If you want to set up a probationary period for your new China employee hires, it is important you get it right. If you do not understand how probation works both in China and where you will be doing your hiring, you are probably better off not even bothering.
Note that employers are not allowed to set a probation period for the following three types of employment arrangements:
- Employment of a part-time employee,
- Employment with a term of fewer than three months,
- Employment whose term is based solely on the employee completing a certain task.
There is a fourth prohibition/restriction: you may use only one probation period for the same employee. As straightforward as this may sound, this rule has caused much confusion to foreign employers (and many Chinese employers as well). For instance, one question that we often get asked is this: whether an employee who has left the company and returns after ten years, can be re-hired as a probationary employee? The answer to this is not quite clear, even in the same locale. A strict interpretation of the law dictates a “no” answer, as the parties are the same, and the law “clearly” states: one employee, one probation period. But many employers have argued that a lot can change in ten years (especially in high tech) and we should be able to test the employee out and not have to rely on what we knew about the employee a decade ago. As logical and reasonable as this may sound, most courts have not sided with employers on this issue.
In one fairly recent case in Zhongshan city, Guangdong Province, an employee worked for an employer from 1998 through early 2015 and then got re-hired for the same role by the same employer near the end of 2015 under a three-year employment contract with a 6-month probation period. The employee was then terminated during the 6-month probation period and he sued, alleging unlawful termination. After multiple proceedings and on appeal, the Zhongshan Intermediate People’s Court essentially ruled that the employer violated the Labor Contract Law for using another probation period for the same employee and awarded the employee damages for the employer’s illegal use of the probation period.
But what if an employee returns to the same employer, but at a different position? Even though the parties are not “strangers” to each other the employer would have little to no knowledge about how the employee is likely to perform in his or her new position. The Zhongshan case above does not answer this question, but it seems an increasing number of judges and China employment lawyers are of the view that an “exception” should exist for an employee rehired for a substantially different position.
Note though that in virtually all employment cases where an employee has sued over a second probation period, the employee signed an otherwise enforceable written employment contract agreeing to the second probation period. So if you will be doing your hiring in a place where the courts strictly interpret the one employee, one probation period law, it doesn’t matter what the employee agreed to, because a violation of the PRC Labor Contract Law violates the law and warrants an employer penalty.
As is true of just about everything related to China employment law, the best way for you to proceed is with caution. When working with our clients, we always check the written law AND confirm our interpretation of that law with the relevant employment authorities before proceeding and you should do the same. Have your employment contract checked before putting it in front of any of your employees for signing. And again, if you do not understand the ins and outs of probation in China, you will probably be better off just skipping it entirely.
What about using a probation period for an existing “employee” who has been working for you in some capacity before your WFOE was formed (see Doing Business in China with Deportation or Worse Hanging Over Your Head). In those situations, our advice is usually to just skip the probation period because you already know that the employee is working out, otherwise you would not be looking to bring him or her into your new WFOE’s fold.