• Area of Law： Contract
• Level of Authority： Provincial Local Regulations
• Date issued：11-15-2001
• Effective Date：05-01-2002
• Issuing Authority： Shanghai Municipality People's Congress (incl. Standing Committee)
• Status： Effective

Announcement of the Standing Committee of the People's Congress of Shanghai Municipality
(No. 58)
The Regulation of Shanghai Municipality on Labor Contracts has been passed at the 33rd meeting of the Standing Committee of the 11th People's Congress of Shanghai Municipality on November 15, 2001 and is hereby promulgated for implementation as of May 1, 2002.


Regulation of Shanghai Municipality on Labor Contract
(Passed at the 33rd meeting of the Standing Committee of the 11th People's Congress of Shanghai Municipality on November 15, 2001)
Chapter I General Principles
Article 1 The present Regulation has been enacted according to the Labor Law of the People's Republic of China and other pertinent laws and regulations and by taking the practical situation of this municipality into consideration for the purpose of regulating labor relationships, establishing and safeguarding the labor contract system that suits the socialist market economy.
Article 2 The present Regulation shall be applicable to the labor contractual relationships that are established or formed between the employing entities including enterprises, individual economic organizations and state organs, public institutions, social organs, etc. (hereinafter referred to as employing entities) that are situated within the administrative region of this Municipality and the laborers.
Article 3 A labor contract is an agreement that establishes the labor relationship between the laborer and the employing entity and specifies the rights and obligations of the parties concerned.
Article 4 A labor contract shall be concluded in written form with the exception of those for which there are special provisions in the present Regulation.
Article 5 The principle of equality, willingness, negotiation-based consensus shall be abided by in the conclusion and modification of labor contracts and the contracts shall be in conformity with the relevant provisions of the laws, regulations and other relevant rules.
A labor contract shall be legally binding once it is concluded and the parties concerned shall perform their respective obligations as provided in the labor contracts.
Article 6 Trade s shall give guidance and help to laborers in terms of labor contracts and shall supervise the performance of labor contracts by the employing entities. In case any employing entity infringes upon the lawful rights and interests of the laborers, the trade unions shall have negotiations with the employing entities on behalf of the laborers concerned so as to safeguard the lawful rights and interests of the laborers in the conclusion and performance of labor contracts.
Article 7 The administrative departments of labor and social security shall be responsible for guiding, supervising and inspecting the implementation of the labor contract system.
Chapter II Conclusion of Labor Contracts
Article 8 Before concluding a labor contract, the laborer shall be entitled to inquire about the relevant rules, working conditions and remunerations, etc. of the employing entity, and the employing entity shall speak the truth.
When recruiting laborers, the employing entity shall have the right to inquire about the physical health of the laborers, knowledge, skills and working experience, etc of the labors, and the laborers shall speak the truth.
Article 9 The text of a labor contract may be provided by the employing entity or be formulated jointly by the employing entity and the labors concerned. Where the text of the labor contract is provided by the employing entity, the principle of fairness shall be observed and the lawful rights and interests of the laborers may not be injured.
Labor contracts shall be concluded in the Chinese language; they may also be written in a foreign language at the same time; where there are different stipulations between the parties concerned, such stipulations shall be prevail. In case discrepancy exists between the Chinese and foreign language versions of the labor contract, the Chinese version shall prevail. A labor contract shall be made in duplicate with each to be kept by either party.
Article 10 A labor contract shall include the following clauses:
a.the term of labor contract;
b.the work to be done;
c.labor protection and working conditions;
d.remunerations for work;
e.disciplines of working;
f.conditions for the termination of the labor contract;
g.liabilities for breach of the labor contract.
Apart from the necessary clauses as provided in the preceding paragraph, the parties concerned may agree upon other stipulations in the labor contract.
Article 11 The term of a labor contract is divided into fixed term, unfixed term, and term based on completing certain work. The term of a labor contract shall be determined by the employing entity and the laborer through negotiations.
Article 12 A labor contract shall become effective as of the day when it is signed by both parties. Where there are different stipulations concerning the term between the parties concerned, such stipulations shall be observed.
