This note was compiled on the basis of information available to CBI China at the time of writing.
It reflects our understanding of the principal issues arising from the new legislation for member companies, and any errors are those
of CBI China; however, this note is not intended to constitute legal advice and no business or legal decision should be taken based
solely on its content. Companies concerned about the impact of legislative changes on their business should seek expert PRC legal
China’s Labour Contract Law
z The second draft of China’s Labour Contract Law (LCL) is expected to be debated mid-2007
and approved more or less ‘as is’, before entering into force later 2007 or early in 2008
z This draft of the law is more benign, from an employer’s point of view, than that of early 2006;
however, many details remain vaguely worded and could give rise to problems in
z Companies should make sure that they are compliant with provisions of the new law, and that
HR departments are fully briefed
The first draft of the LCL was submitted to the NPC in late 2005, before being released for public
comment in March 2006. Reactions to the draft LCL were less than positive, ranging from fears
that it went too far in strengthening labour against management, to more technical issues 1,2.
More than 190,000 comments were received during the consultation period in 2006, and it is
believed that these were taken into account during the re-drafting that preceded the second
reading of the LCL in December 2006. Opinions have not been solicited on the second draft, and it
is expected that this draft will be passed around May without major revisions, and will enter into
force later in 2007 or early 2008.
This draft of the Law is more benign than the 2006 draft LCL; however, problems of wording
remain, with a number of provisions having been left vague. What is more, it is not clear that what
is needed is a new law. Rather, doing more to implement existing rules could prove to be a more