There is certain truth to an old expression about China employees, “once hired, never fired.” Terminating a Chinese employee is rarely going to be easy, and this includes probationary employees as well. Our recent experience in this regard is that while we can usually help our employer clients achieve their goals with respect to their employee termination matters, these matters almost always turn out far more complex (and therefore more expensive) than people realize. And even probationary employees who are terminated or otherwise believe they have been mistreated often follow up with labor arbitration.
China allows probationary periods for China employees, but only if done right. The maximum term of the probationary period depends on the term of the employment contract. If the employment contract is for between three months and one year, the probationary period can be for up to one month. If the employment contract is for between one year and three years, the probationary period can be for up to two months. For fixed-term employment contracts of three years or more, and for open-term employment contracts, the probationary period can be for up to six months.
If the employment contract terminates upon completion of an agreed assignment or if the employment contract is for less than three months or if the employment contract is for a part-time employee, there can be no probationary period.
An employee may be subject to only one probationary period with the same employer and this holds true even if the employee leaves that employer and then rejoins it.
Any probationary period must be set forth in the employment contract. If an employer enters into a “probationary period” agreement with its employee rather than a formal employment contract, such probationary agreement will likely be deemed unenforceable. This sort of arrangement is usually done to circumvent Chinese employment laws and the Chinese employment authorities are aware of this and they do not like this.
If an employer becomes unhappy with an employee after the hiring, the employer cannot put that employee on probation. In other words, if an employer is dissatisfied with an employee, its legal options are usually limited to the following:
- discipline the employee in accordance with the employer’s rules and regulations, or
- terminate the employee (if there is sufficient legal ground), or
- seek to terminate the employee via a mutual termination, or
- do nothing and revisit the termination option when it is time for contract renewal (if non-renewal is an option at that time).
Sometimes companies create a working environment in which the employee would want to resign, but the employer must do it in a lawful manner. And even if the employer’s intended actions technically do not violate any Chinese law, it needs to tread carefully. Remember the decisions you make now will define how your company is viewed in the market long-term.
The key thing to keep in mind is that while a probationary period is permissible under Chinese laws, if you want to set up a probationary period for your new China employees, you need to get it right.