Investors Need to Know the Employment Probation Periods in China
When a new employee becomes part of the company, they do not become regulars right away, and they need to finish their probationary period before they can become permanent.
It is the Ministry of Human Resources and Social Security that administers the Labor Contract Law of China. The companies are permitted to have a set probationary period for their new employees, which lowers the risk of hiring full-time and permanent employees. A foreign company that is new in China will benefit the most from this because they do not have to go through labour disputes.
If you want to set up a business in China, you must know about the employment probation.
What is the Employment Contract Term?
There are three kinds of employment contract terms: non-fixed term employment, fixed-term contract employment, and a project-based employment contract if it is based on the completion of specific tasks.
|Length of Contract||Maximum Probation Period|
|3 months or less||No probationary period|
|3 to 12 months||1 month|
|1 to 3 years||2 months|
|3 years or more||6 months|
Salary During the Probationary Period
The wages of an employee during their probationary period must be at least 80% of their pay that is in the employment contract, also, it must not be less than the area’s minimum wage.
Probationary Periods are not Renewable
The probationary is not renewable once the employee has completed it, and the employer cannot set new ones. For instance, after they get promoted or a company’s merger or acquisition. The other unique rules during this time are: the employer must pay 80% of the salary if it is more than the local minimum wage.
In this period, the employee dismissal has expanded grounds, and the termination during this period costs less and more comfortable than after it expires.
Grounds for Termination
Employee dismissal can be implemented if they are unable to meet the job requirements within the probation period. There needs to be a vague job description and specific skills that are required for the job when terminating an employee. The employer must provide evidence that the employee failed to meet the requirements, and the company has the burden of proof.
- Violation of the labour discipline or the employer’s internal rules
- The employee committed a harmful act to the employer
- The employee did a crime
- Establish another employment relationship with a different employer and did not want to terminate it even after the existing employer has told them to do so
The employer must inform the involved labour unions once an employee will be terminated for any reason. However, their approval is not necessary for employee termination. The employee must show proof of termination, documentation of when they last worked, and settlement of dues and completion of last payments required.
Consequences of Violating the Probation Rules
If the employer violates the probation rule, labour authorities will order to correct it. If the employee completed the illegal probation period, the employer must pay their compensation that is calculated based on the time worked beyond the probation period at the worker’s monthly salary rate after the probation.
When is Probation Period Not Allowed?
- If the employee is part-time
- If their contract is not for three months
- Once the employee was promoted after an acquisition or a merger. Also, an employee can only have one probation period.
You can contact us to help you with setting up a business in China and understanding the probation period of employees.