Changes In Shanghai's Practices For Non-Renewal Of Second Fixed-Term Contracts

Under the Employment Contract Law of the People's Republic of China, an open-term contract must be concluded when an employment relationship is renewed following the completion of two consecutive fixed-term contracts, unless the employee requests a fixed-term contract. In most provinces and cities in China, this requirement means that the company cannot decide not to renew the contract upon the expiry of the second fixed-term contract and must automatically convert it to an open-term contract unless the employee requests otherwise.

However, unlike most cities in China, in Shanghai, this requirement is understood to apply when the employer intends to renew. Hence, Shanghai allows companies to decide not to renew the contract upon the expiry of the second fixed-term contract. Employers can even let the fixed-term contract expire at the end of each term.