Regulation of Shenzhen Special Economic Zone on Labor Contract

(Adopted at the 24th meeting of the Standing Committee of the First Shenzhen Municipal People’s Congress on August 4, 1994, revised at the l6th meeting of the Standing Committee of the Second Shenzhen Municipal People’s Congress on July 15,1997, amended at the 32nd meeting of the Standing Committee of the Third Shenzhen Municipal People’s Congress on June 25, 2004.)

Chapter I General Provisions

Article 1 This Regulation is formulated in order to protect the lawful rights and interests of both the employees and the employing entities, standardize the employment behavior of employing entities, maintain the labor market order of Shenzhen Special Economic Zone (hereinafter referring to as Special Zone), and promote the economic development.

Article 2 A labor contract is an agreement that establishes the labor relationship between the employing entity and the employee and specifies the rights and obligations of both parties concerned.

Article 3 The employees as mentioned in this Regulation refer to those persons who are recruited by the employing entities in Special Zone, but with the exception of civil servants or those persons who are treated as civil servants.
An employing entity as mentioned in this Regulation refers to an enterprise, state organ, public institution, social group or individual business organization in Special Zone that needs to recruit employees.

Article 4 Laws and regulations shall be abided by for the conclusion of labor contracts. And the principles of equality, willingness and consensus through consultation shall be followed.

Article 5 A labor contract shall be legally binding as of its lawful conclusion, and the parties concerned shall perform it in a strict way.

Article 6 The labor administrative department of the People’s Government of Shenzhen Municipality (hereinafter referred to as the labor department) shall be responsible for the implementation of this Regulation and exercise supervision.

Chapter II Conclusion and Performance of Labor Contracts

Article 7 A labor contract shall be concluded where a labor relationship is to be established. A labor contract shall be concluded in written form, with each copy to be kept by every party.
The labor department shall order an employing entity to conclude a supplementary labor contract within the time limit if the labor contract fails to be concluded within 30 days after the employing entity recruits an employee. If the employing entity refuses to do so, the labor department shall impose on it a fine of 50 yuan for each person with whom a labor contract has not been concluded. If any damage is caused to the employee due to the failure of the employing entity to conclude a labor contract, the employing entity shall be liable for compensations.
If an employing entity refuses to render labor contracts to employees, the labor department shall deal with it according to the provisions in the preceding Paragraph.

Article 8 A labor contract shall be established from the day when an employee and the employing entity reach unanimity about contract clauses through consultation and both sign on it.

Article 9 A labor contract shall include the following clauses:
(1) Production (work) assignments;
(2) Term of the labor contract;
(3) Labor protection and working conditions;
(4) Labor disciplines;
(5) Labor remunerations, and method and time of payment;
(6) Social insurance and welfare and benefits;
(7) Conditions for the termination of the labor contract; and
(8) Liabilities for breach of contract.
In addition to the required clauses as specified in the preceding Paragraph, a labor contract may contain other clauses agreed upon by the parties through consultation.

Article 10 The term of a labor contract shall be determined by the employing entity and the employee pursuant to any of the following methods:
(1) Fixed term;
(2) Unfixed term; and
(3) Term based on the completion of certain work.
Where an employee has worked in the same entity for consecutive ten years or more and both parties agree to extend the term of the labor contract, and if the employee requests the conclusion of a labor contract with unfixed term, such a contract shall be concluded.
Where an employee whose domicile is in Shenzhen, whose consecutive working time has exceeded twenty-five years for a male or twenty years for a female, and he or she has worked in the same employing entity for consecutive five years or more, and if he or she requests the conclusion of a labor contract with unfixed term, such a contract shall be concluded.

Article 11 The employing entity may specify, with an employee, a probation period in the labor contract, which may not be more than three months and may be prolonged if there are special technical and operational requirements, but may not be more than six months.

