Why You Need To Sign An Employment Contract
China employment law require all employer enter into written employment contract with employees. However, employers are reluctant—or refuse—to provide an employment contract to the vast majority of employees is because, "We want to be able to fire the employee if we feel they're not working out, and we don't want a contract to limit our ability to do this." This concern arises from the concept of "at-will employment." Simply stated, when a company hires someone at will, it can fire the employee for any or no reason at any time. (Likewise, the employee is free to quit the job.) This situation is not allowed in China. Our China employment lawyer reminds you: there is no room for at-will employment contract in China.
What is the benefit of a Written employment contract
Having a written contract benefits both the employee and the employer because it makes a clear, definitive record of what everyone is agreeing to at the time of the agreement. These contracts are not just for executives, though an employment contract for an executive will be more complex and detailed than for a staff employee or a middle manager. Anyone would rest more easy knowing that the details of employment are set down in writing, both to promote success of the working relationship and to avoid controversies.
Employment contracts are good for everyone. The main benefit for employers is that they don't have to worry about potential verbal promises made by a rogue manager that could come back to haunt them. A company can, if it chooses, make it clear that the employment is not promised for any set length of time. The main benefit for employees is that they are protected if their management changes and if memories fade about promises that were made. The contract ensures promises will be kept
What Terms should be included in the employment contract
- Items Usually Addressed in an Employment Contract
- Job title, responsibilities and duties
- Salary or compensation
- Standards for evaluation
- Health/Medical benefits
- Other benefits (stocks, options, etc.)
- Length of employment
- Grounds for termination
Common Clauses in Employment Contracts
- Arbitration Clause - This clause provides that if the employer and employee have a dispute, they must go through arbitration rather than the court system. Arbitration is much like a trial, except that there is not a real judge and the process is confidential. In many cases, arbitration is binding on the parties, and neither party can seek judicial review of the arbitrator's decision.
- Non-Compete Clause - The employee is restricted from working for the employer's competitors for a period of time after leaving the employer. This clause may also place restrictions on types of industries or geographic locations where the employee may seek future employment.
- Confidentiality - This will specify what business information the employee cannot use or discuss once they leave the job. In some circumstances, the employee's work or products created while employed may also be defined as a confidential work product.
- Choice of Law Clause - This may indicate what state law courts will use to interpret the contract terms and settle contract disputes.
- Severance - This states what the employee will receive if the employment relationship must come to an end. This clause may also specify the difference in benefits the employee will receive if she is fired, resigns, or is laid off.
- Termination Clause - Often this clause will describe the procedure for termination. It may provide whether and when employment is renewable. It may also provide that the employee or employer must give advance notice before ending employment.
- Covenant of good faith and fair dealing - Even if not explicitly stated, both parties are required to treat the other party fairly.
Our Guangzhou Employment attorney reminds you that Guangzhou employment laws are at times tricky. Any foreign invested companies should retain a Guangzhou employment law firm or lawyer to deal with the employ law or labor law compliance.