The Labor Contract Law (Draft) is another important bill after the issue of Labor Law in 1995. The third reading of the draft has been passed by Standing Committee of the National People's Congress on April 24th, 2007, which has responded the newly raised questions after the second version and also adjusted and revised the related terms and regulations. The new Labor Law is closely related to the benefits of all laborers and will have great impact on both employers and employees.
 
Chengdu European Chamber warmly welcomes you to join its working group meeting. Latest changes of the 3rd Draft of Labor Contract Law and practical problems in its implementation will be reviewed and discussed among local FIEs. Please  click prc_employment_contract_law_dec._2006_draft to see the third draft in Chinese and  click bm_prc_employment_contract_law_euccc_chengdu-12544-v1-shidms to see the English translation.
 
Registration: 
 
To register for this event please fax your response to the European Chamber at 028 8666 5844 by Wednesday 13 June 2007, noontime or email chengdu@euccc.com.cn.

Event review

The Labor Contract Law (Draft) is another important bill after the issue of Labor Law in 1995. The third reading of the draft has been passed by the Standing Committee of the National People's Congress on April 24th, 2007, which has responded the newly raised questions after the second version and also adjusted and revised the related terms and regulations. The new Labor Law is closely related to the benefits of all laborers and will have great impact on both employers and employees.

On June 14th, Chengdu European Chamber gathered around 50 HR professionals of FIEs from both Sichuan and Chongqing in Kempinski Hotel to review the draft and discuss practical problems with implementation of the Labour Contract Law (Draft). All of the participants were very concerned and proposed their own ideas and suggestions. The discussion focused on the following issues:

1. Legal Rights and interests of both employees and employers should be equal, but Article 1 just states that the law is to protect employees’ legal rights.
 
2. The Labor Union cannot develop its function very well in real practice and the employee representative is inferior to the employer in negotiation.
 
3. In Article 14, the 3rd circumstance about “open-ended employment contract” renewal is not appropriate, which will lead to some abnormal practice by the employer. (It states that the renewal occurs following the conclusion of a fixed-term employment contract on two consecutive occasions.)
 
4. In Article 17, labor compensation can be separated from the employment contract and be drafted as an attachment which becomes effective simultaneously with the employment contract.
 
5. In Article 18, “If the negotiations are unsuccessful, the provisions of the collective contract shall apply. If the collective contract is silent on such matters, the relevant regulations of the state shall apply.” The relevant regulations of the state should be clearly referred.
 
6. In Article 19, “An Employer may stipulate only one probation period with any given worker.” But what if reemployment or position transfer?
        Suggestion: “In the same consecutive employment relation” should be added as a precondition.
 
7. In Article 22, “If the term of service agreed upon by the employer and the employee is relatively long, the employer shall raise the labor compensation of the worker during the term of service according to the wage adjustment mechanism.”
        Suggestion: this term should be cancelled.
 
8. The 5th term of Article 42 “An Employer may not terminate an employment contract if the worker has been working for the Employer continuously for not less than 15 years and is less than 5 years away from his legal retirement age.” is contradictory to the 2nd term of Article 40 “ An Employer may terminate an employment contract by giving the worker himself 30 days prior written notice, or one month’s wage in lieu of notice, if the worker is incompetent and remains incompetent after training or adjustment of his position.” It seems that the law overprotects the employee.
 
9. Article 43 leaves the employer’s some space to breach the law or regulations, because “The Employer shall study the labor union’s opinions and notify the labor union in writing as to the outcome of its handling of the matter.” That is to say, the employer may not follow the union’s opinions, but only study it.
 
10. In Article 45, “ Matters relating to the ending of the employment contract of a worker has partially lost his capacity to work as specified in item(2) of Article 42 hereof shall be handled in accordance with regulations on work-related injury insurance.” Besides the insurance, the employer himself should also compensate for the employee.
 
11. Article 49 “ The state will take measures to gradually enable workers’ personal accounts for basic old-age pension insurance payments to follow the workers throughout the country.” should be listed in Basic Old-Age Pension Insurance Ordinance instead of the labor contract law.
 
12. When the employee is sent to receive training, who should sign the related contract with him, the employer or FESCO?
 
Lastly, Ms. Val Li, chairwoman of the HR Working Group of Chengdu European Chamber suggested that the employer should submit the employment contract template to the labor administration authority for appraisal first in case any dispute appears.

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