CHAPTER III. EMPLOYMENT CONTRACTS AND COLLECTIVE AGREEMENTS
Section 16. A labour contract is the agreement reached between a labourer and an employing unit for the establishment of the labour relationship and the definition of the rights, interests and obligations of each party.

A labour contract shall be concluded where a labour relationship is to be established.

Section 17. Conclusion and modification of a labour contract shall follow the principles of equality, voluntariness and unanimity through consultation, and shall not run counter to the stipulations of laws, administrative rules and regulations.

A labour contract once concluded in accordance with the law shall possess legal binding force. The parties involved must fulfil the obligations stipulated in the labour contract.

Section 18. The following labour contracts shall be invalid:

(1) labour contracts concluded in violation of laws, administrative rules and regulations; and
(2) labour contracts concluded by resorting to such measures as cheating and intimidation.
An invalid labour contract shall have no legal binding force from the very beginning of its conclusion. Where a part of a labour contract is confirmed as invalid and where the validity of the remaining part is not affected, the remaining part hall remain valid.

The invalidity of a labour contract shall be confirmed by a labour dispute arbitration committee or a people's court.

Section 19. A labour contract shall be concluded in written form and contain the following clauses:

(1) term of labour contract;
(2) contracts of work;
(3) labour protection and working conditions;
(4) labour remuneration;
(5) labour disciplines;
(6) conditions for the termination of a labour contract; and
(7) responsibility for the violation of a labour contract.
Apart from the required clauses specified in the preceding paragraph, other contents in a labour contract may be agreed upon through consultation by the parties involved.

Section 20. The term of a labour contract shall be divided into fixed term, flexible term or taking the completion of a specific amount of work as a term.

In case a labourer has kept working in a same employing unit for ten years or more and the parties involved agree to extend the term of the labour contract, a labour contract with a flexible term shall be concluded between them if the labourer so requested.

Section 21. A probation period may be agreed upon in a labour contract. The longest probation period shall not exceed six months.

Section 22. The parties involved in a labour contract may reach an agreement in their labour contract on matters concerning keeping the commercial secrets of the employing unit.

Section 23. A labour contract shall terminate upon the expiration of its term or the emergence of the conditions for the termination of the labour contract as agreed upon by the parties involved.

Section 24. A labour contract may be revoked upon agreement reached between the parties involved through consultation.

Section 25. The employing unit may revoke the labour contract with a labourer in any of the following circumstances:

(1) to be proved not up to the requirements for recruitment during the probation period;
(2) to seriously violate labour disciplines or the rules and regulations of the employing unit;
(3) to cause great losses to the employing unit due to serious dereliction of duty or engagement in malpractice for selfish ends; and
(4) to be investigated for criminal responsibilities in accordance with the law.
Section 26. In any of the following circumstances, the employing unit may revoke a labour contract but a written notification shall be given to the labourer 30 days in advance;

(1) where a labourer is unable to take up his original work or any new work arranged by the employing unit after the completion of his medical treatment for illness or injury not suffered at work;
(2) when a labourer is unqualified for his work and remains unqualified even after receiving a training or an adjustment to any other work post; and
(3) no agreement on modification of the labour contract can be reached through consultation by the parties involved when the objective conditions taken as the basis for the conclusion of the contract have greatly changed so that the original labour contract can no longer be carried out.
Section 27. During the period of statutory consolidation when the employing unit comes to the brink of bankruptcy or runs into difficulties in production and management, and if reduction of its personnel becomes really necessary, the unit may make such reduction after it has explained the situation to the trade union or all of its staff and workers 30 days in advance, solicited opinions from them and reported to the labour administrative department.

Where the employing unit is to recruit personnel six months after the personnel reduction effected according to the stipulations of this section, the reduced personnel shall have the priority to be re-employed.

Section 28. The employing unit shall make economic compensations in accordance with the relevant provisions of the State if it revokes its labour contracts according to the stipulations in section 24, section 26 and section 27 of this Law.

Section 29. The employing unit shall not revoke its labour contract with a labourer in accordance with the stipulations in section 26 and section 27 of this Law in any of the following circumstances:

(1) to be confirmed to have totally or partially lost the ability to work due to occupational diseases or injuries suffered at work;
(2) to be receiving medical treatment for diseases or injuries within the prescribed period of time;
(3) to be a female staff member or worker during pregnant, puerperal, or breast-feeding period; or
(4) other circumstances stipulated by laws, administrative rules and regulations.
Section 30. The trade union of an employing unit shall have the right to air its opinions if it regards as inappropriate the revocation of a labour contract by the unit. If the employing unit violates laws, rules and regulations or labour contracts, the trade union shall have the right to request for reconsideration. Where the labourer applies for arbitration or brings in a lawsuit, the trade union shall render him support and assistance in accordance with the law.

Section 31. A labourer who intends to revoke his labour contract shall give a written notice to the employing unit 30 days in advance.

Section 32. A labourer may notify at any time the employing unit of his decision to revoke the labour contract in any of the following circumstances:

(1) within the probation period;
(2) where the employing unit forces the labourer to work by resorting to violence, intimidation or illegal restriction of personal freedom; or
(3) failure on the part of the employing unit to pay labour remuneration or to provide working conditions as agreed upon in the labour contract.
Section 33. The staff and workers of an enterprise as one party may conclude a collective contract with the enterprise on matters relating to labour remuneration, working hours, rest and vacations, occupational safety and health, and insurance and welfare. The draft collective contract shall be submitted to the congress of the staff and workers or to all the staff and workers for discussion and adoption.

A collective contract shall be concluded by the trade union on behalf of the staff and workers with the enterprise; in enterprise where the trade union has not yet been set up, such contract shall be also concluded by the representatives elected by the staff and workers with the enterprise.

Section 34. A collective contract shall be submitted to the labour administrative department after its conclusion. The collective contract shall go into effect automatically if no objections are raised by the labour administrative department within 15 days from the date of the receipt of a copy of the contract.

Section 35. Collective contracts concluded in accordance with the law shall have binding force to both the enterprise and all of its staff and workers. The standards on working conditions and labour payments agreed upon in labour contracts concluded between individual labourers and the enterprise shall not be lower than those as stipulated in collective contracts.