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Proclamation of the Standing Committee of People’s Congress of Shanghai Municipality No. 58

Labour Contract Regulations of Shanghai Municipality, adopted at the 33rd Meeting of the Standing Committee of the Eleventh People’s Congress of Shanghai Municipality on November 15, 2001, is hereby promulgated and shall enter into force as of May 1, 2002.

The Standing Committee of People’s Congress of Shanghai Municipality November 15, 2001

Labour Contract Regulations of Shanghai Municipality

(Adopted at the 33rd Meeting of the Eleventh People’s Congress of Shanghai Municipality on November 15, 2001)

Contents

Chapter I       General Provisions
Chapter II      Conclusion of Labour Contracts
Chapter III      Fulfillment and Modification of Labour Contracts
Chapter IV      Revocation and Termination of Labour Contracts
Chapter V       Special Provisions on Labour Contracts of Part-time Work
Chapter VI      Legal Responsibility
Chapter VII     Supplementary Provisions

Chapter I　General Provisions

Article 1　This Regulations is formulated in accordance with the Labour Law of the People’s Republic of China, other competent laws and regulations and in light of the actual situation of the Municipality so as to readjust labour relations, establish and maintain labour contract system adapted to the socialist market economy.

Article 2　This Regulations applies to all enterprises, individual economic organizations, and state organs, institutional organizations and societies (hereinafter referred to as employing units) and employees who form labour relations therewith.

Article 3　A labour contract is the agreement reached between an employee and an employing unit for the establishment of the labour relations and the definition of the rights and obligations of each party.

Article 4　A labour contract shall be concluded in written form, with exception of special provisions in this Regulations.

Article 5　Conclusion and modification of a labour contract shall follow the principles of equity, voluntariness and unanimity through consultation, and shall not run counter to the stipulations of laws , rules and regulations.
A labour contract once concluded in accordance with the law shall possess legal binding force. The parties involved must fulfill the obligations as stipulated in the labour contract.

Article 6　Trade unions should give guidance and assistance to employees when concluding labour contracts and supervise the employing unit to fulfill the contracts. In case of employing units infringing upon the legal rights of the employees, trade unions should negotiate with the employing unit to protect the legal rights of employees in concluding and fulfilling the labour contract.

Article 7　Labour & social security authority has the duty of guidance and supervision on the implementation of the labour contract system.

Chapter II　Conclusion of Labour Contacts

Article 8　The employee has the right to understand the competent rules, working conditions and remuneration etc. of the employing unit before concluding the contract. The employing unit shall inform the employees of the actual situations.
The employing unit has the right to know the health situation, skills and working experiences of the employees when recruiting and selecting workers. The employees shall tell the truth.

Article 9　The text of the labour contract can be provided by the employing unit, or can be jointly drafted by the employing unit and the employees. The text provided by the employing unit shall follow the principle of fairness, not infringing upon the legal rights and interests of the employees.
The labour contract shall be written in Chinese, or in foreign language at the same time, or in the language as agreed upon by both parties. In case of discrepancy between the Chinese version and the version in other language, the Chinese version shall prevail. The labour contract should have two copies, for each party holding one.

Article 10　A labour contract should contain the following clauses:
(1) term of a labour contract;
(2) contents of work;
(3) labour protection and working conditions;
(4) labour remuneration;
(5) labour disciplines;
(6) conditions for the termination of a labour contract; and
(7) responsibility for the violation of a labour contract.
Apart from the required clauses specified in the preceding paragraph, other contents in a labour contract may be agreed upon through consultation by the parties involved.

Article 11　A labour contract can be a fixed-term contract, non-fixed-term contract or a contract of taking the completion of a specific amount of work as a term. The term of the labour contract shall be agreed upon by the employing unit and the employee.

Article 12　The labour contract shall be valid once the parties involved sign in. Where the parties make other agreement on the valid date or conditions, the other agreement shall prevail.

