Can I have a probation clause in my China employment contract?

Can I Have a Probation Clause in My China Employment Contract?

A comprehensive FAQ guide for foreign employers and HR managers hiring in China.

1. Introduction: Understanding Probation in China’s Legal Framework

If you are a foreign business owner or HR manager hiring employees in China, one of the first questions you will face is whether you can include a probation clause in your employment contracts. The short answer is yes, but with strict statutory limitations that differ significantly from the at-will employment systems common in the United States and many other jurisdictions. Probation in China is governed primarily by Articles 19, 20, and 21 of the PRC Labor Contract Law (effective 2008, amended in 2013), as well as Article 21 of the PRC Labor Law. These provisions set clear boundaries on probation duration, salary, renewal, and termination rights.

Misunderstanding these rules is one of the most common compliance pitfalls for foreign-invested enterprises (FIEs) and their HR departments. Many foreign employers assume that a probation period functions as a “trial” during which they can terminate an employee at will and without consequence. This is incorrect under Chinese law. This FAQ article unpacks everything you need to know about probation clauses in China employment contracts, from legal foundations and duration limits to salary requirements, termination procedures, and practical recommendations for compliance.

2. Is a Probation Clause Legally Permitted in China?

Yes. Article 19 of the PRC Labor Contract Law explicitly permits employers and employees to agree on a probation period (“shiyong qi”) as part of a written labor contract. However, the law imposes several critical conditions:

• Probation is optional, not mandatory. Neither party is required to include a probation clause. If no probation is agreed upon, the employee begins regular employment immediately upon signing.
• Probation must be in writing. A probation clause must be expressly stated in the written labor contract. A verbal agreement on probation is not legally valid.
• Probation is part of the contract term. The probation period is counted as part of the total employment period. It is not a separate or pre-employment phase.
• Only one probation per employer–employee relationship. Article 19 expressly states that an employer may not agree on a probation period more than once with the same employee. This means you cannot extend, renew, or re-impose probation even if the employee changes roles or signs a new contract.
• Probation cannot exist in certain short-term contracts. For labor contracts with a term of less than three months, or for task-based contracts where the work can be completed within three months, no probation period is permitted.

These restrictions mean that probation in China is a one-shot tool. Foreign employers must think carefully before including a probation clause and ensure its duration complies with the statutory limits based on the contract term.

3. How Long Can a Probation Period Be?

The maximum length of a probation period is strictly tied to the duration of the labor contract. Article 19 of the Labor Contract Law sets the following caps:

It is important to note that these are maximum limits. Employers are free to agree on a shorter probation period. The duration should be appropriate for the role and the time needed to evaluate the employee’s competencies. For senior management or specialized technical positions, a 6-month probation period may be justified, but the employer must still ensure the underlying contract has a term of at least three years or is an indefinite-term contract.

Any probation period that exceeds these statutory caps is null and void. If an employer illegally sets a probation period longer than permitted, the excess period is treated as regular employment, and the employee is entitled to full salary for that excess time (Article 83, Labor Contract Law).

4. What Are the Salary Requirements During Probation?

Article 20 of the Labor Contract Law establishes minimum salary standards for employees on probation. The probation salary must be at least the highest of the following three benchmarks:

1. 80% of the agreed-upon post-probation salary for the same position; or
2. The minimum wage prescribed by the local municipal government where the employer is located; or
3. The minimum salary level for the same position within the company (if one exists under internal pay scales).

In practice, the “80% of agreed salary” standard is the most commonly applied. For example, if an employee’s post-probation monthly salary is RMB 20,000, the minimum probation salary is RMB 16,000 per month, provided this is not lower than the local minimum wage. As of 2025, minimum wages in major Chinese cities range from approximately RMB 2,420 (some inland cities) to RMB 2,690 (Beijing) and up to RMB 2,690 (Shanghai) per month for full-time employees, though these figures are adjusted periodically.

Importantly, the probation salary must be paid in full and on time just as regular wages are. There is no legal basis for paying a reduced or flat stipend during probation, and doing so exposes the employer to wage claims, administrative penalties, and potential breach-of-contract liability. Foreign employers should also note that social insurance (including pension, medical, unemployment, work-related injury, and maternity insurance) and housing fund contributions are required from day one of the probation period, not “after probation ends.” This is a common area of non-compliance among small and medium-sized FIEs.