Article 13 The parties concerned to a labor contract may agree upon a probation period. If the term of a labor contract is less than 6 months, there shall be no probation period; if the term is more than 6 months but less than 1 year, the probation period shall not be more than 1 month; if the term is more than 1 year but less than 3 years, the probation period shall not be more than 3 months; if the term is more than 3 years, the probation period shall not be more than 6 months.
Where the parties concerned only agrees upon the probation period, the probation period shall not be valid, and the period shall be the term of the labor contract.
Article 14 The parties concerned to a labor contract may agree upon the service period of the laborers that are hired and trained at the expenses of the employing entity or that are provided with other special treatments.
Article 15 The parties concerned to a labor contract may agree upon secret-keeping clauses in the labor contract or enter into separate secret-keeping agreements. When a business secret enters into the state of public knowledge, the secret-keeping clauses and secret-keeping agreements shall be invalidated automatically.
If the laborer is obliged to keep the business secrets of the employing entity as confidential, the parties concerned to the labor contract may agree upon the advance notice period in the labor contract or secret-keeping agreement for the laborer to request for rescinding the labor contract, but the advance notice period shall not be longer than 6 months. During this period, the employing entity may take corresponding measures for declassifying the business secrets.
Article 16 If the laborer is obliged to keep the business secrets of the employing entity confidential, the parties concerned may agree upon non-competition clauses in the labor contract or secret-keeping agreement and come to an agreement that, when the labor contract is canceled or terminated, the laborer shall be given economic compensations. The scope of non-competition shall be limited to that the labor may not, within a certain period of time after the laborer's leaving the employing entity, engage in any business for himself or for other business operators that compete with that of the original employing entity. The non-competition period may be subject to the agreement of the parties to the labor contract, but it shall not be any longer than 3 years with the exception, however, of those as otherwise provided in laws or regulations.
If the parties concerned come to an agreement of non-competition, they shall not come to any agreement on the advance notice period for the laborer to request for rescinding the labor contract.
The agreement of non-competition shall not be in contradiction with the provisions of laws or regulations.
Article 17 The damages agreed upon in the labor contract for the laborer's breach of contract shall be limited to the following circumstances:
a.The laborer breaches the agreement on the term of service;
b.The laborer breaches the agreement on keeping business secrets as confidential.
The amount of damages shall be determined on the basis of the principle of fairness and reasonableness.
Article 18 The working conditions and remunerations as agreed upon in the labor contract shall not be lower than those as provided in the collective labor contract. Where it is lower than those provided in the collective labor contract, the corresponding provisions of the labor contract shall be applied.
The collective labor contracts shall be concluded according to relevant laws and regulations.
Article 19 The parties concerned may, on the basis of agreement reached through negotiations, renew the labor contract upon the expiration of the labor contract. No probation period may be agreed upon in the renewed labor contract.
Article 20 In any of the following circumstances, the labor contract shall be invalidated:
a.The contract is in breach of laws or administrative regulations;
b.The contract is concluded by means of fraud, menace, etc.
An invalid labor contract shall be without 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 affected, the other parts shall remain valid.
The invalidity of the labor contract shall be subject to the award of the labor dispute arbitration committee or the confirmation of the people's court.
Article 21 Where labor contractual relationship is established between the employing entity and the laborer, the entity shall go through registration procedures of employment at the institutions designated by the administrative department of labor and social security.
Chapter III Performance and Modification of Labor Contract
Article 22 The parties concerned shall perform the labor contract from the time as stipulated in the labor contract.
If the starting time as stipulated in the labor contract is different from the time when the contract begins to be actually performed, the time when the labor contract begins to be actually performed shall be the starting time of the labor contract.
Article 23 The modification of labor contracts shall be made in written form on the basis of the agreement reached by negotiations of the parties concerned. Where the parties fail to reach an agreement, they shall continue to perform the labor contract, except it is otherwise prescribed in laws or regulations.
Article 24 Where the employing entity merges or splits, the labor contract shall be performed by the employing entity after the merger or split. The labor contract may, upon the consensus of the parties concerned, be modified or rescinded. If the parties have otherwise agreed, their agreement shall be applied.
Article 25 If the employing entity that signs the labor contract is different from the entity that actually uses the laborer, the employing entity may come to an agreement with the entity that actually uses the laborer and the entity that actually uses the laborer shall undertake all or part of the obligations to the laborer. If the entity that actually uses the laborer fails to undertake the obligations to the laborer as pursuant to the stipulations, the employing entity shall undertake the said obligations.
