EMPLOYMENT LAW PROMPTS FOREIGN COMPANIES TO CLEAN HOUSE

The nation's long-awaited, much-debated and controversial new law on employment contracts was promulgated on June 29 2007 (see our translation on p. 30 and analysis on p. 26). Employment lawyers across China are now finding their hands full as companies take on the monumental task of reviewing and updating their contract templates, codes of conduct and other internal rules and regulations to ensure compliance with the new law.

"Everybody who is operating in China should re-write their employment contracts ... and re-write all of their employee handbooks, employee manuals, and codes of conduct," says Andreas Lauffs, principal partner head of the Employment Law Group at Baker & McKenzie. Lauffs notes that employers should also look at procedures that would make such documents binding and enforceable.

The law, which takes effect on January 1 2008, clarifies and expands the 1995 PRC Labour Law (中华人民共和国劳动法)and other piecemeal local and national regulations. Officials received hundreds of thousands of responses to the March 2006 draft, and its decidedly pro-employee bent brought intense criticism from foreign-invested enterprises operating in China, which feared that their costs would greatly increase.