A
promising company offers you an employment contract. If the numbers are right,
shouldn’t you just skip the legalese, sign and celebrate?
Not so fast -- you need to read the contract carefully, understand some
employment law and have an attorney to review the relevant documents. Here’s a
start on what to look for as you launch the contract review process.
1. Term of employment.
Each employee must be hired pursuant to the terms of a written contract. After the initial contract term expires, you may re-hire the employee pursuant to a second fixed term contract. However, at the end of that fixed term, the employee automatically will be converted into an employee with an open contract term. This means you have only one chance to hire an employee on a fixed term basis.
2. Salary
One issue here is that in many parts of China, it is usual to pay the salary on a 13 month basis, with the final month paid just prior the Chinese New Year. This is completely optional, but it is important to state clearly whether or not you will be using this approach. Many employees just expect this “New Year’s Bonus” and a failure to pay it (if expected) can cause many problems.
3. Bonus
If you plan to have a bonus system for your employees, you should set this out.
4. Vacation
The statutory rule on vacation for employees is as follows:
First
year: No vacation.
Years 2 through 9: 5 days.
Years 10 through 19: 10 days
20 years or more: 15 days.
5. Other benefits.
If you plan to provide benefits beyond the statutory minimum (set out in the rules and regulations provided), we will need to specify that. If you want to provide a particular benefit to all of your employees, you should put it in your rules and regulations. If you want to provide your employees with specific benefits, you will include them in the specific employment contract.
For example, China requires employees to pay a portion of the employment taxes/fees. Some employers pay that portion for the employees as an additional benefit.
6. On- site security
As you will see, the Rules and Regulations have a detailed section regarding on site security. If there are things that should be modified or added, please let us know. In addition, for a company like yours, you should adopt formal policies on data and information security. You surely do this elsewhere, so the use of the same policies in China should not be a problem. You can simply provide them to us, so we can translate them into Chinese, with the other documents.
7. Travel
If your employees have to travel domestically or internationally, you should have a written travel expense policy
8. Trade Secrets/IP Protection
The documents include a separate Trade Secret and IP protection agreement. This is designed to work for software companies like yours.
9. Training
Will you be providing training for your employees? If yes, you should also develop a training agreement.
10. Sign-off Agreement
Note that we have added a “Sign-off Agreement.” With this agreement, the employee acknowledges having received the rules and regulations and agrees to abide by those rules. It is important to get your employees to sign this so they cannot later claim not to have received it, which is a frequent claim at labor arbitration in China.
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