The Labor Contract Law was promulgated in 2007 and amended in 2012 respectively. The latest revision entered into force on July 1, 2013.

There are 98 articles in total.

The key points are as follows:

1.This Law shall apply to the establishment of employment relationship between employees and enterprises, individual economic organizations, private non-enterprise entities, or other organizations, and to the formation, fulfillment, change, dissolution, or termination of labor contracts.

2.An employer establishes an employment relationship with an employee from the date when the employer puts the employee to work.

3.A written labor contract shall be concluded in the establishment of an employment relationship.

4.Labor contracts are classified into fix-term labor contracts, labor contracts without a fixed term, and the labor contracts that set the completion of specific tasks as the term to end contracts.

5.If the term of a labor contract is not less than 3 months but less than 1 year, the probation period shall not exceed one month. If the term of a labor contract is not less than one year but less than 3 years, the probation period shall not exceed 2 months. For a labor contract with a fixed term of 3 years or more or without a fixed term, the probation term shall not exceed 6 months.

6.If an employee violates the stipulation regarding the service time period, he shall pay the employer a penalty for breach of contract. The amount of penalty for breach of contract shall not exceed the training fees provided by the employer.

7.Personnel subject to non-competition restrictive covenant shall be limited to the employer’s senior management personnel, senior technical personnel and other personnel who are obliged to keep confidentiality. The non-competition restrictive covenant period shall not exceed two years.

8.Under any of the following circumstances, the employer may dissolve the labor contract if it notifies the employee in writing 30 days in advance or after it pays the employee an extra month’s wages and pay the employee an economic compensation:

(1) the employee is sick or is injured for a non-work-related reason and cannot resume his original position after the expiration of the prescribed time period for medical treatment, nor can he assume any other position arranged by the employer;

(2) the employee is incompetent to his position or is still so after training or changing his position; or

(3) the objective situation, on which the conclusion of the labor contract is based, has changed considerably, the labor contract is unable to be performed and no agreement on changing the contents of the labor contract is reached after negotiations between the employer and the employee.

9.Where an employee is under any of the following circumstances, the employer may dissolve the labor contract and shall not pay the employee an economic compensation:

(1) it is proven during the probationary period that the employee does not satisfy the employment criteria;

(2) the employee has committed a serious breach of the employer’s rules and system;

(3) the employee is guilty of serious dereliction of duties and corruption and causes the employer to suffer significant damages;

(4) the employee holds a labor relationship with another employer concurrently which has a severe impact on his/her performance of work tasks assigned by the employer or refuses to make correction as demanded by the employer;

(5) the labor contract which is concluded or varied by use of fraudulent or coercive tactics or taking advantage of the employer ’s unfavorable position to cause the employer to act against the real intention.