Article 13　A probation period may be agreed upon in a labour contract. No probation period is allowed if a labour contract lasts less than six months; where the contract lasts more than six months but less than one year, the probation period shall not exceed one month; where the contract lasts more than one year but less than three years, the probation period shall not exceed three months; where the contract lasts three years or more, the probation period shall not exceed six months.
If the parties involved only agree upon the probation period other than the term of a labour contract, this probation period shall be invalid and taken as the term of a labour contract.

Article 14　The parties involved should agree upon the service term of the employee where the employing unit pays for recruiting, training or offers special benefits to the employee.

Article 15　The parties involved may agree upon confidential clauses in a labour contract or make a separate confidentiality agreement. Where the commercial secrets should be made public, the confidentiality clauses or confidentiality agreement shall be automatically invalid.
For the employee who has the obligation to keep commercial secrets of the employing unit, the parties involved shall agree upon the advance notification period of revoking the labour contract by the employee in the labour contract or in the confidentiality agreement. However, the advance notification period shall not exceed six months. During the notification period, the employing unit can take measures to keep the employee away from the commercial secrets.

Article 16　For the employee who has the obligation to keep the commercial secrets of the employing unit, the parties involved may agree upon the non-competition clauses in their labour contract or in the confidentiality agreement, and the compensation thereby to the employee after the termination or revocation of the labour contract as well. Non-competition duties are defined as the employee shall not be allowed to compete against or work for any competitor of his/her former employing unit within a certain period of time after the employment is terminated. The restrictive period shall be agreed upon by both parties, but shall not exceed three years, with the exception of other stipulations of laws and regulations.
The parties who agree upon non-competition clauses shall not agree upon the advance notification period for revoking a labour contract.
The non-competition clauses shall not run counter to laws and regulations.

Article 17　The compensation for breaking the contract by the employee defined in a labour contract shall be limited as in the following circumstances:
(1) breaking the agreement on the service period;
(2) breaking the agreement on keeping commercial secrets;
The amount of the compensation should be defined fairly and reasonably.

Article 18　The working conditions, remuneration agreed upon in a labour contract shall not be lower than those in a collective agreement. The standards in a collective agreement shall prevail over the lower standards in an individual contract.
The collective agreement shall be concluded in accordance with laws and regulations.

Article 19　The labour contract can be renewed at its expiration when the parties involved agree. No probation period shall be agreed upon in the renewed labour contract.

Article 20　The following labour contracts shall be invalid:
(1) labour contracts concluded in violation of laws, administrative rules and regulations;
(2) labour contracts concluded by resorting to such measures as cheating and intimidation.
An invalid labour contract shall have no legal binding force from the very beginning of its conclusion. Where a part of a labour contract is confirmed as invalid and where the validity of the remaining part is not affected, the remaining part remains valid.
The invalidity of a labour contract shall be confirmed by a labour dispute arbitration committee or a people’s court.

Article 21　The employing unit establishing labour relations with an employee shall go through recruitment registration procedures with relevant agencies authorised by the labour & social security authority.

Chapter III　Fulfillment & Modification of Labour Contracts

Article 22　The parties of a labour contract shall start to fulfill the contract on the date agreed upon in the contract. In case of discrepancy between the date agreed upon in the labour contract and the actual time fulfilling the labour contract, the latter shall prevail.

Article 23　Modification to labour contracts shall be agreed in written form by both parties involved. Where an agreement on modification could not be reached by the relative parties, the original labour contract shall continue to be valid, with exception of the circumstances defined in laws and regulations.

Article 24　In case of merging or division of the employing units, the labour contracts shall be carried out by succeeding employing units after completion of merging and division; the labour contracts could be modified or revoked upon agreement by the parties concerned; where other agreements have been reached by the parties involved, the other agreements shall prevail.

Article 25　Where the employing unit signing the labour contract with the employee is not the one using the employee, the contracting employing unit and the employee user could reach an agreement that the employee user shall meet part or full obligations to the employee concerned. Where the employee user does not meet the obligations defined in the agreement, the contracting employing unit shall fulfill the obligations to the employees.

