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 (“Beijing Meeting Minutes II”). While not officially binding on the lower courts and arbitration panels in Beijing, it is likely that the courts and arbitration panels will follow the conclusions in the Beijing Meeting Minutes II. The Beijing Meeting Minutes II provides clarification on some controversial employment issues often faced by employers, such as open-term employment contracts, double wage penalties and other issues.
Regarding the open-term employment contract issues, the Beijing Meeting Minutes II clarifies that upon the expiration of the second fixed-term employment contract after January 1, 2008, if the employee unilaterally demands the renewal of the employment contract (“EC”) on an open-term basis, the employer must renew the EC on an open-term basis. This clarification is in line with the unofficial yet long-standing 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 one at the end of the second fixed-term, though upon the expiration of the third fixed-term EC, the employee again has the right to unilaterally demand an open-term EC.
Regarding the double wage penalty for not concluding a written EC with an employee, the Beijing Meeting Minutes II clarifies that the legal representative and other senior management of a company who are responsible for employment contract management generally cannot claim for double wages in the event the company fails to sign an employment contract with them.
Additionally, the Beijing Meeting Minutes II provides that arbitration committees and courts generally should not grant a female employee’s request to revoke a duly executed mutual termination agreement if she discovers later that she was pregnant at the time the mutual termination agreement was executed. Likewise, an employee who resigns for personal reasons may not afterwards claim during arbitration/litigation proceedings to have terminated the EC because of the employer’s noncompliance with employment laws.