SCMP IHRM HR Conference

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SCMP IHRM HR Conference

• Changing labour laws in Mainland China and
  their implications for the business environment
• Andy Yeo
• Partner
• Johnson Stokes Master
• 6 February 2006

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Proposed PRC Labour Contract Law

1. Oral contract
2. Termination of employment
3. Employment manual / Handbook formulation
4. Contract workers
5. Probation
6. Non-compete covenant
7. Arrears of wages
8. Collective contracts

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Oral contract

• Written labour contract
• conclude within one month from commencement date
  of employment
• Failure
• pay twice the amount of payable remuneration as
  salary

• Oral contract
• Termination of employment
• Employment manual / Handbook formulation
• Contract workers
• Probation
• Non-compete covenant
• Arrears of wages
• Collective contracts

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Termination of employment

1. New categories of non-terminable employees
2. Contract term
3. Severance payment (economic compensation)
4. Illegal dismissal and reinstatement
5. Employee breach Limitations on liquidated
   damages
6. Lay off

• Oral contract
• Termination of employment
• Employment manual / Handbook formulation
• Contract workers
• Probation
• Non-compete covenant
• Arrears of wages
• Collective contracts

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Employment manual / Handbook formulation

1. Union / Worker body acquiescence
2. Public posting requirement
3. Mandatory express provision in rule / regulation

• Oral contract
• Termination of employment
• Employment manual / Handbook formulation
• Contract workers
• Probation
• Non-compete covenant
• Arrears of wages
• Collective contracts

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Contract workers

1. Secondor companys obligations
2. Respective obligations
3. Restrictions

• Oral contract
• Termination of employment
• Employment manual / Handbook formulation
• Contract workers
• Probation
• Non-compete covenant
• Arrears of wages
• Collective contracts

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Probation

1. New regulation on period

• Oral contract
• Termination of employment
• Employment manual / Handbook formulation
• Contract workers
• Probation
• Non-compete covenant
• Arrears of wages
• Collective contracts

Employment term Probate period
lt 1 year not to exceed 1 month
gt 3 years not to exceed 6 months
1-3 years not to exceed 2 months
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Probation

• Salary during probation no less than
• 80 of lowest rate for similar job in the
  company
• or
• 80 of salary on confirmation

• Oral contract
• Termination of employment
• Employment manual / Handbook formulation
• Contract workers
• Probation
• Non-compete covenant
• Arrears of wages
• Collective contracts

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Non-compete covenant

• New minimum period 2 years
• Compensation to employee and liquidated damages
  to employer
• Scope of application
• senior management staff
• senior technical staff
• other staff with knowledge
  of confidential information
  of employer

• Oral contract
• Termination of employment
• Employment manual / Handbook formulation
• Contract workers
• Probation
• Non-compete covenant
• Arrears of wages
• Collective contracts

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Arrears of wages

• If an employer fails to pay wages on time

• Oral contract
• Termination of employment
• Employment manual / Handbook formulation
• Contract workers
• Probation
• Non-compete covenant
• Arrears of wages
• Collective contracts

Under Draft Law Previously
Employee may apply to court directly to obtain order to pay his/her wages. There was a 60-day arbitration time bar, employee had to proceed to arbitration before going to court.
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Collective contracts

• Violation of collective contract / infringe on
  employee's interests
• trade union may request employer to undertake
  relevant responsibilities
• If disputes arise
• trade union may file an application for
  arbitration / bring a lawsuit in its own name
  against employer

• Oral contract
• Termination of employment
• Employment manual / Handbook formulation
• Contract workers
• Probation
• Non-compete covenant
• Arrears of wages
• Collective contracts

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Conclusion
Thank you