Firms warned against avoiding new labor law

By Chen Hong (China Daily)
Updated: 2007-11-09 07:23

The government has warned domestic and overseas companies against trying to bypass the new Labor Contract Law by forcing employees close to completing a decade in service to quit and rejoin.

The All China Federation of Trade Unions knows about such moves and has begun intervening to pre-empt them, an official surnamed Hu told China Daily Thursday. "We have carried out probes into such cases."

Chang Kai, an official with the Legal Affairs Office of the State Council, asked the companies to study the law properly before initiating a move against it.

The new law, which becomes effective from next year, says an employee who has worked for a company for more than 10 years is entitled to sign an open-ended labor contract. The same applies to one who renews his labor contract after working for two fixed terms consecutively.

"The national and local legislatures, the State Council and government agencies will soon issue judiciary interpretation and guidelines to stop employers from trying to dodge the law," Chang said.

According to the interpretation, a firm will be seen as trying to dodge the law if it prompts mass resignation, 21st Century Business Herald quoted him as having said. And "violators will have to pay a heavy price."

Chang criticized some so-called experts for providing "countermeasures" for employers to bypass the new law.

Many companies began worrying that labor cost would rise and it would become more difficult to sack employees on open-ended contracts once public opinion was solicited on the law in March last year.

The US retailing giant Wal-Mart fired about 100 employees at its sourcing center in China last October, claiming the layoff was part of its global restructuring.

Huawei, China's top telecom gear maker, recently prompted more than 7,000 of its employees in service for more than eight years to quit and reapply in an apparent bid to dodge the new law.

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