On march 2020, China recognised for the first time the legitimacy of electronic labour contracts in the country. This marks the official transition into a digital era by using electronic versions and online e-signatures.   

This step toward the evolution of digitisation is also a challenge to employers entering into an electronic labour contract. 

The newly released Guideline deepens the legal effect of a “lawfully concluded” electronic labour contract, covering issues as its conclusion, acquisition, preservation and use. 

First of all, employer and employee have to agree on this form of contract. The Guideline sets out specific employer’s obligations to inform the employee of the procedures, operating methods, precautions, and channels to view and download the complete text of the labour contract. 

Then, they need to conclude the contract through the electronic labour contract management platforms that comply with relevant laws and regulations, ensuring the authenticity, completeness, accuracy, tamper-proof, and traceability of the electronic labour contracts. 

The platform should also cover functions as identity authentication, electronic signature, informed consent confirmation and data security protection.  

Pursuant to the Guideline, employer and employee are obliged to submit factual, complete and accurate identity information to the contract management platform.  

The platform has to verify the identity and willingness of the signatories (by digital certificate, networked information verification, biometric identification verification, and mobile short message verification code).  

Digital certificates and keys, issued by legally established electronic certification service organisations, and meeting the requirements of the Electronic Signature Law of the PRC to perform electronic signatures, are to be implemented.  

According to Article 14 of the Electronic Signature Law, a reliable electronic signature has the same legal effect as a handwritten signature or seal. The electronic labour contract takes effect after the employer and the employee have signed a reliable electronic signature with a trusted timestamp. 

After the conclusion of the electronic labour contract, employers should notify employees by mobile phone text messages, WeChat, email, or APP information that the contract is concluded and prompt employees to download and save the text of the electronic labour contract.  

Employers should also consider that, since the HRMSS issued the Letter on Electronic Labor Contract-Related Issues last March, several localities, such as Suzhou Industrial Park, Beijing, Tianjin, Guangdong, and Shenzhen, successively rolled out local rules on electronic labor contract disputes. 

By using electronic contracts, companies could help their HR departments to enhance work efficiency and save administrative costs. Yet, compliance with high requirements remains complex.

It is also important, in case of a labour dispute, that employers can demonstrate the conclusion and validity of the electronic contract. Ensuring that the creation, transmission and storage of the contract comply with the requirements of law is key. 

China is not the only country that moved to the the digitisation of employment contracts. Among others, Vietnam recognised on 1 January 2021 the validity of the electronic labour contract in the Labour Code and in Kazakisthan Electronic employment contracts (e-ECs) are now permitted.  

It is to be expected that other countries will soon follow suit, as this seems to be the future of contracts.