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Labour Contract Law of the People's Republic of China

The Labour Contract Law of the People's Republic of China (中华人民共和国劳动合同法) is the primary source of labour law in China and went into effect on January 1, 2008, following a series of staff-sacking scandals in many companies. The Ministry of Human Resources and Social Security of the People's Republic of China is the responsible government department for administrating this law.

History

The law prompts companies to improve their management, capital-labour relations and productivity. A sound market economy system in return would benefit businesses—both domestic and foreign companies.

Compared to the old contract law issued in 1994, the new law is supposed to provide greater job security.

Ever since the law was approved by China's top legislature in June 2007, it had aroused heated discussion and concern among domestic and foreign companies.

China appealed to foreign investors with its cheap labour, its preferential investment policies and its immense market. Employers feared the new law would have meant bigger severance payments and higher operational costs.

In the short term, it has been predicted that foreign companies investing in supermarket chains, restaurants, building industries and other low-end manufacturing, which abuse cheap labours and avoid paying social security would suffer some losses. But in the long run, the new labour contract law would not negatively impact China's competitiveness and appeal as a destination for foreign investment.

Small and medium enterprises in particular have already particularly felt the effects of the law. For example, some Korean companies have already decided to move their business from China to Vietnam or other developing countries where labour is much cheaper. About 98 percent of Korean enterprises in China are independent small and medium firms.

Other companies reacted to the law by proactively firing employees who would have come under the new guidelines. In October, US-based retail giant Wal-Mart fired about 100 employees at a sourcing center in China. The company said the layoff was part of its global restructuring. LG and Olympus have respectively announced plans to lay off employees. Carrefour China has asked over 40,000 of its Chinese employees to re-sign a two-year labour contract before December 28, 2007 regardless of an employees' service length or the expiration of their current labour contract.

Indian labour law

Indian labour law refers to laws regulating employment in India. There are over fifty national laws and many more state-level laws.

Traditionally Indian governments at federal and state level have sought to ensure a high degree of protection for workers. So for instance, a permanent worker can be terminated only for proven misconduct or for habitual absence.^[1] In Uttam Nakate case, the Bombay High Court held that dismissing an employee for repeated sleeping on the factory floor was illegal - a decision which was overturned by the Supreme Court of India. Moreover, it took two decades to complete the legal process. In 2008, the World Bank has criticised the complexity, lack of modernisation and flexibility in Indian regulations.^[2][3] India can boast of a quarter of the world's workforce by 2025, provided the country harnesses the potential of its young and productive population. However, the demographic dividend would become a disaster if India does not radically overhaul the labour ecosystem to enhance the productivity of the growing workforce. If reforms are not initiated, it is expected that much of the country's demographic dividend would occur in states with backward labour market ecosystems. It also ranked that states on the basis of improvement in their labour ecosystems in terms of state efforts in various areas like education and training, infrastructure, governance and the legal/regulatory structure.^[4]

Collective labour law

• 
  The Industrial Disputes Act (1947) requires companies employing more than 100 workers to seek government approval before they can fire employees or close down.^[5] In practice, permissions for firing employees are granted.^[5]
  
• 
  Trade Unions Act 1926
  
• 
  Provisions of the Factories Act, 1948
  

• 
  The Contract Labour Act (1970) aims at regulating employment of contract labour so as to place it at par with labour employed directly.^[5] Women are not permitted to work night shifts.^[5]
  
• 
  Minimum Wages Act 1948
  
• 
  Weekly Holidays Act 1942
  
• 
  Beedi and Cigar Workers Act 1966
  
• 
  The Payment of Wages Act, 1936
  
• 
  The Workmen’s Compensation Act, 1923
  
• 
  The Factories Act, 1948
  

Employment Agreements

Under the Civil Code, a contract in which one person performs services for another with compensation may be construed as any one of the following:

• 
  an employment agreement (雇用契約 koyō keiyaku) where the object is the completion of labor under the employing party's direction.
  
• 
  an independent contractor agreement (請負契約 ukeoi keiyaku) where the object is the completion of a specific task.
  
• 
  a mandate agreement (委任契約 inin keiyaku) where, similar to power of attorney in common law countries, one party performs designated tasks on the other party's behalf. These tasks are usually legal acts but may be non-legal acts, in which case, the agreement is referred to as a quasi-mandate (準委任 jun-inin).