency places workers outside its own region, the labour remuneration and working conditions that the temporary workers are entitled to shall be handled in accordance with the rates and standards in the place where the Employer of Temporary Workers is located.

Article 62: An Employer of Temporary Workers shall perform the following obligations:

(1) implementing state working standards and providing the pertinent working conditions and work protection;

(2) informing the temporary workers concerning the work requirements and labour remuneration;

(3) paying overtime pay and performance bonuses, and providing the benefits relevant to the positions;

(4) providing the temporary workers the training necessary for their positions; and

(5) if it uses the workers over an extended period of time, making them eligible for the normal wage adjustment mechanism.

An Employer of Temporary Workers may not second temporary workers to another Employer.

Article 63: Temporary workers have the right to the same pay for the same work as the workers of the Employer of Temporary Workers. The Employer of Temporary Workers shall, in respect of its temporary workers and its workers in the same positions, implement the same labour remuneration distribution method based on the principle of the same pay for the same work. If the Employer of Temporary Workers does not have workers in the same positions, the labour remuneration of the temporary workers shall be determined with reference to the labour remuneration of workers in identical or similar positions in the locality where the Employer of Temporary Workers is located.

The labour remuneration to be paid to a temporary worker as stated or specified in the labour contract between the temp agency and the temporary worker, and in the placement agreement executed between the temp agency and the Employer of Temporary Workers shall be in compliance with the preceding paragraph.

Article 64: Temporary workers have the right to join the labour union of, or organise a labour union in, the temp agency or the Employer of Temporary Workers to safeguard their lawful rights and interests.

Article 65: A temporary worker may terminate his/her employment contract with the temp agency in accordance with Article 36 or 38 hereof.

If a temporary worker is characterised by any of the circumstances set forth in Article 39 or Item (1) or (2) of Article 40 hereof, the Employer of Temporary Workers may return him/her to the temp agency and the temp agency may terminate his/her employment contract in accordance with the relevant provisions hereof.

Article 66: Employment by virtue of an employment contract is the fundamental form of employment in enterprises in the PRC. Employment by way of placement is a supplementary form and may only be applied to temporary, ancillary or substitute positions.

For the purposes of the preceding paragraph, the term “temporary position” means a position that exists for less than six months; the term “ancillary position” means a non-main business position that provides services for main business positions; and the term “substitute position” means a position in which another worker can replace a worker of the Employer of Temporary Workers who cannot work for a certain period of time for reasons such as taking time off work for study or leave.

The Employer of Temporary Workers shall strictly control the number of temporary workers and the same may not exceed a certain percentage of the total workforce. The specific percentage shall be specified by the State Council's labour administrative department.

Article 67: An Employer may not establish a temp agency to place workers with itself or with work units subordinate to it.

Section Three: Part-time employment

Article 68: The term “part-time employment” is a mode of employment wherein remuneration is mainly calculated by the hour and the worker, in general, does not work for more than four hours per day on average and, in the aggregate, not more than 24 hours per week for the same Employer.

Article 69: The parties to a part-time employment arrangement may conclude an oral agreement.

A worker employed part-time may conclude employment contracts with one or more Employers, provided that an employment contract concluded later does not affect the performance of an employment contract concluded earlier.

Article 70: The parties to a part-time employment arrangement may not set a probation period.

Article 71: Either party to a part-time employment arrangement may terminate the employment at any time by giving notice to the other party. When such an employment arrangement is terminated, the Employer will not pay the worker severance pay.

Article 72: The rate for hourly remuneration for part-time employment may not be lower than the minimum hourly wage rate specified by the people's government of the place where the Employer is located.

The interval for the settlement and payment of labour remuneration for part-time employment may not exceed 15 days.

Part Six: Monitoring inspections

Article 73: The State Council's labour administrative department is responsible for overseeing the implementation of the employment contract system nationwide.

The labour administration authorities of local people's governments at the county level and above are responsible for overseeing the implementation of the employment contract system within their jurisdictions.

In the course of overseeing the implementation of the employment contract system, the labour administration authorities of people's governments at the county level and above shall listen to the opinions of labour unions, enterprise representatives and the departments in charge of the relevant industries.

Article 74: The labour administration authorities of local people's governments at the county level and above shall, in accordance with the law, conduct monitoring inspections of the following matters relating to the implementation of the employment contract system:

(1) the formulation by Employers of rules and regulations that have a direct bearing on the immediate interests of workers and their implementation thereof;

(2) the conclusion and termination of employment contracts by Employers and workers;

(3) the compliance by temp agencies and Employers of Temporary Workers with relevant provisions on placement;

(4) the compliance by Employers with state provisions on the working hours, rest and leave of workers;

(5) the payment by Employers of the labour remuneration specified in employment contracts and their implementation of minimum wage rates;

(6) the enrollment by Employers in the various types of social insurance and their payment of social insurance premiums; and

(7) other labour matters subject to monitoring as specified in laws and regulations.

