Implementing Guidelines for China's Labor Contract Law Released

By Manfred Elfstrom, ILRF Program Officer

China has just released its long-awaited implementing guidelines (in Chinese here) for the Labor Contract Law (LCL). 

The guidelines clarify a few rough areas.  For example, in Article 6, they nail down how exactly to calculate the compensation due a worker who has illegally not been given a formal contract: double pay for each month of labor put in after the first month of employment and up until a contract is signed (employers have to sign contracts within the first month, according to the LCL). 

Article 9 further stipulates that the date that a worker begins working for a firm---not when he or she signed a formal contract---should be used in determining which workers have worked ten years at a firm and which have not (ten years being the start date for the LCL's mandated non-fixed-term contracts). 

This clarification could head off further stunts like the one tried by Huawei at the end of last year.  The tech firm pushed thousands of its staff to "resign" and then "rehired" them with new contracts in order to get around LCL conditions... only to be put shoved back in line by public opinion and the All China Federation of Trade Unions (ACFTU).

Article 10 appears to take a swipe at another company trick, moving workers to another plant in order to restart their years-worked counter, by saying that the number of years worked at the original plant carry over to any new facility, including years worked before the LCL went into effect.

Articles 18-19 are likely to receive the most attention, though. They list 13 circumstances in which employees can terminate their labor contracts (and how much advance notice they must give) and 14 instances in which employers can terminate labor contracts.  These are not altogether new---they were already in the LCL---but they have been reassembled more clearly and, by being put in the guidelines at all, have been re-emphasized, just as the LCL re-emphasized existing work hour and wage laws and payments to social security.

The English-language website China.org quotes an anonymous official from the Legislative Affairs Office of the State Council as saying, "By issuing the [guidelines], we hope to make it clear that labor contracts with no fixed termination dates did not amount to lifetime contracts."  Businesses, of course, have been particularly concerned about non-fixed-term contracts... almost as concerned as they've been about having to finally obey the pre-existing rules on basic labor protections.

Labor activists have been concerned for a while that the implementing guidelines would narrow the LCL to the benefit of employers, either through new conditions or through new emphasis.  I look forward to reading more sophisticated analyses of the guidelines, particularly of the guidelines' language (my Chinese is not up to the task of sorting through their nuances).  What do advocacy groups like China Labour Bulletin or the academics who conceived the original LCL think of the specific conditions listed for terminating contracts?  Are people relieved that the guidelines did not go further?  Or are they disappointed?

Regardless, the work cut out for the ACFTU is clear: leap-frog the legislation and sign tough collective contracts, as promoted in everything from the LCL to Shenzhen's admirable draft "harmonious labor relations" rules to the guidelines themselves. 

There is hope in this route.  A recent article in Southern Weekend describes a Wal-Mart union rep's attempts to avoid a cookie-cutter collective contract for his store's workers.  And in Zhejiang, the ACFTU's ambitious target of collective contracts for "70% of all enterprises and 100% of state-owned and collective enterprises" by 2010 offers a promising opening to sector-wide contracts like the one adopted for wool workers in Xinhe Town, Zhejiang.

Comments

[Manfred Elfstrom]

I misinterpreted Article 9. Apparently, companies can now actually pull off more or less exactly what Huawei did. The new implementation guidelines, far from hindering these sorts of tactics, actually permit them.