China Update – September 2008

Labor Contract Law Implementing Rules Issued

Key Points:

• Events leading to contract dissolution clarified
• Methodology for calculating compensation on dismissal clarified
• Events leading to employee penalties clarified

On September 18, 2008 the State Council promulgated the "Regulations on the Implementation of the Labor Contract Law of the People's Republic of China" (the "Rules") which complement the Labor Contract Law (the "LCL") that went into effect on January 1, 2008. The Rules focus on employment contracts, the related issues of contract termination/dissolution and compensation, and labor dispatch contracts. As there are no major substantive revisions in the Rules, the overall reaction of the business community has been positive if not rather muted.