China Employment Contracts: Do Them in Chinese

Our China lawyers sometimes get “simple” questions from our WFOE clients regarding China’s labor law. One such question is whether they must use Chinese as the prevailing language for their employment contracts with their employees, especially with their expat employees. This question is not as simple as it may first appear.

First off, there is little national guidance on this other than an “ancient” 1995 document with the long title of Letter of the General Office of the Ministry of Labor on Implementation of the Regulation on the Labor Administration of Enterprises with Foreign Investment (the “Letter”). The Letter explicitly requires the language of a China employment contract be in Chinese. However, the authority of this document is questionable because its underlying regulation is no longer in effect, having been replaced in 2007 by the PRC Labor Law and other relevant laws and regulations. So just as is the case with so much of employment law in China, it is important to look into how each locale deals with this issue.

In Shanghai, you must have a Chinese version for your labor contract. Though you may have an English language translation of your contract, Chinese must be the controlling language. Shanghai (more so than many other Chinese cities) generally takes a liberal view on freedom of contract and when it comes to employment contracts between Shanghai employers and their expat employees, Shanghai generally will respect the parties’ own arrangement so long as those terms do not contradict matters covered in the relevant laws. Notwithstanding Shanghai’s general approach, if there is a conflict between a Chinese language employment contract and an English language version, the Chinese version will control.

Similarly, Jiangsu Province explicitly states in its provincial Labor Contract Regulations that in the event of a dispute involving an employment contract written in a foreign language and in Chinese, the Chinese language will prevail.

What happens in legal disputes where the employment contract is in just English? The courts will sometimes have the contract translated but other times, they will simply rule there is no valid employment contract and penalize the employer accordingly.

We recommend inserting a provision in your employment contracts making it clear the Chinese language controls. We make this recommendation because the Chinese language version almost certainly will be the one that applies anyway, but also because this lets everyone know exactly what will happen if there is any dispute regarding the applicable language — which disputes happen more often than you would think. It is seldom a good idea to set yourself up for having to pay attorneys to fight about the applicable language.

We virtually always write our clients’ employment contracts in both English and Chinese, even though the Chinese will control. We do this because it is critical our clients fully understand their employment contracts (same for the company rules and regulations relating to their employees) so they can be sure to abide by them. Employer-employee disputes are incredibly common in China, particularly for foreign companies doing business in China. Having clearly written employment contracts in both Chinese and in English reduces the number of those disputes and their cost should one arise.

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.