Hiring Graduates; the Tripartite Agreement

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It is that time of year and universities across China will begin assisting graduates with their Tripartite Agreements.

What is a Tripartite Agreement?
It is an agreement signed by the graduate, the employer and the university prior to commencing work. Tripartite Agreement (TA), short for Common Colleges and Universities Graduate and Postgraduate Employment Agreement (普通高等学校毕业生、毕业研究生就业协议书) is a written agreement that constitutes the rights and obligations of three parties. It assists in resolving any issues such as permanent residency, archives, social insurance, pension and so on.

General Terms and Conditions
In accordance with the rules and regulations of the PRC Ministry of Education, a TA generally includes identity, position, work place, term of service, probation period and its commencement date, monthly salary during the probation period and after the probation period, the benefits for the graduate and the amount of damages payable by the breaching party.

The Nature of a Tripartite Agreement
The TA is a preliminary agreement, a letter of intent on employment or a “pre-contract” (预约合同). The labour contract is signed only after the graduate commences work at which time the TA automatically terminates.

Case 1 Under a TA can an employer sue the employee on the basis of premature resignation?
The employee/defendant (D1) was hired as an intern on 6 June, 2014 with employer/plaintiff (P1). D1 received his/her certificate of graduation on 12 June and officially started work on 10 July. D1, P1 and the university signed a TA on 15 July. Work time 1-year damages were set at ¥4,500. No labour contract was signed. D1 resigned on 31 August, 2014.

P1 filed a lawsuit and claiming ¥4,500 in damages. The court concluded that all parties had performed their rights and obligations in accordance with the TA, D1 had not breached the TA, and P1’s claims proved groundless.

The counterclaim from D1 for the difference of double salary during the period of 10 August to 31 August, 2014 for failure to submit a written labour contract by P1 was successfully approved by the court.

Case 2 Can a TA serve the same function as a written labour contract?
The employee (P2), employer (D2) and the university signed a TA in May, 2013. P2 received his/her certificate of graduation in June, 2013. P2 continued to work without a written labour contract; additionally D2 did not procure social insurance for P2. P2 resigned in June, 2014 and filed a lawsuit against D2 for the payment of double salary from June, 2013. P2 had requested a social insurance form in June, 2013.

D2 argued P2 was paid ¥500 a month extra in cash for social insurance. D2 claimed the TA was as good as a written labour contract, as a result the court denied this claim.

An employer should implement a written labour contract with the employee according to the law after work commences. Failure to do so after one month will result in a monthly double salary paid to the employee. The TA is not the same as a labour contract thus the court favoured P2.

HR Tip
If your company wants to recruit graduates, a written labour contract as specified by the TA and as required by the Labour Contract Law need be drawn up and signed prior to the commencement of work. The TA does not replace a written labour contract, which needs to be signed after work begins. Doing business in full compliance with PRC labour laws is a good and safe practice, not only the basis for building harmonious labour relations but also to control and avoid any legal risk for the company and graduate.

Disclaimer
This article is intended solely for informational purposes and does not constitute legal advice. Although the information in this article was obtained from reliable official sources, no guarantee is made with regard to its accuracy and completeness. For more information please visit dandreapartners.com or WeChat: dandreapartners.

 

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Legal columnist Carlo D’Andrea is Chair of the Legal & Competition Working group of the European Union Chamber of Commerce in China; Shanghai Chapter, Coordinator of the Nanjing Working Group of the Italian Chamber of Commerce in China and has taught Chinese law (commercial and contractual) at Rome 3 University. 法律作家代开乐担任中国欧盟商会上海分会法律与竞争工作组主席,中国意大利商会劳动集团的协调员与曾经在罗马三大担任企业咨询课程中中国商法、合同法的课程教授。

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