Article 12 The parties to a labor contract may stipulate therein matters concerning keeping business secrets of the employing entity.
If an employee violates the secrecy matters as stipulated in a labor contract, and thus causes economic losses to the employing entity, he shall be liable for compensations according to law.

Article 13 In regard to a labor contract with fixed term, if both the employing entity and the employee agree to continue the labor relationship at the expiration of the labor contract, they shall conclude a new labor contract within 30 days before the expiration of the former labor contract according to this Regulation.
Where the employing entity continues to employ an employee but fails to conclude a new labor contract, or refuses to render the labor contract to the employee after the labor contract expires, the labor department shall order it to make corrections within the time limit. If the employing entity refuses to correct, the labor department shall impose a fine of 50 yuan on the employing entity for each person with whom a new labor contract has not been concluded.

Article 14 Any of the following labor contracts shall be invalid:
(1) The contract is in breach of laws or regulations; and
(2) The contract is concluded by means of fraud, menace, or etc.
An invalid labor contract shall have no legal binding force as of its conclusion. If a labor contract is partially invalid and the validity of other parts of the contract is not thus affected, the other parts shall remain valid.
The invalidity of a labor contract shall be subject to the award of the labor dispute arbitration committee or the confirmation of the people’s court.

Article 15 The party at fault shall be liable for compensations to the other party for the damage caused by an invalid labor contract or a labor contract with part invalid clauses.

Article 16 Where the invalid clauses in a labor contract have been modified by both parties through consultation, both parties shall make performance thereof.

Chapter III Modification, Cancellation and Termination of Labor Contracts

Article 17 Both parties may modify or cancel a labor contract if they have reached a consensus through consultation.

Article 18 The employing entity may cancel the labor contract at any time if an employee is under any of the following circumstances:
(1) Having been proved as not up to the requirements for recruitment during the probation period;
(2) Having seriously violated labor disciplines, or the rules and regulations of the employing entity and thus affected the work and production;
(3)Having gross neglect of duty or malpractice for personal gains, and thus caused a great loss to the employing entity;
(4) Having been investigated for criminal liabilities in accordance with the law; and
(5) Other circumstances as provided for in laws and regulations.

Article 19 The employing entity may cancel the labor contract in the case of any of the following circumstances, however, a written notice shall be given to the employee 30 days in advance:
(1)Where an employee is unable to take up his original work or any proper work otherwise allocated by the employing entity after the completion of his medical treatment period for illness or injury not due to his work;
(2) Where an employee is unqualified for his work or remains unqualified even after receiving a training or after the work post is readjusted; and
(3) There are major alterations in the objective conditions on which the labor contract is based when it is concluded, which leads to the incapability of the performance of the original labor contract, and the parties cannot reach an agreement on the alteration of the labor contract upon negotiation.
If the employing entity cancels a labor contract in accordance with the preceding Paragraph without notifying the employee 30 days in advance, it shall pay to the said employee a compensation of his one month’s average salary of the current year.

Article 20 Where it is really necessary for an employing entity to cut down the personnel when it comes to the brink of bankruptcy and undergoes a statutory reorganization or runs deep into difficulties in production and management, the employing entity shall explain the situation to the trade union or all employees 30 days in advance, solicit opinions from them, and report to the labor department before it may cut down the personnel.
Where the employing entity that cut down the personnel in accordance with the preceding Paragraph is to recruit personnel within six months, it shall give priority to the persons who have been dismissed.

Article 21 Where an employing entity cancels its labor contracts, and the trade union that considers it inappropriate shall have the right to put forward its opinions. If the employing entity violates laws, regulations or labor contracts, the trade union shall have the right to request a new handling by the employing entity. Where the employee applies for arbitration or lodges a lawsuit, the trade union shall render him support and assistance in accordance with the law.