Article 26　The labour contract may be suspended within its duration in any of the following circumstances:
(1) The employee joins the Army or fulfill other statutory obligations;
(2) The employee is temporarily unable to fulfill the obligations in the labour contract, while there still exists possibilities or circumstances where the employee may resume fulfillment of the labour contract; and
(3) Other circumstances stipulated by laws and regulations or agreed upon in the labour contract.
Where the circumstances for suspension stop occurring, the employee shall resume fulfilling the contract, with the exception of circumstances defined in other laws and regulations.

Article 27　Where a written labour contract is required according to laws and regulations but not yet concluded, while the employee has fulfilled the obligations upon the requirement of the employing unit, the labour relationship between the two parties shall be recognized. The remuneration and working conditions of the employee shall be determined according to the following principles:
(1) Where the remuneration and working conditions provided to the employee are better than those in the regulations of the employing unit, the collective agreement or statutory labour standards, the better ones shall prevail;
(2) Where remuneration and working conditions provided to the employee are lower than those defined in the regulation of the employing unit, the collective agreement or statutory labour standards, they shall be defined in favor of the employee.

Article 28　If part of the labour contract does not conform to the statutory labour standards, the employing unit shall fulfill obligations as per the statutory labour standards, and is required to make modifications on the concerning part in the labour contract that is not compatible with statutory labour standards.

Chapter IV　Revocation & Termination of Labour Contracts

Article 29　The labour contract could be revoked upon agreement between the parties involved.

Article 30　An employee who intends to revoke his labour contract shall give a written notice to the employing unit 30 days in advance.

Article 31　An employee may notify the employing unit at any time of his decision to revoke the labour contract in any of the following circumstances:
(1) Within the probation period;
(2) Where the employing unit forces the employee to work by resorting to violence, intimidation or illegal restriction of personal freedom; and
(3) Failure on the part of the employing unit to pay labour remuneration or to provide working conditions as agreed upon in the labour contract.

Article 32　In any of the following circumstances, the employing unit may revoke the labour contract but a written notification shall be given to the concerned employee 30 days in advance:
(1) Where an employee is unable to take up his original work or any new work arranged by the employing unit after the completion of his medical treatment for illness or injury not suffered at work;
(2) Where an employee is unqualified for his work and remains unqualified even after receiving training or adjustment to other working post; and
(3) No agreement on modification to the labour contract could be reached through consultation by the parties involved where the objective conditions taken as the basis for conclusion of the contract have changed dramatically so that the original labour contract could no longer be fulfilled.
If the employing unit does not notify the concerning employee of its decision to revoke the labour contract 30 days in advance according to the regulations, it shall fulfill its obligations defined in the labour contract to the employee for 30 days upon the date of notification.

Article 33　The employing unit may revoke the labour contract with the employee at any time in any of the following circumstances:
(1) The employee has been proved not up to the requirements for recruitment during the probation period;
(2) The employee has seriously violated labour disciplines or the rules and regulations of the employing unit;
(3) The employee has caused great losses to the employing unit due to serious dereliction of duty or engagement in malpractice for selfish ends;
(4) The employee has been investigated for criminal responsibilities in accordance with the law; and
(5) Other circumstances stipulated by relative laws and regulations.

Article 34　An employing unit shall not revoke the labour contract with an employee in accordance with the stipulations in Article 32, Article 33 of this Regulations in any of the following circumstances:
(1) The employee has been confirmed to have totally or partially lost working capability due to occupational diseases or injuries suffered at work;
(2) The employee is receiving medical treatment for diseases or injuries within the prescribed period of time;
(3) The female employee during pregnant, puerperal, or breast-feeding period; or
(4) Other circumstances stipulated by relative laws and regulations.

Article 35　If employee reduction is necessary for the employing unit, the employing unit may make such reduction in line with the laws and regulations after it has explained the situation to the trade union or all of its employees and confirmed the reduction plan through consultation with the trade union or representatives of the employees to take remedial measures. The reduction plan shall be reported to the labour & social security authority.
The trade union and concerned employees shall be notified of the implementation of the reduction plan 30 days in advance.
Where the employing unit is to recruit employees in 6 months after the employee reduction effected according to the stipulations of this Article, the reduced employees shall have the priority to be reemployed.

