The short answer: no. The US defaults to at-will employment, where an employer can terminate without cause; China is the mirror image — the law favors stable employment, and after two consecutive fixed-term contracts an employee generally gains the right to an open-ended contract.
Legal basis
- Article 14: after two consecutive fixed-term contracts (and in other cases), a new contract must be open-ended.
- Article 39: termination for cause (serious breach of rules, gross negligence, etc.) — no severance required.
- Article 40: no-fault termination (incompetence, medical issues, etc.) — requires 30 days' written notice or an extra month's pay in lieu.
- Articles 46–47: most terminations require severance, typically one month's pay per year of service; six months to one year counts as a full year, under six months gets half a month; capped at three times the local average wage and 12 years.
Key points
- Termination needs a valid legal reason — you cannot simply fire at will.
- Termination for incompetence requires training or reassignment first; other termination grounds have no such requirement.
- Except for cause-based termination, severance of one month's pay per year of service applies.
- Procedural flaws (no union notice, no advance notice, etc.) can make the termination unlawful and trigger double damages.
Practical tips
- Company rules must be adopted through democratic procedures and published, or they cannot support termination.
- Serve the termination decision in writing with reasons, and keep proof of delivery.
Note for foreign employers
- Whether two consecutive fixed-term contracts force an open-ended contract varies by region (Shanghai allows termination at the second expiry) — follow the rules where the employee works.
Termination in China is far heavier and more formal than in the US. Bringing an at-will mindset is the most common compliance accident for foreign employers. Want a compliant hiring-and-exit framework? Contact CRBPO.
About CRBPO
Founded in 2003, CRBPO (中瑞岳华) is a professional HR service provider with 20+ years in the China market, offering executive search, RPO recruitment, staffing & dispatch, global EOR, tax & accounting, and monthly HR subscription — across 30+ cities — to help foreign companies run compliant, efficient operations in China.
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