5. Can I Terminate an Employee During Probation? What Are the Rules?

This is where many foreign employers misunderstand Chinese law. Probation in China is not an at-will firing period. Article 21 of the Labor Contract Law provides that an employer may terminate an employee during the probation period only if the employee falls under one of the termination grounds listed in Article 39 or Article 40(1)–(2) of the law. The most relevant ground for probation terminations is Article 39(1): the employee is “proved to be unqualified for employment during the probation period.”

However, this provision comes with a heavy burden of proof on the employer. To lawfully terminate on this basis, the employer must be able to demonstrate, with documented evidence, that the employee failed to meet pre-established, objective, and reasonable qualification standards. The following are critical compliance requirements:

• Written assessment criteria must exist. The employer should have clear, written job descriptions and performance standards set before or at the start of the probation period. Vague or subjective criteria (e.g., “not a good fit” or “lacks initiative”) will likely be rejected by labor arbitration commissions.
• The employee must be informed of the criteria. The qualification standards should be communicated to the employee in writing, ideally acknowledged by signature.
• Documented performance evaluation is essential. Employers should conduct formal probation assessments at regular intervals (e.g., monthly) and maintain written records, including signed evaluation forms, meeting minutes, and evidence of any coaching or corrective feedback provided.
• The employee must actually fail the assessment. Termination cannot be arbitrary or based on a mere preference. The evidence must show a genuine failure to meet the stated standards.
• Other Article 39 grounds also apply. Employers may also terminate during probation if the employee commits serious misconduct, causes substantial damage, or has a criminal conviction — but these are rare and fact-specific.

If the employer cannot meet the burden of proof, a probation termination may be ruled unlawful, resulting in reinstatement (at the employee’s option) or payment of double the statutory severance as compensation. This is a costly outcome that foreign employers should take seriously. As a best practice, we recommend that employers treat probation as a period of structured evaluation rather than a “trial without strings.”

6. What Are the Notice Period Requirements During Probation?

One significant difference between probation and regular employment is the notice period. Under Article 37 of the Labor Contract Law:

• Employee resignation during probation: An employee may terminate the contract by giving the employer three days’ notice in writing. No employer consent is required, and no reason need be given.
• Employer termination during probation: The employer must give immediate notice (no statutory waiting period) when terminating under Article 39 grounds, including the “unqualified during probation” ground. However, the employer must still notify the trade union (if one exists) and issue a written termination certificate.
• Regular employee termination: Outside of probation, an employee must give 30 days’ written notice (or pay in lieu of notice) to resign without cause. Employers must give 30 days’ written notice (or pay in lieu) when terminating under Article 40 (non-fault grounds).

The shorter three-day employee notice period during probation is a practical advantage for employers, as it allows for faster replacement. However, this also means that high-performing probationary employees may resign with very little notice, so employers should plan for rapid turnover in the early stages of employment.

7. Common Pitfalls for Foreign Employers

Despite clear statutory rules, foreign employers frequently make mistakes when drafting and enforcing probation clauses. Below are the most common pitfalls and how to avoid them:

1. Treating probation as an at-will period. As discussed above, terminating a probationary employee without documented proof of unqualified performance is high-risk. Foreign managers used to at-will jurisdictions must retrain themselves to follow China’s evidence-based termination process.
2. Setting probation too long for the contract term. For example, imposing a 3-month probation on a 1-year contract is illegal (maximum is 2 months). The excess period converts to regular employment at full salary, and the employer may face administrative fines.
3. Extending probation beyond the legal maximum. Even if both parties agree, Article 19 prohibits any extension beyond the statutory cap. An agreement to extend is void. Only one probation period is permitted per employment relationship.
4. Imposing a second probation on a renewed or new contract. If an employee leaves and is rehired, or signs a new contract for a different role with the same employer, the law still counts it as the “same employer.” A second probation is invalid.
5. Skipping social insurance and housing fund during probation. Some FIEs attempt to register employees for social insurance only “after probation passes.” This is illegal and can result in back-payment orders, late fees, and administrative penalties.
6. Using probation to pay below-minimum-wage salaries. The 80% rule has a floor: even if 80% of the agreed salary is very low, the amount must never fall below the local minimum wage.
7. Failing to put the probation clause in writing. A probation period agreed upon verbally but not recorded in the written labor contract is treated as no probation at all.

