According to the Chinese labor law, a labor contract can be concluded freely either for a fixed period or for an unlimited period. But one in China operating employer is obliged to renew a labor contract to an unlimited period upon employee´s request, if any of the following circumstance exists:
- The employee has already worked for the employer for 10 full years consecutively; or
- The labor contract is to be renewed after two fixed-period labor contracts which have been concluded consecutively, and the employee is not in fundamental breach of the labor contract, in breach of employee´s duty of good faith or to be proved incompetent for his position.
There is no doubt that the employer must fulfill the aforementioned obligation as soon as he receives request from employee. But the Chinese labor law does not state what happens, if both sides negotiate peacefully and sign a renewed contract for a fixed-period again. And after that the employee files a lawsuit to deny the validity of the renewed contract, because his right to a labor contract for an unlimited period is infringed.
The High Court Peking and the Peking Arbitration Commission of Labor and Personnel Disputes have made judicial explanation to clarify such fight on 24.04.2017. In accordance with clause 17 of their official explanation “Answers to the application of laws in the trial of labor dispute cases”, the renewed labor contract is valid and staying for a fixed period. The employee cannot require the court or the arbitration commission to extend the fixed period to an unlimited period, unless he can prove the employer took the means of deception, coercion or took advantage of the employee´s difficulties to force him to conclude the renewed contract.
Therefore it is allowed by Chinese labor law that after 10 full years’ service of the employee or two fixed-term labor contracts a new labor contract is to be concluded with a fixed period again, if the employee agrees on it.