Question 31. When a definite-term LC has been renewed expires, does the Employer have the right to renew with the employee another definite-term LC until the expiration of the operating licence of the enterprise?


According to the Labour Code, if aLCexpires and the parties wish to enter into a new LCwith a definite-term, only one more definite-termLC could be concluded, after that, if the Employee still works for the Employer, the parties must enter into an indefinite-term LC[1]. Apart fromthe above provisions, the Labour Code has no otherprovision regarding the exception that it isnot requiredto convert the type of LCif the operating licence of the enterprise expires. Therefore, in principle, the LC following two definite-term LCsmust be an indefinite-term LC. The termof business licences such as theenterprise registration certificate or theinvestment registration certificate of the enterprise will not affect the conversion of the type of LC according to the Labour Code because the enterprise might want to continue doing business and its operation mightbe extended by a competent State agency. Meanwhile, this case is not specified in the Labour Code as a solid legal groundfor the Employer to refuse to enter into an indefinite-term LCwith the Employee.

In addition, based on cases terminatingthe LCspecified inthe Labour Code, a LCwill terminate if anEmployerbeing an individualdies, is declared incapable of civil acts, missing or dead by a competentCourt; anEmployer not being an individual terminates its operation [2]. Accordingly, if an enterprise terminates its operation due to the expiration of its operating licence, the LC between the enterprise and all Employees working for the enterprise will also automatically terminate, regardless of thekind oftheLC.

[1]Article 20.2 of the Labour Code

[2]Article 34.7of the Labour Code