China -  Chinese law firm

Labor Contract Law (17/04/2007)


1. What is the aim of the law?

The proposed law aims to expand worker protections by giving increased leverage to unions as well as attempting to outline some basic reciprocal employer-employee
responsibilities. Among them, the law attempts to delineate the terms of probationary periods of employment, employment termination and severance compensation more favorably with respect worker interests.

2. Has the role of the union changed at all?

Increased authority has been lent to trade unions to act as employee representatives, secure worker rights and function, more generally, as a workplace watchdog is a prominent feature of the legislation. Unions will be empowered to negotiate and consent to employer policies, regulations and mass labor terminations. Individual employees also stand to receive severance compensation should their "fixed term" contract expire without renewal.

3. Does the scope of the law extend to employee responsibilities as well?

In an effort to improve the Chinese intellectual property (IP) environment, it provides employers avenues by which to use and enforce "non-compete clauses" in their labor contracts. Such laws charge current and former employees privileged with knowledge of trade secrets or IP with a set of fiduciary responsibilities aimed to protect confidential material of the company from which it came.

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