“The Labor Contract Law of the People’s Republic of China” (hereinafter, the “Labor Contract Law”) was promulgated on June 29, 2007 and came into force on January 1, 2008. This is another milestone in the legal construction of labor and social security. Compared with the former “Labor Law”, the “Labor Contract Law” has made new provisions as well as further improvement and development to the labor contract system.
The “Labor Contract Law” enlarges the applicable range of the labor contract system
According to the “Labor Contract Law”, besides the original domestic enterprises and individual economic organizations, private non-enterprise entities and other organizations have also been taken into the applicable range of the labor contract system. Meanwhile, except civil servants and the staff who are administered by reference to the “Civil Servant Law”, and the employers of the public institutions under the system of employment, the state organs, public institutions, social organizations shall establish a labor relationship with their employees and execute according to the “Labor Contract Law”.
The “Labor Contract Law” strictly requires the execution of written labor contract
The “Labor Contract Law” makes improvement to the problem that the employing entities do not execute written labor contracts, and provides that an employer shall establish a labor relationship with an employee from the date of starting to use the employee; and a written labor contract shall be executed to establish a labor relationship. Meanwhile, it provides that if an employer fails to execute a written labor contract with an employee more than one month but less than one year after the date on which it starts using him, it shall pay to the employee his monthly salary at double amount; if an employer executes a written labor contract with an employee more than one year after the date on which it starts using him, it shall be deemed that the employer has executed a labor contract without a fixed term with the employee.
The “Labor Contract Law” strictly requires the execution of written labor contract
The “Labor Contract Law” makes improvement to the problem that the employing entities do not execute written labor contracts, and provides that an employer shall establish a labor relationship with an employee from the date of starting to use the employee; and a written labor contract shall be executed to establish a labor relationship. Meanwhile, it provides that if an employer fails to execute a written labor contract with an employee more than one month but less than one year after the date on which it starts using him, it shall pay to the employee his monthly salary at double amount; if an employer executes a written labor contract with an employee more than one year after the date on which it starts using him, it shall be deemed that the employer has executed a labor contract without a fixed term with the employee.
The “Labor Contract Law” strictly defines the probation period
The “Labor Contract Law” strictly defines the probation period that if the term of a labor contract is more than 3 months but less than 1 year, the probation period shall not exceed one month. If the term of a labor contract is more than one year but less than 3 years, the probation period shall not exceed 2 months, and If the term of a labor contract is more than three years or it is a contract without a fixed term, the probation period shall not exceed 6 months; for a labor contract based on the completion of a particular task or with a fixed term of less than 3 months, no probation period may be stipulated; an employer can only stipulate one probation period with a same employee. Meanwhile, the “Labor Contract Law” strictly defines that the salary of an employee during the probation period shall not be lower than the minimum salary for the same post of the same entity or not lower than 80% of the salary stipulated in the employment contract, nor shall it be lower than the minimum salary of the place where the employer is located. Besides, the “Labor Contract Law” defines that within the probation period, the employer shall not dissolve the labor contract unless for legal circumstances, while the employee may terminate the contract with a notice three days in advance.
The “Labor Contract Law” clearly provides that only under two circumstances can the penalty for breach of contract of the employee be stipulated
The “Labor Contract Law” restricts the employer to stipulate penalty for breach of contract at ease by exploiting its dominant position, and clearly provided that, except the two circumstances of the violation of the stipulation on the training service period or the stipulation on the non-competition, the employer shall not stipulate for the employee to bear the penalty. Meanwhile, the “Labor Contract Law” limits the amount of penalty for the stipulated training service period to be no more than the training fees, and makes detailed provisions on the applicable target, period (2 years) and scope etc. of the non-competition.
The “Labor Contract Law” provides in details the circumstances for dissolving a labor contract
Compared with the “Labor Law”, the “Labor Contract Law” has, on one hand, enlarged the conditions for the employee to dissolve the labor relationship at any time, such as that the employer fails to pay the social security premiums according to the laws, the contract is invalid and the employer’s rules infringe on the rights of the employees, etc.; and on the other hand, has added the circumstances for the employer to dissolve the labor relationship at any time, such as that the employee simultaneously establishes a labor relationship with other employers and may seriously affect his completion of the tasks of this entity, or he refuses to make a correction though the employer has pointed it out, the contract is invalid, etc. and added the circumstance that the employer can pay one month’s salary to substitute the 30 days’ notice period when dissolving the labor relationship. Besides, the “Labor Contract Law” gives more detailed provisions to the applicable circumstances for the dissolution because of downsizing.
Saturday, September 22, 2007
Wednesday, August 8, 2007
Confidentiality and Non-competition under new Employment Law
The Employer and the Employee can reach agreement on confidentiality and non-competition in the employment contract.
For the Employee who has the obligation of confidentiality, the Employer can include clauses of non-competition in the employment contract or confidentiality agreement. In such agreement, the Employer shall be liable for compensation for the Employee on a monthly basis during the non-competition term which starts from the termination of employment contract. In case the Employee violates agreement on non-competition, he shall pay penalty to the Employer.
The Employee with obligation of non-competition is limited to senior management personnel, senior technicians or other employees with obligation of confidentiality.
