Recruiting in China

21/08/2006
By Frank Mulligan, Talent Software

The labor law in China is about to be changed radically. The current law has been in operation for many years but it was created many years ago and necessarily has weaknesses.

Setting out the basis of the current law, I thought, might be a good way to build a base for comparison with the expected changes in the new law.

So here is a quick summmary of where we are now. It is meant as a quick refresher and should not be taken as legal advice.

* Employer and employees need to enter into a written employment contract. However, an oral contract is also enforceable.

* Contracts can apply to a fixed period, an open period, or a specific project.

* There can be a trial period of no more than six months during which time the employer can terminate the employment contract.

* The law allows for a clause requiring employees to keep business information confidential.

* Employers can terminate on 30 days notice, if the employee is not able to do his work due to illness or injury but if he is still being treated this does not apply.

* Termination can be carried out if the employee is not suitable for the work he is doing. This decision must be made after training or alternative work has been given.

* The contract becomes unenforceable because a ’major situation’ has changed on which the employment contract mainly relies. This has not been defined.

* Employees should give 30 days notice except when they are are in the trial period or the employer does not satisfy his end of the contract.

* Redundancy is a vague area that allows an employer to dismiss an employee if the company is about to go bankrupt. Payments to employees equate to one month’s pay for every year with the company.

* The work week is an 8-hour day with no more than 44 hours per week and at least one day off per week, in practice always 2.

* Paid leave is mandatory but depends on local regulations. There is a 90 days maternity leave provision.

* Disciplinary action has a definite path. First an oral warning, then a written warning and finally, dismissal. If this is not followed the dismissal is invalid.

* If the breaches of discipline is very serious instant dismissal is available.

So we can easily see that the basic labor laws in China are not so complicated and many areas are sufficiently vague as to require a new definition.

The current regulations are under review and the government has invited submissions from concerned parties. The new contract law is likely to differ considerably from the current law in terms of details and provisions. The object is to make it fairer and clearer for all parties, and to underline the rights of workers in a market that is considerably different from the one that pertained when the original law was written.

Next week we can make a comparison with what is expected in the new law.