Avoiding these pitfalls requires careful contract drafting, internal HR training, and regular compliance audits. For foreign-invested enterprises with multiple hires, we recommend engaging local employment counsel to review standard contract templates and probation assessment procedures.

8. What Happens After Probation Ends?

When the probation period expires, the employee automatically transitions to regular employee status. There is no additional paperwork or formal confirmation required, though many employers choose to issue a probation completion letter as a matter of good practice. At this point:

• The employee’s salary adjusts to the post-probation rate agreed in the contract (if different).
• The employee is entitled to the full notice period (30 days) for resignation or non-fault termination.
• The employee may be eligible for severance if the employer terminates without cause.
• The one-year limitation period for labor arbitration (for claims arising during probation) begins running from the date the employee knew or should have known of the rights infringement.

It is lawful for an employer to decide during the probation period that the employee has passed and confirm this in writing, but this is not a legal requirement. Silence at the end of probation means the employee continues in regular employment by operation of law.

9. Practical Recommendations for Foreign Employers

Based on the above legal analysis, we offer the following practical recommendations for foreign business owners and HR managers structuring probation clauses in China employment contracts:

1. Use probation strategically. Reserve the probation clause for positions where you genuinely need time to assess competency. For short-term or project-based hires, consider whether probation-free contracts are simpler and less risky.
2. Match probation length to contract duration carefully. Use the statutory cap table (Section 3 above) as a hard ceiling. When in doubt, use a shorter probation period — you can always extend the evaluation informally, but you cannot extend the legal probation.
3. Document assessment criteria before employment begins. Create a written probation evaluation form with objective, measurable metrics (e.g., KPIs, milestone deliverables, quality standards). Have the employee acknowledge the criteria in writing on or before their first day.
4. Conduct regular check-ins. Schedule at least one formal probation review mid-period. Provide written feedback and give the employee an opportunity to improve. Keep meeting notes and signed acknowledgement forms.
5. Do not delay social insurance enrollment. Register the employee for social insurance and housing fund from day one. This is a legal obligation, not a post-probation perk.
6. Engage local legal counsel for contract templates. China’s labor law landscape varies by city (Shanghai, Beijing, Shenzhen, and Guangzhou have slightly different local regulations and arbitration practices). A locally licensed attorney can ensure your contracts are compliant.
7. Never attempt a second probation. Even if an employee changes roles, transfers to a new subsidiary under the same parent group, or signs a new contract after a gap, a second probation is presumptively invalid and may be challenged in arbitration.
8. Document all probation terminations thoroughly. If you decide to terminate during probation, prepare a termination letter citing the specific legal grounds, attach the performance evaluation showing failure, and provide proof of the employee’s acknowledgement of the assessment criteria. Notify the trade union if one exists.

10. Where to Go From Here

11. Frequently Asked Questions (Quick Answers)

Q: Can I waive the probation period entirely?
A: Yes. Probation is optional. If you do not include a probation clause in the written contract, there is no probation period.

Q: Can I set probation at 6 months for a 2-year contract?
A: No. For a 2-year contract (less than 3 years), the maximum probation is 2 months. A 6-month probation would be void and subject to penalties under Article 83.

Q: Can the employee resign during probation without giving 30 days’ notice?
A: Yes. Article 37 allows an employee to resign by giving only 3 days’ written notice during probation.

Q: If I acquire a company, can I impose a new probation on existing employees?
A: Generally no. If the employment relationship continues under the same legal entity or a successor entity, the employee’s prior service carries over, and a new probation is invalid.

Q: Does probation affect the calculation of severance?
A: Yes. Probation time counts toward the employee’s total length of service, which is used to calculate statutory severance under Article 47.

Q: What if my company has no written HR policies on probation assessment?
A: You are at significant legal risk. Without written, objective criteria, you will almost certainly lose a labor arbitration case if you terminate during probation. Draft policies immediately.

Q: Can I extend probation if both parties agree?
A: No. Article 19 prohibits extending probation beyond the statutory cap, even by mutual agreement. Any extension is void. If you need more time, consider a short-term contract extension, but you cannot call it “probation.”

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