After 18 months of
deliberation and public consultation, legislators passed the long-awaited Labor
Contract Law on Friday to improve workers' basic rights.
The law, which would take effect on January 1 next year, won 145 of the 146
votes of the Standing Committee of the National People's Congress (NPC). One
vote was not cast.
The new law is considered the most significant change in the country's labor
rules in more than a decade. It establishes standards for labor contracts, use
of temporary workers and severance pay.
It makes mandatory the use of written contracts and strongly discourages
fixed-term contracts. According to the law, severance should be paid if a
fixed-term contract expires but is not renewed without an appropriate reason.
It is also stipulated that employers must submit proposed workplace rules or
changes concerning pay, work allotment, hours, insurance, safety and holidays to
the workers' congress for discussion.
After the recent exposure of forced labor in brick kilns in Central and North
China, the final draft added stipulations that government officials guilty of
abuse of office and dereliction of duty would face administrative penalties or
Xin Chunying, deputy chairperson of the NPC Law Committee, said the law is
not intended to replace the current Labor Law but rather, to further standardize
labor contracts in favor of employees.
Li Yuan, one of the legislators in charge of drafting the law, said the law
targeted bosses and officials who exploited workers.
The draft law was first proposed in 2005 amid complaints that companies were
mistreating workers by withholding pay, requiring unpaid overtime or failing to
provide written contracts. Many workers were also becoming trapped in short-term
Last March, the draft was made public for consultation, and legislators
received about 192,000 public responses in a month. Only the Constitution,
drafted in 1954, received more.
However, business lobbies are worried that stricter contract requirements
could raise costs and give them less flexibility to hire and fire employees.
Both the European Union Chamber of Commerce in China and the American Chamber
of Commerce in Shanghai (AmCham Shanghai) had made submissions to the NPC,
suggesting the law might exert negative influence on foreign investment in
In a letter to the NPC last year, Serge Janssens de Varebeke, then-president
of the European Union chamber, warned the "strict" regulations could force
foreign companies to "reconsider new investments or continuing their activities
in China" because of possible cost increases.
But Xin said there wouldn't be a substantial cost increase for companies that
strictly follow the existing Labor Law.
"All the principles have been included in the current law. The new law just
details the provisions to facilitate implementation," she