Article 22 The employing entity may not cancel the labor contract by basing on the provisions in Article 19, or 20 under any of the following circumstances:
(1) An employee has suffered occupational diseases or injuries due to his work, and has been confirmed to be qualified to work for the former entity after completion of his medical treatment by the municipal medical and labor appraisal committee;
(2) An employee has received medical treatments for diseases or injuries not due to his work and is within the prescribed medical treatment period;
(3) A female employee is in pregnancy, confinement or lactation; or
(4) Other circumstances as prescribed by laws and regulations.

Article 23 No employing entity may cancel a labor contract due to the change of the legal representative within the valid period of the labor contract.

Article 24 If an employee is to cancel his labor contract, he shall give a written notice to the employing entity 30 days in advance.

Article 25 An employee may notify at any time the employing entity of his cancellation of the labor contract under any of the following circumstances:
(1) Within the probation period;
(2) Where the employing entity forces the employee to work by means of violence, intimidation, or illegal restriction of personnel freedom;
(3) Failure on the part of the employing entity to pay labor remunerations or to provide working conditions as agreed upon in the labor contract; or
(4) Other circumstances as prescribed by laws and regulations.

Article 26 If the employing entity violates this Regulation and illegally cancels a labor contract, and thus results in losses to the employees, it shall compensate for the losses.
Any employee that violates this Regulation, and illegally leaves his post and therefore results in the losses to the employing entity shall compensate for the losses.
The employing entity shall bear the joint and several liabilities for compensations if it recruits an employee who has not yet rescinded the former labor contract, and which causes economic losses to the original employing entity.

Article 27 A labor contract shall be terminated of itself in the case of any of the following circumstances:
(1) The employing entity is declared bankrupt in accordance with the laws;
(2) The employing entity is dissolved or revoked in accordance with the laws; or
(3) An employee dies.

Article 28 A labor contract shall be terminated accordingly if the term of the labor contract expires or the conditions for termination agreed upon by the parties arise.
If a female employee is in pregnancy, confinement or lactation when the labor contract expires, the term of the labor contract shall be extended to the expiration of lactation.

Article 29 Any employee that has cancelled or terminated the labor contract shall be entitled to require the employing entity to provide certification about such items as his years of service, professional category, post, wage and social insurances purchased in the entity, and the employing entity may not refuse such a request.

Article 30 If a labor contract is cancelled due to any of the following circumstances, the employing entity shall pay economic compensations to the employees:
(1) Both parties reach unanimity about cancellation of a labor contract through consultation on the basis of the request of the employing entity;
(2) The employing entity cancels a labor contract according to Paragraph 1 of Article 19 or Paragraph 1 of Article 20 of this Regulation; or
(3) A labor contract is cancelled according to Item (2), (3) or (4) of Article 25 of this Regulation.

Article 31 The standards for economic compensations shall be based on the consecutive years of service of an employee in the same entity: for each full year of service, the employee shall be given an amount of 1 month’s salary; for a service period of more than 6 months but less than 1 year, it shall be deemed as 1 year; for a service period of less than half a year, the employee shall be given a salary of half a month.
Where the labor contract is cancelled in accordance with Item (2) of Paragraph 1 of Article 19 and Item (1) of Article 30, the economic compensations to be granted may not be more than the income of 12 months?salaries.
The salary per month as mentioned in the preceding Paragraph shall be calculated as the average monthly salary of the employee of the three months prior to the cancellation of the labor contract.

Chapter IV Settlement of Disputes on Labor Contracts

Article 32 If a labor dispute arises between both parties to the labor contract, it shall be handled in accordance with the state provisions on the labor disputes of enterprises.

Chapter V Supplementary Provisions

Article 33 In case the residents of Hong Kong, Macao, Taiwan and foreign inhabitants are employed in Special Zone and conclude labor contracts with employing entities, this Regulation shall be applicable.

Article 34 The detailed rules for the implementation of this Regulation may be formulated by the People’s Government of Shenzhen Municipality in accordance with this Regulation.

Article 35 This Regulation shall come into force as of July 15, 1997.