Employment Agreement Adjustments in China

PTO, notice periods, bonuses, and more.

Updated on June 16th, 2023

Can we adjust paid time off (PTO)?

Yes, if desired, you can provide additional time off beyond the statutory requirement. PTO can not be reduced.

Can we adjust working hours?

Yes, working hours can be adjusted with consent from the supported employee, but it cannot be more than eight hours per day.

Please note that general working hours should always be specified in the employment agreement. If the supported employee is expected to work hours in a different time zone, it is advised to specify this in the employment agreement as well. 

Can we remove the notice period?

No. Chinese law provides for a minimum notice period of 30 days. This also gives us time to prepare all the necessary documents and salary calculations in advance.

Can we remove or increase the probationary period?

The probationary period can generally be removed from the employment agreement, however, a probationary period is not available for project-based contracts. The probationary period cannot be increased beyond the statutory maximum. 

  • If the employment is for a period between three months and one year, the statutory maximum is one month
  • If the employment is for a period between one year and three years, the statutory maximum is two months
  • If the employment is for a period of 3 years or more, or is for an indefinite term, the statutory maximum is six months

Can we add commissions, bonuses, or ad hoc payroll items?

Yes. For commissions and bonuses, we will typically use our Variable Compensation Agreement to outline the performance or metrics that your supported employee needs to meet to receive payment. For the bonus, we typically use a simple clause in the employment agreement stating the percentage of the discretionary bonus entitlement.

How can we offer equity or stocks to our supported employees?

In China, clients are able to issue equity as “nonemployee” grants.

For clients that issue equity as “nonemployee” grants, we do not facilitate withholding and payroll reporting unless the award is cash settled.

How can we offer equity without signing a direct agreement between our supported employee and us?

We require you to directly issue the grant notice (i.e., side agreement) to your supported employee. This side agreement should not include any language that indicates a direct employer or employee relationship between you and your supported employee.