Nicholas Lakeland, Employment Partner at Laytons and Donfil Huang, Legal Advisory Manager at Dezan Shira & Associates (DSA) share legal knowledge focusing on when a fixed-term contract becomes an indefinite-term contract.
In the UK, the fixed term contracts have to be signed for four years and then become indefinite term contracts, but employment rights kick in after two years of continuity of employment. There is normally a probation period of three to six months, no more than six months as it’s not recommended and not approved of by the employment tribunal when they look at periods of probation.
In China, an indefinite term employment contract, also known as “open-ended” or “non-fixed term” employment contact is where an employer in China and an employee have agreed there is no definite expiration date.
If an employer has signed an indefinite term contract with an employee, then it is most likely that you will have to pay compensation according to Chinese law, when you dismiss an employee. As an employee, you will not have to pay any compensation when an employee commits serious violations based on the company’s rules, has committed a crime, or when he or she retires or voluntarily resigns.
There are three typical scenarios where you should enter into an indefinite term employment contract:
Both the employer and employee agree to an indefinite term employment.
If an employee has worked for the same employer consecutively for ten years and if this employee proposes to sign an indefinite term employment contract.
If the employer and employee have signed fixed term employment contracts twice consecutively and they are willing to renew the employment contract for the third time.
Drafting a contract of employment in China and the UK (minimum requirements) Episode three: When does a fixed term contract become an indefinite term contract?
