China: Extending the probation period? - Don't be so capricious

Last Updated: 24 June 2015
Article by Linda Yanling Liang and Wen Qin

Ms. Li was first employed by Company A as Chief Financial Officer on November 29, 2012. The two parties had signed a three-year employment contract, the term of which is from November 29, 2012 to November 28, 2015, and the probation period is from November 29, 2012 to January 28, 2013. The Company and Ms. Li agreed in the Offer Letter that, the Company is entitled to extend the probation period based on Ms. Li's performance during that period. On January 16, 2013, the Company conducted a performance evaluation on Ms. Li, and the result showed that the Company needed to extend Ms. Li's probation period for another one month. Ms. Li had no objection to this decision and the Company extended her probation period to February 28, 2013. When the extended probation period was about to expire, the Company conducted another performance evaluation on Ms. Li, which showed that Ms. Li's performance was unsatisfactory. Meanwhile, taking Ms. Li's fake education credentials, frequent lateness and serious absenteeism into consideration, the Company terminated the employment relationship with Ms. Li on February 23, 2013 in accordance with Article 39 (1) of PRC Employment Contract Law. According to this Article 39 (1), if the employee is proved as having failed to meet the recruitment requirements during the probation period, the employer is entitled to dismiss him/her.

Ms. Li refused to accept the Company's decision and filed for arbitration to the Labor Dispute Arbitration Commission. She claimed that the Company should pay her economic compensation for wrongful termination. During the arbitration stage, the Commission deemed the termination as wrongful. In response, the Company filed a lawsuit to the first-instance court challenging the award. The first-instance court held that, an employer may agree on only one probationary period with the same employee, and it was illegal for the Company to extend the probation period. Upon termination, Ms. Li should have passed the probation period and become a regular employee, but the Company had still used the ground of "failing to meet the recruitment requirements in probation period" as the termination ground to dismiss Ms. Li. Such termination is in violation with PRC law. The Company refused to accept the judgment and appealed to the second-instance court. The second-instance court sustained the original judgment.

In this case, the key issue was the agreement and extension of the probation period. The following two issues arising from this case worth our special attention:

  1. Could the Company be capricious to extend the probation period?

In practice, we have observed two ways to extend the probation period. The first way is to extend the probation period to a term longer than the statutory maximum. For instance, for a one-year employment contract with two month probation, the employer further extends the probation period for another one month. Such extension is void even if the employees have recognized such extension in writing, because it violates the statutory maximum requirements on probation period.

The second way to extend the probation period is shown in this case. The Company and Ms. Li had signed a three-year employment contract, under PRC law, they may agree on a probation period up to six months. However, the Company had initially proposed a two-month probation period, then extended it for another one month based on the actual situation. The total probation period after extension was still within the statutory maximum for the term of probation period. Is this type of extension valid? Our answer remains no. That's because Article 19 of PRC Employment Contract Law stipulates that, "an employer may agree on only one probationary period with the same employee" .We are of the view that, the extension of the agreed probation period may be deemed as another agreement on probation period, thus violating the mandatory provision of Article 19 of PRC Employment Contract Law. Even though the extended probation period does not exceed the statutory maximum, it will not be deemed as a legal and valid amendment to the employment contract, and should be considered void.

Why the law is not supportive towards extending the probation period? The reason is that, the law intends to protect the employees' rights and interests during probation period. For employees on probation, many employers will not grant them with full wage as regular employees; in addition, employers may legally dismiss them during probation period by invoking the termination ground of "failing to meet the recruitment requirements during probation", which may result in greater uncertainty on their employment relationship. By stipulating "an employer may agree on only one probationary period with the same employee", the law wants to prevent the employer from damaging the employees' interests by taking advantage of the employer's strong position in employment relationship, and repeatedly lengthening the probation period to use the employees' work force in a more flexible and economic way. Therefore, the extension of probation period should not be done in bad faith.

In conclusion, we suggest that when setting the probation period for employees, employer should not rely on the future possible extension of probation period which may be done based on the employees' actual performance. Instead, employers should fully consider the capability of the employees and fix the term of probation period within the scope allowed by law. For employees with unsatisfactory performance during probation, the employer should conduct a performance evaluation and inform them of the result before the expiry of the probation period. For employees proved to have failed to meet the recruitment requirements, the employer may dismiss them based on Article 39 (1) of PRC Employment Contract Law.

  1. Is it fine to end the employees' probation in advance based on their excellent performance?

In practice, for employees with excellent performance, we have also seen many employers would like to shorten their probation period voluntarily or upon the employees' request. Will such kind of conduct be deemed as another agreement on probation and thus be void? We do not think so. That's because shortening the probation period through consultation will not create a second probation period. Such shortening is an amendment to the existing probation period and is beneficial to the employees' interests. Therefore, we are of the view that such shortening is legal and valid.

In light of the above, the employer needs to note that, once the employer has agreed to shorten the probation period for the employees, the shortened probation period needs to be obeyed when dealing with the employment of the employees. Even if the employees' performance become unsatisfactory after the shortening of probation period, if the shortened probation period has expired, the employer is not allowed to terminate the employees' employment based on the ground of "failing to meet recruitment requirements during probation".

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions