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Yesterday China's top legislature reviewed the second draft of the controversial labor contract law but decided against voting on it. 

The eight-chapter draft that details the establishment, revocation, revision and termination of labor contracts will be the first such law of its kind if passed by the Standing Committee of the National People's Congress (NPC).

However, disagreements between representatives of employees and employers have slowed the legislative process and lawmakers decided not to vote on the draft at this session pending more amendments.

The current version made key changes to the first draft submitted last December in clauses regarding probationary periods, retrenchment and compensation for the termination of contracts.

It requires the probation period to be no more than one month for a one-year contract; and to not exceed six months for a contract of at least three years.

Companies that lay off more than 20 employees at one time because of bankruptcy, production or management difficulties and relocation for environmental protection have to inform staff trade unions or the staff 30 days in advance.

The draft leaves the terms of compensation for contract termination to be set by State Council regulations. Should there be an agreement between the employer and senior staff on the period the employee can't work for competitors after leaving it can't be more than two years, the draft says.

Tian Chengping, minister of labor and social security, said during the draft's first reading that the existing labor contract system, set up in line with the Labor Law enacted in 1994, requires updating following dramatic changes in the labor market.

A lack of minimal labor protection and the imbalance between labor supply and demand have resulted in severe infringements of workers' rights. Millions of foreign and domestic employers arbitrarily set wages and working hours as well as working and living conditions.

The NPC received 191,849 public suggestions in one month after the draft was published in March for consultation. Only the Constitution, in 1954, received more.

Some employers, fearing rising labor costs, strongly oppose the bill.

However, Xin Chunying, deputy director of NPC's Law Committee, yesterday said members agree that it's urgent to have a contract law to protect workers' rights as it is a matter of public interest and social stability.

(China Daily December 27, 2006)