Article 26 The labor contract may be suspended in the process of performance if any of the following circumstances occurs:
a.The laborer joins the army or performs other mandatory obligations as provided by the State;
b.The laborer cannot perform the labor contractual obligations for the time being but there exist the conditions and possibility of continuing to perform the obligations;
c.Other circumstances as provided in laws or regulations or stipulated in the labor contract.
Where the circumstances for suspending the labor contract disappears, the labor contract shall continue to be performed except it is otherwise prescribed in laws or regulations.
Article 27 In case a labor contract fails to be concluded in written form but the labor has performed his obligations of labor as pursuant to the requirements of the employing entity, the labor contractual relationship shall be deemed as having been established between the parties concerned, and the working conditions and remunerations of the labor shall be handled according to the following provisions:
a.If the remunerations and working conditions are higher than those prescribed in the relevant rules, collective contracts of the employing entity or the mandatory standards, the contents that have been actually uted shall be applied;
b.If the remunerations or working conditions are lower than those prescribed in the relevant rules, collective contracts of the employing entity or the mandatory standards, it shall be handled according to the principle of being favorable to the laborer.
Article 28 Where part of a labor contract is not in conformity with the mandatory labor standards, the employing entity shall perform its obligations according to the mandatory obligations, and shall make revisions to the parts of the labor contract that do not conform to the mandatory labor standards.
Chapter IV Rescission and Termination of Labor Contract
Article 29 A labor contract may be rescinded upon the consent of the parties concerned.
Article 30 If the laborer rescinds the labor contract, he shall inform the employing entity in written form 30 days in advance.
Article 31 In any of the following circumstances, the laborer may rescind the labor contract and inform the employing entity at any time:
1.The laborer is in the probation period;
2.The employing entity forces the laborer to work by means of force or menace or other means that illegally restricts the personal freedom of the laborer;
3.The objective circumstances according to which the labor contract was concluded have substantially changed so that it become impossible to perform the labor contract, and the parties to the contract could not come to an agreement as to the modification of the contract.
In case the employing entity rescinds a labor contract without informing the labor 30 days in advance, it shall undertake the obligations as stipulated in the labor contract for 30 days starting from the day when the laborer is informed.
Article 32 In one of the following circumstances, the employing entity may cancel the labor contract, but shall notify the laborer himself/herself in writing 30 days ahead of schedule:
1.The laborer is sick or injured not due to his/her work, and is unable to undertake his/her work nor can he/she undertake any other work allocated by the employing entity;
2.The laborer is incompetent for the job, and is still incompetent for the job after being trained or adjusted post; or
3.There are major alterations on the object 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.
In case the employing entity fails to notify the laborer 30 days before canceling the contract, it shall undertake the duties stipulated in the labor contract to the laborer within 30 days from the date of notice.
Article 33 The employing entity may rescind the labor contract at any time if any of the following occurs to the laborer:
a.The laborer is proved to be ineligible during the probation period;
b.The laborer seriously violates the working disciplines or rules of the employing entity;
c.The laborer is in serious dereliction of his duty or engages in malpractice which has caused material injury to the employing entity;
d.The labor is held to take penal liabilities according to law;
e.Other circumstance as provided in laws or regulations.
Article 34 If any of the following circumstances occurs to the laborer, the employing entity may not rescind the labor contract on the ground of Articles 32 and 35 of the present Regulation:
a.The laborer is inflicted with an occupational disease or has suffered a work-related injury and has been held to have totally or partially lost the capacity of work;
b.The laborer is ill or injured and is under medical treatment;
c.The female laborer is pregnant or in the confinement or lactation;
d.Other circumstances as provided in laws or regulations.
Article 35 If it is necessary for the employing entity to reduce staff, it shall make a statement to the trade union and shall listen to the opinions thereof. The staff-reducing plan of the employing entity shall be made on the basis of negotiations with the trade union or representatives of the employees for taking remedial measures and shall be reported to the administrative department of labor and social security.
The employing entity shall, when carrying out its staff-reducing plan, inform the trade union and the laborers themselves 30 days in advance.
If, after reducing staff as pursuant to the provisions of this article, the employing entity recruits persons within 6 months after reducing staff, it shall put priority in recruiting the reduced persons.
