If you run your own company, or if you have been hired by someone else to run theirs, read this. Because something is going to change on 1 Jan 2008 that will not just have a profound impact on labour relations in China, it may rock your world to its foundations, especially those of you hiring “unofficial” employees. January 1 marks the day when China’s new labour law goes into effect, and it is important not because we say so but because our friends over at the China Law Blog say so.
The guys behind CLB, Dan Harris and Steve Dickinson run their own law firm and according to them, they’ve been working with many of their clients to get into compliance quickly as hungry Chinese lawyers out there already have plaintiffs all lined up and ready to sue. So much for your harmonious society, eh?
Just what is this new Labor Contract Law? Dan explains:
The new labor law is going to apply to all employers, no matter how few employees (even one!) they might have. It is going to require all labor contracts be in writing and it will impose significant penalties on employers for failing to comply with this. Employees can claim double salary for months worked without a contract for up to 12 months’ salary. This rule is absolutely going to apply to “informal” employment relationships common to so many foreign businesses doing business in China. Expect a whole slew of lawsuits to be filed on January 1, 2009, by employees seeking double damages for the 12 months they just completed without a contract.
It is also going to require all employers maintain a written employee handbook setting out the basic rules and regulations of employment. Without an employee handbook, employers will be essentially unable to fire anyone; “the failure to maintain an employee handbook means that an employer will effectively be unable to discharge employees for cause, since “cause” must be determined with reference to the employee handbook.” Do it.
Imagethief says it’s not just the lawyers who are salivating over this new law. The PR people are too:
Personnel disasters and related litigation are one of those things that can damage a company’s reputation very fast. That’s particularly here in China, where the “Chinese employee vs. callous multinational employer or foreign boss” story is well entrenched, and has a near limitless ability to excite the media and Chinese Internet users. For examples you can refer back to McDonald’s and KFC minimum wage scandals of last March, or the “World’s Toughest Secretary” story from May 2006. Or any of a host of similar situations over the years. Foreign companies are targets. I suspect this is for a few reasons: they are much easier to arouse public sentiment against; they are seen as having deep pockets; and they are probably seen as less likely to be locally connected.
Okay, Shanghaiist knows sh*t about law, but here are a few thoughts, and everyone is welcome to correct us and add to the discussion:
1. We think this law, like many others, was designed to protect people at the lowest rung of the social ladder, like the slaves that were forced to work in the Shanxi brick kilns not too long ago. Sure, these guys may not know anything about their own legal rights, but it does put a tool in their hands with which to seek redress if they are exploited.
2. We think some small- and medium-sized enterprises out there are going too be hit really hard by this new law. Seriously, how many Chinese companies out there can afford to retain the services of a law firm?
3. All of you out there that hire freelancers, part-time help, temporary staff, etc., be nice to them. Be very nice.
China Law Blog: China’s New Labor Law — It’s A Huge Deal. Huge I Tell You.
China Law Blog: English version of the new labour law
China International Business: Power to the People
Imagethief: China’s new labor law won’t just make work for lawyers
Photo from jurvetson: Just whom is the new Labor Contract Law meant to protect?