The new Labour Contract Law that enhances rights for workers has come into force on 1 January 2008.   The new Labour Contract Law allows open-ended terms of employment for those who have completed two fixed terms or worked for over 10 years.  It limits overtime, sets minimum wages and guarantees one month's pay for each year worked for those sacked. 

Under the new law's requirements, a written labour contract that specifies the employment provisions (e.g. job duties and responsibilities, working hours, employee's salary and benefits, probation period, rest and leave, labour safety and health, social insurance, etc.) shall be concluded for each employee within one month from the commencement date of employment, failing which the employer shall pay twice the amount of the payable remuneration to employees as salary.  The new law also requires severance pay for employment termination (if it is suggested by the employer) unless the employer can provide evidence demonstrating that the employee is disqualified for the job or that the employee has seriously violated against the labour disciplines or work rules. 

And in response to the new Labour Contract Law, employers in Mainland China need to:

• Review and reword the labour contract if necessary to specify the employment terms
• Establish sets of job descriptions to clarify the duties, responsibilities and requirements for all positions
• Enhance the employment manual to ensure clear communication of labour disciplines and work rules
• Optimize the performance appraisal system to keep track of the work performance and competence levels of employees

Last but not least, hiring the right employees at first and striving to maintain harmonious labour relations, however, are still considered as the best way for employers to reduce disputes and the corresponding cost aroused.

Note:  Nothing above is intended to be legal advice and specific legal advice should be sought from qualified professionals in particular cases.