China: Draft Interpretations of Labor Contract Law Released

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By Rick Vollmar

Aug. 10—The Ministry of Human Resource and Social Security clarified certain provisions of the Labor Contract Law in a recent internal conference, Jasmine Chen of Herbert Smith Freehills LLP reported in an Aug. 5 release.

Chen noted the following key provisions:

• “Employers should duly inform new employees of existing internal rules, regulations and decided matters that directly impact the employees' vital interests. Once new employees are informed they will be bound by the existing rules, regulations and decided matters.”

•  “Employers must terminate employees within one year of knowing or within one year of when they should have known that they have a right to terminate under . . . the Labor Contract Law.”

• “Employers may not terminate employees merely because their performance rating is ranked the lowest in the team.”

• “The Labor Contract Law requires an employer to enter into open-term (permanent) labor contracts with an employee that has already signed two fixed-term labor contracts or if the employee has already worked for the employer for more than 10 years.”

• “When formulating internal rules and regulations that involve the interests of dispatched [temporary] workers, employers must solicit opinions from the dispatched workers. Dispatched workers may appoint representatives to participate in the discussions between employers and employees.”

• “Unless otherwise agreed by the parties, a labor contract expires at 12 a.m. (midnight) at the end of the last day of the term of the contract.”


While these are draft opinions of the ministry, Chen notes that they “ reflect likely legislative trends in Chinese employment law in the near future” and recommends that employers “keep an eye on legislative developments . . . and prepare for the possible changes.”

To contact the reporter on this story: Rick Vollmar at

The Herbert Smith Freehills release is available at

For more information on Chinese HR law and regulation, see the China primer.