A recent case published in the People’s Court Case Database has drawn attention on a crucial point in China’s labor law: after two consecutive fixed-term contracts, employers cannot unilaterally refuse to renew the contract or terminate the employment relationship—unless special circumstances apply.
🔹 On December 11, 2024, the court clarified that employees meeting the conditions under Article 14, Paragraph 3 of the PRC Labor Contract Law have the right to request an open-ended contract. The case confirms that employers cannot terminate or refuse renewal after two fixed-employment contracts. This overturns previous interpretations—particularly in Shanghai, where employers had more flexibility to terminate after two fixed-term contracts provided it is in accordance with the law.
⚖️ As required by the Supreme Court, judges must refer to similar cases in the database when deciding disputes. Consequently, this ruling is expected to significantly impact future disputes: employers who refuse to renew open-ended contracts may now face claims of unlawful termination.
Going forward, Chinese courts will likely consider an employer’s attempt to terminate the employee under these circumstances as unlawful termination.
💡 If you’re managing a team in China, this development could have important implications for your HR policies. Feel free to reach out to Jean-Philippe Engel (jp.engel@leaf-legal.com) or Charlotte Mantoux (c.mantoux@leaf-legal.com) for insights on how this may affect your business.
#China #LaborLaw #HR #EmploymentLaw #BusinessInChina
