Labor contract law in the People's Republic of China

Labor contract law in the People's Republic of China

A new labor contract law in the People's Republic of China went into effect on January 1, 2008, following a series of staff-sacking scandals in many companies.

According to the new 98-article-long "Labor Contract Law", employees of at least 10 years standing are entitled to contracts that protect them from being dismissed without cause. The new law also requires employers to contribute to employees' social security accounts and sets wage standards for employees on probation and working overtime.

China's new labor contract law targets, primarily domestic companies that do not have labor contracts and that generally fail to comply with China's old laws. Foreign companies have had a stronger track record of signing contracts with employees and bringing to China their global work rules and environmental, health and safety practices.

According to statistics from the All-China Federation of Trade Unions in 2008, 40 percent of private-sector employees lack labor contracts and there are many cases of wage default and forced labor. The new law is to strengthen China's overall economy and regulation.

The law prompts companies to improve their management, capital-labor relations and productivity. A sound market economy system in return would benefit businesses -- both domestic and foreign companies.

Compared to the old contract law issued in 1994, the new law is supposed to provide greater job security.

Ever since the law was approved by China's top legislature in June 2007, it had aroused heated discussion and concern among domestic and foreign companies.

China appealed to foreign investors with its cheap labor, its preferential investment policies and its immense market. Employers feared the new law would have meant bigger severance payments and higher operational costs.

In the short term, it has been predicted that foreign companies investing in supermarket chains, restaurants, building industries and other low-end manufacturing, which abuse cheap labors and avoid paying social security would suffer some losses. But in the long run, the new labor contract law would not negatively impact China's competitiveness and appeal as a destination for foreign investment.

Small and medium enterprises in particular have already particularly felt the effects of the law.For example, some Korean companies have already decided to move their business from China to Vietnam or other developing countries where labor is much cheaper. About 98 percent of Korean enterprises in China are independent small and medium firms.

Other companies reacted to the law by proactively firing employees who would have come under the new guidelines. In October, US-based retail giant Wal-Mart fired about 100 employees at a sourcing center in China. The company said the the layoff was part of its global restructuring. LG and Olympus have respectively announced plans to lay off employees. Carrefour China has asked over 40,000 of its Chinese employees to re-sign a two-year labor contract before December 28, 2007 regardless of an employees' service length or the expiration of their current labor contract.

References

* Ministry of Labor and Social Security

ee also


Wikimedia Foundation. 2010.

Игры ⚽ Поможем написать курсовую

Look at other dictionaries:

  • Labor Contract Law of the People's Republic of China — A new labor contract law in the People s Republic of China (中华人民共和国劳动合同法) went into effect on January 1, 2008, following a series of staff sacking scandals in many companies. The Ministry of Human Resources and Social Security of the People s… …   Wikipedia

  • Ministry of Human Resources and Social Security of the People's Republic of China — 中华人民共和国人力资源和社会保障部 Agency overview Formed 2008 Preceding agencies Ministry of Labour and Social Security Ministry of Personnel Jurisdiction …   Wikipedia

  • List of statutes of the People's Republic of China — The following is an incomprehensive list of the statutes of the People s Republic of China (PRC), classified and ordered according to the [http://www.npc.gov.cn/englishnpc/Law/Frameset index.html Database of Laws and Regulations] of the National… …   Wikipedia

  • Illegal drug trade in the People's Republic of China — The illegal drug trade in China is influenced by factors such as history, location, size, population, and current economic conditions which are good. China has one fifth of the world s population and a large and expanding economy. Opium has… …   Wikipedia

  • Five-year plans of the People's Republic of China — The five year plans of People s Republic of China (PRC) (simplified Chinese: 中国五年计划; traditional Chinese: 中國五年計劃; pinyin: Zhōngguó Wǔnián Jìhuà) are a series of economic development initiatives. The economy was shaped by the Communist Party of… …   Wikipedia

  • Judicial system of the People's Republic of China — For the Ministry of Justice, see Ministry of Justice of the People s Republic of China. People s Republic of China This article is part of the series: Politics and government of …   Wikipedia

  • Education in the People's Republic of China — This article is about education in the People s Republic of China. See Education in Hong Kong and Education in Macau for education in Hong Kong and Macau, respectively. For education in the Republic of China (Taiwan), see Education in the… …   Wikipedia

  • Intellectual property in the People's Republic of China — This article is about intellectual property in mainland China. Intellectual property rights (IPRs) have been acknowledged and protected in the People s Republic of China since 1979. The People s Republic of China has acceded to the major… …   Wikipedia

  • Prostitution in the People's Republic of China — This article is about prostitution in mainland China. See also Prostitution in Hong Kong and Prostitution in Taiwan. Shortly after taking power in 1949, the Communist Party of China embarked upon a series of campaigns that purportedly eradicated… …   Wikipedia

  • History of trade of the People's Republic of China — Trade has been a very significant factor of the People s Republic of China s economy. In the twenty five years that followed the founding of the People s Republic of China in 1949, China s trade institutions were built into a partially modern but …   Wikipedia

Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”