Labor Contract Law of the People's Republic of China (2012 Amendment)

Labor Contract Law of the People's Republic of China (2012 Amendment) Labor Contract Law of the People's Republic of China (Adopted at the 28th Session of Standing Committee of the Tenth National People's Congress of the People's Republic of China on June 29, 2007；amended in accordance with the Decision on Amending the Labor Contract Law of the People's Republic of China at the 30 the Session of the Standing Committee of the Eleventh National People's Congress on December 28, 2012; Order No.73 of the President of the People's Republic of China) Contents Chapter I General Provisions Chapter II Formation of Labor Contracts Chapter III Fulfillment and Change of Labor Contracts Chapter IV Dissolution and Termination of Labor Contracts Chapter V Special Provisions Section 1 Collective Contract Section 2 Worker Dispatch Section 3 Part-time Employment Chapter VI Supervision and Inspection Chapter VII Legal Liabilities Chapter VIII Supplementary Provisions Chapter I General Provisions Article 1 This Law is formulated for the purposes of improving the labor contractual system, clarifying the rights and obligations of both parties of labor contracts, protecting the legitimate rights and interests of employees, and establishing and developing a harmonious and stable employment relationship. Article 2 This Law shall apply to the establishment of employment relationship between employees and enterprises, individual economic organizations, private non-enterprise entities, or other organizations (hereafter referred to as employers), and to the formation, fulfillment, change, dissolution, or termination of labor contracts. The state organs, public institutions, social organizations, and their employees among them there is an employment relationship shall observe this Law in the formation, fulfillment, change, dissolution, or termination of their labor contracts. Article 3 The principle of lawfulness, fairness, equality, free will, negotiation for agreement and good faith shall be observed in the formation of a labor contract. A labor contract concluded according to the law shall have a binding force. The employer and the employee shall perform the obligations as stipulated in the labor contract. Article 4 An employer shall establish a sound system of employment rules so as to ensure that its employees enjoy the labor rights and perform the employment obligations. Where an employer formulates, amends or decides rules or important events concerning the remuneration, working time, break, vacation, work safety and sanitation, insurance and welfare, training of employees, labor discipline, or management of production quota, which are directly related to the interests of the employees, such rules or important events shall be discussed at the meeting of employees' representatives or the general meeting of all employees, and the employer shall also put forward proposals and opinions to the employees and negotiate with the labor union or the employees' representatives on a equal basis to reach agreements on these rules or events. During the process of execution of a rule or decision about an important event, if the labor union or the employees deems it improper, they may require the employer to amend or improve it through negotiations. The employer shall make an announcement of the rules and important events which are directly related to the interests of the employees or inform the employees of these rules or events. Article 5 The labor administrative department of the people's government at the county level or above shall, together with the labor union and the representatives of the enterprise, establish a sound three-party mechanism to coordinate employment relationship and shall jointly seek to solve the major problems related to employment relations. Article 6 The labor union shall assist and direct the employees when they conclude with the employers and fulfill labor contracts and establish a collective negotiation mechanism with the employers so as to maintain the lawful rights and interests of the employees. Chapter II Formation of Labor Contracts Article 7 An employer establishes an employment relationship with an employee from the date when the employer puts the employee to work. The employer shall prepare a roster of employees for inspection. Article 8 When an employer hires an employee, it shall faithfully inform him of the work contents, conditions and location, occupational harm, work safety state, remuneration, and other information which the employee requires to be informed. The employer has the right to know the basic information of the employer which is directly related to the labor contract and the employee shall faithfully provide such information. Article 9 When an employer hires an employee, it shall not detain his identity card or other certificates, nor require him to provide a guaranty or collect money or property from him under any other excuse. Article 10 A written labor contract shall be concluded in the establishment of an employment relationship. Where an employment relationship has already been established with an employee but no written labor contract has been entered simultaneously, a written labor contract shall be concluded within one month from the date when the employee begins to work. Where an employer and an employee conclude a labor contract prior to the employment, the employment relationship is established from the date when the employee begins to work. Article 11 Where an employer fails to conclude a written labor contract when the employer put his employee to work, if the remuneration stipulated between the employer and the employee is not clear, the remuneration to the new employee shall conform to the provisions of the collective contract. If there is no collective contract or if there is no such stipulation in the collective contract, the principle of equal pay for equal work shall be observed. Article 12 Labor contracts are classified into fix-term labor contracts, labor contracts without a fixed term, and the labor contracts that set the completion of specific tasks as the term to end contracts. Article 13 A fixed-term labor contract refers to a labor contract in which the employer and the employee stipulate the time of termination of the contract. The employer and the employee may conclude a fixed-term labor contract upon negotiation. Article 14 A labor contract without a fixed term refers to a labor contract in which the employer and the employee stipulate no certain time to end the contract. An employer and an employee may, through negotiations, conclude a labor contract without a fixed term. Under any of the following circumstances, if the employee proposes or agrees to renew or conclude a labor contract, a labor contract without a fixed term shall be concluded unless the employee proposes to conclude a fixed-term labor contract: 1. The employee has already worked for the employer for 10 full years consecutively; 2. When the employer initially adopts the labor contract system or when a state-owned enterprise re-concludes the labor contract due to restructuring, the employee has already worked for this employer for 10 full years consecutively and he attains to the age which is less than 10 years up to the statutory retirement age; or 3. The labor contract is to be renewed after two fixed-term labor contracts have been concluded consecutively, and the employee is not under any of the circumstances as mentioned in Article 39 and Paragraphs (1) and (2) of Article 40 of this Law. If the employer fails to sign a written labor contract with an employee after the lapse of one full year from the date when the employee begins to work, it shall be deemed that the employer and the employee have