New Labor Contract Law BUSI 3001 SBLC Week 8(9), Spring 2014 Charles Mo & Company April 21, 2014.
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Transcript of New Labor Contract Law BUSI 3001 SBLC Week 8(9), Spring 2014 Charles Mo & Company April 21, 2014.
New Labor Contract Law BUSI 3001 SBLCWeek 8(9), Spring 2014
Charles Mo & CompanyApril 21, 2014
Background – New Labor Contract Law
Issued on June 29, 2007, effective January 1, 2008 Purpose:
Improve basic worker rights amid widespread complaints of withheld unpaid wages
Address unpaid overtime Prevent abuses to workers
Applicable to all domestic and foreign companies Established standards for
Labor contract Probationary period Severance Mass layoff Non compete clause Penalty for violation
continued Before this law - workers were poorly treated. Majority did not receive
contracts, wages were withheld and unpaid, employer demanded excessive overtime, and dismissed workers anytime without compensation
Even if the contract was signed, the contract terms were usually short and vague. Therefore they were difficult to enforce.
Some factories withheld wages from the workers regularly until the company made a profit
Law of PRC Labor Contract General Provision Conclusion (signing) of Employment Contracts Performance and amendment of Employment
Contracts Termination of Employment Contracts Special Provisions Monitoring Inspection Legal Liability Supplementary Provisions
General Provision
Principles Defines the rights and responsibilities for both
the employer and the employee Applicable to all organizations inside China
incorporated or non incorporated
Employment Contracts 劳动合同的订立 Article 7- employer/employee relation begins when the
employee has started an assignment for the employer. Article 9 - employer may not withhold employee ID
card/other ID document Employer can not demand a security deposit, money, or a
guarantor for the job Article 10- Written employment contract must be signed
within one month from the start date. Article 12- 3 types of employment contract
Fixed Term Open ended term Term to expire upon completion of a project.
Fixed Term Labor Contract There is an ending date for the contract Date of expiration is agreed between the employer
and employee
Article 14-Open Ended Term Contract Agreed between employer and employee, anytime can sign open
ended term contract Unless employee choose to fixed term labor contract, otherwise open
ended term contract must be signed if: Employee worked for 10 consecutive or more years Even if an employee’s contract term stated less than the actual
work period especially for a state enterprise that has restructured the entity resulting a new contract of less years in service. For those employees, the total year of tenure counts. Thus, those employees with 10 consecutive or more years of employment and is less than 10 years away from legal retirement qualify under this rule.
An employee renewing the labor contract following 2 consecutive fixed term employment contracts
If no written contract is provided and the employee worked for a year, the contract is treated or deemed as open ended
Employment contract with a term to expire
Employment contract ends when the project is completed
Article 17 – essential information required for the employment K 1.Name, domicile, of legal representative or main person in charge
of the employer. 2. Name, domicile, resident ID card or other ID paper for worker 3. Term of the employment contract 4. Job description and place of work 5. Working hours and vacation 6. Compensation 7. Social welfare insurance 8. Labor protection and working conditions 9. Other requirement by laws 10. May include probation, training, confidentiality of trade secrets
(non compete clause)
Article 18 If a dispute arises from disagreement in the rate of
compensation or working conditions because they are not explicitly specified in the employment contract, the Employer and the worker may renegotiate a new term.
Probation Period (A 19)
Employment term Probation allowed
3 months = Term < 12 months 1 month< Probation
1 year < Term < 3 years 2 months< Probation
Term = or > 3 years or Open Ended
6 months< Probation
1 probation only
Term to expire upon project completion or less than 3 months,
No probation
Probation Wage must be higher than (A20)
Lowest wage level of the same job 80% of the agreed upon wage in contract Minimum wage in that locale (province, township)
Employer provided training (A22)
Liquidated damage agreed in the contract can be recovered from the employee:
If employee leaves before the agreed service term Damage may not exceed the actual cost of training Damage is allocated to the extent of unfilled service
time
Non Compete Clause (A23)
Employer must pay the worker to keep confidentiality after the contract has expired.
