Open-term employment contracts
Double wage penalties
Other issues


In May 2014 the Beijing High People's Court and the Beijing Municipal Employment Dispute Arbitration Committee jointly issued the Meeting Minutes (II) on the Application of Law in Employment Disputes. Although the meeting minutes are not officially binding, it is likely that the lower courts and arbitration panels in Beijing will follow the conclusions of the meeting minutes. The meeting minutes clarify some controversial employment issues often faced by employers, such as open-term employment contracts and double wage penalties.

Open-term employment contracts

Regarding open-term employment contract issues, the meeting minutes clarify that on expiration of a second fixed-term employment contract after January 1 2008, if the employee unilaterally demands renewal of the employment contract on an open-term basis, the employer must do so. This clarification is in line with the unofficial (yet longstanding) Beijing practice and the position taken by most courts in China (except those in Shanghai). In addition, the parties can sign a third fixed-term contract if the employee does not demand an open-term contract at the end of the second fixed term; however, on expiration of the third fixed-term contract, the employee again has the right to demand unilaterally an open-term employment contract.

Double wage penalties

Regarding the double wage penalty for not concluding a written employment contract with an employee, the meeting minutes clarify that the company's legal representative and other senior management who are responsible for employment contract management generally cannot claim for double wages if the company fails to sign an employment contract with them.

Other issues

Additionally, the meeting minutes provide that arbitration committees and courts generally should not grant a female employee's request to revoke a duly executed mutual termination agreement if she subsequently discovers that she was pregnant when the mutual termination agreement was executed. Likewise, an employee who resigns for personal reasons may not subsequently claim during arbitration or litigation proceedings to have terminated the employment contract because of the employer's non-compliance with employment laws.

For further information on this topic please contact Andreas Lauffs or Jonathan Isaacs at Baker & McKenzie's Hong Kong office by telephone (+852 2846 1888), fax (+852 2845 0476) or email (andreas.lauffs@bakermckenzie.com or jonathan.isaacs@bakermckenzie.com). The Baker & McKenzie website can be accessed at www.bakermckenzie.com.