Article 36 Where the employing entity unilaterally rescinds a labor contract, it shall inform the trade union of the reasons in advance. If the trade union thinks that the employing entity has violated any law, regulation or the relevant labor contract, it may demand further discussions for handling, and the employing entity shall study the opinions of the trade union and inform the trade union of the result of discussion in written form.
Article 37 In any of the following circumstances, a labor contract may be terminated:
a.The labor contract expire;
b.The conditions as agreed by the parties concerned for terminating the contract occur;
c.The employing entity goes bankrupt, is dissolved or canceled;
d.The laborer retires or quits working or dies.
If a labor contract fails to be actually performed for up to 3 months by the parties concerned, it may be terminated.
Where a laborer is proved to have partially lost his working capacity as a result of occupational disease or work-related injury and if the employing entity pays employment subsidies for the disabled according to relevant provisions, the labor contract may be terminated.
Article 38 If the laborer is proved to have lost most of his working capacity as a result of occupational disease or work-related injury, the employing entity may not terminate the contract; however, if the parties concerned so agree on the basis of negotiations and the employing entity pays employment subsidies for the disabled according to relevant provisions, the labor contract may also be terminated.
Article 39 When the term of a labor contract expires or the conditions agreed upon by the parties concerned for terminating the labor contract occur, and if any of the following circumstances occurs to the laborer but does not belong to any of the provisions of Article (b), (c) or (d), the term of the labor contract may be extended until the following circumstances disappear:
a.The laborer is sick or injured and is under medical treatment;
b.The female laborer is pregnant or in the confinement or lactation;
c.Other circumstances as provided in laws, regulations or ministerial rules.
Article 40 In case a labor contract should have been concluded but fails to be concluded, the laborer may terminate the labor relations at any time.
In case a labor contract should have been concluded and if the employing entity proposes to terminate the labor relations, it shall inform the laborer 30 days in advance except, however, any of the circumstances as mentioned in Article 39 occurs to the laborer when the labor relationship shall be extended to the disappearance of the circumstances.
Article 41 If a labor contract is rescinded or terminated, the employing entity shall issue a valid certificate of rescinding or terminating the labor contract.
The laborer may go through unemployment formalities by directly presenting the valid certification materials.
Article 42 In any of the following circumstances, the employing entity shall make economic compensations to the laborer according to the number of years that the laborer has worked at the entity. For each year of work, the laborer shall be given an amount of 1 month's salary:
a.The employing entity proposes to rescind the labor contract as pursuant to the provisions of Article 29 of the present Regulation;
b.The laborer rescinds the labor contract as pursuant to the provisions of Article 31 (2) and (3) of the present Regulation;
c.The employing entity rescinds the labor contract as pursuant to item 2 of paragraph 1 of Article 32 of the present Regulation;
d.The employing entity rescinds the labor contract as pursuant to the provisions of items 1 and 3 of paragraph 1 of Article 32 of the present Regulation;
e.The employing entity rescinds the labor contract as pursuant to the provisions of Article 35 of the present Regulation;
f.The employing entity terminate the labor contract as pursuant to the provisions of Article 37 (3) of the present Regulation.
In any of the circumstances as mentioned in items 1, 2 and 3 of the preceding paragraph, the total amount of compensation shall, generally speaking, be more than the income of 12 months' salary; if the parties concerned have otherwise agreed, such agreement shall be applied.
Article 43 If the conditions for termination of labor contract as agreed upon by the parties concerned are the same as those for rescinding the contract as provided in the present Regulation, the employing entity shall make economic compensations to the laborer according to the compensation rates as provided in the present Regulation for rescinding labor contracts.
Article 44 Where the employing entity rescinds a labor contract as pursuant to the provisions of item 1 of paragraph 1 of Article 32 of the present Regulation, it shall, apart from making economic compensations, give the laborer a medical subsidy at the sum of not less than 6 months' salary of the laborer.
Article 45 The salary as mentioned in Articles 42 and 44 of the present Regulation shall be the average of salaries of the laborer during the last 12 months prior to the rescission or termination of the labor contract. If the average monthly salary of the laborer is less than the minimum salary level of this municipality, it shall be calculated at the minimum salary level of this municipality.
