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Draft implementation regulations for labour contract law issued

Government seeks to clarify confusion surrounding the new law

Date: 13 May 2008

Keywords (click to search): Labour contract law Labour law

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The Legislative Affairs Office of the State Council issued draft implementation regulations for the Labour Contract Law on Thursday to solicit public opinions.

The Labour Contract Law, which took effect on January 1, caused confusion and anger among employers as it entitles employees of 10 years’ standing to sign labour contracts with no fixed termination dates.

The draft regulations focus on the terms of labour contracts, economic compensation after labour contract termination and the dispatch of workers.

Since the law was issued by the State Council and not by the labour ministry, the draft implementation rules aim at making all local governments strictly comply with the Labour Law, said Zhao Deming, senior partner at HaoLiWen PRC Attorneys. The labour ministry does not have authority over local governments, he added.

Zhao also said that the rules fail to clarify whether or not the second or third renewal of a labour contract will result in an open-ended term, nor did the draft provide a clear definition of equal consultation.

"It may be a good thing, because the government will have to decide how to implement the equal consultation under the labour contract law," he said.

The labour law has had a huge impact on employers. Many of them have already moved offices or manufacturing factories as the law increases their operating costs and creates uncertainty. As a result, the law raises the level of unemployment Zhao added.

"There is much room for improvements in the draft as some of the wording may create new problems and controversy," he said.