PRC Labour Law - Bitesize: Am I required to give notice to an employee if I decide not to renew his labour contract when its term expires?
4 March 2010
Mayer Brown JSM Newsletter
Am I required to give notice to an employee if I decide not to renew his labour contract when its term expires? There are no provisions under the Labour Contract Law which require an employer to provide prior notice to its employees for renewal or non-renewal of a fixed term labour contract. Therefore, at the national level, if you decide not to renew a fixed term labour contract, you are not obliged to give notice to the employee. However, some contracts themselves contain a notice provision which requires notice to end a fixed term contract. As such, care needs to be taken to comply with your contractual commitment. In addition, there may exist relevant local rules requiring notification. For example, Beijing requires 30 days’ prior written notice be given to an employee if the employer decides not to renew such employee’s fixed term contract. I have decided not to renew a labour contract with one of my employees who joined our company in 2006. Do I need to pay economic compensation to such employee? Yes, you are required to pay economic compensation to this employee as required by the Labour Contract Law. However, you only need to pay economic compensation for the period from the date on which the Labour Contract Law came into force, 1 January 2008, (rather than from the employee’s commencement date with the company in 2006) to the termination date. Before the expiry of a labour contract, the relevant employee submitted a medical certificate requesting a non-work-related medical treatment period. Can I end the employment relationship with the employee on the normal expiry date? No. You must extend the term of the contract until the earlier of the date when the employee returns to work or the employee has used up his statutory non-work-related medical treatment period. Do I have to enter into another written contract during the extended medical treatment period? Will I be subject to double salary for lack of such written contract? No. You are not required to enter into a new contract for the statutory extended period. As such, double salary will not be triggered. However, you may wish to issue a written notice to the employee in respect of the extension in order to avoid any dispute. If you are interested in receiving our "PRC Labour Law - Bitesize" articles, or if you have any questions on PRC employment law, please email to firstname.lastname@example.org to register.