Electronic Employment Contracts

As we all know, employers are legally obligated to sign a written employment contract with their employees. Any employer who fails to sign a written contract within one month from the date of employment is in fact liable for a penalty equal to double the monthly wage.

Looking at this a bit more in depth, we realize that “written” is an explicit requirement. However, China’s Employment Contract Law does not explicitly state whether or not the “written” form must be on physical “paper”. With the development of paperless technology and the associated growth of social demand for such conveniences, companies are becoming more willing to use electronic forms of employment contracts with their employees.

→ Historical Disputes
The validity of electronic employment contracts is, and has been, a disputed topic. This is partially due to Article 3 of the Law on Electronic Signatures, which stipulates that electronic signatures cannot be applied to personal relationships, whereas employment relationships implicate both property and personal considerations.

As a follow-on effect of this, a uniform or clear regulatory framework on electronic labor contracts has been lacking, and the weight of decisions in judicial cases have varied from place to place, on almost an ad-hoc basis towards each case.

With this in mind, and driven by the objective need for electronic contracting during Covid-19, the Central HR Office – in a reply letter to the Beijing HR Bureau (Ren She Tin Han [2020] No. 33) – finally confirmed the validity of electronic employment contracts at the national level, and stressed that employers should ensure that generation, transmission, electronic signing, and storage should meet new, stringent legal requirements. As the saying goes, “a stone stirred up a thousand waves.” This letter actually puts forward strict technical requirements, while placing burden of proof on employers, and putting businesses in a position of waiting for further guidance for the relevant authorities.

→More Clarity after a long wait!
On 1 July 2021, the Central HR Office issued the “Notice on the Guidelines on the Formation of Electronic Employment Contracts ” (Ren She Tin Fa [2021] No. 54). Below are some of the relevant questions and answers.

1.Which platform should we use for signing electronic employment contracts?

Since the Central HR Office requires local human resources departments to accelerate the construction of the official government platforms, it would be wise to use the government platform. If using non-government platforms which should comply with the statutory technical requirements, the employer should submitted such electronic employment contracts to the local human resources department for recordations.

2. Is it necessary for employers to obtain employee consent to enter into an electronic employment contract?

Yes. Employers must clearly inform their employees about the process, provide them with complete text, and must also not charge their employees any fees associated with the process.

3. How do I sign an electronic employment contract and what kind of electronic signature is valid?

Digital certificates and keys that comply with the requirements of the Electronic Signature Law and issued by certified service companies are required. In addition, a trusted timestamp must be affixed – a timestamp is data generated by certified service companies using technology that can prove that the original document existed prior to signing and was properly executed.

4. How can we keep apprised of the status of these documents?

The employer is obligated to notify the employee of the completion of the electronic employment contract via mobile phone SMS, WeChat, emails, mobile app messages, or some other means.

5. How can we check or view electronic employment contracts?

The employer should ensure that employees can view, download, and print the electronic employment contract at any time, using commonly used devices, free of charge.

6、Do employees have the right to request a paper copy of the employment contract?

Yes, the employer must provide at least one copy free of charge upon an employee’s request. The copy should be chopped by the employer in order to prove the paper texts are the same as the texts in the electronic contract.

We think that electronic employment contracts might bring a brand new set of considerations to the field of labor laws and practices. If you have any questions about the above, please do not hesitate to reach out.