concluded a labor contract without a fixed term. Article 15 A labor contract that sets the completion of a specific task as the term to end the contract refers to the labor contract in which the employer and the employee stipulate that the time period of the contract shall be based on the completion of a specific task. An employer and an employee may, upon negotiation, conclude a labor contract that sets the completion of a specific task to end the contract. Article 16 A labor contract shall be agreed with by the employer and the employee and shall come into effect after the employer and the employee affix their signatures or seals to the labor contract. The employer and the employee shall each hold one copy of the labor contract. Article 17 A labor contract shall include the following clauses: 1. The employer's name, domicile, legal representative, or major person-in-charge; 2. The employee's name, domicile, identity card number, or other valid identity certificate number; 3. The time limit for the labor contract; 4. The job descriptions and work locations; 5. The work hours, break time, and vacations; 6. The remunerations; 7. The social security; 8. The employment protection, work conditions, and protection against and prevention of occupational harm; and 9. Other items that shall be included in the labor contract under any laws or regulations. Apart from the essential clauses as prescribed in the preceding paragraph, the employer and the employee may, in the labor contract, stipulate the probation time period, training, confidentiality, supplementary insurances, welfares and benefits, and other items. Article 18 If remunerations, work conditions, and other criterions are not expressly stipulated in a labor contract and a dispute is triggered, the employer and the employee may re-negotiate the contract. If no agreement is reached through negotiations, the provisions of the collective contract shall be followed. If there is no collective contract or if there is no such stipulation about the remuneration, the principle of equal pay for equal work shall be observed. If there is no collective contract or if there is no such stipulation about the work conditions and other criterions in the collective contract, the relevant provisions of the state shall be followed. Article 19 If the term of a labor contract is not less than 3 months but less than 1 year, the probation period shall not exceed one month. If the term of a labor contract is not less than one year but less than 3 years, the probation period shall not exceed 2 months. For a labor contract with a fixed term of 3 years or more or without a fixed term, the probation term shall not exceed 6 months. An employer can only impose one probation time period on an employee. For a labor contract that sets the completion of a specific task as the term to end the contract or with a fixed term of less than 3 months, no probation period may be stipulated. The probation period shall be included in the term of a labor contract. If a labor contract only provides the term of probation, the probation shall be null and void and the term of the probation shall be treated as the term of the labor contract. Article 20 The wage of an employee during the probation period shall not be lower than the minimum wage for the same position of the same employer or lower than 80% of the wage stipulated in the labor contract, nor may it be lower than the minimum wage of the locality where the employer is located. Article 21 During the probation period, except when the employee is under any of the circumstances as described in Article 39 and Article 40 (i) and (ii), the employer shall not dissolve the labor contract. If an employer dissolves a labor contract during the probation period, it shall make an explanation. Article 22 Where an employer pays special training expenses for the special technical training of his employees, the employer may enter an agreement with his employees to specify their service time period. If an employee violates the stipulation regarding the service time period, he shall pay the employer a penalty for breach of contract. The amount of penalty for breach of contract shall not exceed the training fees provided by the employer. The penalty for breach of a contract in which the employer requires the employee to pay shall not exceed the training expenses attributable to the service time period that is unfulfilled. The service time period stipulated by the employer and the employee does not affect the promotion of the remuneration of the employee during the probation period under the normal wage adjustment mechanism. Article 23 An employer may enter an agreement with his employees in the labor contract to require his employees to keep the business secrets and intellectual property of the employer confidential. For an employee who has the obligation of keeping confidential, the employer and the employee may stipulate non-competition clauses in the labor contract or in the confidentiality agreement and come to an agreement that, when the labor contract is dissolved or terminated, the employee shall be given economic compensations within the non-competition period. If the employee violates the stipulation of non-competition, it shall pay the employer a penalty for breaching the contract. Article 24 The persons who should be subject to non-competition shall be limited to the senior mangers, senior technicians, and the other employees, who have the obligation to keep secrets, of employers. The scope, geographical range and time limit for non-competition shall be stipulated by the employer and the employee. The stipulation on non-competition shall not be contrary to any laws or regulations. After the dissolution or termination of a labor contract, the non-competition period for any of the persons as mentioned in the preceding paragraph to work in any other employer producing or engaging in products of the same category or engaging in business of the same category as this employer shall not exceed two years. Article 25 Except for the circumstances as prescribed in Articles 22 and 23 of this Law, the employer shall not stipulate with the employee that the employee shall pay the penalty for breaching contract. Article 26 The following labor contracts are invalid or are partially invalid if: 1. a party employs the means of deception or coercion or takes advantage of the other party's difficulties to force the other party to conclude a labor contract or to make an amendment to a labor contract, which is contrary to his will; 2. an employer disclaims its legal liability or denies the employee's rights; or 3. the mandatory provisions of laws or administrative regulations are violated. If there is any dispute over the invalidating or partially invalidating of a labor contract, the dispute shall be settled by the labor dispute arbitration institution or by the people's court. Article 27 The invalidity of any part of a labor contract does not affect the validity of the other parts of the contract. The other parts shall still remain valid. Article 28 If a labor contract has been confirmed to be invalid, the employer shall pay remunerations to his employees who have labored for the employer. The amount of remunerations shall be determined by analogy to the remuneration to the employees taking up the same or similar positions of the employer . Chapter III Fulfillment and Change of Labor Contracts Article 29 An employer and an employee shall, according to the stipulations of the labor contract, fully perform their respective obligations. Article 30 An employer shall, under the contractual stipulations and the provisions of the state, timely pay its employees the full amount of remunerations. Where an employer defers paying or fails to pay the full amo......