The Benelux Chamber of Commerce (together with the Danish Chamber) invited two speakers to give their insight into the new law: Ms. Luka Lu, Lawyer and Managing Partner for Capital Associates and Mr. Paul van de Kerkhof, Managing Director Randstad China. Both gave good presentations and Bencham members received their presentations in electronic form.

Many foreigners are not yet aware of the changes this law will bring – they better get an update because it is going to change a lot how companies handle their Human Resources.
Several clauses of the law will need further clarification. The final version is more balanced than the earlier drafts. One provision that was changed is regarding the ceiling for liquidity damages in relation with the non-competition clause – very reassuring because the former draft left the door open to stealing employees along with their expertise and technical secrets without due legal ways to stop it.
Overall the law seems to be made more for blue collar workers than for top execs. The question is, will China really enforce the rules for those workers who are regularly badly treated, mostly by local Chinese companies.
The law will result in higher HR costs but will make it more easy to fire top level staff.
Outsourcing of staff as done in western countries still is much a grey area, the least to say.
I found the following overview interesting, source: FIDUCIA. Gives a flavor of what it is all about.
New labour law regulations

• Employers are required to sign written contracts. If within one month, no written contract is signed the employers have to pay double salary. If within one year, still no contract is signed, an indefinite contract is deemed to be signed.
• Each employee can be offered a maximum of two fixed-term contracts. The third contract will be considered
• as indefinite.
• Employees who have worked for the same employer
• for ten years are entitled to an indefinite contract unless they request a fixed-term contract.
• The length of the probation period is linked to the duration of the contract and only applies once.
• Salary during the probationary period cannot be lower than 80% of the salary after probation.
• Labour unions have the right to negotiate contracts and company policies with employers on behalf of employees.
• Changes concerning hours, safety, insurance and allotment of holidays must be submitted to the employee
• representatives for discussion (this regulation
• already applies for labour union members).
• Employers are limited in their demand for training cost repayment when staff leave before the end of their contract.
• Employers are forced to pay severance if they do not renew employees’ fixed-term contracts, unless they can state a valid reason.
• The non-compete obligation is limited to two years and only applicable for senior management and technical personnel and other staff who are subject
• to confidentiality obligations.

Be warned…