China employers often want to extend an offer letter to their potential new hires to prove they are serious about bringing them on board. Some candidates expect or may even request an “official” offer letter from their potential employer. This is understandable. However, offer letters are neither needed nor required in China and they do not replace an employment contract. For these reasons, when our clients ask us to review their China job offer letters, we see our job as China employment lawyers to be to make sure the offer letters do not harm our client. Most of the job offer letters we are tasked with reviewing would have hurt our clients (some very badly) had we not remedied them.
If your China job offer letter is not written with China’s employment laws in mind you almost certainly would be better off not using a job offer letter at all. Instead, consider just verbally tell your potential employee what you will be offering and then later you can provide that employee with a full-fledge, fully vetted, China-centric employment contract.
What are the more common red flags our China employment lawyers typically see in job offer letters? What do our China employment attorneys often see that tell us the job offer letter should not be used or at least should be seriously revised before being used? The following are our big three:
1. The most common red flag we see are job offer letters written as though they were for the country in which our client is based and not for China. Many of these explicitly reference U.S. or Canada or Australia or EU law and that is just not going to fly. In particular, our U.S. clients will often reference U.S. at-will employment and that definitely makes no sense for China. See China Employment Contract FAQs. These sorts of things will only set you up for trouble down the road.
Along these same lines of using non-China law for a China job offer letter, we also often see employers write that “either party can terminate with a month’s written notice.” This does not comply with Chinese employment law and it should not be used. In fact, we generally recommend the job offer letter not discuss termination at all as this is best saved for the employment contract. Pretty much all notice period requirements are also better left to the employment contract itself and left out of your job offer letters.
Rule #1 for a China job offer letter is that it should — if at all possible — include only language that 1) fully complies with China’s employment laws (both national and local) and 2) that benefits you. Just by way of one important example of this maxim: it can benefit you as the employer to include your potential employee’s total compensation and company-provided annual paid leave in your China job offer letter because these are things your employees really care about but including these could harm you if they do not comply with Chinese employment law or even if they do not line up with your company’s Employer Rules and Regulations.
2. The job offer letter does not specify an initial employment term or state whether the employee will be hired on a fixed-term or an open-term contract. Since the terms of the employment contract will eventually control, you can to a certain extent deal with these issues in the contract itself. But normally the offer letter should specify an initial employment term and a probation period (if any). These are important issues and if they not in the offer letter, your potential employee likely will become concerned. So our China employment lawyers usually recommend to our clients that they include a brief section in the offer letter setting out the employment term and any probation period.
3. The probation period set out in the job offer letter is not proportional to the employment term. Getting this proportionality right is not that difficult, but getting it wrong can lead to all sorts of problems. What happens when you seek to terminate the “probationary” employee for failing to satisfy your conditions of employment? Suppose the probation period you set out in your job offer letter is longer than what is legally permitted and your termination occurs after the statutory probation period has passed. Your termination decision will almost certainly be deemed to have been unlawful because it came too late. Your employee will sue and you will lose.
Just as a quick aside because at least 90 percent of our clients justifiably are surprised by this, but even your China employees working for you during their probation period cannot be terminated at will. Foreign companies seldom realize this and so they set their employee probation periods for as long as legally possible (actually, many set them for even longer than legally possible) and they do this believing that the longer it is the better, but that is definitely not always true.
Bottom Line: Like pretty much everything China employment law related, your job offer letters need to be done right and, at minimum, that means they should comply with China’s national and local employment laws. Our China employment lawyers regularly conduct China employer audits and oftentimes these audits reveal that even our own clients have sent out job offer letters (without sending them to us first for our review) that failed to comply with Chinese law and put them at risk.
Don’t let that be you….