Deciphering the Labor Contract Law(1)

From News, page 3, issue no. 342, November 19th, 2007
Translated by Zuo Maohong
Original article: [Chinese]

To await the destiny of being laid off, or to take the initiative in quitting? To renew the contract, or fight for reinstatement?

The above conflicts are highlighted by a recent, 7,000-strong, mass voluntary resignation at Huawei, China's biggest telecommunication equipment maker. Other companies and trade unions have also joined the tug-of-war between laborers and employers, and their conflicts have cascaded into a wider public debate throughout the country.

The source of it all is the new Labor Contract Law, which will come into effect on January 1st of next year.

Four Unpleasant Regulations

The basic principle of the Law is to "protect the rights of employees", according to Zhang Shicheng, deputy director of the administrative law office of the Working Committee of Legislative Affairs under the Standing Committee of National People's Congress.

Among 16 articles in the "Legal Liability" chapter, only one and a half focus on employee obligations. Many articles have been likened to strict military rules imposed on employers.

As a result, Liang Zhi, from All-China Lawyers Association, has been busy giving lectures on the new law to companies all over China. He points out that one of the rules that alarms employers is the "open-ended employment contract".

According to the 14th article of the Law, an employee who has served a company for more than 10 years; or who is under a fixed-term employment contract for two consecutive terms, shall be offered an open-ended employment contract, unless he or she refuses.

"Many Companies regard this rule as a scourge," says Liang, the association's deputy director for Committee of Labor and Social Securities Law.

The other main sticking point for companies concerns the probation period.