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China Employment Contracts: If Yours Are Not Current, You Have A Problem. The Shanghai Version.
In China Employment Contracts: If Yours Are Not Current, You Have A Problem, I wrote about how Beijing employers with employees who continue working after the initial labor contract expires will be severely penalized for not having a written labor contract with the employee. Since Shanghai and Beijing often do not see eye to eye on employment matters (Beijing is generally more pro-employee than Shanghai) I thought it would be interesting to compare the two cities on how they treat employees who continue working after their written contract has expired. Not surprisingly, Shanghai’s position is not as cut and dried as Beijing’s. In Shanghai, the principle of good faith governs and the labor arbitration commission/court should base its decision on the specific circumstances that led to the lack of a written contract.
To avoid steep penalties you need a CURRENT written employment agreement (in Chinese) with your employees.
Pursuant to the Circular of the Supreme People’s Court of Shanghai on the Issuance of Opinions Regarding Several Issues Concerning the Application of the Labor Contract Law (上海市高级人民法院关于印发《关于适用< 劳动合同法>若干问题的意见》的通知), the court will consider whether the employer fulfilled its obligation to consult with the employee in good faith and whether the employee refused to sign the agreement after the employer provided him/her with such a document. Further, the court will not impose a double wage penalty on the employer if it determines that the employer acted in good faith and the lack of a written contract was solely the employee’s fault or based on a situation completely out of the employer’s control (e.g., force majeure).
Another judicial document, Answers of the Supreme People’s Court of Shanghai to Several Questions Regarding Labor Disputes (上海市高级人民法院关于劳动争议若干问题的解答), offers additional guidance. It provides that if there is evidence that the employee acted in bad faith and was the reason no written contract was executed, the employer will not be penalized for the employee’s wrongdoing. One example of such wrongdoing is an employee who tricks his or her employer into believing that the employee executed a labor when, in fact, the employee had someone else sign the contract, thus causing the employer to “fail” to execute a contract with the employee in question. Moreover, if the employer is able to prove that the reason it is unable to produce signed contracts as evidence is because company managers or human resources managers hid the contracts, the employer can still avoid the double wage penalty by providing other evidence showing that the parties did in fact execute contracts.
Bottom line: Just as in Beijing, smart employers never ever ever let an employee stay employed without a signed written contract in Chinese. In Shanghai, however, the employer at least has some small chance of avoiding steep penalties for no written contract if the employer can prove that it acted in good faith.
The post China Employment Contracts: If Yours Are Not Current, You Have A Problem. The Shanghai Version. appeared first on China Law Blog.
We will be discussing the practical aspects of Chinese law and how it impacts business there. We will be telling you what works and what does not and what you as a businessperson can do to use the law to your advantage. Our aim is to assist businesses already in China or planning to go into China, not to break new ground in legal theory or policy.
Source: http://www.chinalawblog.com/2015/08/china-employment-contracts-if-yours-are-not-current-you-have-a-problem-the-shanghai-version.html
