As we reported earlier this year, the PRC enacted sweeping
new laws governing employment contracts. Those laws will become
effective very soon. If you have operations and employees in
China, you need to comply with the New Labor Contract Law
effective January 1, 2008. You should be reviewing your labor
contracts and your handbooks to update them for compliance with
the law. Here are a few areas to consider:
Do all the employees have written contracts?
What is the duration of those contracts? If one year,
should the term be increased to a longer fixed term?
What are the non-compete terms? Is the non-compete for
two years, geographically limited and supported by adequate
Are the probationary periods in the contracts compliant
with the law?
Are the bases for termination compliant with the law? Is
there any indication of when severance shall be paid? If so
is that section of the contract compliant with the law?
What does the contract say about unused annual leaves?
Are those terms compliant with the law?
What about the handbook for the office? Is it current and
does it reflect changes under the law, termination
requirements, rights of women, national holidays, role of
Will my company have a labor union under the new law? How
can the company best manage that relationship? What does the
existing collective bargaining agreement say? Is it compliant
with the new law?
These are a few of the issues the company should review. We
can assist you in reviewing these and other matters as you move
forward with your China team in 2008.
You can find our earlier-and more detailed-reports on the
New Labor Contract Law
The content of this article is intended to provide a
general guide to the subject matter. Specialist advice should
be sought about your specific circumstances.
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