On June 29, 2007, the Standing Committee of the National People’s Congress adopted the Labor Contract Law of the People’s Republic of China, set to come into effect January 1, 2008.
The aim of the new law is to improve the employment relationship, clarify rights and obligations of employees and employers and provide more stability and security for the employees in the PRC.
Employers 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. Penalties can be imposed by the authorities in cases where the employer keeps the employees' ID card or collects security deposits from their employees, and when salaries are not paid in time or below the locally stipulated minimum levels. The same is true of nonpayment or no additional rest time for overtime work and nonpayment of severance pay after termination or expiration of labor contracts.
Items that must be included in the labor contract
In this article we will mainly focus on the implications for foreign invested enterprises. The law will considerably change the requirements for both employer and employee and requires many companies, both foreign and domestic, to review their labor contracts.
Please contact Dezan Shira & Associates for more information about doing business in China.
