The newly approved Labor Contract Law will not undermine the
investment environment although it will better protect workers'
interests and rights, China's top trade union body said
yesterday.
Liu Jichen, director of the law department at the All-China
Federation of Trade Unions, denied that the law - which goes into
force from January 1 next year - is biased toward employees.
"It not only protects workers' interests and rights, but also
equally protects employers'," he told a press conference.
The law, passed on Friday by the Standing Committee of the
National People's Congress, the top legislature, had raised
concerns that stricter contract requirements could raise business
costs and give companies less flexibility to hire and fire
employees.
Liu, however, said that the law takes into account employers'
interests.
For example, he said, employers can sign non-competition
contracts with workers, with a non-competition period of not more
than two years to encourage innovation and ensure fair
competition.
So an employer can rest assured that an employee does not walk
out at the end of the contract period and join a direct
competitor.
It also softens the terms under which employers can cut staff -
if an enterprise switches to other production, adopts a major
technological innovation or changes its mode of business.
Liu stressed that the law will help create a harmonious labor
relationship.
"Labor protection is a worldwide trend," he said. "With working
conditions improved and rights protected, employees will feel more
secure, which leads to a higher productivity."
Liu pointed out most labor disputes result from violations of
workers' rights.
Because of the huge supply of labor force, workers are in a
disadvantaged position, he said.
Liu said the federation has succeeded in keeping most of the
items on protecting workers' rights and interests in the law.
For example, the law makes mandatory the use of written
contracts and strongly discourages fixed- or short-term
contracts.
It also stipulates severance be paid if a fixed-term contract
expires but is not renewed without an appropriate reason.
The law requires all employers to submit proposed workplace
rules or changes for discussion to the workers' congress -
concerning pay, work allotment, hours, insurance, safety, holidays
and training.
Employers and trade unions will then jointly decide on workplace
agreements.
It stipulates trade unions have the right to sign collective
contracts with employers on behalf of workers.
In a position paper released yesterday, the European Chamber of
Commerce in China said it welcomes the law and its aim of improving
labor conditions and creating workplace harmony.
"A more mature legal environment should be considered as an
advantage in attracting foreign investment," the statement
said.
However, the chamber said the key challenge remains compliance
by employers and the enforcement by authorities of the existing
laws.
(China Daily July 3, 2007)