The Jing’an District People’s Court in Shanghai reportedly ruled that an employer’s online registration of an employee’s employment does not constitute a written employment contract. As a result, the court ordered the employer to pay double salary to the employee for not signing a written employment contract as required by law.
According to the report, immediately after the commencement of employment, the company completed the online employment registration on the Shanghai labor authority’s official website and started making social insurance and housing fund contributions for the employee. However, the company never signed a written employment contract with the employee. The company argued that even though the parties did not sign a formal employment contract, the online employment registration that carries information such as identifying the employer and the employee and the type of employment, should be deemed as the parties’ written employment contract in an electronic form.
The court did not agree with this argument, because: (a) the online registration was not signed by both parties and thus does not form a valid contract, and (b) the online registration does not include all of the mandatory contents (e.g., employment contract term, work location, and salary) that are required for an employment contract.
Key Take-Away Points
Companies should track employees’ employment contract status carefully. Under PRC law, companies must sign a written employment contract with all full time employees within one month after the employee’s commencement date. If a written employment contract is not signed, the company will be liable for double salary from the second month of employment until the earlier of (i) the date when it signs a written employment contract with the employee or (ii) the one year anniversary of the employee’s employment. After that, if the company still has not signed a written employment contract, the parties will be deemed to have entered into an open-term employment contract, and the company would still be obligated to sign a written employment contract.