Bill Aims at Layoffs and Compensation

The second draft of the Labor Contract Law presented on December 24th at a convention of the National People’s Congress directly addresses issues of labor rights, greatly increasing conditions necessary to be met for layoffs and raising compensation packages. If it passes, firms must be more careful in the future when signing new hires and managers must be cautious when dissolving departments and laying off staff.????

Dong Baohua, professor at the Huadong Institute of Political Science and Law and one of the bill’s drafters, says that in comparison to suggestions made this past March the current draft is even stricter about layoffs.?????

According to the bill, if a firm wants to eliminate either 10 percent of its workforce or 20 positions or more, it must first make an announcement to all staff explaining why and hold a conference with staff representatives to hear suggestions and feedback. If 50 or more positions are eliminated, it must hold conference with a labor union. And certain staff cannot be arbitrarily fired-- for example, staff who are the sole breadwinners for their household or who are taking care of sick family members will have preference to continue working during layoffs.?????

According to Guo Jun, minister of the National Federation of Trade Unions, it is the right of a firm to implement large-scale layoffs. But in unilaterally terminating contracts, a firm must follow procedure and provide satisfactory compensation where appropriate.?

Dong says that the gaps between compensation packages are obscured in the current draft. A common worker who has worked for one year will probably only receive six or seven hundred RMB in compensation, and after 20 years they would only receive a few dozen thousand. But a manager at the same firm could receive millions. 'Can this destabalize society?' asks Dong.?????

Last December was the first time the bill was introduced to Congress. In March the full text was publicly released, along with an invitation for public criticism and suggestions. This latest revision is also calling for scrutiny.?????

In one month alone the standing committee had received 190,000 responses, 65 percent of which were from ordinary workers. Foreign firms had unusually strong feelings, claiming that if the bill passes they will divest from China. Because of the great divide in opinion, the bill will be delayed further to allow for more consideration.????

Guo believes that in this second draft workers haven’t fared so well. But he expects that when the debate starts again, they will make their voices heard.?