With regards the term of non-competition, according to the new Employment Law, within 2 years upon termination of employment contract, the Employee with obligation of non-competition shall not seek employment in other Employers who manufacture or engage in like product or business and have competitive relationship with the Employer, or start his own business on manufacturing or engaging in like product or business.
For the Employee who has the obligation of confidentiality, the Employer can include clauses of non-competition in the employment contract or confidentiality agreement. In such agreement, the Employer shall be liable for compensation for the Employee on a monthly basis during the non-competition term which starts from the termination of employment contract. In case the Employee violates agreement on non-competition, he shall pay penalty to the Employer.
The Employee with obligation of non-competition is limited to senior management personnel, senior technicians or other employees with obligation of confidentiality.
With regards the term of non-competition, according to the new Employment Law, within 2 years upon termination of employment contract, the Employee with obligation of non-competition shall not seek employment in other Employers who manufacture or engage in like product or business and have competitive relationship with the Employer, or start his own business on manufacturing or engaging in like product or business.
Tuesday, July 31, 2007
Service Term
Service Term means the term the Employee promises to work for the Employer in case the Employee receives special treatment from the Employer.
If the Employer provides training for the Employee at its own cost, the Employer can enter into agreement with the Employee and have a service term in such agreement.
In the event the Employee violates the service term, he shall pay penalty to the Employer, which shall not be more than the training expense. Furthermore, the penalty the Employer requires the Employee to pay shall not exceed the part of training expense which is the rest of the training expense according to the term left.
If the Employer provides training for the Employee at its own cost, the Employer can enter into agreement with the Employee and have a service term in such agreement.
In the event the Employee violates the service term, he shall pay penalty to the Employer, which shall not be more than the training expense. Furthermore, the penalty the Employer requires the Employee to pay shall not exceed the part of training expense which is the rest of the training expense according to the term left.
Sunday, July 29, 2007
Probation Period
In the new Employment Law, the probation period has direct link with the employment term. In case the employment term is more than 3 months but less than one year, then the probation period shall be no more than 1 month; If the employment term is more than one year (including one year) but less than three years, the employment term shall be no more than 2 months; if the employment term is more than three years (including three years) or the employment contract is an open term contract, then the probation period shall be no more than 6 months.
The same Employer can only be allowed to have probation period with the same Employee for one time.
No probation period is allowed if the contract is a task completion-based contract or the employment term is less than three months.
The probation period shall be included into the employment term. That is to say, if the employment term is 6 months and the probation period is 1 month, then the 1 month shall be part of the 6 months.
With regards the salary for probation period, according to the new Employment Law, the Employee’s salary for probation period shall be no less than the minimum salary for the same position in the company or no less than 80% of the salary as agreed in the employment contract.
During the probation period, the Employer is not allowed to terminate the contract except:
a) The Employee is proven not up to the requirements for recruitment during the probation period;
b) The Employee seriously violates the Employer’s disciplines or the rules;
c) The Employee causes great losses to the Employer due to serious dereliction of duty or engagement in malpractice for selfish ends;
d) The Employee meanwhile enters into employment relationship with other employer(s), which brings serious impact to the task which the Employee needs to complete for the Employer, or for such situation, the Employer has pointed it out but the Employee refuses to rectify;
e) The employment contract is concluded or modified by one party against the other party’s true intentions through the use of fraud or coercion or exploitation of the other party’s unfavorable position, which makes the contract null and void;
f) The Employee is investigated for criminal responsibility;
g) The Employee is unable to take up his original work or other work assigned by the Employer after expiry of his medical treatment term for illness or non work-related injury;
h) The Employee is unqualified for his work and remains unqualified even after receiving training or an adjustment of job position.
In case the Employer terminates the contract during the probation period, it shall explain the reason to the Employee.
The same Employer can only be allowed to have probation period with the same Employee for one time.
No probation period is allowed if the contract is a task completion-based contract or the employment term is less than three months.
The probation period shall be included into the employment term. That is to say, if the employment term is 6 months and the probation period is 1 month, then the 1 month shall be part of the 6 months.
With regards the salary for probation period, according to the new Employment Law, the Employee’s salary for probation period shall be no less than the minimum salary for the same position in the company or no less than 80% of the salary as agreed in the employment contract.
During the probation period, the Employer is not allowed to terminate the contract except:
a) The Employee is proven not up to the requirements for recruitment during the probation period;
b) The Employee seriously violates the Employer’s disciplines or the rules;
c) The Employee causes great losses to the Employer due to serious dereliction of duty or engagement in malpractice for selfish ends;
d) The Employee meanwhile enters into employment relationship with other employer(s), which brings serious impact to the task which the Employee needs to complete for the Employer, or for such situation, the Employer has pointed it out but the Employee refuses to rectify;
e) The employment contract is concluded or modified by one party against the other party’s true intentions through the use of fraud or coercion or exploitation of the other party’s unfavorable position, which makes the contract null and void;
f) The Employee is investigated for criminal responsibility;
g) The Employee is unable to take up his original work or other work assigned by the Employer after expiry of his medical treatment term for illness or non work-related injury;
h) The Employee is unqualified for his work and remains unqualified even after receiving training or an adjustment of job position.
In case the Employer terminates the contract during the probation period, it shall explain the reason to the Employee.
Friday, July 27, 2007
The Employment Term
According to the new Employment Law, there are fixed-term employment contract, open term employment contract and task completion-based employment contract.
