China requires an employer have a written employment contract with all full-time employees.But because China’s employment laws can vary so much depending on locale, there is no suchuniversal rule regarding part-time employees. But for many reasons, no matter where you are in China, you should have written employment contracts with your part-time employees as well. The most important reason to have such a contract with all of your employees — full and part-time — is because it will be your best evidence to show what your employment relationship entailed.
Consider this hypothetical. An employer and employee orally agree the employee will work no more than 12 hours each month. The employee works in the finance department and she is allowed to make her own schedule. The employee does not record her attendance. The employer pays her on monthly basis and it pays for all her social insurance (just as it does for its full-time employees). It is unclear when the employee officially started with this employer, nor is it clear exactly when she ceased being an employee. Around the time of her termination, the employer promised to pay the employee 1.5 months her monthly wages as severance.
The employee sues the employer for (among other things) damages she sustained for being employed without a written employment contract and for the difference between what she made in wages and the local minimum wage. How will the court likely rule?
Most facts of this hypothetical come from an actual case in Beijing. Let’s look at the Beijing court’s analysis here.
At the outset, it is important to note that the employer has converted the employee to a full-time employee by its own actions. How so?
First, Beijing mandates a 15-day payment cycle for part-time employees. This differs from the rules for full-time employees who are usually paid monthly. The employer violated the law by paying the “part-time” employee on a monthly basis and the employer’s payment cycle with this employee suggests the employer viewed her as a full-time employee. Note that the payment cycle standing alonedoes not determine whether an employee is full-time or part-time, but it is an important factor Chinese courts consider in determining an employee’s status. So you do not want to lump your part-time employees together with your full-time employees in terms of payroll. You should pay your part-time employees every 15 days at most, no matter when you pay your full-time employees.
Second, the employer’s failure to record the employee’s attendance made it impossible for it to meet its burden of proving the employee worked 12 or fewer hours each month and therefore made it impossible for it to prove she was truly a part-time employee. This flexible arrangement essentially set the employer up for trouble because the burden is on the employer to prove the employee’s working hours do not exceed the legal maximum for part-time employees. So foreign companies need to beware. Being too flexible (especially without anything in writing) is a common recipe for foreign company employer problems in China.
Third, the employer agreed to pay this employee severance at the time of termination of the employment relationship. In Beijing, employers are not required to pay part-time employees statutory severance when the relationship is terminated. The employer’s choosing to pay this employee severance notwithstanding its argument that this is a part-time employee actually backfired on them as it was yet another factor the court used to determine this employee had not been part-time.
Lastly, the employer contributed the full range of social insurance for this employee, but because Beijing does not require this for part-time employees, these contributions were considered as further evidencing the employee was full-time.
The court ruled this employee was a full-time employee and held that she was owed double her monthly wage for the time period she was employed without a written employment contract. Needless to say, the employee also should have been paid at least the local minimum wage because of her “full-time” status.
Just one very clear reason why you should have a contract with your part-time employees. And if you are going to have such a contract, you must make sure it makes sense for China and works under Chinese law.
Elite Stage is a platform that provides One-stop business Solution for start-ups and foreign enterprises, founded by Venture Capital and Elite Stage Consulting Company, individual Lawyer Partners and Deloitte Auditors. For over 8 years, Elite Stage successfully assisted more than 800 companies from all over the world with their China market entry.