Article 75: When conducting a monitoring inspection, the labour administrative department of a people's government at the county level or above shall have the right to review materials relating to employment contracts and the collective contract(s) and to conduct onsite inspections of premises where labour is performed, and the Employer and workers shall truthfully provide to it relevant information and materials.

When conducting a monitoring inspection, the working personnel of the labour administrative department shall present their credentials, exercise their functions and powers in accordance with the law and enforce the law in a civilised manner.

Article 76: The construction, health, work safety and other relevant competent departments of people's governments at the county level and above shall oversee, within their respective purviews, the implementation of the employment contract system by Employers.

Article 77: If the lawful rights and interests of a worker are infringed, he/she shall have the right to request that the relevant department deal with the matter in accordance with the law, or to apply for arbitration or institute a legal action in accordance with the law.

Article 78: A labour union shall safeguard the lawful rights and interests of workers and monitor the performance of employment contracts and the collective contract(s) by the Employer. If the Employer violates labour laws or regulations or breaches an employment contract or collective contract, the labour union shall have the right to make its opinion known or demand rectification of the matter. If a worker applies for arbitration or institutes a legal action, the labour union shall support and assist him/her in accordance with the law.

Article 79: Any organisation or individual shall have the right to report violations hereof and the labour administrative department of the people's government at the county level or above shall verify and deal with the matter in a timely manner, and reward persons whose reports prove useful.

Part Seven: Legal liability

Article 80: If an Employer's rules and regulations that have a direct bearing on the immediate interests of workers violate laws or regulations, the labour administrative department shall order the Employer to rectify the matter and give it a warning. If workers incurred damage as a result thereof, the Employer shall be liable for compensation.

Article 81: If the employment contract furnished by an Employer does not contain the mandatory employment contract terms specified herein or if the Employer fails to deliver a copy of the employment contract to a worker, the labour administrative department shall order it to rectify the matter. If the worker incurred damage as a result thereof, the Employer shall be liable for compensation.

Article 82: If an Employer fails to conclude a written employment contract with a worker and the duration of such failure is more than one month from the date it commenced using him/her and less than one year, it shall pay him/her twice his/her wage for each month of that period.

If an Employer fails to conclude an open-ended employment contract with a worker in violation of the provisions hereof, it shall pay such worker twice his/her wage for each month from the date on which it ought to have concluded the open-ended employment contract with him/her.

Article 83: If an Employer violates this Law when setting a probation period for a worker, the labour administrative department shall order it to rectify the matter; if the illegally set probation period has been performed, the Employer shall pay the worker compensation based on his/her monthly wage after the expiration of his/her probation period for that period of time exceeding the legally permitted probation period.

Article 84: If an Employer violates this Law by retaining a worker's resident ID card or other such document, the labour administrative department shall order it to return the same to the worker within a specified period of time, and penalise it in accordance with relevant laws.

If an Employer violates this Law by requiring workers to provide property as security or in some other guise, the labour administrative department shall order it to return the same to the workers within a specified period of time and fine it not less than Rmb500 and not more than Rmb2,000 per person. If the workers incurred damage as a result thereof, the Employer shall be liable for compensation.

If a worker terminates or ends the employment contract in accordance with the law and the Employer retains his/her file or other articles, the Employer shall be penalised in accordance with the preceding paragraph.

Article 85: If an Employer commits any of the acts set forth below, the labour administrative department shall order it to pay labour remuneration, overtime pay or severance pay within a specified period of time. If the labour remuneration is lower than the local minimum wage rate, the Employer shall pay the difference. If the Employer fails to make payment on time, the labour administrative department shall order the Employer to pay the worker additional compensation at a rate of not less than 50% and not more than 100% of the amount payable:

(1) it fails to pay the worker labour remuneration on time and in full in accordance with his/her employment contract or state provisions;

(2) it pays the worker wages at a rate lower than the local minimum wage rate;

(3) it schedules overtime work but fails to pay overtime pay; or

(4) a worker's employment contract is terminated or ended and it fails to pay him/her severance pay in accordance herewith.

Article 86: If an employment contract is confirmed to be invalid in accordance with Article 26 hereof, causing the other party to incur damage, the party at fault shall be liable for compensation.