Fixed-term employment contract means the contract has an expiry date. The fixed-term employment contract can be concluded by the Employer and the Employee on the basis of consultation.
Open-term employment contract means the contract has no definite expiry date.
Open-term employment contract can be reached by the Employer and Employee on the basis of consultation. However, in the following situations, if the Employee puts forward or agree to renew or conclude the employment contract, an open-term employment contract shall be concluded except the Employee proposes to conclude a fixed-term contract:-
1. The Employee has been working for no less than 10 years for the Employer;
2. When the Employer adopts the employment contract system for the first time or state-owned enterprise is reorganized and reenters into employment contract with the Employee, the Employee has been working for no less than 10 years for the Employer and there is less than 10 years before he/she retires;
3. The fixed-term employment contract has been concluded for consecutive two times, and no following situations exist when reentering into the contract:-
a) The Employee is proven not up to the requirements for recruitment during the probation period;
b) The Employee seriously violates the Employer’s disciplines or the rules;
c) The Employee causes great losses to the Employer due to serious dereliction of duty or engagement in malpractice for selfish ends;
d) The Employee meanwhile enters into employment relationship with other employer(s), which brings serious impact to the task which the Employee needs to complete for the Employer, or for such situation, the Employer has pointed it out but the Employee refuses to rectify;
e) The employment contract is concluded or modified by one party against the other party’s true intentions through the use of fraud or coercion or exploitation of the other party’s unfavorable position, which makes the contract null and void;
f) The Employee is investigated for criminal responsibility;
g) The Employee is unable to take up his original work or other work assigned by the Employer after expiry of his medical treatment term for illness or non work-related injury;
h) The Employee is unqualified for his work and remains unqualified even after receiving training or an adjustment of job position.
If the Employer does not sign written employment contract with the Employee and such condition has last for over one month starting from the date when the Employee carries out the work but less than one year, the Employer shall pay double salaries each month to the Employee.
In the event the Employer does not sign written employment contract with the Employee and such condition has last for one year, the Employer is deemed to have entered into open term employment contract with the Employee.
If the Employer violates the law and refuses to sign open term employment contract with the Employee, the Employer shall pay double salaries to the Employee from the date when the open term employment contract shall be signed.
Task completion-based employment contract means the contract comes to an end when the task is completed.
Task completion-based employment contract can be concluded between the Employer and the Employee on the basis of consultation.
Fixed-term employment contract means the contract has an expiry date. The fixed-term employment contract can be concluded by the Employer and the Employee on the basis of consultation.
Open-term employment contract means the contract has no definite expiry date.
Open-term employment contract can be reached by the Employer and Employee on the basis of consultation. However, in the following situations, if the Employee puts forward or agree to renew or conclude the employment contract, an open-term employment contract shall be concluded except the Employee proposes to conclude a fixed-term contract:-
1. The Employee has been working for no less than 10 years for the Employer;
2. When the Employer adopts the employment contract system for the first time or state-owned enterprise is reorganized and reenters into employment contract with the Employee, the Employee has been working for no less than 10 years for the Employer and there is less than 10 years before he/she retires;
3. The fixed-term employment contract has been concluded for consecutive two times, and no following situations exist when reentering into the contract:-
a) The Employee is proven not up to the requirements for recruitment during the probation period;
b) The Employee seriously violates the Employer’s disciplines or the rules;
c) The Employee causes great losses to the Employer due to serious dereliction of duty or engagement in malpractice for selfish ends;
d) The Employee meanwhile enters into employment relationship with other employer(s), which brings serious impact to the task which the Employee needs to complete for the Employer, or for such situation, the Employer has pointed it out but the Employee refuses to rectify;
e) The employment contract is concluded or modified by one party against the other party’s true intentions through the use of fraud or coercion or exploitation of the other party’s unfavorable position, which makes the contract null and void;
f) The Employee is investigated for criminal responsibility;
g) The Employee is unable to take up his original work or other work assigned by the Employer after expiry of his medical treatment term for illness or non work-related injury;
h) The Employee is unqualified for his work and remains unqualified even after receiving training or an adjustment of job position.
If the Employer does not sign written employment contract with the Employee and such condition has last for over one month starting from the date when the Employee carries out the work but less than one year, the Employer shall pay double salaries each month to the Employee.
In the event the Employer does not sign written employment contract with the Employee and such condition has last for one year, the Employer is deemed to have entered into open term employment contract with the Employee.
If the Employer violates the law and refuses to sign open term employment contract with the Employee, the Employer shall pay double salaries to the Employee from the date when the open term employment contract shall be signed.
Task completion-based employment contract means the contract comes to an end when the task is completed.
Task completion-based employment contract can be concluded between the Employer and the Employee on the basis of consultation.
Wednesday, July 25, 2007
The rights that Employees enjoy when concluding an employment contract
During the course of concluding employment contract, the Employees have the right of knowing . The Employer shall faithfully inform the Employees of the job content, job condition, working address, work-related danger, safety production condition, remuneration and other issues that the Employees want to learn about.
The employer is not allowed to detain the Employees ID or other certificates, or ask for guarantee from the Employee as a means to keep the employment.
