Increased Importance on China’s Electronic Labor Contracts

The covid-19 pandemic has accelerated certain developments in laws across countries all over the world. The need for social distancing and the need to reduce spreading has resulted in work from home arrangements, and this means that for some stepping into a new job, procedures such as the signing of labor contracts would have to take place online, hence the rise in need and usage of electronic labor contracts.

According to a report done in 2021, 15% of corporations have included electronic labor contracts as a part of their onboarding processes, taking up 36% of those with pre-existing online onboarding systems, a 140% increase from 2020. On a city level, Beijing announced that Beijing would be pushing forth a single unified platform for the management of electronic labor contracts for all companies in Beijing, joining other areas such as Qingdao, Zibo, Shenyang, Kunming, Guangzhou, Cangzhou, Guilin and Nanning. For companies operating in more than one part of China, the inclusion of unified platforms for electronic labor contracts on a per-city basis (what we are seeing so far) would surely mean more complications.

It was suggested that the contract itself should be defined by five major factors: clarity, preservability, whether it is distinguishable, and whether it is “true”. The last point indicates a need for non-falsification protections placed on digital documents, such as electronic signatures, security of access, and a whole slew of other factors that governance and employers will have to figure out.

This development further implies the likelihood of more regulations over the execution and the management of other electronic contracts, not just labor contracts.. The weaknesses of paper contracts have long since been a source of issues for many companies, such as its vulnerability to damage, high costs for cross-borders signing, and other factors. The increased implementation as well as regulation of electronic contracts are a relief to those bothered by the troubles of paper contracts.

In addition, remarkably, as a known testing ground for many new policies, laws have been experimentally introduced in Shenzhen for disputes over electronic labor contracts. Results from this test would likely determine the general direction the newly developed electronic labor contract laws the country would evolve towards.

So what does it all mean? It is inevitable that documents become digitalised, given the rapid evolution of modern technology, and covid-19 simply accelerated what is bound to come. For employers with employees located in China especially, these recent developments are a reminder to adjust company policies in order to adapt to said developments. For help with adjustments in lieu of changes in laws, do utilise our compliance advisory services for full compliance and a peace of mind.

Articles referenced: 

https://finance.sina.com.cn/tech/2021-06-22/doc-ikqciyzk1111567.shtml

http://www.xinhuanet.com/fortune/2020-05/18/c_1125997826.htm