A labor contract is a legally binding document that defines the rights and responsibilities of employers and employees. Here is a straightforward, practical guide to the essential aspects to review before signing a labor contract. Understanding these points allows employees to protect their rights and ensures that their employment terms are transparent, fair, and legally sound.

I. Types of labor contracts

In China, labor contracts are categorized into three types:

1. Fixed-term contracts:

These contracts specify a clear start and end date for employment and are established by mutual agreement between the employer and the employee.

2. Open-ended contracts:

These contracts have no fixed end date and are based on mutual agreement between the employer and the employee.

However, the employer must offer an open-ended contract if:

- The employee has worked for the employer for 10 consecutive years.

- The employee is in their 10th consecutive year with the employer and is within 10 years of the legal retirement age, when the employer first signs a contract or undergoes State-owned enterprise restructuring.

- The employer and the employee are signing a contract for the third consecutive time, and the employee has not violated any provisions under the Labor Contract Law of the People's Republic of China.

If the employer fails to sign a written contract within one year from the employee's first working day, it is automatically deemed an open-ended contract.

3. Task-based contracts:

These contracts end upon completion of a specific task or project, as agreed by both parties.

4. Electronic employment contracts

If an electronic contract is used, the employer must:

- Promptly notify the employee to download and save the contract;

- Explain to the employee how to access and download it; and

- Provide necessary guidance to ensure the employee can view, download, or print the complete contract using standard devices.

Upon request, the employer must provide at least one free printed copy, stamped to confirm it matches the electronic version.

II. Essential clauses in a labor contract

According to the Labor Contract Law of the People's Republic of China, a labor contract must include the following legally mandated clauses:

- The employer's name, address, and legal representative or principal responsible person;

- The employee's name, address, and ID card or other valid identification number;

- Contract duration;

- Job description and work location;

- Working hours, rest days, and leave;

- Remuneration details;

- Social insurance; and

- Labor protection, working conditions, and occupational safety measures.

Additional clauses may cover probationary periods, training, confidentiality, supplementary insurance, and other benefits.

III. FAQs

1. Is an open-ended contract mandatory after two fixed-term contracts?

Yes. When an employer has signed two consecutive fixed-term labor contracts with an employee, and the employee qualifies for an open-ended contract, the employer is legally required to inform the employee of their right to choose an open-ended contract.

Under Article 14 of China's Labor Contract Law, once two consecutive fixed-term employment contracts have been signed, the employer is prohibited from entering into another fixed-term contract or terminating the employment relationship. If the employee requests or agrees to renew or sign an open-ended employment contract, the employer is obligated to comply.

This obligation not only protects the employee's rights, but also ensures that the employer fulfills their legal responsibilities.

If the employee believes that the employer has failed to fulfill this obligation, resulting in the employee missing the opportunity to sign an open-ended labor contract, the employee may seek redress through legal channels such as labor arbitration or litigation.

2. When should the contract be signed?

The Labor Contract Law requires a written contract to be signed within one month of the employee's first working day, regardless of any probationary period.

3. Should the employee keep a copy?

Yes. A labor contract takes effect once both parties have signed or stamped it. Both the employer and the employee must retain one copy.

If the employee does not have a copy, it may complicate future dispute resolution.

Employees are advised to request a signed copy for their own records. If the employer refuses, the issue may be reported to the local labor supervision authority, which can require the employer to comply.

4. Can a letter of appointment substitute for a labor contract?

No. A letter of appointment typically specifies only the position being offered and omits key provisions such as contract duration, job responsibilities, and pay. As such, it does not meet the formal requirements of a labor contract.

Furthermore, under legal provisions, a labor contract becomes effective only when the employer and the employee have reached mutual agreement and have signed or affixed their seal to the contract.

Creating a labor contract typically involves two steps: offering and accepting. When an employer issues a letter of appointment unilaterally, it serves as an “offer” — a proposal from the employer to the employee. Since the employee has neither signed nor sealed the document, it is not considered accepted. Consequently, it is unclear whether both parties have reached a mutual agreement or intend to honor the appointment terms. Therefore, the letter of appointment does not have the legal status of a labor contract.

According to the law, if the employer fails to sign a written labor contract with the employee within one month but no more than one year from the start date of the employment, the employer must pay the employee double the monthly wage for each month missed. If the employer fails to sign a written labor contract with the employee after one year, it shall be deemed that an open-ended labor contract has been signed. Clearly, failing to sign a written labor contract leads to financial losses for the employer and poses a risk for the employee, as their rights may not be adequately protected.

 

Disclaimer: This article is for general reference only and does not constitute legal advice. For specific cases, please consult the competent authorities or a qualified legal professional.

 

Sources: Official WeChat account of the Ministry of Human Resources and Social Security (ID: "rsbwwx"); official WeChat account of Beijing Municipal Human Resources and Social Security Bureau (ID: "Beijing_12333")

 

 

Updated Aug 24, 2026