Written employment contract shall be concluded. In case the employment relationship has been set up but no written employment contract was ever signed, the contract shall be signed within one month upon establishment of employment relationship. If the contract is signed before the Employee carries out the work as assigned by the Employer, the employment relationship shall be deemed to be established when the work is carried out.
The employer is not allowed to detain the Employees ID or other certificates, or ask for guarantee from the Employee as a means to keep the employment.
Written employment contract shall be concluded. In case the employment relationship has been set up but no written employment contract was ever signed, the contract shall be signed within one month upon establishment of employment relationship. If the contract is signed before the Employee carries out the work as assigned by the Employer, the employment relationship shall be deemed to be established when the work is carried out.
Wednesday, July 4, 2007
China Promulgated the new Employment Contract
The new Employment Contract law was passed by the 28th Secession of Standing Committee of NPC on June 29, 2007. The new Law increases penality to the employer who violates the Law and refuses to sign written employment contract with the employee. Also when disputes arise, the old procedure i.e. arbitration first and then litigation, is expected to be modified. This new Law will become effective on January 1, 2008.
Double salary shall be paid in case no written employment contract is signed
According to the Law, the employer shall sign a written employment contract with the employee. If no such contract is signed during the term starting from the next month of employment to expiry of one year of employment, the employer shall pay double monthly salary to the employer during such term; In case no written contract is signed after expiry of one year, besides the double monthly salary to be paid, it is deemed the employer has entered into non-fixed term contract with the employee.
The Probation term shall be no more than six months
With regards the probation term, if the employment term is over three months but no more than one year, the probation term shall be no more than one month; if the employment term is over one year but no more than three years, the probation term shall be no more than two months; if the employment term is over three years or the contract is a non-fixed term contract, the probation term shall be no more than six months.
In addition, the employee's salary during the probation term shall be no less than 80 % of the salary as agreed in the contract or no less than the minimum salary for the same position in the company.
Double salary shall be paid in case no written employment contract is signed
According to the Law, the employer shall sign a written employment contract with the employee. If no such contract is signed during the term starting from the next month of employment to expiry of one year of employment, the employer shall pay double monthly salary to the employer during such term; In case no written contract is signed after expiry of one year, besides the double monthly salary to be paid, it is deemed the employer has entered into non-fixed term contract with the employee.
The Probation term shall be no more than six months
With regards the probation term, if the employment term is over three months but no more than one year, the probation term shall be no more than one month; if the employment term is over one year but no more than three years, the probation term shall be no more than two months; if the employment term is over three years or the contract is a non-fixed term contract, the probation term shall be no more than six months.
In addition, the employee's salary during the probation term shall be no less than 80 % of the salary as agreed in the contract or no less than the minimum salary for the same position in the company.
Friday, June 22, 2007
The company's right to terminate the employment contract
1. In the following cases, the company is entitled to terminate the employment contract unilaterally without prior notice to the employee:
a) the employee is proved not up to the requirements for recruitment during the probationary period(usually the probationary period is 3 months);
b) the employee seriously violates the discipline or regulations of the company;
c) the employee causes great losses to the company due to his/her dereliction of duty or engagement in malpractice for selfish ends;
d) the employee is facing investigation by the police for criminal action.
2. In the following cases, the company can terminate the employment contract but a written notice shall be given to the employee 30 days in advance:-
a) after the completion of medical treatment for illness or non work-related injury, the employee is unable to take up his/her original work or any new job assigned by the company,
b) the employee is unqualified for the work assigned and continue this status even after he/she receives training or adjustment to other position;
c) no agreement on modification of the employment contract can be reached between the company and the employee when the conditions taken as the basis for the conclusion of the employment contract have greatly changed so that the original employment contract can no longer be carried out.
d) during the period of statutory consolidation when the company comes to the brink of bankruptcy or runs into difficulties in production and management, and if reduction of its personnel becomes really necessary, the company may make such reduction after it has explained the situation to the trade union or all of its staff and workers 30 days in advance, solicited opinions from them and reported to the labour administrative department.
3. Both the company and the employee can terminate the employment contract if they reach an agreement.
In above-mentioned 2 and 3, the company is liable to pay compensation to the employee when the employment contract is terminated.
a) the employee is proved not up to the requirements for recruitment during the probationary period(usually the probationary period is 3 months);
b) the employee seriously violates the discipline or regulations of the company;
c) the employee causes great losses to the company due to his/her dereliction of duty or engagement in malpractice for selfish ends;
d) the employee is facing investigation by the police for criminal action.
2. In the following cases, the company can terminate the employment contract but a written notice shall be given to the employee 30 days in advance:-
a) after the completion of medical treatment for illness or non work-related injury, the employee is unable to take up his/her original work or any new job assigned by the company,
b) the employee is unqualified for the work assigned and continue this status even after he/she receives training or adjustment to other position;
c) no agreement on modification of the employment contract can be reached between the company and the employee when the conditions taken as the basis for the conclusion of the employment contract have greatly changed so that the original employment contract can no longer be carried out.
d) during the period of statutory consolidation when the company comes to the brink of bankruptcy or runs into difficulties in production and management, and if reduction of its personnel becomes really necessary, the company may make such reduction after it has explained the situation to the trade union or all of its staff and workers 30 days in advance, solicited opinions from them and reported to the labour administrative department.