If the worker (employee) breaches the non compete clause, the worker must pay liquidated damage.
A24 Non disclosure/non compete is only applicable to senior management, senior technicians, and personnel who have knowledge of trade secrets
Non compete term cannot exceed two years.
Article 24 The personnel subject to competition restrictions
shall be limited to the Employer’s senior management, senior technicians and other personnel who have knowledge of trade secrets of the employer.
A25 Other than training and non disclosure clause, no
other monetary damage may be assessed to the employee on liquidated damage
A26 Invalid Contract Employer:
Deception Coercion Taking advantage of the other party’s difficulty Contrary to the party’s real (true) intent Failed to fulfill his responsibility or deny worker’s right Violated administrative law
A27 Partial invalidity of the employment contract does not nullify the remaining provisions of the contract
Article 35 An Employer and a worker may amend the
provisions of their employment contract after the contract is signed if they both agree upon discussion.
Employee to terminate contract A37 Worker may terminate employment by a
written notice 30 days in advance During probation, a 3 day advance verbal notice is
adequate for terminating employment contract
A38 Verbal Notice by Employee to Terminate a labor contract
Employer: Failed to provide safety Failed to pay wages Failed to pay social welfare Failed to comply with law Committed deception or used coercion
A39 Employer can terminate an employee Employee:
During probation, not qualified for the job Materially violated company policies and procedures Material negligence, graft, causing financial losses to the
employer Worked for another employer Material misrepresentation at the time of signing the contract Involved in a Felony (different from civil violation)
A 40 Terminate with 30 day notice or one month wage
After the period the medical care prescribed by the hospital due to illness or non work related injury, the employee cannot fulfill the job duty of his original position, or the job responsibility of another position assigned by the HR Department
The employee cannot fulfill the job duty after training or change of duty.
Circumstances at the time of signed contract have changed rendering the employment contract not executable and no agreement between the parties can be reached
A41 Reduction in Force/Layoff Reduction of 20 employees or 10% of workforce
Explain to labor union or all employees 30 days in advance Notify the plan to Labor Bureau
Pursuant to bankruptcy law Severe production issue Change in enterprise structure, production technique, still needs to reduce
employees Other circumstances changed rendering contract not executable
Priority to retain the employee Employees with longer term fixed contract Employees with open end term contract Employee is the only wage earner and needs to support older
parents Layoff under bankruptcy.
If rehiring starts within 6 months. Those laid off should be rehired first
A 42 Employees cannot be terminated under these conditions even though allowed under A40 or A41
Engaged in occupational disease related line of duty or being diagnosed for occupational related disease.
Confirmed harmed by an occupational disease Still within the prescribed medical care period due to an
illness or injury Female employee pregnant, during delivery, or nursing
time 15 year tenure and within 5 years of legal retirement age Other laws prohibited circumstances
A44 Labor contract terminates upon Contract expires Employee starts to draw basic government
pension Employee died or declared dead or missing by the
court Employer bankrupt Employer is dissolved, revoked business license,
ordered to be closed by government Other administrative law order to end the contract
A46 Severance Pay for terminating contract
A38 Failure to pay and provide safe working conditions
A40 Employee sick, incompetent, change in circumstance
A41 Bankruptcy, reduction in production Consensus Termination A44 if offered the same contract or better, no
agreement is reached, contract expires A44 employer license revoked, bankrupt, ordered
to cease business
A47 Severance Pay One month per year Less than 6 months 0.5 year, more than 6 months,
1 year Highly paid employee, 3 times the average of
company employee and no more than 12 years of work
A 50 Administration of Termination File
On the date of termination Employer must issue a proof of termination or ending of
the employment contract Within 15 days
Arrange the social welfare transfer and employee personnel file transfer
Agreed time frame Duty transfer Severance pay
For two years Keep the termination file
A74 Monitoring and Inspection State Council’s Labor Administration is responsible
for inspection Labor administration at the county level oversees
the implementation of employment contract
Article 91 If a new Employer hires a worker whose
employment contract with the old Employer has not been terminated or ended, the worker caused the original Employer to suffer a financial loss, the new employer will be liable for any damages.