1.       What is open-term labour contract in China?

An open-term labour contract or a non-fix-term labour contract refers to a labour contract for which the employer and the employee have agreed that the date of termination is not fixed. The biggest difference between the open-term labour contract and the fixed term labour contract is that there is no fixed-term of termination of the contract.

2.      Under what circumstances an open-term labour contract must be signed?

Upon negotiation and consensus between the employer and the employee, a non-fixed-term labour contract may be concluded. Under any of the following circumstances, an employee may propose or agree to renewal or conclusion of labour contract; except where an employee proposes for the conclusion of a fixed-term labour contract, an open-term labour contract shall be concluded:

(1)	the employee has worked for the employer for a period of 10 years consecutively;
(2)	when the employer first implemented the labour contract system or when a new labour contract is concluded upon restructuring of a State-owned enterprise, the employee has worked for the employer for a period of 10 years consecutively and will attain his/her statutory retirement age in less than 10 years' time; or
(3)	where a fixed-term labour contract has been concluded twice consecutively and the employee who does not fall under any of the categories stipulated in Article 39 and item (1) and item (2) of Article 40 of the Labour Contract Law of the PRC renews his/her labour contract.

Where an employer fails to conclude a written contract with an employee after one year has lapsed since the date of commencement of work, the employer and the employee shall be deemed to have concluded an open-term labour contract.

3.      What are the legal consequences of not signing an open-term labour contract?

Where an employer violates the provisions of Labour Contract Law of the PRC in failing to conclude an open-term labour contract with an employee, the employer shall pay the employee double wages each month with effect from the date of conclusion of open-term labour contract.

4.       Under what circumstances can the employer terminate an open-term labour contract?

Under the following circumstances, the employer may terminate an open-term labour contract in accordance with the law:

(1)	The employee and employer have reached a consensus;
(2)	It is proven during the probation period that the employee does not satisfy the employment criteria;
(3)	The employee has committed a serious breach of the employer's rules and regulations;
(4)	The employee is guilty of serious dereliction of duties and corruption and causes the employer to suffer significant damages;
(5)	The employee holds a labour relationship with another employer concurrently which has a severe impact on his/her performance of work tasks assigned by the employer or refuses to make correction as demanded by the employer;
(6)	The labour contract is rendered void under the circumstances stipulated in item (1) of the first paragraph of Article 26 of the Labour Contract Law of the PRC;
(7)	Criminal prosecution is instituted against the employee pursuant to the law.
(8)	The employee suffers from an illness or a non-work-related injury and is unable to undertake the original job duties or other job duties arranged by the employer following completion of the stipulated medical treatment period;
(9)	The employee is not competent for performing his/her duties and remains to be incapable of performing the job duties after training or job transfer;
(10)	The objective circumstances for which the conclusion of the labour contract is based upon have undergone significant changes and as a result thereof, the labour contract can no longer be performed and upon negotiation between the employer and the employee, both parties are unable to reach an agreement on variation of the contents of the labour contract.
(11)	The employer undergoes restructuring pursuant to the Enterprise Bankruptcy Law of the PRC;
(12)	The employer has serious production and business difficulties;
(13)	The enterprise undergoes a change of production, significant technological reform or change of mode of operation and upon variation of labour contracts, there is still a need for retrenchment.

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