In China, this is the graduation season and millions of students graduate from colleges and universities. Many graduates are looking for or may have landed their first full time jobs and a lot of enterprises or companies or institutions are recruiting outstanding new graduates. Colleges and universities also care much about the job market and employment rate of their graduates, because this has always a direct impact on their reputation, since colleges and universities of high employment rate would attract more students.
Generally, a graduate and the employer will reach intent of employment by signing a Tripartite Agreement.
What is a Tripartite Agreement?
Each graduate will receive a Tripartite Agreement from his college or university in the last semester, which will be signed by the graduate, the employer and the college or university. Tripartite Agreement is an abbreviation of the 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》, which is a written agreement that defines the rights and obligations of the three parties – the graduate, the employer and the college or university – in the graduates employment work, which can resolve a series of issues of the graduate such as the registered permanent residence, archives, social insurance, common reserve fund and so on.
The General Terms and Conditions of a Tripartite Agreement
A Tripartite Agreement is a contract form uniformly printed by the Ministry of Education of PRC in accordance with the rules and regulations on employment of the college and university graduates, and a Tripartite Agreement generally specifies the identity and the basic information of the parties, the position, the working place, the term of service, the probation period and its commencement date, the monthly salary during the probation period and after the probation period, the benefits for the graduate and the amount of liquidated damages payable by the breaching party. All such terms and conditions are the most import elements of a labor contract; therefore the parties shall be careful while preparing the Tripartite Agreement.
The Nature of a Tripartite Agreement
The Tripartite Agreement can be describe as a preliminary agreement, a letter of intent on employment or a “precontract” (预约合同) for the future labor contract between the graduate and the employer. After the graduate reports to the employer for duty, the graduate and the employer shall conclude a labor contract in accordance with the provisions of the Tripartite Agreement and the relevant laws and regulations. The Tripartite Agreement shall automatically terminate after the graduate reports to the employer for duty and the parties establish a labor relationship.
In order to give a full understanding of its nature and the legal risk, here we describe two real cases:
Case 1. Can an employer sue the graduate or the employee for his early quit on the basis of a Tripartite Agreement?
The graduate/employee/defendant (D1) went to work for the employer/plaintiff (P1) as from June 6, 2014, and D1 received his certificate of graduation on June 12, 2014 and reported to P1 for duty on July 10, and D1, and P1 and the College reached a Tripartite Agreement on July 15, 2014, specifying that the term of service would be one year and the liquidated damages for breach was RMB 4500. No labor contract was reached by and between the parties. However, D1 quitted his job by submitting an Employee Quit Application Form on August 31, 2014.
P1 brought a lawsuit and claimed the liquidated damages RMB 4500 against D1 for his breach of the Tripartite Agreement. The court concludes that, after the Tripartite Agreement was signed, and the parties has performed their respective rights and obligations of reporting to duty and arranging for a job in accordance with the Tripartite Agreement, D1 did not breach the Tripartite Agreement, and the reasons of P1 for claiming for liquidated damages against D1 were groundless. However, the counterclaim of D1 for the difference of double salary during the period from August 10 to August 31, 2014 against P1 for failure to conclude a written labor contract was successfully approved by the court.
Case 2. Can a Tripartite Agreement serve as the written labor contract as required by the Labor Contract Law of the PRC?
The graduate/employee/plaintiff (P2) and the employer/defendant (D2) and the college reached a Tripartite Agreement in May 2013, and P2 received her certificate of graduation in June 2013 and continued to work thereafter without a written labor contract between the parties, and D2 did not procure social insurance for P2. P2 left the company D2 in June 10, 2014.
P2 brought a lawsuit and claimed against D2 for payment of the difference of double salary during the period from June 2013 for failure to conclude a written labor contract, and for procurement of the social insurance from June 2013.
D2 argued that it has paid P2 RMB 500 per month in cash in the name of social insurance premium and that the Tripartite Agreement may be deemed to be a written labor contract. However, the allegation of D2 that it has paid P2 RMB 500 per month in cash in the name of social insurance premium and, therefore, it was no longer obligated to procure social insurance for P2, was denied by the court for lack of legal basis.
An employer shall conclude a written labor contract with the employee according to law, if the employer fails to conclude a written labor contract with the employee after one month but less than one year as from the date when the employee started work, the employer shall monthly pay double salary to the employee. D2 failed to prove that failure to conclude a written labor contract was caused by P2, and the court did not approve the allegation of D2 that the Tripartite Agreement may be deemed to be a written labor contract between the parties by reasoning that the parties, contents and legal basis and other aspects of a Tripartite Agreement are different from those of a labor contract, and that the Tripartite Agreement does not have the effect of a labor contract.
The court decided in favor of P2.
Tips to HR
If your company desires to recruit a new graduate, and after the graduate reports to your company for duty, your company needs to conclude a written labor contract as specified by the Tripartite Agreement and as required by the Labor Contract Law, because the Tripartite Agreement cannot replace a written labor contract as provided in the Labor Contract Law.
Anyhow, doing business in full compliance with the labor laws of the People’s Republic of China is a good and safe practice, which is not only the necessary basis to build a strong team and harmonious labor relation, but also to control and avoid any legal risk for the company.
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