An open-ended employment contract in China has no fixed expiry date. It is not the same as permanent employment and does not prevent lawful termination, but it removes expiry of a fixed term as an ordinary endpoint. Employers therefore need a reliable record of service dates, contract terms, renewals, employee requests and any statutory exceptions before a fixed-term contract ends.
The Labor Contract Law identifies several routes to an open-ended contract, including ten consecutive years of service, specified successive fixed-term contracting, and continued employment without a written contract for one year. The result cannot safely be reduced to the slogan that a “third contract is automatically permanent.” The facts, employee election, statutory exceptions, transitional history and current judicial interpretation all matter.
Direct answer
An employer must conclude an open-ended contract when a statutory trigger is satisfied and the employee requests or agrees to renew or conclude the employment relationship, unless the employee requests a fixed term in circumstances where the law permits that election. The employer should identify the trigger before renewal discussions and document the process rather than presenting a fixed-term form as the only option.
Open-ended status changes duration, not every other employment rule. The contract can still end through employee resignation, mutual termination, lawful employer termination, retirement-related events or another statutory ground. The employer must still prove the ground, procedure, notice and payment relied upon.
What an open-ended contract means
The Labor Contract Law defines an open-ended contract as one for which the employer and employee agree no definite ending date. It does not guarantee lifetime employment. Its practical significance is that the employer cannot simply wait for a fixed expiry date and decline renewal.
Terms on role, workplace, remuneration, hours, confidentiality and other lawful matters still apply. The parties should sign a written instrument that accurately records the open-ended status and the date from which it operates.
Ten consecutive years of service
One principal trigger applies when the employee has worked for the employer continuously for ten years. The service calculation should be reconstructed from the actual employment relationship, not only the latest contract. Transfers, reorganizations, related entities, interruptions and historic arrangements may require separate analysis.
The implementing regulation contains rules relevant to continuity, including circumstances in which service may be carried forward after an employee is assigned to a new employer for reasons not attributable to the employee. A group transfer document should therefore state what happens to prior service and should be checked against the actual facts.
There is also a specific statutory route concerning an employer’s first implementation of the employment-contract system or restructuring of a state-owned enterprise where the employee satisfies both a service and proximity-to-retirement test. It should not be generalized to ordinary private-company renewals.
Successive fixed-term contracts
The law identifies a trigger involving two consecutive fixed-term contracts followed by renewal, subject to statutory conditions and exceptions. Before treating the next term as fixed or open-ended, check:
- whether the earlier agreements were legally qualifying fixed-term contracts;
- whether they were consecutive with the same employer;
- when each was concluded and performed;
- whether a statutory employee-fault or incapacity ground affects the rule;
- whether the parties are renewing or concluding a further contract; and
- what the employee requested.
Current Supreme People’s Court Interpretation II addresses arrangements that may be treated as satisfying the successive-contract condition, including certain extensions, automatic-renewal arrangements and other conduct used to avoid the statutory rule. A short amendment or relabelled agreement should not be assumed to reset the count.
This is why the “third contract” shortcut is incomplete. The decision turns on the statutory sequence, exceptions, employee position and evidence. Local arbitral and judicial treatment should be checked for the case at hand.
One year without a written contract
Where an employer fails to conclude a written employment contract for one year after employment begins, the law treats the parties as having concluded an open-ended contract. The implementing regulation also addresses the employer’s duty to complete the written instrument.
This deemed-status rule is related to, but distinct from, the statutory double-wage consequences for periods without a written contract. Limitation, calculation, employee refusal and procedural questions should be analyzed separately. The consolidated open-ended guide should link to a narrower written-contract and double-wage resource rather than collapsing all remedies into one formula.
Work continuing after a fixed term expires
Continuing work after the stated expiry date creates avoidable uncertainty. Payroll, attendance, management instructions and continued benefits may show that the relationship persisted even if no renewal was signed. Current judicial interpretation addresses liability where work continues after expiry without a new written agreement.
Employers should not rely on silence or backdated documents. Before expiry, decide whether employment will end, renew for a lawful fixed term, or move to open-ended status. If work has already continued, preserve the timeline and obtain advice before issuing documents or terminating.
Employee request, agreement or refusal
The employee’s request matters under the statutory language. Renewal communications should clearly identify the available lawful contract form and invite a recorded response. A pre-signed waiver or general handbook statement should not be treated as a safe substitute for the required process.
If an employee refuses to sign, the employer should record the proposed terms, delivery, explanation, response and subsequent steps. The legal consequence depends on when the refusal occurred, whether the offered document was lawful and consistent with the employee’s rights, and whether employment continued.
Do not manufacture evidence through a backdated contract or pressure an employee to sign an inaccurate fixed term. Those steps can worsen the evidentiary position.
Remedies and employer exposure
The Labor Contract Law provides a double-wage consequence where an employer fails to conclude an open-ended contract when legally required. The start, duration and interaction with other claims require fact-specific analysis under current interpretations and limitation rules.
If the employer ends the relationship because it does not want to provide the required contract, the employee may also dispute the termination. Potential outcomes can involve continued performance, compensation or damages depending on the claim and facts. An open-ended-contract dispute therefore should not be analyzed as a payroll calculation alone.
Evidence file
Maintain a contract-history file containing:
- the employment start date and evidence of actual commencement;
- every signed contract, amendment and extension;
- records of any transfer, merger, outsourcing or related-entity change;
- renewal reminders, proposals and employee responses;
- delivery or receipt evidence for proposed agreements;
- attendance, payroll, benefits and management records after any expiry date;
- evidence relevant to a statutory exception; and
- termination notices, union steps and payment calculations if employment ends.
The evidence should identify who sent each communication and when. Informal messages may be relevant, but preserve them with context rather than relying on isolated screenshots.
Renewal calendar
Use a controlled renewal process:
- At onboarding, record the actual start and signing dates.
- Maintain a complete contract sequence rather than only the current PDF.
- Review service continuity and prior fixed terms at least 90 days before expiry.
- Identify any open-ended trigger and statutory exception.
- Obtain management instructions before making a renewal representation.
- Present the lawful contract option and record the employee’s response.
- Complete signature before the current term expires where possible.
- Escalate any continued work, refusal, dispute or proposed termination promptly.
Common mistakes
- Assuming a change of title, affiliate or contract label resets service automatically.
- Treating every third document as automatically open-ended without testing the statutory conditions.
- Offering only a fixed term when an open-ended right may have arisen.
- Allowing work to continue after expiry while renewal remains unresolved.
- Using a waiver or backdated agreement as a substitute for contemporaneous evidence.
- Combining open-ended status, unsigned-contract double wages and termination remedies into one calculation.
- Ignoring local arbitration practice and the latest judicial interpretation.
Sources
- Labor Contract Law of the PRC, National People’s Congress.
- Regulations for Implementation of the Labor Contract Law, State Council.
- SPC Interpretation II on Issues Concerning the Application of Law in Labor Dispute Cases, Supreme People’s Court; effective 1 September 2025.
General legal information only; not legal advice for a specific employment relationship, renewal, termination or claim.
