Responding to a surge in labour disputes in recent years, the Supreme People’s Court has introduced a new judicial interpretation that refines judicial standards, raising new challenges for corporate compliance and employment risk management.

Interpretation (II) of Issues Concerning the Application of Law in the Trial of Labour Dispute Cases, which took effect on 1 September 2025, serves as a pivotal regulatory document in the field of labour and employment law.

Previously, in Part 1, the author examined key provisions of Interpretation II. In this instalment, the analysis continues with a focus on additional clauses, drawing on related judicial practices to offer guidance on identifying employment risks and enhancing corporate management systems.

Q: How does Interpretation II determine “consecutive execution of two fixed-term employment contracts”?

A: The determination of “consecutive execution of two fixed-term employment contracts” is addressed in article 10. This states that a people’s court should deem the situation as compliant with article 14, paragraph 2, item 3 of the Labour Contract Law under any of four circumstances, namely:

1. Where the employer and employee negotiate to extend the labour contract for a cumulative period exceeding one year, and the extended period expires;
2. Where the employer and employee agree that the labour contract will automatically renew upon expiration, and the renewed period expires;
3. Where the employee, without fault on their part,...

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