As the world embarks into the Year of the Dragon, China is making every effort to draw in more and more international business to add to its already skyrocketing economy.  China’s current Labor Law is expected to be amended in 2012. The issue is to what degree and to what effect the 2012 amendments, if enacted, will have on employers.  The changes and effect of the 2012 amendments are yet to be fully known or disclosed, but it is now a good time for all of us to review and ensure compliance with the complexities of China’s labor laws to: (1) reduce risks of legal liability and (2) understand and implement any changes that may be required should the 2012 amendments be enacted. 

China’s employment laws have experienced significant changes from the Iron Rice Bowl employment system 35 years ago(e.g. guaranteed job security with steady income and benefits similar to, but not identical, to the English concept of a breadwinner with ‘cradle to grave’ socialism), to the liberalization of the labor market under the Labor Law of 1994, and then to the Labor Contract Law in 2008 which affected the large majority of full-time positions and required employers to provide employees with written contracts.  Although we do not anticipate a complete transformation from the current Labor Contract Law of 2008, employers should understand that China’s contract employment system is the opposite of the United States’ at-will employment system since the law provides that all employees must be engaged under a written employment contract, which shall at minimum include:

• Terms of Employment.  In China, the law provides for three types of employment terms: definite, indefinite, or piecemeal (a compensation system in which employees are paid for each unit produced or action performed, not on the basis of time worked).

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