China’s new guidelines for Electronic Labor Contracts

The Ministry of Human Resources and Social Security (MHRSS) of China issued new guidelines for the conclusion of Electronic Labor Contracts (“the Guidelines”). To better guide employers and employees to enter into an appropriate electronic labor contract, the Guidelines were compiled based on China’s Labor Contract Law, Electronic Signature Law, and Civil Code.

The Guidelines mark the official transition of labour contract signing procedures into a digital era by using electronic versions and online e-signatures rather than the usual paperwork. Companies should start looking into electronic labour contracts as early as possible, especially for industries where there is frequent turnover of staff and a complex allocation of employees. By using electronic contracts companies will help their HR departments to enhance work efficiency, save administrative costs, and mitigate risks deriving from paper-based documents. Please find below the checklist for properly concluding an electronic labor contract.

1) Choosing an appropriate electronic contract management platform

If the employer and the employee agree to conclude a labor contract in digital form, the contract must be concluded through an electronic contract management platform. This platform can be self-built, purchased from a third party, or provided by the government. But in any case, the platform must meet the qualification requirements set out in the Guidelines:

1. The platform enables users to sign, access, store, and use the electronic labor contract by providing effective means of modern information technology;
2. The platform is able to verify the identity of the parties to the contract, apply the electronic signature, confirm the willingness of the parties, and ensure the security of contract data;
3. The platform ensures the conclusion, generation, transfer, and storage of the electronic labor contract comply with relevant laws and regulations; and
4. The platform ensures that the electronic labor contract is authentic, complete, accurate, tamper-proof, and traceable.

It is recommended that employers first consider a platform provided by the local government or a platform recognized by the local judicial authorities.

2) Verifying the identity and willingness of signatories

It is essential for the platform to identify the parties to the contract and their willingness to sign a labor contract in electronic form. Pursuant to the Guidelines, both the employer and the employee are obliged to submit factual, complete, and accurate identity information to the contract management platform.

The platform should verify the identity and willingness of the signatories through technical means – such as digital certificate, biometric identification verification and mobile short message verification code. The employer can also use the electronic social security card to conduct real-name authentication.

3) Applying reliable electronic signature and credible timestamp

A labor contract is effective once the employer and the employee have signed the contract. For electronic contracts, it can be done through an electronic signature, which has to comply with China’s Electronic Signature Law. To make sure the electronic signature is reliable, the parties to the contract should use the “digital certificate” and “key” issued by the legally established electronic authentication service agency in compliance with the E-Signature Law.

The contract should also be affixed with a credible timestamp to pinpoint the exact effective date of the contract.

For more personalized information on how to appropriately conclude an electronic labor contract in China, please feel free to contact us at contact@orbis alliance.com.