Key Changes Affecting Employers Under The New PRC Labour Contract Law

After more than 2 years of consultation and redrafting, the Standing Committee of the National People’s Congress finally passed the new PRC Labour Contract Law (the "New Law") on 29 June 2007. The New Law will take effect on 1 January 2008 and is widely regarded as more "employee friendly" and "socialistic". It worries employers in China because of changes made to the employers’ obligations and employees’ rights including the strengthening of collective rights through various organizations.

Some of the key amendments in the New Law are highlighted as follows :-

Under the current law, a probationary period may be agreed upon in a labour contract and the maximum probation must not exceed 6 months. The New Law now specifies a maximum probation period depending on the contract term :-