Don't get caught in an employee dispute

Foreign companies in China must be very careful during recruitment to minimise the risk of future litigation from employees, says counsel.

“Companies should always have a contract with a probation period,” advises Fiona Loughery, the Head of Simmons & Simmons' China employment practice. “When the employee successfully passes probation, then management can choose to continue. They then have a second opportunity to assess before entering into a second contract, usually with a longer duration.”

A report last week highlighted the explosion of employment legal disputes as the Chinese become more savvy about enforcing their rights through trials or arbitration.

Loughrey believes that companies are not powerless to defend against legal troubles with Chinese employees. If they have carefully drafted labour-related documentation, a solid and updated knowledge of PRC employment regulations, and apply efforts to comply with these, they can have a reasonable expectation of a fair approach by both the local courts and the Beijing Foreign Enterprise Human Resource Service Co., she said.