Article 36　Where the employing unit decides to revoke the labour contract unilaterally, it shall notify the trade union of the reasons in advance. Where the trade union considers it against relative laws, regulations and contracts, and requests reconsideration and other decisions, the employing unit shall consider the opinions of the trade union and notify the trade union of its further decision in written form.

Article 37　The labour contract shall be terminated in any of the following circumstances:
(1) Expiration of the labour contract;
(2) The agreed circumstances under which the labour contract terminate occur;
(3) Bankruptcy, dissolution or revocation of the employing unit; and
(4) Retirement, resignation or death of the employee.
The labour contract may be terminated if one party of a labour contract has failed to fulfill the contract for more than 3 months.
The labour contract may be terminated if the employing unit has made disability employment compensation according to regulations to the employee that has been confirmed to have partially lost the working capability due to occupational diseases or injuries suffered at work.

Article 38　The employing unit shall not terminate the labour contract if the employee has been confirmed to have totally or largely lost the working ability due to occupational diseases or injuries suffered at work, but the labour contract may be terminated if an agreement has been reached by the parties involved and the employing unit has made disability employment compensation to the employee according to regulations.

Article 39　Upon expiration of a labour contract, or the occurrence of circumstances agreed by the parties involved to terminate the labour contract, the labour contract shall be extended under any of the following circumstances until such circumstance stops occurring , with the exception of the circumstances stipulated in (2), (3) and (4) of Article 33:
(1) The employee receiving medical treatment for diseases or injuries within the prescribed period of time;
(2) The female employees during pregnant, puerperal, or breast-feeding period; or
(3) Other circumstances stipulated by relative laws and regulations.

Article 40　The employee may terminate the labour relations at any time if a labour contract required is not yet concluded.
The employing unit shall notify the employee of terminating the labour relationship 30 days in advance where a labour contract required is not yet concluded. However, the labour relationship shall be extended under any of the circumstances stipulated in Article 39 until the circumstance stops occurring.

Article 41　The employing unit shall produce valid proof on the termination or revocation of the labour relationship once the labour relationship is terminated or revoked.
The former employee may apply for unemployment registration with the valid proof produced by the previous employing unit.

Article 42　In any of the following circumstances, the employing unit shall be liable for paying economic compensations to the employee on the basis of the employee’s one month’s salary for per full-year service with the employing unit:
(1) The employing unit revokes the labour contract with the employee according to the stipulations of Article 29 of this Regulations;
(2) The employee has terminated the labour contract according to (2), (3) of Article 31 of this Regulations;
(3) The employing unit revokes the labour contract with the employee according to the stipulations of (2) of Item 1 in Article 32 of this Regulations;
(4) The employing unit revokes the labour contract with the employee according to the stipulations of (1), (3) of Item 1 in Article 32 of this Regulations;
(5) The employing unit revokes the labour contract with the employee according to the stipulations of Article 35 of this regulations;
(6) The employing unit terminates the labour contract with the employee according to the stipulations of (3) of Article 37 of this Regulations;
Under the circumstances of stipulations of (1), (2), (3) in this Article, the economic compensation normally shall not exceed total amount of 12 months’ salaries of the employee, with exception of the agreement reached by parties involved.

Article 43　If the circumstances agreed upon in a labour contract to terminate the contract are similar to those on revocation of the contract stipulated in this Regulations, the employing unit shall be liable for paying the employee economic compensation according to corresponding standards on revoking the labour contract defined in this Regulations.

Article 44　The employing unit that has terminated the labour contract with the employee according to the stipulations of (2) of Item 1 in Article 32 in this regulation shall provide the employee with medical compensation equivalent to the amount of no less than 6 months’ salaries of the employee in addition to the economic compensation.