3. Both the company and the employee can terminate the employment contract if they reach an agreement.
In above-mentioned 2 and 3, the company is liable to pay compensation to the employee when the employment contract is terminated.
Salary for sick leave
When an employee needs to have a sick leave, he/she shall apply with the company with the doctor's note and get approval from the company. Sick leave term shall not include holiday. In case the sick leave term is within 6 months, the company shall pay the salary for sick leave as follows:-
1. If the employee's working term in the company is less than 2 years, the employee is entitled to 60% of the Salary;
2. If the working term in the company is above 2 years (including 2 years) but less than 4 years, the employee is entitled to 70% of the Salary;
3. If the working term in the company is above 4 years (including 4 years) but less than 6 years, the employee is entitled to 80% of the Salary;
4If the working term in the company is above 6 years (including 6 years) but less than 8 years, the employee is entitled to 90% of the Salary;
5.If the working term in the company is above 8 years (including 8 years), the employee is entitled to 100% of the Salary.
In case the sick leave term is above 6 months, the company shall also pay illness relief fee.
The illness relief fee shall be calculated as follows:-
1.If the working term in the company is less than 1 years, the illness relief fee shall be 40% of the Salary;
2.If the working term in the company is above 1 years (including 1 year) but less than 3 years, the illness relief fee shall be 50% of the Salary;
3.If the working term in the company is above 3 years(including 3 years), the illness relief fee shall be 60% of the Salary.
The Salary herein refers to 70% of the payment the employee receives from the company in normal condition.
1. If the employee's working term in the company is less than 2 years, the employee is entitled to 60% of the Salary;
2. If the working term in the company is above 2 years (including 2 years) but less than 4 years, the employee is entitled to 70% of the Salary;
3. If the working term in the company is above 4 years (including 4 years) but less than 6 years, the employee is entitled to 80% of the Salary;
4If the working term in the company is above 6 years (including 6 years) but less than 8 years, the employee is entitled to 90% of the Salary;
5.If the working term in the company is above 8 years (including 8 years), the employee is entitled to 100% of the Salary.
In case the sick leave term is above 6 months, the company shall also pay illness relief fee.
The illness relief fee shall be calculated as follows:-
1.If the working term in the company is less than 1 years, the illness relief fee shall be 40% of the Salary;
2.If the working term in the company is above 1 years (including 1 year) but less than 3 years, the illness relief fee shall be 50% of the Salary;
3.If the working term in the company is above 3 years(including 3 years), the illness relief fee shall be 60% of the Salary.
The Salary herein refers to 70% of the payment the employee receives from the company in normal condition.
Thursday, June 21, 2007
China's Draft Employment Contract Law—Third Deliberation
An Employment Contract Law is scheduled for inclusion in the 2007 legislative agenda. As the administrative authority responsible for labor and social security related issues in China, the State Council appointed Ministry of Labor and Social Security drew up and studied the draft Employment Contract Law with the State Council in late 2006.From April 24 to April 27, the Standing Committee of National People's Congress ("NPC") completed the third deliberation of the draft Labor Contract Law.The New Employment Contract Law is expected to be published around June 2007.
The third deliberation of the Employment Contract Law Draft raised new issues. However, since the Employment Contract Law is still in the drafting stage, none of its provisions are confirmed by the law.As such, any discussion of the Employment Contract Law Draft ("the Draft") should be conducted with the understanding that the Draft has not been finalized.
1. Establishment Procedures for an Employer's Internal Rules
The Draft clarifies that the employer shall negotiate with employees or the employee representatives' congress and shall bring forward schemes and opinions to stipulate the internal rules on an equal basis involving the following issues: remuneration, working hours, leave and holidays, labor security and sanitation, insurance and benefits, vocational training, labor discipline, etc.
2. Conclusion of Labor Contract in Written Form
The Draft prescribes that where the employer has not signed the labor contract in written form with employees, the labor contract in written form shall be concluded within one month of establishing the labor relationship, or else the employer shall pay to the employee two times of the wages to which the employee is entitled.
3. Non-fixed-term Contract
The Draft requires the employer to enter into a non-fixed-term labor contract with the employee after the employer twice consecutively executes the fixed-term labor contract with such employee.
4. Retrenchment
The Draft stipulates that the employer may layoff redundant employees, subject to mandatory procedures, under the following circumstances: (1) where the employer is restructured in accordance with laws and regulation on the bankruptcy of enterprises; (2) where serious difficulties occur to the production and management of the employer; (3) where the employer is relocated for prevention of pollution; and (4) where the employer engages in change of products line, technical renovation, or change of business model, and the employer still needs to layoff redundant employees after the amendment to the original employment contract.
5. Compensation
The Draft clarifies the compensation shall equal the employee's monthly remuneration multiplied by the the length of service year and a service year of less than one year will be counted as one year.Further, it stipulates the maximum amount shall be three times the city average salary with a 12 month cap.It is required for compensation when the employer would not renew the labor contract with the employee at the expiration date.
6. Labor Dispatch
The Draft clarifies that the obligations for the labor dispatching enterprise are: (1) entering into labor dispatching agreement with the real employer; and (2) notifying the dispatched employee the content of the labor dispatching agreement.In addition, the dispatched employee shall have the right to organize or join in the trade union in the dispatching enterprise or the real employing enterprise.
