Probationary periods are permitted in China for Chinese employees, but only when done properly. The length of the employment contract determines the probationary period’s maximum duration. The probationary period may last up to one month if the length of the employment contract is between three months and a year. The probationary period may last up to two months if the length of the employment contract is between one year and three years. The probationary period may last up to six months for open-term employment contracts and fixed-term employment contracts with a duration of three years or more.
Setting a probationary term could be particularly helpful for international businesses who are just starting out in China and want to lower their risk of difficult labor disputes. Recent market entrants may not be aware of the variations in knowledge and skill-sets in specific niches, making them more uncertain about the impact that a particular employee will have on their company.
It is important for foreign employers to understand how labor contracts and employment probation works in China to avoid liability related to noncompliance.
Salary During Probationary Period
The law offers the following general features of employment probation periods:
- Simplified and less costly process to terminate labor contracts.
- Employer is permitted to pay the employee 80% of the contract salary, so long as it does not fall below the city’s minimum wage.
To avoid abuse and exploitation, the probationary period is subject to a number of restrictions. These include restrictions on the length of the probationary period, the categories of workers for which an employer cannot impose a probationary period, and the procedures for termination. Companies must make sure they adhere to these limits or they risk being fined or subject to other penalties. The employment contract should include all probationary information so that it can be reviewed by the employee once they accept a job offer.
Termination Procedures During Probation Period
Termination during probation period is less onerous and less likely to result in a complex labor dispute. Nonetheless, protections are still given to the employee and the employer’s ability to terminate remains regulated.
Chinese labor laws do not allow employers to terminate employment contracts in a spontaneous manner. Instead, termination is only permitted if certain conditions are present, such as:
- The employee failed to satisfy the recruitment requirements during the employment probation period.
- The employee substantially violated the discipline code or internal rules of the employer
- The employee has substantially harmed the employer’s interests
- The employee committed a criminal act
- The employee has established a new employment relationship with a different employer and refuses to terminate it upon the request by the present employer
An employee who wishes to leave their position during the employment probationary period must provide the employer notice of at least three days in advance.
Any impacted labor unions must be informed of the employee’s termination by the company, however their consent is not necessary.
The employer also has to provide the ex-employee with documentation of the last day of employment as well as proof of termination of the employment contract. These agreements need to be signed by both the employer and the employee.
Employer is also responsible for making any outstanding payments and dues. The local social insurance authorities must also be notified of the termination by the employer. Employers must keep employee files on file for at least two years after a termination.
When Probation Period is not Permitted
- For part-time employees.
- For contracts less than three months.
- When an employee is promoted (within the company) or after a merger or acquisition. Moreover, a single employee can not be given more than one probation period.
Employers who disregard the requirements for employment probation face consequences under the China Labor Contract Law.
If the probationary period has passed, the employer is responsible for paying the employee’s employer a sum based on the time the employee worked past the required probationary period, calculated at the employee’s monthly salary following the probationary period.
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