More than 7,000 loyal employees of Huawei, China's largest
private telecom gear maker based in the southern city of Shenzhen,
have quit in exchange for the chance to work for the company
again.
The mass resignation triggered by the company management started
last month. Many legal experts believe it was an irresponsible
decision to exploit a legal loophole before the Labor Contract Law
takes effect on January 1 next year.
Under the new law, employees can sign open-ended labor contracts
if they have worked for the same company for 10 or more years in a
row.
Huawei employees who have been serving the company for at least
eight years, including founder Ren Zhengfei, will soon sign new
contracts, lasting one to three years, but may have to leave when
they expire.
To encourage them to accept the new arrangement, Huawei worked
out a compensation scheme based on length of service, salaries and
bonuses. The total cost of the package is expected to reach 1
billion yuan (US$134 million).
"I can't understand why Huawei has taken such an unwise step,"
You Yunting, a lawyer with JoinWay Law Firm in Shanghai, said.
"Once this problem is solved, new problems will arise and the
costs will mount up."
You added that open-ended contracts did not necessarily mean the
employees had jobs for life.
According to the Labor Contract Law, employers can revoke the
contract under six circumstances, including seriously violating the
company's rules and causing the employer major losses due to
serious dereliction of duty or engagement in malpractice for
selfish ends.
"I think it's more important to improve internal governance and
the existing rules rather than look for legal loopholes," You
said.
Lu Tong, a researcher at the China Academy of Social Sciences,
said: "I think it's a very bad example. Other companies will follow
Huawei's example and mess things up."
Xiao Fangsheng, director of the labor law committee of the
lawyer's associations of Guangzhou in Guangdong Province, agreed
that Huawei did not have a clear understanding of the contract
law.
"It tries to dodge the disadvantages of the open-ended contract
but its efforts will turn out to be invalid.
"Even with the new contracts, employees can still enjoy the
benefits of open-ended contracts because they never left the
company and are still working for the company even if they quit,"
Xiao said.
An official at the Shenzhen labor authority told China
Daily that an official investigation into the case is
ongoing.
(China Daily November 4, 2007)