How to cut labour costs without being sued

July 29, 2009 | BY

clpstaff &clp articles

There are many innovative ways for companies to costs in China, and they are growing in popularity. Although consultation with employees is compulsory, it should not be feared

By Phil Taylor.

“Costs are just too high – we'll have to lose a few people.” That dreaded edict from upper management has been echoing through offices and factories all over the world all too frequently since the start of the financial crisis last year. But most companies now realise that there are other ways to slim down their budgets without sacrificing valuable staff.

In China, pay cuts and reduced hours are proving the most popular choices for employers wishing to cut costs, and they are now exploring a range of other options, including extended leave or rotating working weeks. According to the results of an online survey conducted by China Law & Practice during a recent web-seminar on the PRC Employment Contract Law (中华人民共和国劳动合同法), almost one-third (30%) of employers have recently explored the idea of reduced hours and a quarter (26%) have looked at reducing pay.