7. Non-competition
The non-competition clause shall apply to senior management, senior technical staff and other staff familiar with the business secrets of the employer.The non-competition period shall be limited to the maximum of two years.
8. Trade Union
The current draft Labor Contract Law has reinforced the role of labor union in safeguarding the legitimate rights and interests on employees in the following areas: (1) formulating corporate rules and bylaws; (2) bargaining on the collective contract; (3) providing opinion on mass layoffs; and (4) providing opinion on the termination of a labor contract.
Conclusion
As embodied in this Draft, the forthcoming Labor Contract Law may cause extensive changes to labor relations.Consequently, corporate human resources management must adapt to the requirements of the new law.The current letters of appointment, labor contracts, internal labor rules, and various other documents shall be amended in order to satisfy the requirements of the Labor Contract Law.
The third deliberation of the Employment Contract Law Draft raised new issues. However, since the Employment Contract Law is still in the drafting stage, none of its provisions are confirmed by the law.As such, any discussion of the Employment Contract Law Draft ("the Draft") should be conducted with the understanding that the Draft has not been finalized.
1. Establishment Procedures for an Employer's Internal Rules
The Draft clarifies that the employer shall negotiate with employees or the employee representatives' congress and shall bring forward schemes and opinions to stipulate the internal rules on an equal basis involving the following issues: remuneration, working hours, leave and holidays, labor security and sanitation, insurance and benefits, vocational training, labor discipline, etc.
2. Conclusion of Labor Contract in Written Form
The Draft prescribes that where the employer has not signed the labor contract in written form with employees, the labor contract in written form shall be concluded within one month of establishing the labor relationship, or else the employer shall pay to the employee two times of the wages to which the employee is entitled.
3. Non-fixed-term Contract
The Draft requires the employer to enter into a non-fixed-term labor contract with the employee after the employer twice consecutively executes the fixed-term labor contract with such employee.
4. Retrenchment
The Draft stipulates that the employer may layoff redundant employees, subject to mandatory procedures, under the following circumstances: (1) where the employer is restructured in accordance with laws and regulation on the bankruptcy of enterprises; (2) where serious difficulties occur to the production and management of the employer; (3) where the employer is relocated for prevention of pollution; and (4) where the employer engages in change of products line, technical renovation, or change of business model, and the employer still needs to layoff redundant employees after the amendment to the original employment contract.
5. Compensation
The Draft clarifies the compensation shall equal the employee's monthly remuneration multiplied by the the length of service year and a service year of less than one year will be counted as one year.Further, it stipulates the maximum amount shall be three times the city average salary with a 12 month cap.It is required for compensation when the employer would not renew the labor contract with the employee at the expiration date.
6. Labor Dispatch
The Draft clarifies that the obligations for the labor dispatching enterprise are: (1) entering into labor dispatching agreement with the real employer; and (2) notifying the dispatched employee the content of the labor dispatching agreement.In addition, the dispatched employee shall have the right to organize or join in the trade union in the dispatching enterprise or the real employing enterprise.
7. Non-competition
The non-competition clause shall apply to senior management, senior technical staff and other staff familiar with the business secrets of the employer.The non-competition period shall be limited to the maximum of two years.
8. Trade Union
The current draft Labor Contract Law has reinforced the role of labor union in safeguarding the legitimate rights and interests on employees in the following areas: (1) formulating corporate rules and bylaws; (2) bargaining on the collective contract; (3) providing opinion on mass layoffs; and (4) providing opinion on the termination of a labor contract.
Conclusion
As embodied in this Draft, the forthcoming Labor Contract Law may cause extensive changes to labor relations.Consequently, corporate human resources management must adapt to the requirements of the new law.The current letters of appointment, labor contracts, internal labor rules, and various other documents shall be amended in order to satisfy the requirements of the Labor Contract Law.