Article 87: If an Employer terminates or ends an employment contract in violation hereof, it shall pay the worker compensation in an amount equivalent to twice the rate for severance pay specified in Article 47 hereof.

Article 88: If an Employer commits any of the acts set forth below, it shall be subjected to administrative penalties in accordance with the law; if a criminal offence is established, its criminal liability shall be pursued in accordance with the law; and if workers incurred damage as a result thereof, it shall be liable for compensation:

(1) it uses means such as violence, threats or illegal restriction of personal liberty to compel workers to work;

(2) it instructs, in violation of regulations, or arbitrarily orders a worker to carry out a dangerous operation that jeopardises his/her personal safety;

(3) it insults, corporally punishes, beats, or illegally searches or detains a worker; or

(4) it seriously harms the physical and/or mental health of workers due to odious working conditions or serious environmental pollution.

Article 89: If an Employer violates this Law by failing to issue a worker a written proof of termination or ending of his/her employment contract, the labour administrative department shall order it to rectify the matter. If the worker incurred damage as a result thereof, the Employer shall be liable for compensation.

Article 90: If a worker violates this Law in terminating his/her employment contract, or breaches his/her confidentiality obligation or the anti-competition restriction in his/her employment contract, thereby causing the Employer to incur a loss, he/she shall be liable for compensation.

Article 91: If an Employer employs a worker whose employment contract with another Employer has not been terminated or has not ended, thereby causing the other Employer to incur a loss, it shall bear joint and several liability for compensation.

Article 92: If this Law is violated by engaging in placement business without permission, the labour administrative department shall order a stop to the violation, confiscate the illegal income and impose a fine of not less than one time and not more than five times the illegal income. If there is no illegal income, it may impose a fine of up to Rmb50,000.

If a temp agency or Employer of Temporary Workers violates a provision hereof on placement, the labour administrative department shall order it to rectify the matter within a specified period of time. If it fails to do so, the labour administrative department shall impose a fine at the rate of not less than Rmb5,000 and not more than Rmb10,000 per person, and in the case of a temp agency, revoke its permit for engaging in placement business. If an Employer of Temporary Workers causes a temporary worker to incur damage, the temp agency and the Employer of Temporary Workers shall bear joint and several liability therefor.

Article 93: If an Employer that does not have lawful business qualifications commits a violation of the law or criminal offence, its legal liability shall be pursued in accordance with the law. If workers have provided labour to the Employer, the Employer or its investor(s) shall pay labour remuneration, severance pay and compensation to the workers in accordance with the relevant provisions hereof. If the workers incurred damage as a result thereof, the Employer or its investor(s) shall be liable for compensation.

Article 94: If an individual who has contracted to operate a business violates this Law in employing workers, causing such workers to incur damage, the owner and the individual who contracted to operate the business shall bear joint and several liability for compensation.

Article 95: If a labour administrative department, another relevant competent department or a member of the working personnel thereof is derelict in its/his/her duties, fails to perform its/his/her statutory duties or exercises its/his/her functions and power in violation of the law, causing a worker or Employer to incur damage, it/he/she shall be liable for compensation. The officer directly in charge and other directly responsible persons shall be subjected to administrative penalties in accordance with the law. If a criminal offence is established, criminal liability shall be pursued in accordance with the law.

Part Eight: Supplementary provisions

Article 96: Where laws, administrative regulations or the State Council provide otherwise with respect to the conclusion, performance, amendment, termination and ending of employment contracts between institutions and working personnel subject to the engagement system, matters shall be handled in accordance with such provisions. Where the same are silent on such matters, matters shall be handled in accordance with the relevant provisions hereof.

Article 97: Employment contracts concluded in accordance with the law prior to the implementation hereof and continuing to exist on the implementation date hereof shall continue to be performed. The number of times in succession for which a fixed-term employment contract can be concluded as specified in Item (3) of the second paragraph of Article 14 hereof shall commence counting from the renewal of the fixed-term employment contract after the implementation hereof.

If an employment relationship has been established prior to the implementation hereof, but no written employment contract has been concluded in respect thereof, such a contract shall be concluded within one month from the implementation date hereof.

If an employment contract in existence on the implementation date hereof is terminated or ends after the implementation hereof and if, pursuant to Article 46 hereof, the payment of severance pay is required, the number of years for the purpose of severance pay shall be counted from the implementation date hereof. If, pursuant to relevant provisions in effect prior to the implementation hereof, an Employer is required to pay a worker severance pay, matters shall be handled in accordance with the relevant provisions then in effect.

Article 98: This Law shall be effective as of January 1 2008.