Adhesion employment contracts, Chinese style

Chinese students in Shanghai, who must sign employment letters of intent while they were still in school for jobs they will get when the graduate, caught a break this week. From now on, the maximum amount they’ll have to pay if they breach their contract is simply the monthly income the new job would have paid.

If that sounds a bit harsh, it’s a big improvement over the previous situation, under which the penalties for breach of such contracts were unlimited. The Shanghai Education Commission decided that it made sense to provide some kind of uniform standard to avoid the problem of students stuck with penalties much higher than the compensation they would have received from the spurned employer.