As for the number of years of working at an employing entity as mentioned in Article 42 of the present Regulation, the career is more than 6 months but less 1 year, it shall be deemed as 1 year.
Chapter V Special Provisions on Non-full-time Labor Contracts
Article 46 A non-full-time labor contract is an agreement concluded between the laborer and employing entity for establishing their labor relations with the working time calculated on the hourly basis.
When a laborer establish non-full-time labor relations with one or more employing entities, the working daily, weekly or monthly time as agreed upon between the laborer and each employing entity shall be less than 50% of the legally prescribed working time.
The total working time of the laborer at more than 1 employing entity shall not be more than the legally prescribed maximum working time.
Article 47 Non-full-time labor contracts may be concluded in written form or other forms. If any party to the contract proposes to adopt the written form, the contract shall be concluded in written form.
Article 48 If the term of labor is not agreed upon in the non-full-time labor contract, any party to the contract shall be entitled to inform the other party for terminating the labor relations.
Article 49 The parties to a non-full-time labor contract may agree upon the working time, the work to be done, remunerations and the way of payment, keep the business secret of the employing entity as confidential, etc.
Article 50 The remunerations of a non-full-time laborer shall be calculated on the basis of the hour.
The remunerations shall include the salary income calculated on the hourly basis and the social security fees that should be paid according to the provisions of relevant laws or regulations.
Article 51 If any non-full-time laborer suffers from any work-related injury or is inflicted with an occupational disease in the process of work, the employing entity shall take corresponding liabilities.
Article 52 The minimum hourly-based salary of the non-full-time laborers shall be formulated by the Bureau of Labor and Social Security of the Shanghai Municipality and publicized after being ratified by the people's government of the Municipality. In the determination of the minimum hourly-based salary, the elements like the stability of the non-full-time job, welfare, etc shall be taken into consideration.
The measures for paying social security premiums for non-full-time labor shall be separately formulated by the Municipal people's government.
Article 53 The provisions of chapters II, III, and IV of the present Regulation shall not be applicable to the non-full-time labor contracts with the exception of the provisions of Articles 8, 20 and 21.
Chapter VI Legal Liabilities
Article 54 If a labor contract is invalidated or partially invalidated by a party to the labor contract and thus causing damages to the other party, the said party shall be responsible for compensation.
Article 55 Any party to the labor contract that breaches the labor contract shall undertake corresponding liabilities. If economic losses have been caused to the other party, it shall be responsible for making compensations.
If both parties have breached the labor contract, they shall take corresponding liabilities for themselves.
Article 56 In case the employing entity fails to enter into a labor contract with the labor contract in written form, it shall be ordered by the administrative department of labor and social security to make corrections within a time limit and may be fined not less than 500 yuan but not more than 1000 yuan per laborer.
Article 57 If any employing entity fails to go through registration formalities for using laborers according to the provisions of the present Regulation, it shall be ordered by the administrative department of labor and social security to make up the registration within a time limit. If it fails to make up the formalities when the time limit expires, it shall be fined 500 yuan for each laborer used.
Article 58 Any dispute that arise between the parties to a labor contract shall handled according to the provisions concerning the handling of labor disputes.
Article 59 Where any of the employing entity refuses to accept the concrete administrative act of the department of labor and social security, it may apply for administrative review or institute an administrative lawsuit as pursuant to the provisions of the Law of the People's Republic of China on Administrative Reconsideration or the Administrative Procedure Law of the People's Republic of China.
Chapter VII Supplementary Provisions
Article 60 Where there are special provisions concerning the subject of labor contracts in laws or administrative regulations, such provisions shall be applied.
Article 61 If, prior to the implementation of the present Regulation, a labor contract has already been performed and there are already clear prescriptions concerning the rights and obligations of the parties to in the local regulations or the rules of the Municipal people's government, the parties to the labor contract shall continue to perform the contract subsequent to the implementation of the present Regulation; if there are no clear provisions in the local regulations or the rules of the Municipal people's government, the provisions of the present Regulation shall be applied.
After the present Regulation becomes effective, The provisions of the Regulation of Shanghai Municipality on the Administration of Labor and Personnel of Foreign-funded Enterprises shall no longer be applicable to the labor contracts concluded between the foreign-funded enterprises and the laborers.
Article 62 The present Regulation shall take force as of May 1, 2002.