China Expat Employment Contracts: Red Flags

As part of our China employment work, we help expats navigate the China employee onboarding process, including reviewing and revising their employment-related documents, such as employment contracts. This involves our making sure our clients’ contracts protect their interests and achieve their goals and minimizes the likelihood of confusion and future disputes, which in turn saves them money.

As most of the major cities in China are getting back to normal and looking again at hiring foreign employees, we are seeing an uptick in needs in this area. Prospective/existing expat clients often ask us what are some of the main red flags we see in expat employment contract.s The below lists the expat employment problems we often see.

1. The employment contract contains illegal provisions that violate employee rights.

An employment contract with illegal provisions may in fact be completely unenforceable and a waste of your time and energy. Working in a foreign country is already challenging. Why not work for a company that strives to comply with the law and treat its employees with respect?

2. The employment contract’s Chinese and  English versions differ.

This is actually quite common and most of the time. the Chinese company has done this deliberately to take advantage of the expat’s lack of Chinese language skills. Normally the Chinese version is the controlling version, therefore it is crucial you have a Chinese-speaking employment lawyer review that version. On the other hand, unless you are fluent in Chinese, having the English version is critical for you to be able to understand the terms of the contract before you join the company and while employed there. This is why we always emphasize the importance of ensuring the Chinese and English versions match each other.

If your prospective employer refuses to give you either version, that is another red flag. For example, some Chinese employers may tell you that you do not need an English version because the Chinese version is all that matters. Or some may tell you the Chinese contract is just a formality to get you a work permit. They are wrong. Your employment contract is really important as it memorializes all essential aspects of your employment relationship with the company.

3. The employment contract and the offer letter differ.

The Chinese company changes or even deletes key terms that were agreed upon by both sides. If the Chinese company does not agree to revert to the original language in the offer letter, it should, at minimum, explain why they made the changes that they did. A company that acts in bad faith during employee onboarding is a company that will almost certainly act badly when there is a problem/dispute in the future.

4. The employment contract is just flat out bad.

Many Chinese companies have no clue about what it takes to comply with China expat hiring rules or with what makes sense for a foreign employee compensation package and their employment contracts reflect this. We have seen just about every variety of bad Chinese employment contract possible, and the below are just a small sampling of the sort of “mistakes” we see:

• The employment contract refers to other documents, such as a non-compete agreement, that have not been provided to the expat employee. If there are no such documents, any reference to them should be deleted to eliminate confusion. If there are such documents, they should be reviewed and negotiated.
• The employment contract is missing legally mandated provisions.
• The employment contract contains illegal provisions.
• The employment contract does not provide the sorts of perks typically provided to expats.
• The contract fails to clearly define critical terms.

You want to root out these sorts of employment contract problems because if not fixed, it is nearly always the expat employee who will pay.

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.