Article 45　The salary in Article 42 and Article 44 in this Regulations shall be calculated according to the average salary of the employee in a period of 12 months before termination or revocation of the labour contract. Where the salary of the employee is lower than the Minimum Wage of Shanghai Municipality, the salary shall be calculated on the basis of the Minimum Wage of Shanghai Municipality.
If the year of seniority with the employing unit in Article 42 is between 6 to 12 months, it shall be calculated as 1 year.

Chapter V　Special Provisions on Labour Contracts of Part-time Work

Article 46　A part-time labour contract is the agreement reached between an employee and an employing unit for the establishment of labour relationship on a paid-by-hour basis.
If an employee establishes labour relationship by part-time labour contract with more than one employing unit, the daily, weekly or monthly working hours agreed under each contract shall not exceed 50% of the statutory working hours.
The total working hours of an employee in all these employing units shall not exceed the statutory maximum working hours.

Article 47　A part-time labour contract can be concluded in written form or in other forms. The part-time labour contract shall be concluded in written form if one party of the contract so requests.

Article 48　If the term of a contract is not agreed upon in a part-time labour contract, either party may notify the other party of his decision to terminate the labour relationship at any time.

Article 49　Parties of a part-time labour contract may agree upon the following clauses such as working hours, content of work, labour remuneration, means of payment and keeping the commercial secrets of the employing unit.

Article 50　The labour remuneration of a part-timer is calculated on an hourly basis.
The labour remuneration includes hourly wage and social insurance contributions according to laws and regulations.

Article 51　The employing unit shall bear respective responsibilities for work-related injuries or occupational diseases incurred to the part-timers in the process of work.

Article 52　The minimum wage standard for part-timers shall be issued by Shanghai Municipal Labour and Social Security Bureau once approved by Shanghai Municipal Government. The minimum wage standard shall be determined with comprehensive consideration of the conditions of part-time work such as job security and welfare benefits.
The procedures of social insurance contribution by part-time employment shall be issued by Shanghai Municipal Government separately.

Article 53　Stipulations of Chapter 2, Chapter 3 and Chapter 4 shall not apply to part-time labour contract with the exception of Article 8, Article 20 and Article 21.

Chapter VI　Legal Responsibility

Article 54　If the labour contract is invalid or partially invalid due to the act of one party and thereby causing damages to the other party, the liable party shall bear the responsibility for compensation.

Article 55　Either party of the labour contract shall bear responsibility for breach of the contract and shall be liable for compensation for any damages caused to the other party.
If both parties breach the contract, each shall bear its own responsibility.

Article 56　Where the employing unit fails to sign a written contract with the employee in violation of the stipulations of this Regulations, the labour and social security administrative department shall order it to make correction within set time, and may impose a fine of RMB500 to RMB1000 per person in question on the employing unit.

Article 57　Where the employing unit fails to go through the employment registration required in this Regulations, the labour and social security administrative authority shall order it to go through the registration procedures in set time. If the unit fails to fulfill the registration within the time limit, a fine of RMB500 per person in question shall be imposed on the employing unit.

Article 58　Any labour disputes that take place between the parties of a labour contract shall be settled under the provisions of labour dispute settlement.

Article 59　Any party of the labour contract that disagrees with the administrative sanction by the labour administrative department may, in accordance with the Administrative Reconsideration Law or the Administrative Procedure Law of the People’s Republic of China, apply for administrative reconsideration or take legal proceedings to the people’s court.

Chapter VII　Supplementary Provisions

Article 60　Where there are special stipulations in laws and administrative Regulations on the applicable parties of the labour contract, such stipulations shall prevail.

Article 61　Where a labour contract has been fulfilled before the enforcement of this Regulations, the parties involved shall continue to fulfill the contract if the liabilities of each party involved were clearly defined according to the then local regulations and government rules. Where the then local regulations and government rules did not make such clear provisions on the liabilities of labour contracting parties, this Regulations shall prevail.
The stipulations on a labour contract in Shanghai Municipal Regulations of Labour & Personnel Management in Foreign Invested Enterprises shall no longer apply to the labour contracts signed by foreign invested enterprises and their employees upon the enforcement of this Regulations.

Article 62　This Regulations shall become effective as of May 1st, 2002.