Workers whose contracts have been broken by their employers will
be paid no more than 12 months' salary as compensation, under a new
draft law proposed yesterday.
But the compensation cap will not apply if employees have been
fired for serious workplace breaches or disciplinary action, or if
the employer can prove they have serious economic problems.
Legislators yesterday started to read the third draft of the
controversial labor contract law, which for the first time details
the standard for compensation for contract termination.
The draft, discussed at the 27th meeting of the Standing
Committee of the 10th National People's Congress (NPC), the top
legislature, states that if employers want to end contracts, they
should pay employees the equivalent of one month's salary for every
year of service, capped at 12 months.
The calculations will be based on the employee's average monthly
salary over a 12-month period, prior to the end of the
contract.
However, high earners will be paid compensation no more than
three times the local monthly average salary, according to the
draft.
Li Yuan, director of the administrative law division of NPC
Standing Committee's legislative affairs commission, said the
average monthly salary in Beijing last year was about 3,000 yuan
(US$388).
Under the new draft law, if a person who has worked at a company
in Beijing for 15 years and received 20,000 yuan (US$2,590) a month
was to receive compensation, he will be paid 108,000 yuan
(US$13,989) instead of 300,000 yuan.
Hu Guangbao, deputy director of the NPC Law Committee, said such
stipulations are made in response to public suggestions.
The existing Labor Law spells out the need for economic
compensation, but does not demonstrate how through uniform
guidelines.
The previous draft of the labor contract law did not detail the
issue either, leaving it to be set by State Council
regulations.
Li said many overseas enterprises and organizations, including
the American Chamber of Commerce in Shanghai (AmCham Shanghai) and
the Hong Kong Chamber of Commerce, have also suggested setting the
standard by law so that employers were able to calculate costs.
The AmCham Shanghai said in a letter to China Daily it applauds
the Chinese government for its initiative.
"The stipulation on compensation is a major change in the latest
draft, and it directly affects the interests of employers and
employees," Li said.
"We would like to hear more comments from the public."
But Li said that because the labor contract issue is very
complicated, the draft law needs further discussion.
Official figures show that the NPC received about 192,000 public
responses in the month after the draft was published last March for
consultation. Only the Constitution, in 1954, received more.
(China Daily April 25, 2007)