For more than a year now, the Standing Committee of the National People’s Congress ("SCNPC") has been reviewing the draft Labor Contract Law. On June 29, 2007, the SCNPC passed the PRC Labor Contract, which will take effect on January 1, 2008.
Although existing labor contracts will be grandfathered, and employers do not need to execute new contracts for existing employees at the beginning of next year, the new law changes how foreign employers will do business in China. All employees who commence work on or after January 1, 2008, will have the benefit of the new law, and their labor contracts must be in accordance with it. The law requires a written contract for each employee and sets certain penalties for failing to timely execute a written contract. The emphasis on the written contract will mean a need for skillfully-drafted contracts, and probably greater involvement of lawyers in the process. There are new provisions about invalidity of labor contracts that will certainly
