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 consideration?
- 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 unions, etc.?
- 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 here and here.
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.
