China's National People's Congress (NPC), or top legislature, on Friday defended a new labor contract law that will be brought into effect from January 1, 2008.
The new labor contract law required Chinese employers to sign no-fixed-term contracts with their employees if the employees have worked for them for more than ten consecutive years, or the two sides have signed fixed-term contracts twice.
Some employers who have hired large amount of staff have started to reduce their employees before the law takes effect by ending contracts before expiration.
Some employers have prepared a compensation plan, some have not. Public opinion has indicated that the main reason for their practice is that "no-fixed-term contract" would either bring heavy burden or less efficiency to the employers.
"Those practices (ending employee's contracts before expiration) reflected employer's misunderstandings about the law," Zhang Shicheng, an official with NPC's Standing Committee, told Xinhua.
"No-fixed-term contract does not mean a lifelong job and the new law has granted employers right to fire employees with no-fixed-term contracts if the employees violate laws or are no longer capable for the job," Zhang said.
No-fixed-term contract has been widely adopted in developed countries that could bring a more stable relationship between employee and employer, he added.
The official told Xinhua that in China employees will be more likely to be at a disadvantage when seeking jobs because of employment pressure and the labor contract law's protection for them is definitely "necessary".
Huawei, one of China's biggest telecommunications network equipment makers, courted controversy in the third quarter of the year, when it called on its staff who have worked for eight consecutive years to hand in voluntary resignations. It was believed to be a bid to avoid the consequences of the new law.
Huawei has spent about one billion yuan (US$135,78 million) to pay for the compensation to its employees who 'voluntarily' resigned and shortly resumed posts with new contracts.
Zhang also revealed that the top legislature has started making more detailed regulations to complete the new law and prevent employers from carrying out other illegal practices in signing contracts with employees.
(Xinhua News Agency December 22, 2007)