New Labour Law

• The New Labor Contract Law came into effect in January 1 2008, in order to serve employees' rights better in China.

• The new law was a result of continuous mistreatment of workers in China, and it now brings considerable costs for employers of China if not complied with carefully.

• The new law applies to all employers within the People's Republic of China, both foreign and domestic.

  WRITTEN CONTRACT                                                                                                                           

• New labor contracts and old labor contract revisions are required in accordance with the new law.

  • Several details need to be included.

• The main effect is the fixed-term contract severance obligation on expiration.

  • Employee Handbook needs to be revised to have strict conditions for terminating the employment relationship to protect the employer.

• Employee Handbook is required.

  • The Employee Handbook, like stated before, should be strict, fulfill the regulations of the new law, while having provisions to prevent employees abusing the new law.

  EMPLOYEE HANDBOOK                                                                                                                        

• The Employee Handbook should be a detailed, informational and strict document stating company rules, employee obligations and breach consequences.

• The Employee Handbook should contain first and foremost basis for termination of relationship, and this basis has to be in accordance with the new labor contract law.

• Professional help when crafting the handbook is strongly recommended

  • Employment relationship termination conditions need to be applied according to the Chinese system.

• Labor contract needs to be in accordance with laws, respect employee's rights, yet maintaining employer's liabilities.

  • Foreign investors cannot afford invalid contracts due to new obligatory compensations.

  • Written labour contracts, signed by both parties, are required with each employment relationship, except in the case of part-time employment.

  • Failing to execute a written contract will result in double salary payment obligations and further consequences.

• Since January 1, 2008 all employer's in PRC are liable for damages caused by invalid contracts, lack of mandatory minimum content in labor contracts, violating laws by company rules or failure to issue termination certificates.

• List of items that need to be included in the labor contract:

– Company name, address and legal representation
– Employee's name, address and personal ID number
– Term
– Job description and location
– Working hours, rest and leave
– Compensation
– Working conditions
– Workplace safety/protection
– Protection for job-related hazards
– Social insurance

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