Sunday, May 27, 2007
上海市就劳动争议仲裁管辖地作出新规定
2007年3月23日，上海市劳动和社会保障局通过了《本市劳动争议仲裁管辖暂行规定》（以下简称“规定”），就劳动争议仲裁管辖地作出了新的规定，该《规定》于2007年5月1日起正式实施。
一、根据该《规定》，以下劳动仲裁案件由上海市劳动争议仲裁委员会负责管辖和审理：
1、注册资金在1千万美元以上（或相当于1千万美元以上）的上海市外商独资企业和劳动者发生的劳动争议案件；
2、上海市企业与其取得合法就业资格的外籍人员、台港澳人员和定居国外人员发生的劳动争议案件；
3、劳动者与用人单位因缴纳本市城镇或小城镇社会保险费发生的劳动争议案件；
4、有重大影响的劳动争议案件。
二、其他由区县劳动争议仲裁委员会受理的劳动争议案件。
其他由区县劳动争议仲裁委员会受理的劳动争议案件，以用人单位所在地确定管辖权。此处“用人单位所在地”指用人单位主要办事机构所在地，如主要办事机构所在地无法确定的，以用人单位注册登记地为用人单位所在地。
三、非法用工单位劳动者职业事故伤害案件的管辖地。
非法用工单位，在这里是指无营业执照或未经依法登记、备案的单位，以及被依法吊销营业执政或者撤销登记、备案的单位。如劳动者与此类单位发生职业事故伤害方面的劳动争议案件，有单位经营形态的，由单位主要经营场所所在地劳动争议仲裁委员会管辖；单位经营形态不明确或无经营形态的，由出资人住所地劳动争议仲裁委员会管辖；有多个出资人且不在同一辖区的，多个出资人住所地劳动争议仲裁委员会都有管辖权。
一、根据该《规定》，以下劳动仲裁案件由上海市劳动争议仲裁委员会负责管辖和审理：
1、注册资金在1千万美元以上（或相当于1千万美元以上）的上海市外商独资企业和劳动者发生的劳动争议案件；
2、上海市企业与其取得合法就业资格的外籍人员、台港澳人员和定居国外人员发生的劳动争议案件；
3、劳动者与用人单位因缴纳本市城镇或小城镇社会保险费发生的劳动争议案件；
4、有重大影响的劳动争议案件。
二、其他由区县劳动争议仲裁委员会受理的劳动争议案件。
其他由区县劳动争议仲裁委员会受理的劳动争议案件，以用人单位所在地确定管辖权。此处“用人单位所在地”指用人单位主要办事机构所在地，如主要办事机构所在地无法确定的，以用人单位注册登记地为用人单位所在地。
三、非法用工单位劳动者职业事故伤害案件的管辖地。
非法用工单位，在这里是指无营业执照或未经依法登记、备案的单位，以及被依法吊销营业执政或者撤销登记、备案的单位。如劳动者与此类单位发生职业事故伤害方面的劳动争议案件，有单位经营形态的，由单位主要经营场所所在地劳动争议仲裁委员会管辖；单位经营形态不明确或无经营形态的，由出资人住所地劳动争议仲裁委员会管辖；有多个出资人且不在同一辖区的，多个出资人住所地劳动争议仲裁委员会都有管辖权。
Penalty provisions on illegal employment
According to the Law of the People’s Republic of China on the Entry and Exit of Foreigners and its detailed rules, foreigners who are employed in China without permission from Chinese government shall have their employment terminated and may at the same time be fined up to RMB 1,000, and those whose offenses are serious may at the same time be ordered to leave China within a specified time. Companies and individuals who employ foreigners without permission shall terminate employment with the foreigners and may at the same time be fined from RMB 5,000 to RMB 50,000, and be ordered to cover all the expenses of repatriating the foreigners whom they had employed.
According to Rules for the Administration of Employment of Foreigner in China, for foreigners who refuse to have their Employment License inspected by the labor administrative authorities, change their employers and professions at will or extend their term of employment without permission, the labor administrative authorities shall withdraw their Employment Permit and recommend that their residence status be canceled by the public security organs. In case of deportation, the costs and expenses shall be borne by the said foreigners or their employer. For foreigners and employers who forge, alter, falsely use, transfer, buy and sell the Employment Permit and the Employment License, the labor administrative authorities shall take over the Employment Permit and the Employment License in question, confiscate the illegal proceeds and impose a fine between RMB 10,000 and RMB 100,000. In serious cases which constitute a crime, their criminal responsibility of perpetrators shall be looked into by the judicial authorities.
According to Rules for the Administration of Employment of Foreigner in China, for foreigners who refuse to have their Employment License inspected by the labor administrative authorities, change their employers and professions at will or extend their term of employment without permission, the labor administrative authorities shall withdraw their Employment Permit and recommend that their residence status be canceled by the public security organs. In case of deportation, the costs and expenses shall be borne by the said foreigners or their employer. For foreigners and employers who forge, alter, falsely use, transfer, buy and sell the Employment Permit and the Employment License, the labor administrative authorities shall take over the Employment Permit and the Employment License in question, confiscate the illegal proceeds and impose a fine between RMB 10,000 and RMB 100,000. In serious cases which constitute a crime, their criminal responsibility of perpetrators shall be looked into by the judicial authorities.
The procedures of applying for the Employment License and Employment Permit.
1) To apply for Employment License before he or she enters into China.
2) To go through formalities with Shanghai Municipal Foreign Trade and Economy Committee or Foreign Affairs Office of Pudong New Area for the Z visa notification of the foreigner.
3) Foreigner with permission to work in Shanghai shall apply for the Z visa at the Chinese embassy by presenting his or her passport, Employment License and letter of visa notification.
4) After entering China with Z visa, the foreigner shall make a health examination at Shanghai Exit-Entry Health and Quarantine Bureau.
5) Foreigner shall apply for the Employment Permit after passing the health examination and receiving permit at Shanghai Exit-Entry Administration Bureau.
6) Foreigner who receives Employment Permit shall go through formalities for the residence permit at Shanghai Exit-Entry Administration Bureau.
2) To go through formalities with Shanghai Municipal Foreign Trade and Economy Committee or Foreign Affairs Office of Pudong New Area for the Z visa notification of the foreigner.
3) Foreigner with permission to work in Shanghai shall apply for the Z visa at the Chinese embassy by presenting his or her passport, Employment License and letter of visa notification.
4) After entering China with Z visa, the foreigner shall make a health examination at Shanghai Exit-Entry Health and Quarantine Bureau.
5) Foreigner shall apply for the Employment Permit after passing the health examination and receiving permit at Shanghai Exit-Entry Administration Bureau.
