The newly approved Labor Contract Law will not undermine the investment
environment although it will better protect workers' interests and rights,
China's top trade union body said yesterday.
Liu Jichen, director of the law department at the All-China Federation of
Trade Unions, denied that the law - which goes into force from January 1 next
year - is biased toward employees.
"It not only protects workers' interests and rights, but also equally
protects employers'," he told a press conference.
The law, passed on Friday by the Standing Committee of the National People's
Congress, the top legislature, had raised concerns that stricter contract
requirements could raise business costs and give companies less flexibility to
hire and fire employees.
Liu, however, said that the law takes into account employers' interests.
For example, he said, employers can sign non-competition contracts with
workers, with a non-competition period of not more than two years to encourage
innovation and ensure fair competition.
So an employer can rest assured that an employee does not walk out at the end
of the contract period and join a direct competitor.
It also softens the terms under which employers can cut staff - if an
enterprise switches to other production, adopts a major technological innovation
or changes its mode of business.
Liu stressed that the law will help create a harmonious labor relationship.
"Labor protection is a worldwide trend," he said. "With working conditions
improved and rights protected, employees will feel more secure, which leads to a
Liu pointed out most labor disputes result from violations of workers'
Because of the huge supply of labor force, workers are in a disadvantaged
position, he said.
Liu said the federation has succeeded in keeping most of the items on
protecting workers' rights and interests in the law.
For example, the law makes mandatory the use of written contracts and
strongly discourages fixed- or short-term contracts.
It also stipulates severance be paid if a fixed-term contract expires but is
not renewed without an appropriate reason.
The law requires all employers to submit proposed workplace rules or changes
for discussion to the workers' congress - concerning pay, work allotment, hours,
insurance, safety, holidays and training.
Employers and trade unions will then jointly decide on workplace agreements.
It stipulates trade unions have the right to sign collective contracts with
employers on behalf of workers.
In a position paper released yesterday, the European Chamber of Commerce in
China said it welcomes the law and its aim of improving labor conditions and
creating workplace harmony.
"A more mature legal environment should be considered as an advantage in
attracting foreign investment," the statement said.
However, the chamber said the key challenge remains compliance by employers
and the enforcement by authorities of the existing laws.
(China Daily 07/03/2007 page1)