In China, an offer letter (录用通知书) is a written document delivered by an employer to an employee stating the employer’s intent to enter into a labor relationship with the employee. An offer letter typically proposes the employee’s work title, work location, wages, and the term of the employment arrangement.
Despite the relatively common use of employment offer letters in China (especially by state-owned enterprises) no Chinese law specifically addresses them. For that reason and for the reasons set forth below, employers should be careful in using them.
To begin with, despite what many believe, offer letters are not an official labor contract and they do not satisfy the legal requirement that labor contracts be in writing. Under Chinese law, an offer letter is regarded as an employer’s unilateral act expressing its willingness to enter into an employment relationship with a potential employee. An offer letter is deemed to be an “offer” (要约) and it is governed by China’s Contract Law, not by China’s Labor Contract Law. A labor contract is a legal document evidencing the existence of a labor relationship between the employer and the employee but an offer letter has no such effect. So even when the employee returns a signed offer letter, the employer must nonetheless execute a formal labor contract with the employee within one month after the employee begins working for the employer to be in compliance with Chinese law.
Under China’s Labor Contract Law, an employer can be required to pay its employees twice the employees’ monthly salary if it fails to execute a written labor contract within one month of the commencement of the employment relationship. Further, if the employer goes more than a year without having a written labor contract with an employee, the employee lacking the written labor contract will be deemed to have entered into an open-term labor contract with its employer, which essentially means there is no definitive end date to the labor relationship.
Nearly all of the offer letters our China lawyers have reviewed made statements violating PRC labor laws. This alone generally makes it a bad idea to refer to the offer letter in any eventual labor contract. But on top of this, nearly all of the offer letters we see also usually also contain terms that conflict with the labor contracts and/or other employment agreements such as the employer’s rules and regulations.
When an offer letter makes sense for our clients, we usually recommend that they insert a provision in the formal labor contract (in Chinese, of course) explicitly providing that the labor contract supersedes the offer letter.
In conclusion, if you are going to use an offer letter, you should, at minimum make sure of the following:
- It does not violate any PRC laws.
- You have a written labor contract with the employee to whom you sent the offer letter.
- Your written labor contract clearly provides (in Chinese) that it supersedes the offer letter.