After 18 months of deliberation and public consultation,
legislators passed the long-awaited Labor Contract Law on?June
29?to improve workers' basic rights.
The law, which would take effect on January 1 next year, won 145
of the 146 votes of the Standing Committee of the National People's Congress (NPC). One vote was
not cast.
The new law is considered the most significant change in the
country's labor rules in more than a decade. It establishes
standards for labor contracts, use of temporary workers and
severance pay.
It makes mandatory the use of written contracts and strongly
discourages fixed-term contracts. According to the law, severance
should be paid if a fixed-term contract expires but is not renewed
without an appropriate reason.
It is also stipulated that employers must submit proposed
workplace rules or changes concerning pay, work allotment, hours,
insurance, safety and holidays to the workers' congress for
discussion.
After the recent exposure of forced labor in brick kilns in
central and north China, the final draft added stipulations that
government officials guilty of abuse of office and dereliction of
duty would face administrative penalties or criminal
prosecution.
Xin Chunying, deputy chairperson of the NPC Law Committee, said
the law is not intended to replace the current Labor Law but
rather, to further standardize labor contracts in favor of
employees.
Li Yuan, one of the legislators in charge of drafting the law,
said the law targeted bosses and officials who exploited
workers.
The draft law was first proposed in 2005 amid complaints that
companies were mistreating workers by withholding pay, requiring
unpaid overtime or failing to provide written contracts. Many
workers were also becoming trapped in short-term contracts.
Last March, the draft was made public for consultation, and
legislators received about 192,000 public responses in a month.
Only the Constitution, drafted in 1954, received more.
However, business lobbies are worried that stricter contract
requirements could raise costs and give them less flexibility to
hire and fire employees.
Both the European Union Chamber of Commerce in China and the
American Chamber of Commerce in Shanghai (AmCham Shanghai) had made
submissions to the NPC, suggesting the law might exert negative
influence on foreign investment in China.
In a letter to the NPC last year, Serge Janssens de Varebeke,
then-president of the European Union chamber, warned the "strict"
regulations could force foreign companies to "reconsider new
investments or continuing their activities in China" because of
possible cost increases.
But Xin said there wouldn't be a substantial cost increase for
companies that strictly follow the existing Labor Law.
"All the principles have been included in the current law. The
new law just details the provisions to facilitate implementation,"
she said.
(China Daily June 30, 2007)