6) Foreigner who receives Employment Permit shall go through formalities for the residence permit at Shanghai Exit-Entry Administration Bureau.
Part-time job?
Q: I’ve been working in a local company for years, being a holder of a valid Employment Permit. Can I leave for another company or have a part-time job with this Employment Permit if there is an offer?
A: No. According to relevant regulations, a foreigner can only work for the employer registered on the Employment Permit. The state of being employed by a second employer is illegal unless those employers are invested by a same investor. Therefore, the correct procedure of changing employer shall be as follows:
a) you shall resign from your employer according to the terms mentioned in your employment contract, and get agreement by the employer;
b) the new employer shall apply for the amendment of your Employment Permit and residence permit with relevant documents;
c) then you can start working for the new employer.
A: No. According to relevant regulations, a foreigner can only work for the employer registered on the Employment Permit. The state of being employed by a second employer is illegal unless those employers are invested by a same investor. Therefore, the correct procedure of changing employer shall be as follows:
a) you shall resign from your employer according to the terms mentioned in your employment contract, and get agreement by the employer;
b) the new employer shall apply for the amendment of your Employment Permit and residence permit with relevant documents;
c) then you can start working for the new employer.
Foreigners are not allowed to work in China with F or L visa
Q: I entered China with an L or F visa, and can I start working within the validity of this visa if there is a company who intends to employ me?
A: No. F visa can only be used for business trip or visiting, while L visa for tourism. The employer has to go through formalities for employment procedures if it intends to employ you.
A: No. F visa can only be used for business trip or visiting, while L visa for tourism. The employer has to go through formalities for employment procedures if it intends to employ you.
Friday, May 25, 2007
Residence Permit for Dependent
Q: My spouse is permitted to work in Shanghai, and I also live in Shanghai with a residence permit for dependents. Being a holder of valid residence permit, can I work for a company if it intends to employ me?
A: No, you cannot work for any employer as long as you reside in China a dependent. The state of being employment is not legitimate until employer obtains your Employment License and Employment Permit at relevant authorities, and changes your purpose of residence from dependents to employment.
A: No, you cannot work for any employer as long as you reside in China a dependent. The state of being employment is not legitimate until employer obtains your Employment License and Employment Permit at relevant authorities, and changes your purpose of residence from dependents to employment.
Thursday, May 24, 2007
Foreigner assigned to work in China
Q: I am going to be assigned by oversea headquarter to work for a foreign-invested company in Shanghai, and I sign my contract with the oversea headquarter that pays me salary. In this situation, is it necessary for me to go through formalities for employment certificates?
A: If the remuneration of assigned foreigner is paid abroad, he or she may be exempted from the Employment License and Employment Permit, provided he or she will work for less than 3 months in China. However, if the working period will be more than 3 months in a year, application for Employment License and Employment Permit has to be made.
A: If the remuneration of assigned foreigner is paid abroad, he or she may be exempted from the Employment License and Employment Permit, provided he or she will work for less than 3 months in China. However, if the working period will be more than 3 months in a year, application for Employment License and Employment Permit has to be made.
How to work legally in China?
Q: I have been told that foreigner who intends to work in China shall apply for employment permission, obtain Employment License, and then apply for Employment Permit. How to apply for those two certificates? Can I start working for my employer after receiving my Employment License?
A: If employment is going to occur between the employer in Shanghai and a foreigner, the employer shall apply to the Labor Bureau of Shanghai for Employment License before the entry of the foreigner. After the application is approved, Employment License of the foreigner shall be granted to the employer. Then the employer shall visit authorized organizations and go through formalities for the Z visa notification. After the entry of the foreigner with Z visa, the employer shall apply to the Labor Bureau of Shanghai for the Employment Permit with relevant documents such as the Employment License, then apply to the entry-exit administration department for the residence permit by presenting the Employment Permit. Only on completion of these procedures can the foreigner work and reside in Shanghai legally. Employment between holder of a mere Employment License and employer is illegal.
A: If employment is going to occur between the employer in Shanghai and a foreigner, the employer shall apply to the Labor Bureau of Shanghai for Employment License before the entry of the foreigner. After the application is approved, Employment License of the foreigner shall be granted to the employer. Then the employer shall visit authorized organizations and go through formalities for the Z visa notification. After the entry of the foreigner with Z visa, the employer shall apply to the Labor Bureau of Shanghai for the Employment Permit with relevant documents such as the Employment License, then apply to the entry-exit administration department for the residence permit by presenting the Employment Permit. Only on completion of these procedures can the foreigner work and reside in Shanghai legally. Employment between holder of a mere Employment License and employer is illegal.
Q: I wish to work in Shanghai, China one day. Are there any prerequisites for me to fulfill my plan?
According to the government regulations, any foreigner seeking employment in China shall meet the following conditions:-
a) Between the age of 18 and 60 for male and between 18 and 55 for female;
b) In good health;
c) With professional skills and job experience required for the work of intended employment;
d) With no criminal record;
e) A clearly-defined employer;
f) With valid passport or other international travel document in lieu of the passport.
a) Between the age of 18 and 60 for male and between 18 and 55 for female;
b) In good health;
c) With professional skills and job experience required for the work of intended employment;
d) With no criminal record;
e) A clearly-defined employer;
f) With valid passport or other international travel document in lieu of the passport.
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