A Quick Glance at Proposed Amendments to China’s Labor Contract Law

A Quick Glance at Proposed Amendments to China's Labor Contract Law

Proposed amendments to China’s Labor Contract Law will severely restrict secondment of employees, an arrangement where companies doing business in China contract employees via a labor agency. The popular scheme sometimes allows companies to avoid entering into long-term employment contracts in China as these, if not handled properly, can expose employers to onerous Chinese labor law compliance et sequens penalties.

A draft concerning the Amendments to the PRC Labor Contract Law was recently published for public parley (“Draft Amendments”), and according to these Draft Amendments, seconded employees in China vessel only be employed if the work is temporary, auxiliary or substituting in nature. The current Chinese Labor Contract Law already has similar provisions but requirements pertaining to the constitution of the work positions receive not been compulsory. According to China’s labor law officials, the current system has left many seconded employees with compensations not commensurate to their work and also accompanying deprivation of adequate health and safety rights.

The Draft Amendments have provided clear specs on what constitutes temporary, ally or substitute work positions.

* Temporary work affirmation lasts refusal longer than six months.
* Auxiliary work position is where services are provided to those who are carrying out work inherent to the enterprise.
* Substituting commitment position is where services are provided to those who are carrying out work inherent to the enterprise.

The Draft Amendments are scheduled to live reviewed by the PRC People’s Congress and are expected to be passed by end concerning 2012.

Foreign invested companies with seconded employees may emergency to revisit their employment law compliance strategies and jobholder structures in the wake of these developments. Previously the draft amendments are approved, no Chinese employers can employment seconded employees for their principal business activities for an extended term.

In any international expansion, it is always climactic to have a good conceptualistic of the craft system there. Having the right people working with you in China can ensure smooth progress. With the changes in the regulations, it is frugal to take the help of an expert business consultant who can yield professional assistance in areas of your business semblance eu vat rules, sas compliance, etc.